House Report 111-443, Part 1 - 111th Congress (2009-2010)
March 17, 2010, As Reported by the Budget Committee

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House Report 111-443 - THE RECONCILIATION ACT OF 2010




[House Report 111-443]
[From the U.S. Government Printing Office]


111th Congress 
2d Session             HOUSE OF REPRESENTATIVES        Report
                                                       111-443
_______________________________________________________________________

                                     


                     THE RECONCILIATION ACT OF 2010

                               ----------                              

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                              to accompany

                               H.R. 4872

  A BILL TO PROVIDE FOR RECONCILIATION PURSUANT TO SECTION 202 OF THE 
        CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2010

                             together with

                             MINORITY VIEWS

<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>


                                Volume I
                               Division I

 March 17, 2010.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed
                THE RECONCILIATION ACT OF 2010--VOLUME I
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512�091800  
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111th Congress 
 2d Session             HOUSE OF REPRESENTATIVES                 Report
                                                                111-443
_______________________________________________________________________

                                     


                     THE RECONCILIATION ACT OF 2010

                               __________

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET

                        HOUSE OF REPRESENTATIVES

                              to accompany

                               H.R. 4872

  A BILL TO PROVIDE FOR RECONCILIATION PURSUANT TO SECTION 202 OF THE 
        CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2010

                             together with

                             MINORITY VIEWS

<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>


                                Volume I

                               Division I

 March 17, 2010.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed
                        COMMITTEE ON THE BUDGET

             JOHN M. SPRATT, Jr., South Carolina, Chairman
ALLYSON Y. SCHWARTZ, Pennsylvania    PAUL RYAN, Wisconsin,
MARCY KAPTUR, Ohio                     Ranking Minority Member
XAVIER BECERRA, California           JEB HENSARLING, Texas
LLOYD DOGGETT, Texas                 SCOTT GARRETT, New Jersey
EARL BLUMENAUER, Oregon              MARIO DIAZ-BALART, Florida
MARION BERRY, Arkansas               MICHAEL K. SIMPSON, Idaho
ALLEN BOYD, Florida                  PATRICK T. McHENRY, North Carolina
JAMES P. McGOVERN, Massachusetts     CONNIE MACK, Florida
NIKI TSONGAS, Massachusetts          JOHN CAMPBELL, California
BOB ETHERIDGE, North Carolina        JIM JORDAN, Ohio
BETTY McCOLLUM, Minnesota            CYNTHIA M. LUMMIS, Wyoming
JOHN A. YARMUTH, Kentucky            STEVE AUSTRIA, Ohio
ROBERT E. ANDREWS, New Jersey        ROBERT B. ADERHOLT, Alabama
ROSA L. DeLAURO, Connecticut,        DEVIN NUNES, California
CHET EDWARDS, Texas                  GREGG HARPER, Mississippi
ROBERT C. ``BOBBY'' SCOTT, Virginia  ROBERT E. LATTA, Ohio
JAMES R. LANGEVIN, Rhode Island
RICK LARSEN, Washington
TIMOTHY H. BISHOP, New York
GWEN MOORE, Wisconsin
GERALD E. CONNOLLY, Virginia
KURT SCHRADER, Oregon
DENNIS MOORE, Kansas

                           Professional Staff

            Thomas S. Kahn, Staff Director and Chief Counsel
                 Austin Smythe, Minority Staff Director


                            C O N T E N T S


                              ----------                              

                                Volume I

                                                                   Page
Introduction.....................................................     1
Division I--Committee on Ways and Means: Health Care Reform......     5


                                                                       
111th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     111-443

======================================================================



 
                     THE RECONCILIATION ACT OF 2010

                                _______
                                

PROVIDING FOR RECONCILIATION PURSUANT TO SECTION 202 OF THE CONCURRENT 
             RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2010

                                _______
                                

 March 17, 2010.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Spratt, from the Committee on the Budget, submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 4872]

    The Committee on the Budget, to whom reconciliation 
recommendations were submitted pursuant to section 202 of 
Senate Concurrent Resolution 13, the Concurrent Resolution on 
the Budget for Fiscal Year 2010, having considered the same, 
report the bill without recommendation.

                     BUDGET COMMITTEE INTRODUCTION


                                Overview

    The reconciliation bill reported by the Budget Committee 
includes provisions for health care reform and for investing in 
education. The need for health care reform is clear. By most 
measures, we have the best medical care system in the world, 
but it is also by a wide margin the world's most expensive, and 
it is not readily accessible to millions of Americans. The 
rising cost of health care is not sustainable, not only in 
household and business budgets, but in the federal budget as 
well.
    Making higher education more affordable and accessible 
without adding to the deficit is also an important goal. A 
productive economy requires affordable, accessible, high-
quality education and the higher education provisions included 
in the reconciliation bill will help advance that goal.
    The reconciliation process has been used 22 times in prior 
years. During the previous Administration and the previous 
Congressional majority, reconciliation was used in 2001 to pass 
tax cuts that worsened the bottom line by $1.35 trillion over 
ten years. In 2003, a second round of tax cuts passed under 
reconciliation added $350 billion to the deficit. By contrast, 
the use of reconciliation in this year's budget process 
requires that reconciliation legislation reduce the deficit, 
not add to it.
    Reconciliation has been used in the recent past to invest 
in education in a fiscally responsible way--the College Cost 
Reduction and Access Act of 2007 passed using reconciliation 
procedures. The Consolidated Omnibus Budget Reconciliation Act 
of 1985 (COBRA) gave recently separated workers the choice to 
temporarily continue employer-provided health coverage. When 
reconciliation was used in the Balanced Budget Act of 1997, the 
Children's Health Insurance Program (CHIP), Medicare Payment 
Advisory Commission (MedPAC), and Medicare Advantage were 
created. The use of reconciliation in the current budget 
process lies well within those past practices.
    The Concurrent Resolution on the Budget for Fiscal Year 
2010, S. Con. Res. 13, included two reconciliation instructions 
as part of Section 202--one for legislation on health care 
reform and the second for legislation investing in education.
    Under the Budget Act, a concurrent resolution on the budget 
can include reconciliation instructions to authorizing 
committees. These reconciliation instructions provide a 
specified dollar amount of budgetary change to be accomplished 
by reconciliation, but the decisions about the policies to be 
included in the reconciliation legislation are left to the 
authorizing committees themselves.
    The Budget Act assigns the Budget Committee the role of 
packaging the reconciliation bills sent to us by the 
authorizing committees and transmitting them to the House 
``without any substantive revision.''
    Division I of this year's reconciliation bill consists of 
legislative language on health care reform submitted to the 
Budget Committee in October by the Ways and Means Committee. 
Division II of the bill consists of legislative language on 
health care reform submitted to the Budget Committee by the 
Education and Labor Committee. Division III consists of 
legislative language on investing in education submitted to the 
Budget Committee by the Education and Labor Committee. The 
recommendations that were submitted to the Budget Committee in 
October were in compliance with the savings required by Section 
202 of the budget resolution.
    The Energy and Commerce Committee did not submit 
recommendations to the Budget Committee in response to the 
reconciliation instruction.
    As noted in the following material, after reporting the 
reconciliation legislation to the House, the Budget Committee 
approved a number of non-binding motions expressing support for 
certain amendments being made in order by the Rules Committee 
when it grants a rule for floor consideration of this 
reconciliation bill.
                               DIVISION I

                         LETTER OF TRANSMITTAL

                              ----------                              

                          House of Representatives,
                               Committee on Ways and Means,
                                  Washington, DC, October 15, 2009.
Hon. John Spratt,
Chairman, Committee on the Budget, Cannon HOB, Washington, DC.
    Dear Chairman Spratt: On July 16, 2009, the Committee on 
Ways and Means ordered favorably reported to the House, an 
Amendment in the Nature of a Substitute to H.R. 3200 by a 
recorded vote of 23 to 18. Pursuant to section 202(c) of Senate 
Concurrent Resolution 13, I am hereby transmitting the 
Amendment in the Nature of a Substitute to you as fulfillment 
of the Committee on Ways and Means budget reconciliation 
instructions.
    Enclosed please find a copy of our Committee's report on 
H.R. 3200, including legislative language, explanatory report 
language, estimates from the Joint Committee on Taxation and 
additional views. Please feel free to contact me if you have 
any questions.
            Sincerely,
                                  Charles B. Rangel
                                                  Chairman,
                                       Committee on Ways and Means.
    Enclosure.


111th Congress                                            Rept. 111-299
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 2

======================================================================




            AMERICA'S AFFORDABLE HEALTH CHOICES ACT OF 2009

                                _______
                                

October 14, 2009.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Rangel, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                             together with

                    DISSENTING AND ADDITIONAL VIEWS

                        [To accompany H.R. 3200]

  The Committee on Ways and Means, to whom was referred the 
bill (H.R. 3200) to provide affordable, quality health care for 
all Americans and reduce the growth in health care spending, 
and for other purposes, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.
  The amendment is as follows:
  Strike out all after the enacting clause (other than title 
VII of division B and division C) and insert the following:

SECTION 1. SHORT TITLE; TABLE OF DIVISIONS, TITLES, AND SUBTITLES.

  (a) Short Title.--This Act may be cited as the ``America's Affordable 
Health Choices Act of 2009''.
  (b) Table of Divisions, Titles, and Subtitles.--This Act is divided 
into divisions, titles, and subtitles as follows:

               DIVISION A--AFFORDABLE HEALTH CARE CHOICES

TITLE I--PROTECTIONS AND STANDARDS FOR QUALIFIED HEALTH BENEFITS PLANS
Subtitle A--General Standards
Subtitle B--Standards Guaranteeing Access to Affordable Coverage
Subtitle C--Standards Guaranteeing Access to Essential Benefits
Subtitle D--Additional Consumer Protections
Subtitle E--Governance
Subtitle F--Relation to other requirements; Miscellaneous
Subtitle G--Early Investments
TITLE II--HEALTH INSURANCE EXCHANGE AND RELATED PROVISIONS
Subtitle A--Health Insurance Exchange
Subtitle B--Public health insurance option
Subtitle C--Individual Affordability Credits
TITLE III--SHARED RESPONSIBILITY
Subtitle A--Individual responsibility
Subtitle B--Employer Responsibility
TITLE IV--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986
Subtitle A--Shared responsibility
Subtitle B--Credit for small business employee health coverage expenses
Subtitle C--Disclosures to carry out health insurance exchange 
subsidies
Subtitle D--Other revenue provisions

             DIVISION B--MEDICARE AND MEDICAID IMPROVEMENTS

TITLE I--IMPROVING HEALTH CARE VALUE
Subtitle A--Provisions related to Medicare part A
Subtitle B--Provisions Related to Part B
Subtitle C--Provisions Related to Medicare Parts A and B
Subtitle D--Medicare Advantage Reforms
Subtitle E--Improvements to Medicare Part D
Subtitle F--Medicare Rural Access Protections
TITLE II--MEDICARE BENEFICIARY IMPROVEMENTS
Subtitle A--Improving and Simplifying Financial Assistance for Low 
Income Medicare Beneficiaries
Subtitle B--Reducing Health Disparities
Subtitle C--Miscellaneous Improvements
TITLE III--PROMOTING PRIMARY CARE, MENTAL HEALTH SERVICES, AND 
COORDINATED CARE
TITLE IV--QUALITY
Subtitle A--Comparative Effectiveness Research
Subtitle B--Nursing Home Transparency
Subtitle C--Quality Measurements
Subtitle D--Physician Payments Sunshine Provision
Subtitle E--Public Reporting on Health Care-Associated Infections
TITLE V--MEDICARE GRADUATE MEDICAL EDUCATION
TITLE VI--PROGRAM INTEGRITY
Subtitle A--Increased funding to fight waste, fraud, and abuse
Subtitle B--Enhanced penalties for fraud and abuse
Subtitle C--Enhanced Program and Provider Protections
Subtitle D--Access to Information Needed to Prevent Fraud, Waste, and 
Abuse
TITLE VII--MEDICAID AND CHIP
Subtitle A--Medicaid and Health Reform
Subtitle B--Prevention
Subtitle C--Access
Subtitle D--Coverage
Subtitle E--Financing
Subtitle F--Waste, Fraud, and Abuse
Subtitle G--Puerto Rico and the Territories
Subtitle H--Miscellaneous
TITLE VIII--REVENUE-RELATED PROVISIONS
TITLE IX--MISCELLANEOUS PROVISIONS

          DIVISION C--PUBLIC HEALTH AND WORKFORCE DEVELOPMENT

TITLE I--COMMUNITY HEALTH CENTERS
TITLE II--WORKFORCE
Subtitle A--Primary care workforce
Subtitle B--Nursing workforce
Subtitle C--Public Health Workforce
Subtitle D--Adapting workforce to evolving health system needs
TITLE III--PREVENTION AND WELLNESS
TITLE IV--QUALITY AND SURVEILLANCE
TITLE V--OTHER PROVISIONS
Subtitle A--Drug discount for rural and other hospitals
Subtitle B--School-Based health clinics
Subtitle C--National medical device registry
Subtitle D--Grants for comprehensive programs To provide education to 
nurses and create a pipeline to nursing
Subtitle E--States failing To adhere to certain employment obligations

               DIVISION A--AFFORDABLE HEALTH CARE CHOICES

SEC. 100. PURPOSE; TABLE OF CONTENTS OF DIVISION; GENERAL DEFINITIONS.

  (a) Purpose.--
          (1) In general.--The purpose of this division is to provide 
        affordable, quality health care for all Americans and reduce 
        the growth in health care spending.
          (2) Building on current system.--This division achieves this 
        purpose by building on what works in today's health care 
        system, while repairing the aspects that are broken.
          (3) Insurance reforms.--This division--
                  (A) enacts strong insurance market reforms;
                  (B) creates a new Health Insurance Exchange, with a 
                public health insurance option alongside private plans;
                  (C) includes sliding scale affordability credits; and
                  (D) initiates shared responsibility among workers, 
                employers, and the government;
        so that all Americans have coverage of essential health 
        benefits.
          (4) Health delivery reform.--This division institutes health 
        delivery system reforms both to increase quality and to reduce 
        growth in health spending so that health care becomes more 
        affordable for businesses, families, and government.
  (b) Table of Contents of Division.--The table of contents of this 
division is as follows:

Sec. 100. Purpose; table of contents of division; general definitions.

 TITLE I--PROTECTIONS AND STANDARDS FOR QUALIFIED HEALTH BENEFITS PLANS

                     Subtitle A--General Standards

Sec. 101. Requirements reforming health insurance marketplace.
Sec. 102. Protecting the choice to keep current coverage.

    Subtitle B--Standards Guaranteeing Access to Affordable Coverage

Sec. 111. Prohibiting pre-existing condition exclusions.
Sec. 112. Guaranteed issue and renewal for insured plans.
Sec. 113. Insurance rating rules.
Sec. 114. Nondiscrimination in benefits; parity in mental health and 
substance abuse disorder benefits.
Sec. 115. Ensuring adequacy of provider networks.
Sec. 116. Ensuring value and lower premiums.

    Subtitle C--Standards Guaranteeing Access to Essential Benefits

Sec. 121. Coverage of essential benefits package.
Sec. 122. Essential benefits package defined.
Sec. 123. Health Benefits Advisory Committee.
Sec. 124. Process for adoption of recommendations; adoption of benefit 
standards.

              Subtitle D--Additional Consumer Protections

Sec. 131. Requiring fair marketing practices by health insurers.
Sec. 132. Requiring fair grievance and appeals mechanisms.
Sec. 133. Requiring information transparency and plan disclosure.
Sec. 134. Application to qualified health benefits plans not offered 
through the Health Insurance Exchange.
Sec. 135. Timely payment of claims.
Sec. 136. Standardized rules for coordination and subrogation of 
benefits.
Sec. 137. Application of administrative simplification.

                         Subtitle E--Governance

Sec. 141. Health Choices Administration; Health Choices Commissioner.
Sec. 142. Duties and authority of Commissioner.
Sec. 143. Consultation and coordination.
Sec. 144.  Health Insurance Ombudsman.

       Subtitle F--Relation to Other Requirements; Miscellaneous

Sec. 151. Relation to other requirements.
Sec. 152. Prohibiting discrimination in health care.
Sec. 153. Whistleblower protection.
Sec. 154. Construction regarding collective bargaining.
Sec. 155. Severability.

                     Subtitle G--Early Investments

Sec. 161. Ensuring value and lower premiums.
Sec. 162. Ending health insurance rescission abuse.
Sec. 163. Administrative simplification.
Sec. 164. Reinsurance program for retirees.

       TITLE II--HEALTH INSURANCE EXCHANGE AND RELATED PROVISIONS

                 Subtitle A--Health Insurance Exchange

Sec. 201. Establishment of Health Insurance Exchange; outline of 
duties; definitions.
Sec. 202. Exchange-eligible individuals and employers.
Sec. 203. Benefits package levels.
Sec. 204. Contracts for the offering of Exchange-participating health 
benefits plans.
Sec. 205. Outreach and enrollment of Exchange-eligible individuals and 
employers in Exchange-participating health benefits plan.
Sec. 206. Other functions.
Sec. 207. Health Insurance Exchange Trust Fund.
Sec. 208. Optional operation of State-based health insurance exchanges.

               Subtitle B--Public Health Insurance Option

Sec. 221. Establishment and administration of a public health insurance 
option as an Exchange-qualified health benefits plan.
Sec. 222. Premiums and financing.
Sec. 223. Payment rates for items and services.
Sec. 224. Modernized payment initiatives and delivery system reform.
Sec. 225. Provider participation.
Sec. 226. Application of fraud and abuse provisions.

              Subtitle C--Individual Affordability Credits

Sec. 241. Availability through Health Insurance Exchange.
Sec. 242. Affordable credit eligible individual.
Sec. 243. Affordable premium credit.
Sec. 244. Affordability cost-sharing credit.
Sec. 245. Income determinations.
Sec. 246. No Federal payment for undocumented aliens.

                    TITLE III--SHARED RESPONSIBILITY

                 Subtitle A--Individual Responsibility

Sec. 301. Individual responsibility.

                  Subtitle B--Employer Responsibility

           Part 1--Health Coverage Participation Requirements

Sec. 311. Health coverage participation requirements.
Sec. 312. Employer responsibility to contribute towards employee and 
dependent coverage.
Sec. 313. Employer contributions in lieu of coverage.
Sec. 314. Authority related to improper steering.

   Part 2--Satisfaction of Health Coverage Participation Requirements

Sec. 321. Satisfaction of health coverage participation requirements 
under the Employee Retirement Income Security Act of 1974.
Sec. 322. Satisfaction of health coverage participation requirements 
under the Internal Revenue Code of 1986.
Sec. 323. Satisfaction of health coverage participation requirements 
under the Public Health Service Act.
Sec. 324. Additional rules relating to health coverage participation 
requirements.

         TITLE IV--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986

                   Subtitle A--Shared Responsibility

                   Part 1--Individual Responsibility

Sec. 401. Tax on individuals without acceptable health care coverage.

                    Part 2--Employer Responsibility

Sec. 411. Election to satisfy health coverage participation 
requirements.
Sec. 412. Responsibilities of nonelecting employers.

Subtitle B--Credit for Small Business Employee Health Coverage Expenses

Sec. 421. Credit for small business employee health coverage expenses.

    Subtitle C--Disclosures to Carry Out Health Insurance Exchange 
                               Subsidies

Sec. 431. Disclosures to carry out health insurance exchange subsidies.

                  Subtitle D--Other Revenue Provisions

                       Part 1--General Provisions

Sec. 441. Surcharge on high income individuals.
Sec. 442. Distributions for medicine qualified only if for prescribed 
drug or insulin.
Sec. 443. Delay in application of worldwide allocation of interest.

                  Part 2--Prevention of Tax Avoidance

Sec. 451. Limitation on treaty benefits for certain deductible 
payments.
Sec. 452. Codification of economic substance doctrine.
Sec. 453. Penalties for underpayments.

                   Part 3--Parity in Health Benefits

Sec. 461. Certain health related benefits applicable to spouses and 
dependents extended to eligible beneficiaries.

  (c) General Definitions.--Except as otherwise provided, in this 
division:
          (1) Acceptable coverage.--The term ``acceptable coverage'' 
        has the meaning given such term in section 202(d)(2).
          (2) Basic plan.--The term ``basic plan'' has the meaning 
        given such term in section 203(c).
          (3) Commissioner.--The term ``Commissioner'' means the Health 
        Choices Commissioner established under section 141.
          (4) Cost-sharing.--The term ``cost-sharing'' includes 
        deductibles, coinsurance, copayments, and similar charges but 
        does not include premiums or any network payment differential 
        for covered services or spending for non-covered services.
          (5) Dependent.--The term ``dependent'' has the meaning given 
        such term by the Commissioner and includes a spouse.
          (6) Employment-based health plan.--The term ``employment-
        based health plan''--
                  (A) means a group health plan (as defined in section 
                733(a)(1) of the Employee Retirement Income Security 
                Act of 1974); and
                  (B) includes such a plan that is the following:
                          (i) Federal, state, and tribal governmental 
                        plans.--A governmental plan (as defined in 
                        section 3(32) of the Employee Retirement Income 
                        Security Act of 1974), including a health 
                        benefits plan offered under chapter 89 of title 
                        5, United States Code.
                          (ii) Church plans.--A church plan (as defined 
                        in section 3(33) of the Employee Retirement 
                        Income Security Act of 1974).
          (7) Enhanced plan.--The term ``enhanced plan'' has the 
        meaning given such term in section 203(c).
          (8) Essential benefits package.--The term ``essential 
        benefits package'' is defined in section 122(a).
          (9) Family.--The term ``family'' means an individual and 
        includes the individual's dependents.
          (10) Federal poverty level; fpl.--The terms ``Federal poverty 
        level'' and ``FPL'' have the meaning given the term ``poverty 
        line'' in section 673(2) of the Community Services Block Grant 
        Act (42 U.S.C. 9902(2)), including any revision required by 
        such section.
          (11) Health benefits plan.--The terms ``health benefits 
        plan'' means health insurance coverage and an employment-based 
        health plan and includes the public health insurance option.
          (12) Health insurance coverage; health insurance issuer.--The 
        terms ``health insurance coverage'' and ``health insurance 
        issuer'' have the meanings given such terms in section 2791 of 
        the Public Health Service Act.
          (13) Health insurance exchange.--The term ``Health Insurance 
        Exchange'' means the Health Insurance Exchange established 
        under section 201.
          (14) Medicaid.--The term ``Medicaid'' means a State plan 
        under title XIX of the Social Security Act (whether or not the 
        plan is operating under a waiver under section 1115 of such 
        Act).
          (15) Medicare.--The term ``Medicare'' means the health 
        insurance programs under title XVIII of the Social Security 
        Act.
          (16) Plan sponsor.--The term ``plan sponsor'' has the meaning 
        given such term in section 3(16)(B) of the Employee Retirement 
        Income Security Act of 1974.
          (17) Plan year.--The term ``plan year'' means--
                  (A) with respect to an employment-based health plan, 
                a plan year as specified under such plan; or
                  (B) with respect to a health benefits plan other than 
                an employment-based health plan, a 12-month period as 
                specified by the Commissioner.
          (18) Premium plan; premium-plus plan.--The terms ``premium 
        plan'' and ``premium-plus plan'' have the meanings given such 
        terms in section 203(c).
          (19) QHBP offering entity.--The terms ``QHBP offering 
        entity'' means, with respect to a health benefits plan that 
        is--
                  (A) a group health plan (as defined, subject to 
                subsection (d), in section 733(a)(1) of the Employee 
                Retirement Income Security Act of 1974), the plan 
                sponsor in relation to such group health plan, except 
                that, in the case of a plan maintained jointly by 1 or 
                more employers and 1 or more employee organizations and 
                with respect to which an employer is the primary source 
                of financing, such term means such employer;
                  (B) health insurance coverage, the health insurance 
                issuer offering the coverage;
                  (C) the public health insurance option, the Secretary 
                of Health and Human Services;
                  (D) a non-Federal governmental plan (as defined in 
                section 2791(d) of the Public Health Service Act), the 
                State or political subdivision of a State (or agency or 
                instrumentality of such State or subdivision) which 
                establishes or maintains such plan; or
                  (E) a Federal governmental plan (as defined in 
                section 2791(d) of the Public Health Service Act), the 
                appropriate Federal official.
          (20) Qualified health benefits plan.--The term ``qualified 
        health benefits plan'' means a health benefits plan that meets 
        the requirements for such a plan under title I and includes the 
        public health insurance option.
          (21) Public health insurance option.--The term ``public 
        health insurance option'' means the public health insurance 
        option as provided under subtitle B of title II.
          (22) Service area; premium rating area.--The terms ``service 
        area'' and ``premium rating area'' mean with respect to health 
        insurance coverage--
                  (A) offered other than through the Health Insurance 
                Exchange, such an area as established by the QHBP 
                offering entity of such coverage in accordance with 
                applicable State law; and
                  (B) offered through the Health Insurance Exchange, 
                such an area as established by such entity in 
                accordance with applicable State law and applicable 
                rules of the Commissioner for Exchange-participating 
                health benefits plans.
          (23) State.--The term ``State'' means the 50 States and the 
        District of Columbia.
          (24) State medicaid agency.--The term ``State Medicaid 
        agency'' means, with respect to a Medicaid plan, the single 
        State agency responsible for administering such plan under 
        title XIX of the Social Security Act.
          (25) Y1, y2, etc.--The terms ``Y1'' , ``Y2'', ``Y3'', ``Y4'', 
        ``Y5'', and similar subsequently numbered terms, mean 2013 and 
        subsequent years, respectively.

 TITLE I--PROTECTIONS AND STANDARDS FOR QUALIFIED HEALTH BENEFITS PLANS

                     Subtitle A--General Standards

SEC. 101. REQUIREMENTS REFORMING HEALTH INSURANCE MARKETPLACE.

  (a) Purpose.--The purpose of this title is to establish standards to 
ensure that new health insurance coverage and employment-based health 
plans that are offered meet standards guaranteeing access to affordable 
coverage, essential benefits, and other consumer protections.
  (b) Requirements for Qualified Health Benefits Plans.--On or after 
the first day of Y1, a health benefits plan shall not be a qualified 
health benefits plan under this division unless the plan meets the 
applicable requirements of the following subtitles for the type of plan 
and plan year involved:
          (1) Subtitle B (relating to affordable coverage).
          (2) Subtitle C (relating to essential benefits).
          (3) Subtitle D (relating to consumer protection).
  (c) Terminology.--In this division:
          (1) Enrollment in employment-based health plans.--An 
        individual shall be treated as being ``enrolled'' in an 
        employment-based health plan if the individual is a participant 
        or beneficiary (as such terms are defined in section 3(7) and 
        3(8), respectively, of the Employee Retirement Income Security 
        Act of 1974) in such plan.
          (2) Individual and group health insurance coverage.--The 
        terms ``individual health insurance coverage'' and ``group 
        health insurance coverage'' mean health insurance coverage 
        offered in the individual market or large or small group 
        market, respectively, as defined in section 2791 of the Public 
        Health Service Act.

SEC. 102. PROTECTING THE CHOICE TO KEEP CURRENT COVERAGE.

  (a) Grandfathered Health Insurance Coverage Defined.--Subject to the 
succeeding provisions of this section, for purposes of establishing 
acceptable coverage under this division, the term ``grandfathered 
health insurance coverage'' means individual health insurance coverage 
that is offered and in force and effect before the first day of Y1 if 
the following conditions are met:
          (1) Limitation on new enrollment.--
                  (A) In general.--Except as provided in this 
                paragraph, the individual health insurance issuer 
                offering such coverage does not enroll any individual 
                in such coverage if the first effective date of 
                coverage is on or after the first day of Y1.
                  (B) Dependent coverage permitted.--Subparagraph (A) 
                shall not affect the subsequent enrollment of a 
                dependent of an individual who is covered as of such 
                first day.
          (2) Limitation on changes in terms or conditions.--Subject to 
        paragraph (3) and except as required by law, the issuer does 
        not change any of its terms or conditions, including benefits 
        and cost-sharing, from those in effect as of the day before the 
        first day of Y1.
          (3) Restrictions on premium increases.--The issuer cannot 
        vary the percentage increase in the premium for a risk group of 
        enrollees in specific grandfathered health insurance coverage 
        without changing the premium for all enrollees in the same risk 
        group at the same rate, as specified by the Commissioner.
  (b) Grace Period for Current Employment-based Health Plans.--
          (1) Grace period.--
                  (A) In general.--The Commissioner shall establish a 
                grace period whereby, for plan years beginning after 
                the end of the 5-year period beginning with Y1, an 
                employment-based health plan in operation as of the day 
                before the first day of Y1 must meet the same 
                requirements as apply to a qualified health benefits 
                plan under section 101, including the essential benefit 
                package requirement under section 121.
                  (B) Exception for limited benefits plans.--
                Subparagraph (A) shall not apply to an employment-based 
                health plan in which the coverage consists only of one 
                or more of the following:
                          (i) Any coverage described in section 
                        3001(a)(1)(B)(ii)(IV) of division B of the 
                        American Recovery and Reinvestment Act of 2009 
                        (P.L. 111-5).
                          (ii) Excepted benefits (as defined in section 
                        733(c) of the Employee Retirement Income 
                        Security Act of 1974), including coverage under 
                        a specified disease or illness policy described 
                        in paragraph (3)(A) of such section.
                          (iii) Such other limited benefits as the 
                        Commissioner may specify.
                In no case shall an employment-based health plan in 
                which the coverage consists only of one or more of the 
                coverage or benefits described in clauses (i) through 
                (iii) be treated as acceptable coverage under this 
                division
          (2) Transitional treatment as acceptable coverage.--During 
        the grace period specified in paragraph (1)(A), an employment-
        based health plan that is described in such paragraph shall be 
        treated as acceptable coverage under this division.
  (c) Limitation on Individual Health Insurance Coverage.--
          (1) In general.--Individual health insurance coverage that is 
        not grandfathered health insurance coverage under subsection 
        (a) may only be offered on or after the first day of Y1 as an 
        Exchange-participating health benefits plan.
          (2) Separate, excepted coverage permitted.--Excepted benefits 
        (as defined in section 2791(c) of the Public Health Service 
        Act) are not included within the definition of health insurance 
        coverage. Nothing in paragraph (1) shall prevent the offering, 
        other than through the Health Insurance Exchange, of excepted 
        benefits so long as it is offered and priced separately from 
        health insurance coverage.

    Subtitle B--Standards Guaranteeing Access to Affordable Coverage

SEC. 111. PROHIBITING PRE-EXISTING CONDITION EXCLUSIONS.

  A qualified health benefits plan may not impose any pre-existing 
condition exclusion (as defined in section 2701(b)(1)(A) of the Public 
Health Service Act) or otherwise impose any limit or condition on the 
coverage under the plan with respect to an individual or dependent 
based on any health status-related factors (as defined in section 
2791(d)(9) of the Public Health Service Act) in relation to the 
individual or dependent.

SEC. 112. GUARANTEED ISSUE AND RENEWAL FOR INSURED PLANS.

  The requirements of sections 2711 (other than subsections (c) and 
(e)) and 2712 (other than paragraphs (3), and (6) of subsection (b) and 
subsection (e)) of the Public Health Service Act, relating to 
guaranteed availability and renewability of health insurance coverage, 
shall apply to individuals and employers in all individual and group 
health insurance coverage, whether offered to individuals or employers 
through the Health Insurance Exchange, through any employment-based 
health plan, or otherwise, in the same manner as such sections apply to 
employers and health insurance coverage offered in the small group 
market, except that such section 2712(b)(1) shall apply only if, before 
nonrenewal or discontinuation of coverage, the issuer has provided the 
enrollee with notice of non-payment of premiums and there is a grace 
period during which the enrollees has an opportunity to correct such 
nonpayment. Rescissions of such coverage shall be prohibited except in 
cases of fraud as defined in sections 2712(b)(2) of such Act.

SEC. 113. INSURANCE RATING RULES.

  (a) In General.--The premium rate charged for an insured qualified 
health benefits plan may not vary except as follows:
          (1) Limited age variation permitted.--By age (within such age 
        categories as the Commissioner shall specify) so long as the 
        ratio of the highest such premium to the lowest such premium 
        does not exceed the ratio of 2 to 1.
          (2) By area.--By premium rating area (as permitted by State 
        insurance regulators or, in the case of Exchange-participating 
        health benefits plans, as specified by the Commissioner in 
        consultation with such regulators).
          (3) By family enrollment.--By family enrollment (such as 
        variations within categories and compositions of families) so 
        long as the ratio of the premium for family enrollment (or 
        enrollments) to the premium for individual enrollment is 
        uniform, as specified under State law and consistent with rules 
        of the Commissioner.
  (b) Study and Reports.--
          (1) Study.--The Commissioner, in coordination with the 
        Secretary of Health and Human Services and the Secretary of 
        Labor, shall conduct a study of the large group insured and 
        self-insured employer health care markets. Such study shall 
        examine the following:
                  (A) The types of employers by key characteristics, 
                including size, that purchase insured products versus 
                those that self-insure.
                  (B) The similarities and differences between typical 
                insured and self-insured health plans.
                  (C) The financial solvency and capital reserve levels 
                of employers that self-insure by employer size.
                  (D) The risk of self-insured employers not being able 
                to pay obligations or otherwise becoming financially 
                insolvent.
                  (E) The extent to which rating rules are likely to 
                cause adverse selection in the large group market or to 
                encourage small and mid size employers to self-insure
          (2) Reports.--Not later than 18 months after the date of the 
        enactment of this Act, the Commissioner shall submit to 
        Congress and the applicable agencies a report on the study 
        conducted under paragraph (1). Such report shall include any 
        recommendations the Commissioner deems appropriate to ensure 
        that the law does not provide incentives for small and mid-size 
        employers to self-insure or create adverse selection in the 
        risk pools of large group insurers and self-insured employers. 
        Not later than 18 months after the first day of Y1, the 
        Commissioner shall submit to Congress and the applicable 
        agencies an updated report on such study, including updates on 
        such recommendations.

SEC. 114. NONDISCRIMINATION IN BENEFITS; PARITY IN MENTAL HEALTH AND 
                    SUBSTANCE ABUSE DISORDER BENEFITS.

  (a) Nondiscrimination in Benefits.--A qualified health benefits plan 
shall comply with standards established by the Commissioner to prohibit 
discrimination in health benefits or benefit structures for qualifying 
health benefits plans, building from sections 702 of Employee 
Retirement Income Security Act of 1974, 2702 of the Public Health 
Service Act, and section 9802 of the Internal Revenue Code of 1986.
  (b) Parity in Mental Health and Substance Abuse Disorder Benefits.--
To the extent such provisions are not superceded by or inconsistent 
with subtitle C, the provisions of section 2705 (other than subsections 
(a)(1), (a)(2), and (c)) of section 2705 of the Public Health Service 
Act shall apply to a qualified health benefits plan, regardless of 
whether it is offered in the individual or group market, in the same 
manner as such provisions apply to health insurance coverage offered in 
the large group market.

SEC. 115. ENSURING ADEQUACY OF PROVIDER NETWORKS.

  (a) In General.--A qualified health benefits plan that uses a 
provider network for items and services shall meet such standards 
respecting provider networks as the Commissioner may establish to 
assure the adequacy of such networks in ensuring enrollee access to 
such items and services and transparency in the cost-sharing 
differentials between in-network coverage and out-of-network coverage.
  (b) Provider Network Defined.--In this division, the term ``provider 
network'' means the providers with respect to which covered benefits, 
treatments, and services are available under a health benefits plan.

SEC. 116. ENSURING VALUE AND LOWER PREMIUMS.

  (a) In General.--A qualified health benefits plan shall meet a 
medical loss ratio as defined by the Commissioner. For any plan year in 
which the qualified health benefits plan does not meet such medical 
loss ratio, QHBP offering entity shall provide in a manner specified by 
the Commissioner for rebates to enrollees of payment sufficient to meet 
such loss ratio.
  (b) Building on Interim Rules.--In implementing subsection (a), the 
Commissioner shall build on the definition and methodology developed by 
the Secretary of Health and Human Services under the amendments made by 
section 161 for determining how to calculate the medical loss ratio. 
Such methodology shall be set at the highest level medical loss ratio 
possible that is designed to ensure adequate participation by QHBP 
offering entities, competition in the health insurance market in and 
out of the Health Insurance Exchange, and value for consumers so that 
their premiums are used for services.

    Subtitle C--Standards Guaranteeing Access to Essential Benefits

SEC. 121. COVERAGE OF ESSENTIAL BENEFITS PACKAGE.

  (a) In General.--A qualified health benefits plan shall provide 
coverage that at least meets the benefit standards adopted under 
section 124 for the essential benefits package described in section 122 
for the plan year involved.
  (b) Choice of Coverage.--
          (1) Non-exchange-participating health benefits plans.--In the 
        case of a qualified health benefits plan that is not an 
        Exchange-participating health benefits plan, such plan may 
        offer such coverage in addition to the essential benefits 
        package as the QHBP offering entity may specify.
          (2) Exchange-participating health benefits plans.--In the 
        case of an Exchange-participating health benefits plan, such 
        plan is required under section 203 to provide specified levels 
        of benefits and, in the case of a plan offering a premium-plus 
        level of benefits, provide additional benefits.
          (3) Continuation of offering of separate excepted benefits 
        coverage.--Nothing in this division shall be construed as 
        affecting the offering of health benefits in the form of 
        excepted benefits (described in section 102(b)(1)(B)(ii)) if 
        such benefits are offered under a separate policy, contract, or 
        certificate of insurance.
  (c) No Restrictions on Coverage Unrelated to Clinical 
Appropriateness.--A qualified health benefits plan may not impose any 
restriction (other than cost-sharing) unrelated to clinical 
appropriateness on the coverage of the health care items and services.

SEC. 122. ESSENTIAL BENEFITS PACKAGE DEFINED.

  (a) In General.--In this division, the term ``essential benefits 
package'' means health benefits coverage, consistent with standards 
adopted under section 124 to ensure the provision of quality health 
care and financial security, that--
          (1) provides payment for the items and services described in 
        subsection (b) in accordance with generally accepted standards 
        of medical or other appropriate clinical or professional 
        practice;
          (2) limits cost-sharing for such covered health care items 
        and services in accordance with such benefit standards, 
        consistent with subsection (c);
          (3) does not impose any annual or lifetime limit on the 
        coverage of covered health care items and services;
          (4) complies with section 115(a) (relating to network 
        adequacy); and
          (5) is equivalent, as certified by Office of the Actuary of 
        the Centers for Medicare & Medicaid Services, to the average 
        prevailing employer-sponsored coverage.
  (b) Minimum Services to Be Covered.--The items and services described 
in this subsection are the following:
          (1) Hospitalization.
          (2) Outpatient hospital and outpatient clinic services, 
        including emergency department services.
          (3) Professional services of physicians and other health 
        professionals.
          (4) Such services, equipment, and supplies incident to the 
        services of a physician's or a health professional's delivery 
        of care in institutional settings, physician offices, patients' 
        homes or place of residence, or other settings, as appropriate.
          (5) Prescription drugs.
          (6) Rehabilitative and habilitative services.
          (7) Mental health and substance use disorder services.
          (8) Preventive services, including those services recommended 
        with a grade of A or B by the Task Force on Clinical Preventive 
        Services and those vaccines recommended for use by the Director 
        of the Centers for Disease Control and Prevention.
          (9) Maternity care.
          (10) Well baby and well child care and oral health, vision, 
        and hearing services, equipment, and supplies at least for 
        children under 21 years of age.
  (c) Requirements Relating to Cost-sharing and Minimum Actuarial 
Value.--
          (1) No cost-sharing for preventive services.--There shall be 
        no cost-sharing under the essential benefits package for 
        preventive items and services (as specified under the benefit 
        standards), including well baby and well child care.
          (2) Annual limitation.--
                  (A) Annual limitation.--The cost-sharing incurred 
                under the essential benefits package with respect to an 
                individual (or family) for a year does not exceed the 
                applicable level specified in subparagraph (B).
                  (B) Applicable level.--The applicable level specified 
                in this subparagraph for Y1 is $5,000 for an individual 
                and $10,000 for a family. Such levels shall be 
                increased (rounded to the nearest $100) for each 
                subsequent year by the annual percentage increase in 
                the Consumer Price Index (United States city average) 
                applicable to such year.
                  (C) Use of copayments.--In establishing cost-sharing 
                levels for basic, enhanced, and premium plans under 
                this subsection, the Secretary shall, to the maximum 
                extent possible, use only copayments and not 
                coinsurance.
          (3) Minimum actuarial value.--
                  (A) In general.--The cost-sharing under the essential 
                benefits package shall be designed to provide a level 
                of coverage that is designed to provide benefits that 
                are actuarially equivalent to approximately 70 percent 
                of the full actuarial value of the benefits provided 
                under the reference benefits package described in 
                subparagraph (B).
                  (B) Reference benefits package described.--The 
                reference benefits package described in this 
                subparagraph is the essential benefits package if there 
                were no cost-sharing imposed.

SEC. 123. HEALTH BENEFITS ADVISORY COMMITTEE.

  (a) Establishment.--
          (1) In general.--There is established a private-public 
        advisory committee which shall be a panel of medical and other 
        experts to be known as the Health Benefits Advisory Committee 
        to recommend covered benefits and essential, enhanced, and 
        premium plans.
          (2) Chair.--The Surgeon General shall be a member and the 
        chair of the Health Benefits Advisory Committee.
          (3) Membership.--The Health Benefits Advisory Committee shall 
        be composed of the following members, in addition to the 
        Surgeon General:
                  (A) 9 members who are not Federal employees or 
                officers and who are appointed by the President.
                  (B) 9 members who are not Federal employees or 
                officers and who are appointed by the Comptroller 
                General of the United States in a manner similar to the 
                manner in which the Comptroller General appoints 
                members to the Medicare Payment Advisory Commission 
                under section 1805(c) of the Social Security Act.
                  (C) Such even number of members (not to exceed 8) who 
                are Federal employees and officers, as the President 
                may appoint.
        Such initial appointments shall be made not later than 60 days 
        after the date of the enactment of this Act.
          (4) Terms.--Each member of the Health Benefits Advisory 
        Committee shall serve a 3-year term on the Committee, except 
        that the terms of the initial members shall be adjusted in 
        order to provide for a staggered term of appointment for all 
        such members.
          (5) Participation.--The membership of the Health Benefits 
        Advisory Committee shall at least reflect providers, consumer 
        representatives, employers, labor, health insurance issuers, 
        experts in health care financing and delivery, experts in 
        racial and ethnic disparities, experts in care for those with 
        disabilities, representatives of relevant governmental 
        agencies. and at least one practicing physician or other health 
        professional and an expert on children's health and shall 
        represent a balance among various sectors of the health care 
        system so that no single sector unduly influences the 
        recommendations of such Committee.
  (b) Duties.--
          (1) Recommendations on benefit standards.--The Health 
        Benefits Advisory Committee shall recommend to the Secretary of 
        Health and Human Services (in this subtitle referred to as the 
        ``Secretary'') benefit standards (as defined in paragraph (4)), 
        and periodic updates to such standards. In developing such 
        recommendations, the Committee shall take into account 
        innovation in health care and consider how such standards could 
        reduce health disparities.
          (2) Deadline.--The Health Benefits Advisory Committee shall 
        recommend initial benefit standards to the Secretary not later 
        than 1 year after the date of the enactment of this Act.
          (3) Public input.--The Health Benefits Advisory Committee 
        shall allow for public input as a part of developing 
        recommendations under this subsection.
          (4) Benefit standards defined.--In this subtitle, the term 
        ``benefit standards'' means standards respecting--
                  (A) the essential benefits package described in 
                section 122, including categories of covered 
                treatments, items and services within benefit classes, 
                and cost-sharing; and
                  (B) the cost-sharing levels for enhanced plans and 
                premium plans (as provided under section 203(c)) 
                consistent with paragraph (5).
          (5) Levels of cost-sharing for enhanced and premium plans.--
                  (A) Enhanced plan.--The level of cost-sharing for 
                enhanced plans shall be designed so that such plans 
                have benefits that are actuarially equivalent to 
                approximately 85 percent of the actuarial value of the 
                benefits provided under the reference benefits package 
                described in section 122(c)(3)(B).
                  (B) Premium plan.--The level of cost-sharing for 
                premium plans shall be designed so that such plans have 
                benefits that are actuarially equivalent to 
                approximately 95 percent of the actuarial value of the 
                benefits provided under the reference benefits package 
                described in section 122(c)(3)(B).
  (c) Operations.--
          (1) Per diem pay.--Each member of the Health Benefits 
        Advisory Committee shall receive travel expenses, including per 
        diem in accordance with applicable provisions under subchapter 
        I of chapter 57 of title 5, United States Code, and shall 
        otherwise serve without additional pay.
          (2) Members not treated as federal employees.--Members of the 
        Health Benefits Advisory Committee shall not be considered 
        employees of the Federal government solely by reason of any 
        service on the Committee.
          (3) Application of faca.--The Federal Advisory Committee Act 
        (5 U.S.C. App.), other than section 14, shall apply to the 
        Health Benefits Advisory Committee.
  (d) Publication.--The Secretary shall provide for publication in the 
Federal Register and the posting on the Internet website of the 
Department of Health and Human Services of all recommendations made by 
the Health Benefits Advisory Committee under this section.

SEC. 124. PROCESS FOR ADOPTION OF RECOMMENDATIONS; ADOPTION OF BENEFIT 
                    STANDARDS.

  (a) Process for Adoption of Recommendations.--
          (1) Review of recommended standards.--Not later than 45 days 
        after the date of receipt of benefit standards recommended 
        under section 123 (including such standards as modified under 
        paragraph (2)(B)), the Secretary shall review such standards 
        and shall determine whether to propose adoption of such 
        standards as a package.
          (2) Determination to adopt standards.--If the Secretary 
        determines--
                  (A) to propose adoption of benefit standards so 
                recommended as a package, the Secretary shall, by 
                regulation under section 553 of title 5, United States 
                Code, propose adoption such standards; or
                  (B) not to propose adoption of such standards as a 
                package, the Secretary shall notify the Health Benefits 
                Advisory Committee in writing of such determination and 
                the reasons for not proposing the adoption of such 
                recommendation and provide the Committee with a further 
                opportunity to modify its previous recommendations and 
                submit new recommendations to the Secretary on a timely 
                basis.
          (3) Contingency.--If, because of the application of paragraph 
        (2)(B), the Secretary would otherwise be unable to propose 
        initial adoption of such recommended standards by the deadline 
        specified in subsection (b)(1), the Secretary shall, by 
        regulation under section 553 of title 5, United States Code, 
        propose adoption of initial benefit standards by such deadline.
          (4) Publication.--The Secretary shall provide for publication 
        in the Federal Register of all determinations made by the 
        Secretary under this subsection.
  (b) Adoption of Standards.--
          (1) Initial standards.--Not later than 18 months after the 
        date of the enactment of this Act, the Secretary shall, through 
        the rulemaking process consistent with subsection (a), adopt an 
        initial set of benefit standards.
          (2) Periodic updating standards.--Under subsection (a), the 
        Secretary shall provide for the periodic updating of the 
        benefit standards previously adopted under this section.
          (3) Requirement.--The Secretary may not adopt any benefit 
        standards for an essential benefits package or for level of 
        cost-sharing that are inconsistent with the requirements for 
        such a package or level under sections 122 and 123(b)(5).

              Subtitle D--Additional Consumer Protections

SEC. 131. REQUIRING FAIR MARKETING PRACTICES BY HEALTH INSURERS.

  The Commissioner shall establish uniform marketing standards that all 
insured QHBP offering entities shall meet.

SEC. 132. REQUIRING FAIR GRIEVANCE AND APPEALS MECHANISMS.

  (a) In General.--A QHBP offering entity shall provide for timely 
grievance and appeals mechanisms that the Commissioner shall establish.
  (b) Internal Claims and Appeals Process.--Under a qualified health 
benefits plan the QHBP offering entity shall provide an internal claims 
and appeals process that initially incorporates the claims and appeals 
procedures (including urgent claims) set forth at section 2560.503-1 of 
title 29, Code of Federal Regulations, as published on November 21, 
2000 (65 Fed. Reg. 70246) and shall update such process in accordance 
with any standards that the Commissioner may establish.
  (c) External Review Process.--
          (1) In general.--The Commissioner shall establish an external 
        review process (including procedures for expedited reviews of 
        urgent claims) that provides for an impartial, independent, and 
        de novo review of denied claims under this division.
          (2) Requiring fair grievance and appeals mechanisms.--A 
        determination made, with respect to a qualified health benefits 
        plan offered by a QHBP offering entity, under the external 
        review process established under this subsection shall be 
        binding on the plan and the entity.
  (d) Construction.--Nothing in this section shall be construed as 
affecting the availability of judicial review under State law for 
adverse decisions under subsection (b) or (c), subject to section 151.

SEC. 133. REQUIRING INFORMATION TRANSPARENCY AND PLAN DISCLOSURE.

  (a) Accurate and Timely Disclosure.--
          (1) In general.--A qualified health benefits plan shall 
        comply with standards established by the Commissioner for the 
        accurate and timely disclosure of plan documents, plan terms 
        and conditions, claims payment policies and practices, periodic 
        financial disclosure, data on enrollment, data on 
        disenrollment, data on the number of claims denials, data on 
        rating practices, information on cost-sharing and payments with 
        respect to any out-of-network coverage, and other information 
        as determined appropriate by the Commissioner. The Commissioner 
        shall require that such disclosure be provided in plain 
        language.
          (2) Plain language.--In this subsection, the term ``plain 
        language'' means language that the intended audience, including 
        individuals with limited English proficiency, can readily 
        understand and use because that language is clean, concise, 
        well-organized, and follows other best practices of plain 
        language writing.
          (3) Guidance.--The Commissioner shall develop and issue 
        guidance on best practices of plain language writing.
  (b) Contracting Reimbursement.--A qualified health benefits plan 
shall comply with standards established by the Commissioner to ensure 
transparency to each health care provider relating to reimbursement 
arrangements between such plan and such provider.
  (c) Advance Notice of Plan Changes.--A change in a qualified health 
benefits plan shall not be made without such reasonable and timely 
advance notice to enrollees of such change.

SEC. 134. APPLICATION TO QUALIFIED HEALTH BENEFITS PLANS NOT OFFERED 
                    THROUGH THE HEALTH INSURANCE EXCHANGE.

  The requirements of the previous provisions of this subtitle shall 
apply to qualified health benefits plans that are not being offered 
through the Health Insurance Exchange only to the extent specified by 
the Commissioner.

SEC. 135. TIMELY PAYMENT OF CLAIMS.

  A QHBP offering entity shall comply with the requirements of section 
1857(f) of the Social Security Act with respect to a qualified health 
benefits plan it offers in the same manner an Medicare Advantage 
organization is required to comply with such requirements with respect 
to a Medicare Advantage plan it offers under part C of Medicare.

SEC. 136. STANDARDIZED RULES FOR COORDINATION AND SUBROGATION OF 
                    BENEFITS.

  The Commissioner shall establish standards for the coordination and 
subrogation of benefits and reimbursement of payments in cases 
involving individuals and multiple plan coverage.

SEC. 137. APPLICATION OF ADMINISTRATIVE SIMPLIFICATION.

  A QHBP offering entity is required to comply with standards for 
electronic financial and administrative transactions under section 
1173A of the Social Security Act, added by section 163(a).

                         Subtitle E--Governance

SEC. 141. HEALTH CHOICES ADMINISTRATION; HEALTH CHOICES COMMISSIONER.

  (a) In General.--There is hereby established, as an independent 
agency in the executive branch of the Government, a Health Choices 
Administration (in this division referred to as the 
``Administration'').
  (b) Commissioner.--
          (1) In general.--The Administration shall be headed by a 
        Health Choices Commissioner (in this division referred to as 
        the ``Commissioner'') who shall be appointed by the President, 
        by and with the advice and consent of the Senate.
          (2) Compensation; etc.--The provisions of paragraphs (2), 
        (5), and (7) of subsection (a) (relating to compensation, 
        terms, general powers, rulemaking, and delegation) of section 
        702 of the Social Security Act (42 U.S.C. 902) shall apply to 
        the Commissioner and the Administration in the same manner as 
        such provisions apply to the Commissioner of Social Security 
        and the Social Security Administration.

SEC. 142. DUTIES AND AUTHORITY OF COMMISSIONER.

  (a) Duties.--The Commissioner is responsible for carrying out the 
following functions under this division:
          (1) Qualified plan standards.--The establishment of qualified 
        health benefits plan standards under this title, including the 
        enforcement of such standards in coordination with State 
        insurance regulators and the Secretaries of Labor and the 
        Treasury.
          (2) Health insurance exchange.--The establishment and 
        operation of a Health Insurance Exchange under subtitle A of 
        title II.
          (3) Individual affordability credits.--The administration of 
        individual affordability credits under subtitle C of title II, 
        including determination of eligibility for such credits.
          (4) Additional functions.--Such additional functions as may 
        be specified in this division.
  (b) Promoting Accountability.--
          (1) In general.--The Commissioner shall undertake activities 
        in accordance with this subtitle to promote accountability of 
        QHBP offering entities in meeting Federal health insurance 
        requirements, regardless of whether such accountability is with 
        respect to qualified health benefits plans offered through the 
        Health Insurance Exchange or outside of such Exchange.
          (2) Compliance examination and audits.--
                  (A) In general.--The commissioner shall, in 
                coordination with States, conduct audits of qualified 
                health benefits plan compliance with Federal 
                requirements.   Such audits may include random 
                compliance audits and targeted audits in response to 
                complaints or other suspected non-compliance.
                  (B) Recoupment of costs in connection with 
                examination and audits.--The Commissioner is authorized 
                to recoup from qualified health benefits plans 
                reimbursement for the costs of such examinations and 
                audit of such QHBP offering entities.
  (c) Data Collection.--The Commissioner shall collect data for 
purposes of carrying out the Commissioner's duties, including for 
purposes of promoting quality and value, protecting consumers, and 
addressing disparities in health and health care and may share such 
data with the Secretary of Health and Human Services.
  (d) Sanctions Authority.--
          (1) In general.--In the case that the Commissioner determines 
        that a QHBP offering entity violates a requirement of this 
        title, the Commissioner may, in coordination with State 
        insurance regulators and the Secretary of Labor, provide, in 
        addition to any other remedies authorized by law, for any of 
        the remedies described in paragraph (2).
          (2) Remedies.--The remedies described in this paragraph, with 
        respect to a qualified health benefits plan offered by a QHBP 
        offering entity, are--
                  (A) civil money penalties of not more than the amount 
                that would be applicable under similar circumstances 
                for similar violations under section 1857(g) of the 
                Social Security Act;
                  (B) suspension of enrollment of individuals under 
                such plan after the date the Commissioner notifies the 
                entity of a determination under paragraph (1) and until 
                the Commissioner is satisfied that the basis for such 
                determination has been corrected and is not likely to 
                recur;
                  (C) in the case of an Exchange-participating health 
                benefits plan, suspension of payment to the entity 
                under the Health Insurance Exchange for individuals 
                enrolled in such plan after the date the Commissioner 
                notifies the entity 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
                  (D) working with State insurance regulators to 
                terminate plans for repeated failure by the offering 
                entity to meet the requirements of this title.
  (e) Standard Definitions of Insurance and Medical Terms.--The 
Commissioner shall provide for the development of standards for the 
definitions of terms used in health insurance coverage, including 
insurance-related terms.
  (f) Efficiency in Administration.--The Commissioner shall issue 
regulations for the effective and efficient administration of the 
Health Insurance Exchange and affordability credits under subtitle C, 
including, with respect to the determination of eligibility for 
affordability credits, the use of personnel who are employed in 
accordance with the requirements of title 5, United States Code, to 
carry out the duties of the Commissioner or, in the case of sections 
208 and 241(b)(2), the use of State personnel who are employed in 
accordance with standards prescribed by the Office of Personnel 
Management pursuant to section 208 of the Intergovernmental Personnel 
Act of 1970 (42 U.S.C. 4728).

SEC. 143. CONSULTATION AND COORDINATION.

  (a) Consultation.--In carrying out the Commissioner's duties under 
this division, the Commissioner, as appropriate, shall consult with at 
least with the following:
          (1) The National Association of Insurance Commissioners, 
        State attorneys general, and State insurance regulators, 
        including concerning the standards for insured qualified health 
        benefits plans under this title and enforcement of such 
        standards.
          (2) Appropriate State agencies, specifically concerning the 
        administration of individual affordability credits under 
        subtitle C of title II and the offering of Exchange-
        participating health benefits plans, to Medicaid eligible 
        individuals under subtitle A of such title.
          (3) Other appropriate Federal agencies.
          (4) Indian tribes and tribal organizations.
          (5) The National Association of Insurance Commissioners for 
        purposes of using model guidelines established by such 
        association for purposes of subtitles B and D.
  (b) Coordination.--
          (1) In general.--In carrying out the functions of the 
        Commissioner, including with respect to the enforcement of the 
        provisions of this division, the Commissioner shall work in 
        coordination with existing Federal and State entities to the 
        maximum extent feasible consistent with this division and in a 
        manner that prevents conflicts of interest in duties and 
        ensures effective enforcement.
          (2) Uniform standards.--The Commissioner, in coordination 
        with such entities, shall seek to achieve uniform standards 
        that adequately protect consumers in a manner that does not 
        unreasonably affect employers and insurers.

SEC. 144. HEALTH INSURANCE OMBUDSMAN.

  (a) In General.--The Commissioner shall appoint within the Health 
Choices Administration a Qualified Health Benefits Plan Ombudsman who 
shall have expertise and experience in the fields of health care and 
education of (and assistance to) individuals.
  (b) Duties.--The Qualified Health Benefits Plan Ombudsman shall, in a 
linguistically appropriate manner--
          (1) receive complaints, grievances, and requests for 
        information submitted by individuals;
          (2) provide assistance with respect to complaints, 
        grievances, and requests referred to in paragraph (1), 
        including--
                  (A) helping individuals determine the relevant 
                information needed to seek an appeal of a decision or 
                determination;
                  (B) assistance to such individuals with any problems 
                arising from disenrollment from such a plan;
                  (C) assistance to such individuals in choosing a 
                qualified health benefits plan in which to enroll; and
                  (D) assistance to such individuals in presenting 
                information under subtitle C (relating to affordability 
                credits); and
          (3) submit annual reports to Congress and the Commissioner 
        that describe the activities of the Ombudsman and that include 
        such recommendations for improvement in the administration of 
        this division as the Ombudsman determines appropriate. The 
        Ombudsman shall not serve as an advocate for any increases in 
        payments or new coverage of services, but may identify issues 
        and problems in payment or coverage policies.

       Subtitle F--Relation to Other Requirements; Miscellaneous

SEC. 151. RELATION TO OTHER REQUIREMENTS.

  (a) Coverage Not Offered Through Exchange.--
          (1) In general.--In the case of health insurance coverage not 
        offered through the Health Insurance Exchange (whether or not 
        offered in connection with an employment-based health plan), 
        and in the case of employment-based health plans, the 
        requirements of this title do not supercede any requirements 
        applicable under titles XXII and XXVII of the Public Health 
        Service Act, parts 6 and 7 of subtitle B of title I of the 
        Employee Retirement Income Security Act of 1974, or State law, 
        except insofar as such requirements prevent the application of 
        a requirement of this division, as determined by the 
        Commissioner.
          (2) Construction.--Nothing in paragraph (1) shall be 
        construed as affecting the application of section 514 of the 
        Employee Retirement Income Security Act of 1974.
  (b) Coverage Offered Through Exchange.--
          (1) In general.--In the case of health insurance coverage 
        offered through the Health Insurance Exchange--
                  (A) the requirements of this title do not supercede 
                any requirements (including requirements relating to 
                genetic information nondiscrimination and mental 
                health) applicable under title XXVII of the Public 
                Health Service Act or under State law, except insofar 
                as such requirements prevent the application of a 
                requirement of this division, as determined by the 
                Commissioner; and
                  (B) individual rights and remedies under State laws 
                shall apply.
          (2) Construction.--In the case of coverage described in 
        paragraph (1), nothing in such paragraph shall be construed as 
        preventing the application of rights and remedies under State 
        laws with respect to any requirement referred to in paragraph 
        (1)(A).

SEC. 152. PROHIBITING DISCRIMINATION IN HEALTH CARE.

  (a) In General.--Except as otherwise explicitly permitted by this Act 
and by subsequent regulations consistent with this Act, all health care 
and related services (including insurance coverage and public health 
activities) covered by this Act shall be provided without regard to 
personal characteristics extraneous to the provision of high quality 
health care or related services.
  (b) Implementation.--To implement the requirement set forth in 
subsection (a), the Secretary of Health and Human Services shall, not 
later than 18 months after the date of the enactment of this Act, 
promulgate such regulations as are necessary or appropriate to insure 
that all health care and related services (including insurance coverage 
and public health activities) covered by this Act are provided (whether 
directly or through contractual, licensing, or other arrangements) 
without regard to personal characteristics extraneous to the provision 
of high quality health care or related services.

SEC. 153. WHISTLEBLOWER PROTECTION.

  (a) Retaliation Prohibited.--No employer may discharge any employee 
or otherwise discriminate against any employee with respect to his 
compensation, terms, conditions, or other privileges of employment 
because the employee (or any person acting pursuant to a request of the 
employee)--
          (1) provided, caused to be provided, or is about to provide 
        or cause to be provided to the employer, the Federal 
        Government, or the attorney general of a State information 
        relating to any violation of, or any act or omission the 
        employee reasonably believes to be a violation of any provision 
        of this Act or any order, rule, or regulation promulgated under 
        this Act;
          (2) testified or is about to testify in a proceeding 
        concerning such violation;
          (3) assisted or participated or is about to assist or 
        participate in such a proceeding; or
          (4) objected to, or refused to participate in, any activity, 
        policy, practice, or assigned task that the employee (or other 
        such person) reasonably believed to be in violation of any 
        provision of this Act or any order, rule, or regulation 
        promulgated under this Act.
  (b) Enforcement Action.--An employee covered by this section who 
alleges discrimination by an employer in violation of subsection (a) 
may bring an action governed by the rules, procedures, legal burdens of 
proof, and remedies set forth in section 40(b) of the Consumer Product 
Safety Act (15 U.S.C. 2087(b)).
  (c) Employer Defined.--As used in this section, the term ``employer'' 
means any person (including one or more individuals, partnerships, 
associations, corporations, trusts, professional membership 
organization including a certification, disciplinary, or other 
professional body, unincorporated organizations, nongovernmental 
organizations, or trustees) engaged in profit or nonprofit business or 
industry whose activities are governed by this Act, and any agent, 
contractor, subcontractor, grantee, or consultant of such person.
  (d) Rule of Construction.--The rule of construction set forth in 
section 20109(h) of title 49, United States Code, shall also apply to 
this section.

SEC. 154. CONSTRUCTION REGARDING COLLECTIVE BARGAINING.

  Nothing in this division shall be construed to alter of supercede any 
statutory or other obligation to engage in collective bargaining over 
the terms and conditions of employment related to health care.

SEC. 155. SEVERABILITY.

  If any provision of this Act, or any application of such provision to 
any person or circumstance, is held to be unconstitutional, the 
remainder of the provisions of this Act and the application of the 
provision to any other person or circumstance shall not be affected.

                     Subtitle G--Early Investments

SEC. 161. ENSURING VALUE AND LOWER PREMIUMS.

  (a) Group Health Insurance Coverage.--Title XXVII of the Public 
Health Service Act is amended by inserting after section 2713 the 
following new section:

``SEC. 2714. ENSURING VALUE AND LOWER PREMIUMS.

  ``(a) In General.--Each health insurance issuer that offers health 
insurance coverage in the small or large group market shall provide 
that for any plan year in which the coverage has a medical loss ratio 
below a level specified by the Secretary, the issuer shall provide in a 
manner specified by the Secretary for rebates to enrollees of payment 
sufficient to meet such loss ratio. Such methodology shall be set at 
the highest level medical loss ratio possible that is designed to 
ensure adequate participation by issuers, competition in the health 
insurance market, and value for consumers so that their premiums are 
used for services.
  ``(b) Uniform Definitions.--The Secretary shall establish a uniform 
definition of medical loss ratio and methodology for determining how to 
calculate the medical loss ratio. Such methodology shall be designed to 
take into account the special circumstances of smaller plans, different 
types of plans, and newer plans.''.
  (b) Individual Health Insurance Coverage.--Such title is further 
amended by inserting after section 2753 the following new section:

``SEC. 2754. ENSURING VALUE AND LOWER PREMIUMS.

  ``The provisions of section 2714 shall apply to health insurance 
coverage offered in the individual market in the same manner as such 
provisions apply to health insurance coverage offered in the small or 
large group market.''.
  (c) Immediate Implementation.--The amendments made by this section 
shall apply in the group and individual market for plan years beginning 
on or after January 1, 2011.

SEC. 162. ENDING HEALTH INSURANCE RESCISSION ABUSE.

  (a) Clarification Regarding Application of Guaranteed Renewability of 
Individual Health Insurance Coverage.--Section 2742 of the Public 
Health Service Act (42 U.S.C. 300gg-42) is amended--
          (1) in its heading, by inserting ``AND CONTINUATION IN FORCE, 
        INCLUDING PROHIBITION OF RESCISSION,'' after ``GUARANTEED 
        RENEWABILITY''; and
          (2) in subsection (a), by inserting ``, including without 
        rescission,'' after ``continue in force''.
  (b) Secretarial Guidance Regarding Rescissions.--Section 2742 of such 
Act (42 U.S.C. 300gg-42) is amended by adding at the end the following:
  ``(f) Rescission.--A health insurance issuer may rescind health 
insurance coverage only upon clear and convincing evidence of fraud 
described in subsection (b)(2). The Secretary, no later than July 1, 
2010, shall issue guidance implementing this requirement, including 
procedures for independent, external third party review.''.
  (c) Opportunity for Independent, External Third Party Review in 
Certain Cases.--Subpart 1 of part B of title XXVII of such Act (42 
U.S.C. 300gg-41 et seq.) is amended by adding at the end the following:

``SEC. 2746. OPPORTUNITY FOR INDEPENDENT, EXTERNAL THIRD PARTY REVIEW 
                    IN CASES OF RESCISSION.

  ``(a) Notice and Review Right.--If a health insurance issuer 
determines to rescind health insurance coverage for an individual in 
the individual market, before such rescission may take effect the 
issuer shall provide the individual with notice of such proposed 
rescission and an opportunity for a review of such determination by an 
independent, external third party under procedures specified by the 
Secretary under section 2742(f).
  ``(b) Independent Determination.--If the individual requests such 
review by an independent, external third party of a rescission of 
health insurance coverage, the coverage shall remain in effect until 
such third party determines that the coverage may be rescinded under 
the guidance issued by the Secretary under section 2742(f).''.
  (d) Effective Date.--The amendments made by this section shall apply 
on and after October 1, 2010, with respect to health insurance coverage 
issued before, on, or after such date.

SEC. 163. ADMINISTRATIVE SIMPLIFICATION.

  (a) Standardizing Electronic Administrative Transactions.--
          (1) In general.--Part C of title XI of the Social Security 
        Act (42 U.S.C. 1320d et seq.) is amended by inserting after 
        section 1173 the following new section:

``SEC. 1173A. STANDARDIZE ELECTRONIC ADMINISTRATIVE TRANSACTIONS.

  ``(a) Standards for Financial and Administrative Transactions.--
          ``(1) In general.--The Secretary shall adopt and regularly 
        update standards consistent with the goals described in 
        paragraph (2).
          ``(2) Goals for financial and administrative transactions.--
        The goals for standards under paragraph (1) are that such 
        standards shall--
                  ``(A) be unique with no conflicting or redundant 
                standards;
                  ``(B) be authoritative, permitting no additions or 
                constraints for electronic transactions, including 
                companion guides;
                  ``(C) be comprehensive, efficient and robust, 
                requiring minimal augmentation by paper transactions or 
                clarification by further communications;
                  ``(D) enable the real-time (or near real-time) 
                determination of an individual's financial 
                responsibility at the point of service and, to the 
                extent possible, prior to service, including whether 
                the individual is eligible for a specific service with 
                a specific physician at a specific facility, which may 
                include utilization of a machine-readable health plan 
                beneficiary identification card;
                  ``(E) enable, where feasible, near real-time 
                adjudication of claims;
                  ``(F) provide for timely acknowledgment, response, 
                and status reporting applicable to any electronic 
                transaction deemed appropriate by the Secretary;
                  ``(G) describe all data elements (such as reason and 
                remark codes) in unambiguous terms, not permit optional 
                fields, require that data elements be either required 
                or conditioned upon set values in other fields, and 
                prohibit additional conditions; and
                  ``(H) harmonize all common data elements across 
                administrative and clinical transaction standards.
          ``(3) Time for adoption.--Not later than 2 years after the 
        date of implementation of the X12 Version 5010 transaction 
        standards implemented under this part, the Secretary shall 
        adopt standards under this section.
          ``(4) Requirements for specific standards.--The standards 
        under this section shall be developed, adopted, and enforced so 
        as to--
                  ``(A) clarify, refine, complete, and expand, as 
                needed, the standards required under section 1173;
                  ``(B) require paper versions of standardized 
                transactions to comply with the same standards as to 
                data content such that a fully compliant, equivalent 
                electronic transaction can be populated from the data 
                from a paper version;
                  ``(C) enable electronic funds transfers, in order to 
                allow automated reconciliation with the related health 
                care payment and remittance advice;
                  ``(D) require timely and transparent claim and denial 
                management processes, including tracking, adjudication, 
                and appeal processing;
                  ``(E) require the use of a standard electronic 
                transaction with which health care providers may 
                quickly and efficiently enroll with a health plan to 
                conduct the other electronic transactions provided for 
                in this part; and
                  ``(F) provide for other requirements relating to 
                administrative simplification as identified by the 
                Secretary, in consultation with stakeholders.
          ``(5) Building on existing standards.--In developing the 
        standards under this section, the Secretary shall build upon 
        existing and planned standards.
          ``(6) Implementation and enforcement.--Not later than 6 
        months after the date of the enactment of this section, the 
        Secretary shall submit to the appropriate committees of 
        Congress a plan for the implementation and enforcement, by not 
        later than 5 years after such date of enactment, of the 
        standards under this section. Such plan shall include--
                  ``(A) a process and timeframe with milestones for 
                developing the complete set of standards;
                  ``(B) an expedited upgrade program for continually 
                developing and approving additions and modifications to 
                the standards as often as annually to improve their 
                quality and extend their functionality to meet evolving 
                requirements in health care;
                  ``(C) programs to provide incentives for, and ease 
                the burden of, implementation for certain health care 
                providers, with special consideration given to such 
                providers serving rural or underserved areas and ensure 
                coordination with standards, implementation 
                specifications, and certification criteria being 
                adopted under the HITECH Act;
                  ``(D) programs to provide incentives for, and ease 
                the burden of, health care providers who volunteer to 
                participate in the process of setting standards for 
                electronic transactions;
                  ``(E) an estimate of total funds needed to ensure 
                timely completion of the implementation plan; and
                  ``(F) an enforcement process that includes timely 
                investigation of complaints, random audits to ensure 
                compliance, civil monetary and programmatic penalties 
                for non-compliance consistent with existing laws and 
                regulations, and a fair and reasonable appeals process 
                building off of enforcement provisions under this part.
  ``(b) Limitations on Use of Data.--Nothing in this section shall be 
construed to permit the use of information collected under this section 
in a manner that would adversely affect any individual.
  ``(c) Protection of Data.--The Secretary shall ensure (through the 
promulgation of regulations or otherwise) that all data collected 
pursuant to subsection (a) are--
          ``(1) used and disclosed in a manner that meets the HIPAA 
        privacy and security law (as defined in section 3009(a)(2) of 
        the Public Health Service Act), including any privacy or 
        security standard adopted under section 3004 of such Act; and
          ``(2) protected from all inappropriate internal use by any 
        entity that collects, stores, or receives the data, including 
        use of such data in determinations of eligibility (or continued 
        eligibility) in health plans, and from other inappropriate 
        uses, as defined by the Secretary.''.
          (2) Definitions.--Section 1171 of such Act (42 U.S.C. 1320d) 
        is amended--
                  (A) in paragraph (7), by striking ``with reference 
                to'' and all that follows and inserting ``with 
                reference to a transaction or data element of health 
                information in section 1173 means implementation 
                specifications, certification criteria, operating 
                rules, messaging formats, codes, and code sets adopted 
                or established by the Secretary for the electronic 
                exchange and use of information''; and
                  (B) by adding at the end the following new paragraph:
          ``(9) Operating rules.--The term `operating rules' means 
        business rules for using and processing transactions. Operating 
        rules should address the following:
                  ``(A) Requirements for data content using available 
                and established national standards.
                  ``(B) Infrastructure requirements that establish best 
                practices for streamlining data flow to yield timely 
                execution of transactions.
                  ``(C) Policies defining the transaction related 
                rights and responsibilities for entities that are 
                transmitting or receiving data.''.
          (3) Conforming amendment.--Section 1179(a) of such Act (42 
        U.S.C. 1320d-8(a)) is amended, in the matter before paragraph 
        (1)--
                  (A) by inserting ``on behalf of an individual'' after 
                ``1978)''; and
                  (B) by inserting ``on behalf of an individual'' after 
                ``for a financial institution'' and
  (b) Standards for Claims Attachments and Coordination of Benefits .--
          (1) Standard for health claims attachments.--Not later than 1 
        year after the date of the enactment of this Act, the Secretary 
        of Health and Human Services shall promulgate a final rule to 
        establish a standard for health claims attachment transaction 
        described in section 1173(a)(2)(B) of the Social Security Act 
        (42 U.S.C. 1320d-2(a)(2)(B)) and coordination of benefits.
          (2) Revision in processing payment transactions by financial 
        institutions.--
                  (A) In general.--Section 1179 of the Social Security 
                Act (42 U.S.C. 1320d-8) is amended, in the matter 
                before paragraph (1)--
                          (i) by striking ``or is engaged'' and 
                        inserting ``and is engaged''; and
                          (ii) by inserting ``(other than as a business 
                        associate for a covered entity)'' after ``for a 
                        financial institution''.
                  (B) Effective date.--The amendments made by paragraph 
                (1) shall apply to transactions occurring on or after 
                such date (not later than 6 months after the date of 
                the enactment of this Act) as the Secretary of Health 
                and Human Services shall specify.

SEC. 164. REINSURANCE PROGRAM FOR RETIREES.

  (a) Establishment.--
          (1) In general.--Not later than 90 days after the date of the 
        enactment of this Act, the Secretary of Health and Human 
        Services shall establish a temporary reinsurance program (in 
        this section referred to as the ``reinsurance program'') to 
        provide reimbursement to assist participating employment-based 
        plans with the cost of providing health benefits to retirees 
        and to eligible spouses, surviving spouses and dependents of 
        such retirees.
          (2) Definitions.--For purposes of this section:
                  (A) The term ``eligible employment-based plan'' means 
                a group health benefits plan that--
                          (i) is maintained by one or more employers, 
                        former employers or employee associations, or a 
                        voluntary employees' beneficiary association, 
                        or a committee or board of individuals 
                        appointed to administer such plan, and
                          (ii) provides health benefits to retirees.
                  (B) The term ``health benefits'' means medical, 
                surgical, hospital, prescription drug, and such other 
                benefits as shall be determined by the Secretary, 
                whether self-funded or delivered through the purchase 
                of insurance or otherwise.
                  (C) The term ``participating employment-based plan'' 
                means an eligible employment-based plan that is 
                participating in the reinsurance program.
                  (D) The term ``retiree'' means, with respect to a 
                participating employment-benefit plan, an individual 
                who--
                          (i) is 55 years of age or older;
                          (ii) is not eligible for coverage under title 
                        XVIII of the Social Security Act; and
                          (iii) is not an active employee of an 
                        employer maintaining the plan or of any 
                        employer that makes or has made substantial 
                        contributions to fund such plan.
                  (E) The term ``Secretary'' means Secretary of Health 
                and Human Services.
  (b) Participation.--To be eligible to participate in the reinsurance 
program, an eligible employment-based plan shall submit to the 
Secretary an application for participation in the program, at such 
time, in such manner, and containing such information as the Secretary 
shall require.
  (c) Payment.--
          (1) Submission of claims.--
                  (A) In general.--Under the reinsurance program, a 
                participating employment-based plan shall submit claims 
                for reimbursement to the Secretary which shall contain 
                documentation of the actual costs of the items and 
                services for which each claim is being submitted.
                  (B) Basis for claims.--Each claim submitted under 
                subparagraph (A) shall be based on the actual amount 
                expended by the participating employment-based plan 
                involved within the plan year for the appropriate 
                employment based health benefits provided to a retiree 
                or to the spouse, surviving spouse, or dependent of a 
                retiree. In determining the amount of any claim for 
                purposes of this subsection, the participating 
                employment-based plan shall take into account any 
                negotiated price concessions (such as discounts, direct 
                or indirect subsidies, rebates, and direct or indirect 
                remunerations) obtained by such plan with respect to 
                such health benefits. For purposes of calculating the 
                amount of any claim, the costs paid by the retiree or 
                by the spouse, surviving spouse, or dependent of the 
                retiree in the form of deductibles, co-payments, and 
                co-insurance shall be included along with the amounts 
                paid by the participating employment-based plan.
          (2) Program payments and limit.--If the Secretary determines 
        that a participating employment-based plan has submitted a 
        valid claim under paragraph (1), the Secretary shall reimburse 
        such plan for 80 percent of that portion of the costs 
        attributable to such claim that exceeds $15,000, but is less 
        than $90,000. Such amounts shall be adjusted each year based on 
        the percentage increase in the medical care component of the 
        Consumer Price Index (rounded to the nearest multiple of 
        $1,000) for the year involved.
          (3) Use of payments.--Amounts paid to a participating 
        employment-based plan under this subsection shall be used to 
        lower the costs borne directly by the participants and 
        beneficiaries for health benefits provided under such plan in 
        the form of premiums, co-payments, deductibles, co-insurance, 
        or other out-of-pocket costs. Such payments shall not be used 
        to reduce the costs of an employer maintaining the 
        participating employment-based plan. The Secretary shall 
        develop a mechanism to monitor the appropriate use of such 
        payments by such plans.
          (4) Appeals and program protections.--The Secretary shall 
        establish--
                  (A) an appeals process to permit participating 
                employment-based plans to appeal a determination of the 
                Secretary with respect to claims submitted under this 
                section; and
                  (B) procedures to protect against fraud, waste, and 
                abuse under the program.
          (5) Audits.--The Secretary shall conduct annual audits of 
        claims data submitted by participating employment-based plans 
        under this section to ensure that they are in compliance with 
        the requirements of this section.
  (d) Retiree Reserve Trust Fund.--
          (1) Establishment.--
                  (A) In general.--There is established in the Treasury 
                of the United States a trust fund to be known as the 
                ``Retiree Reserve Trust Fund'' (referred to in this 
                section as the ``Trust Fund''), that shall consist of 
                such amounts as may be appropriated or credited to the 
                Trust Fund as provided for in this subsection to enable 
                the Secretary to carry out the reinsurance program. 
                Such amounts shall remain available until expended.
                  (B) Funding.--There are hereby appropriated to the 
                Trust Fund, out of any moneys in the Treasury not 
                otherwise appropriated, an amount requested by the 
                Secretary as necessary to carry out this section, 
                except that the total of all such amounts requested 
                shall not exceed $10,000,000,000.
                  (C) Appropriations from the trust fund.--
                          (i) In general.--Amounts in the Trust Fund 
                        are appropriated to provide funding to carry 
                        out the reinsurance program and shall be used 
                        to carry out such program.
                          (ii) Budgetary implications.--Amounts 
                        appropriated under clause (i), and outlays 
                        flowing from such appropriations, shall not be 
                        taken into account for purposes of any budget 
                        enforcement procedures including allocations 
                        under section 302(a) and (b) of the Balanced 
                        Budget and Emergency Deficit Control Act and 
                        budget resolutions for fiscal years during 
                        which appropriations are made from the Trust 
                        Fund.
                          (iii) Limitation to available funds.--The 
                        Secretary has the authority to stop taking 
                        applications for participation in the program 
                        or take such other steps in reducing 
                        expenditures under the reinsurance program in 
                        order to ensure that expenditures under the 
                        reinsurance program do not exceed the funds 
                        available under this subsection.

       TITLE II--HEALTH INSURANCE EXCHANGE AND RELATED PROVISIONS

                 Subtitle A--Health Insurance Exchange

SEC. 201. ESTABLISHMENT OF HEALTH INSURANCE EXCHANGE; OUTLINE OF 
                    DUTIES; DEFINITIONS.

  (a) Establishment.--There is established within the Health Choices 
Administration and under the direction of the Commissioner a Health 
Insurance Exchange in order to facilitate access of individuals and 
employers, through a transparent process, to a variety of choices of 
affordable, quality health insurance coverage, including a public 
health insurance option.
  (b) Outline of Duties of Commissioner.--In accordance with this 
subtitle and in coordination with appropriate Federal and State 
officials as provided under section 143(b), the Commissioner shall--
          (1) under section 204 establish standards for, accept bids 
        from, and negotiate and enter into contracts with, QHBP 
        offering entities for the offering of health benefits plans 
        through the Health Insurance Exchange, with different levels of 
        benefits required under section 203, and including with respect 
        to oversight and enforcement;
          (2) under section 205 facilitate outreach and enrollment in 
        such plans of Exchange-eligible individuals and employers 
        described in section 202; and
          (3) conduct such activities related to the Health Insurance 
        Exchange as required, including establishment of a risk pooling 
        mechanism under section 206 and consumer protections under 
        subtitle D of title I.
  (c) Exchange-participating Health Benefits Plan Defined.--In this 
division, the term ``Exchange-participating health benefits plan'' 
means a qualified health benefits plan that is offered through the 
Health Insurance Exchange.

SEC. 202. EXCHANGE-ELIGIBLE INDIVIDUALS AND EMPLOYERS.

  (a) Access to Coverage.--In accordance with this section, all 
individuals are eligible to obtain coverage through enrollment in an 
Exchange-participating health benefits plan offered through the Health 
Insurance Exchange unless such individuals are enrolled in another 
qualified health benefits plan or other acceptable coverage.
  (b) Definitions.--In this division:
          (1) Exchange-eligible individual.--The term ``Exchange-
        eligible individual'' means an individual who is eligible under 
        this section to be enrolled through the Health Insurance 
        Exchange in an Exchange-participating health benefits plan and, 
        with respect to family coverage, includes dependents of such 
        individual.
          (2) Exchange-eligible employer.--The term ``Exchange-eligible 
        employer'' means an employer that is eligible under this 
        section to enroll through the Health Insurance Exchange 
        employees of the employer (and their dependents) in Exchange-
        eligible health benefits plans.
          (3) Employment-related definitions.--The terms ``employer'', 
        ``employee'', ``full-time employee'', and ``part-time 
        employee'' have the meanings given such terms by the 
        Commissioner for purposes of this division.
  (c) Transition.--Individuals and employers shall only be eligible to 
enroll or participate in the Health Insurance Exchange in accordance 
with the following transition schedule:
          (1) First year.--In Y1 (as defined in section 100(c))--
                  (A) individuals described in subsection (d)(1), 
                including individuals described in paragraphs (3) and 
                (4) of subsection (d); and
                  (B) smallest employers described in subsection 
                (e)(1).
          (2) Second year.--In Y2--
                  (A) individuals and employers described in paragraph 
                (1); and
                  (B) smaller employers described in subsection (e)(2).
          (3) Third and subsequent years.--In Y3 and subsequent years--
                  (A) individuals and employers described in paragraph 
                (2); and
                  (B) larger employers as permitted by the Commissioner 
                under subsection (e)(3).
  (d) Individuals.--
          (1) Individual described.--Subject to the succeeding 
        provisions of this subsection, an individual described in this 
        paragraph is an individual who--
                  (A) is not enrolled in coverage described in 
                subparagraphs (C) through (F) of paragraph (2); and
                  (B) is not enrolled in coverage as a full-time 
                employee (or as a dependent of such an employee) under 
                a group health plan if the coverage and an employer 
                contribution under the plan meet the requirements of 
                section 312.
        For purposes of subparagraph (B), in the case of an individual 
        who is self-employed, who has at least 1 employee, and who 
        meets the requirements of section 312, such individual shall be 
        deemed a full-time employee described in such subparagraph.
          (2) Acceptable coverage.--For purposes of this division, the 
        term ``acceptable coverage'' means any of the following:
                  (A) Qualified health benefits plan coverage.--
                Coverage under a qualified health benefits plan.
                  (B) Grandfathered health insurance coverage; coverage 
                under current group health plan.--Coverage under a 
                grandfathered health insurance coverage (as defined in 
                subsection (a) of section 102) or under a current group 
                health plan (described in subsection (b) of such 
                section).
                  (C) Medicare.--Coverage under part A of title XVIII 
                of the Social Security Act.
                  (D) Medicaid.--Coverage for medical assistance under 
                title XIX of the Social Security Act, excluding such 
                coverage that is only available because of the 
                application of subsection (u), (z), or (aa) of section 
                1902 of such Act
                  (E) Members of the armed forces and dependents 
                (including tricare).--Coverage under chapter 55 of 
                title 10, United States Code, including similar 
                coverage furnished under section 1781 of title 38 of 
                such Code.
                  (F) VA.--Coverage under the veteran's health care 
                program under chapter 17 of title 38, United States 
                Code, but only if the coverage for the individual 
                involved is determined by the Commissioner in 
                coordination with the Secretary of Treasury to be not 
                less than a level specified by the Commissioner and 
                Secretary of Veteran's Affairs, in coordination with 
                the Secretary of Treasury, based on the individual's 
                priority for services as provided under section 1705(a) 
                of such title.
                  (G) Other coverage.--Such other health benefits 
                coverage, such as a State health benefits risk pool, as 
                the Commissioner, in coordination with the Secretary of 
                the Treasury, recognizes for purposes of this 
                paragraph.
        The Commissioner shall make determinations under this paragraph 
        in coordination with the Secretary of the Treasury.
          (3) Treatment of certain non-traditional medicaid eligible 
        individuals.--An individual who is a non-traditional Medicaid 
        eligible individual (as defined in section 205(e)(4)(C)) in a 
        State may be an Exchange-eligible individual if the individual 
        was enrolled in a qualified health benefits plan, grandfathered 
        health insurance coverage, or current group health plan during 
        the 6 months before the individual became a non-traditional 
        Medicaid eligible individual. During the period in which such 
        an individual has chosen to enroll in an Exchange-participating 
        health benefits plan, the individual is not also eligible for 
        medical assistance under Medicaid.
          (4) Continuing eligibility permitted.--
                  (A) In general.--Except as provided in subparagraph 
                (B), once an individual qualifies as an Exchange-
                eligible individual under this subsection (including as 
                an employee or dependent of an employee of an Exchange-
                eligible employer) and enrolls under an Exchange-
                participating health benefits plan through the Health 
                Insurance Exchange, the individual shall continue to be 
                treated as an Exchange-eligible individual until the 
                individual is no longer enrolled with an Exchange-
                participating health benefits plan.
                  (B) Exceptions.--
                          (i) In general.--Subparagraph (A) shall not 
                        apply to an individual once the individual 
                        becomes eligible for coverage--
                                  (I) under part A of the Medicare 
                                program;
                                  (II) under the Medicaid program as a 
                                Medicaid eligible individual, except as 
                                permitted under paragraph (3) or clause 
                                (ii); or
                                  (III) in such other circumstances as 
                                the Commissioner may provide.
                          (ii) Transition period.--In the case 
                        described in clause (i)(II), the Commissioner 
                        shall permit the individual to continue 
                        treatment under subparagraph (A) until such 
                        limited time as the Commissioner determines it 
                        is administratively feasible, consistent with 
                        minimizing disruption in the individual's 
                        access to health care.
  (e) Employers.--
          (1) Smallest employer.--Subject to paragraph (4), smallest 
        employers described in this paragraph are employers with 10 or 
        fewer employees.
          (2) Smaller employers.--Subject to paragraph (4), smaller 
        employers described in this paragraph are employers that are 
        not smallest employers described in paragraph (1) and have 20 
        or fewer employees.
          (3) Larger employers.--
                  (A) In general.--Beginning with Y3, the Commissioner 
                may permit employers not described in paragraph (1) or 
                (2) to be Exchange-eligible employers.
                  (B) Phase-in.--In applying subparagraph (A), the 
                Commissioner may phase-in the application of such 
                subparagraph based on the number of full-time employees 
                of an employer and such other considerations as the 
                Commissioner deems appropriate.
          (4) Continuing eligibility.--Once an employer is permitted to 
        be an Exchange-eligible employer under this subsection and 
        enrolls employees through the Health Insurance Exchange, the 
        employer shall continue to be treated as an Exchange-eligible 
        employer for each subsequent plan year regardless of the number 
        of employees involved unless and until the employer meets the 
        requirement of section 311(a) through paragraph (1) of such 
        section by offering a group health plan and not through 
        offering an Exchange-participating health benefits plan.
          (5) Employer participation and contributions.--
                  (A) Satisfaction of employer responsibility.--For any 
                year in which an employer is an Exchange-eligible 
                employer, such employer may meet the requirements of 
                section 312 with respect to employees of such employer 
                by offering such employees the option of enrolling with 
                Exchange-participating health benefits plans through 
                the Health Insurance Exchange consistent with the 
                provisions of subtitle B of title III.
                  (B) Employee choice.--Any employee offered Exchange-
                participating health benefits plans by the employer of 
                such employee under subparagraph (A) may choose 
                coverage under any such plan. That choice includes, 
                with respect to family coverage, coverage of the 
                dependents of such employee.
          (6) Affiliated groups.--Any employer which is part of a group 
        of employers who are treated as a single employer under 
        subsection (b), (c), (m), or (o) of section 414 of the Internal 
        Revenue Code of 1986 shall be treated, for purposes of this 
        subtitle, as a single employer.
          (7) Other counting rules.--The Commissioner shall establish 
        rules relating to how employees are counted for purposes of 
        carrying out this subsection.
  (f) Special Situation Authority.--The Commissioner shall have the 
authority to establish such rules as may be necessary to deal with 
special situations with regard to uninsured individuals and employers 
participating as Exchange-eligible individuals and employers, such as 
transition periods for individuals and employers who gain, or lose, 
Exchange-eligible participation status, and to establish grace periods 
for premium payment.
  (g) Surveys of Individuals and Employers.--The Commissioner shall 
provide for periodic surveys of Exchange-eligible individuals and 
employers concerning satisfaction of such individuals and employers 
with the Health Insurance Exchange and Exchange-participating health 
benefits plans.
  (h) Exchange Access Study.--
          (1) In general.--The Commissioner shall conduct a study of 
        access to the Health Insurance Exchange for individuals and for 
        employers, including individuals and employers who are not 
        eligible and enrolled in Exchange-participating health benefits 
        plans. The goal of the study is to determine if there are 
        significant groups and types of individuals and employers who 
        are not Exchange eligible individuals or employers, but who 
        would have improved benefits and affordability if made eligible 
        for coverage in the Exchange.
          (2) Items included in study.--Such study also shall examine--
                  (A) the terms, conditions, and affordability of group 
                health coverage offered by employers and QHBP offering 
                entities outside of the Exchange compared to Exchange-
                participating health benefits plans; and
                  (B) the affordability-test standard for access of 
                certain employed individuals to coverage in the Health 
                Insurance Exchange.
          (3) Report.--Not later than January 1 of Y3, in Y6, and 
        thereafter, the Commissioner shall submit to Congress on the 
        study conducted under this subsection and shall include in such 
        report recommendations regarding changes in standards for 
        Exchange eligibility for individuals and employers.

SEC. 203. BENEFITS PACKAGE LEVELS.

  (a) In General.--The Commissioner shall specify the benefits to be 
made available under Exchange-participating health benefits plans 
during each plan year, consistent with subtitle C of title I and this 
section.
  (b) Limitation on Health Benefits Plans Offered by Offering 
Entities.--The Commissioner may not enter into a contract with a QHBP 
offering entity under section 204(c) for the offering of an Exchange-
participating health benefits plan in a service area unless the 
following requirements are met:
          (1) Required offering of basic plan.--The entity offers only 
        one basic plan for such service area.
          (2) Optional offering of enhanced plan.--If and only if the 
        entity offers a basic plan for such service area, the entity 
        may offer one enhanced plan for such area.
          (3) Optional offering of premium plan.--If and only if the 
        entity offers an enhanced plan for such service area, the 
        entity may offer one premium plan for such area.
          (4) Optional offering of premium-plus plans.--If and only if 
        the entity offers a premium plan for such service area, the 
        entity may offer one or more premium-plus plans for such area.
All such plans may be offered under a single contract with the 
Commissioner.
  (c) Specification of Benefit Levels for Plans.--
          (1) In general.--The Commissioner shall establish the 
        following standards consistent with this subsection and title 
        I:
                  (A) Basic, enhanced, and premium plans.--Standards 
                for 3 levels of Exchange-participating health benefits 
                plans: basic, enhanced, and premium (in this division 
                referred to as a ``basic plan'', ``enhanced plan'', and 
                ``premium plan'', respectively).
                  (B) Premium-plus plan benefits.--Standards for 
                additional benefits that may be offered, consistent 
                with this subsection and subtitle C of title I, under a 
                premium plan (such a plan with additional benefits 
                referred to in this division as a ``premium-plus 
                plan'') .
          (2) Basic plan.--
                  (A) In general.--A basic plan shall offer the 
                essential benefits package required under title I for a 
                qualified health benefits plan.
                  (B) Tiered cost-sharing for affordable credit 
                eligible individuals.--In the case of an affordable 
                credit eligible individual (as defined in section 
                242(a)(1)) enrolled in an Exchange-participating health 
                benefits plan, the benefits under a basic plan are 
                modified to provide for the reduced cost-sharing for 
                the income tier applicable to the individual under 
                section 244(c).
          (3) Enhanced plan.--An enhanced plan shall offer, in addition 
        to the level of benefits under the basic plan, a lower level of 
        cost-sharing as provided under title I consistent with section 
        123(b)(5)(A).
          (4) Premium plan.--A premium plan shall offer, in addition to 
        the level of benefits under the basic plan, a lower level of 
        cost-sharing as provided under title I consistent with section 
        123(b)(5)(B).
          (5) Premium-plus plan.--A premium-plus plan is a premium plan 
        that also provides additional benefits, such as adult oral 
        health and vision care, approved by the Commissioner. The 
        portion of the premium that is attributable to such additional 
        benefits shall be separately specified.
          (6) Range of permissible variation in cost-sharing.--The 
        Commissioner shall establish a permissible range of variation 
        of cost-sharing for each basic, enhanced, and premium plan, 
        except with respect to any benefit for which there is no cost-
        sharing permitted under the essential benefits package. Such 
        variation shall permit a variation of not more than plus (or 
        minus) 10 percent in cost-sharing with respect to each benefit 
        category specified under section 122.
  (d) Treatment of State Benefit Mandates.--Insofar as a State requires 
a health insurance issuer offering health insurance coverage to include 
benefits beyond the essential benefits package, such requirement shall 
continue to apply to an Exchange-participating health benefits plan, if 
the State has entered into an arrangement satisfactory to the 
Commissioner to reimburse the Commissioner for the amount of any net 
increase in affordability premium credits under subtitle C as a result 
of an increase in premium in basic plans as a result of application of 
such requirement.

SEC. 204. CONTRACTS FOR THE OFFERING OF EXCHANGE-PARTICIPATING HEALTH 
                    BENEFITS PLANS.

  (a) Contracting Duties.--In carrying out section 201(b)(1) and 
consistent with this subtitle:
          (1) Offering entity and plan standards.--The Commissioner 
        shall--
                  (A) establish standards necessary to implement the 
                requirements of this title and title I for--
                          (i) QHBP offering entities for the offering 
                        of an Exchange-participating health benefits 
                        plan; and
                          (ii) for Exchange-participating health 
                        benefits plans; and
                  (B) certify QHBP offering entities and qualified 
                health benefits plans as meeting such standards and 
                requirements of this title and title I for purposes of 
                this subtitle.
          (2) Soliciting and negotiating bids; contracts.--The 
        Commissioner shall--
                  (A) solicit bids from QHBP offering entities for the 
                offering of Exchange-participating health benefits 
                plans;
                  (B) based upon a review of such bids, negotiate with 
                such entities for the offering of such plans; and
                  (C) enter into contracts with such entities for the 
                offering of such plans through the Health Insurance 
                Exchange under terms (consistent with this title) 
                negotiated between the Commissioner and such entities.
          (3) FAR not applicable.--The provisions of the Federal 
        Acquisition Regulation shall not apply to contracts between the 
        Commissioner and QHBP offering entities for the offering of 
        Exchange-participating health benefits plans under this title.
  (b) Standards for QHBP Offering Entities to Offer Exchange-
participating Health Benefits Plans.--The standards established under 
subsection (a)(1)(A) shall require that, in order for a QHBP offering 
entity to offer an Exchange-participating health benefits plan, the 
entity must meet the following requirements:
          (1) Licensed.--The entity shall be licensed to offer health 
        insurance coverage under State law for each State in which it 
        is offering such coverage.
          (2) Data reporting.--The entity shall provide for the 
        reporting of such information as the Commissioner may specify, 
        including information necessary to administer the risk pooling 
        mechanism described in section 206(b) and information to 
        address disparities in health and health care.
          (3) Implementing affordability credits.--The entity shall 
        provide for implementation of the affordability credits 
        provided for enrollees under subtitle C, including the 
        reduction in cost-sharing under section 244(c).
          (4) Enrollment.--The entity shall accept all enrollments 
        under this subtitle, subject to such exceptions (such as 
        capacity limitations) in accordance with the requirements under 
        title I for a qualified health benefits plan. The entity shall 
        notify the Commissioner if the entity projects or anticipates 
        reaching such a capacity limitation that would result in a 
        limitation in enrollment.
          (5) Risk pooling participation.--The entity shall participate 
        in such risk pooling mechanism as the Commissioner establishes 
        under section 206(b).
          (6) Essential community providers.--With respect to the basic 
        plan offered by the entity, the entity shall contract for 
        outpatient services with covered entities (as defined in 
        section 340B(a)(4) of the Public Health Service Act, as in 
        effect as of July 1, 2009). The Commissioner shall specify the 
        extent to which and manner in which the previous sentence shall 
        apply in the case of a basic plan with respect to which the 
        Commissioner determines provides substantially all benefits 
        through a health maintenance organization, as defined in 
        section 2791(b)(3) of the Public Health Service Act.
          (7) Culturally and linguistically appropriate services and 
        communications.--The entity shall provide for culturally and 
        linguistically appropriate communication and health services.
          (8) Additional requirements.--The entity shall comply with 
        other applicable requirements of this title, as specified by 
        the Commissioner, which shall include standards regarding 
        billing and collection practices for premiums and related grace 
        periods and which may include standards to ensure that the 
        entity does not use coercive practices to force providers not 
        to contract with other entities offering coverage through the 
        Health Insurance Exchange.
  (c) Contracts.--
          (1) Bid application.--To be eligible to enter into a contract 
        under this section, a QHBP offering entity shall submit to the 
        Commissioner a bid at such time, in such manner, and containing 
        such information as the Commissioner may require.
          (2) Term.--Each contract with a QHBP offering entity under 
        this section shall be for a term of not less than one year, but 
        may be made automatically renewable from term to term in the 
        absence of notice of termination by either party.
          (3) Enforcement of network adequacy.--In the case of a health 
        benefits plan of a QHBP offering entity that uses a provider 
        network, the contract under this section with the entity shall 
        provide that if--
                  (A) the Commissioner determines that such provider 
                network does not meet such standards as the 
                Commissioner shall establish under section 115; and
                  (B) an individual enrolled in such plan receives an 
                item or service from a provider that is not within such 
                network;
        then any cost-sharing for such item or service shall be equal 
        to the amount of such cost-sharing that would be imposed if 
        such item or service was furnished by a provider within such 
        network.
          (4) Oversight and enforcement responsibilities.--The 
        Commissioner shall establish processes, in coordination with 
        State insurance regulators, to oversee, monitor, and enforce 
        applicable requirements of this title with respect to QHBP 
        offering entities offering Exchange-participating health 
        benefits plans and such plans, including the marketing of such 
        plans. Such processes shall include the following:
                  (A) Grievance and complaint mechanisms.--The 
                Commissioner shall establish, in coordination with 
                State insurance regulators, a process under which 
                Exchange-eligible individuals and employers may file 
                complaints concerning violations of such standards.
                  (B) Enforcement.--In carrying out authorities under 
                this division relating to the Health Insurance 
                Exchange, the Commissioner may impose one or more of 
                the intermediate sanctions described in section 142(c).
                  (C) Termination.--
                          (i) In general.--The Commissioner may 
                        terminate a contract with a QHBP offering 
                        entity under this section for the offering of 
                        an Exchange-participating health benefits plan 
                        if such entity fails to comply with the 
                        applicable requirements of this title. Any 
                        determination by the Commissioner to terminate 
                        a contract shall be made in accordance with 
                        formal investigation and compliance procedures 
                        established by the Commissioner under which--
                                  (I) the Commissioner provides the 
                                entity with the reasonable opportunity 
                                to develop and implement a corrective 
                                action plan to correct the deficiencies 
                                that were the basis of the 
                                Commissioner's determination; and
                                  (II) the Commissioner provides the 
                                entity with reasonable notice and 
                                opportunity for hearing (including the 
                                right to appeal an initial decision) 
                                before terminating the contract.
                          (ii) Exception for imminent and serious risk 
                        to health.--Clause (i) shall not apply if the 
                        Commissioner determines that a delay in 
                        termination, resulting from compliance with the 
                        procedures specified in such clause prior to 
                        termination, would pose an imminent and serious 
                        risk to the health of individuals enrolled 
                        under the qualified health benefits plan of the 
                        QHBP offering entity.
                  (D) Construction.--Nothing in this subsection shall 
                be construed as preventing the application of other 
                sanctions under subtitle E of title I with respect to 
                an entity for a violation of such a requirement.

SEC. 205. OUTREACH AND ENROLLMENT OF EXCHANGE-ELIGIBLE INDIVIDUALS AND 
                    EMPLOYERS IN EXCHANGE-PARTICIPATING HEALTH BENEFITS 
                    PLAN.

  (a) In General.--
          (1) Outreach.--The Commissioner shall conduct outreach 
        activities consistent with subsection (c), including through 
        use of appropriate entities as described in paragraph (4) of 
        such subsection, to inform and educate individuals and 
        employers about the Health Insurance Exchange and Exchange-
        participating health benefits plan options. Such outreach shall 
        include outreach specific to vulnerable populations, such as 
        children, individuals with disabilities, individuals with 
        mental illness, and individuals with other cognitive 
        impairments.
          (2) Eligibility.--The Commissioner shall make timely 
        determinations of whether individuals and employers are 
        Exchange-eligible individuals and employers (as defined in 
        section 202).
          (3) Enrollment.--The Commissioner shall establish and carry 
        out an enrollment process for Exchange-eligible individuals and 
        employers, including at community locations, in accordance with 
        subsection (b).
  (b) Enrollment Process.--
          (1) In general.--The Commissioner shall establish a process 
        consistent with this title for enrollments in Exchange-
        participating health benefits plans. Such process shall provide 
        for enrollment through means such as the mail, by telephone, 
        electronically, and in person.
          (2) Enrollment periods.--
                  (A) Open enrollment period.--The Commissioner shall 
                establish an annual open enrollment period during which 
                an Exchange-eligible individual or employer may elect 
                to enroll in an Exchange-participating health benefits 
                plan for the following plan year and an enrollment 
                period for affordability credits under subtitle C. Such 
                periods shall be during September through November of 
                each year, or such other time that would maximize 
                timeliness of income verification for purposes of such 
                subtitle. The open enrollment period shall not be less 
                than 30 days.
                  (B) Special enrollment.--The Commissioner shall also 
                provide for special enrollment periods to take into 
                account special circumstances of individuals and 
                employers, such as an individual who--
                          (i) loses acceptable coverage;
                          (ii) experiences a change in marital or other 
                        dependent status;
                          (iii) moves outside the service area of the 
                        Exchange-participating health benefits plan in 
                        which the individual is enrolled; or
                          (iv) experiences a significant change in 
                        income.
                  (C) Enrollment information.--The Commissioner shall 
                provide for the broad dissemination of information to 
                prospective enrollees on the enrollment process, 
                including before each open enrollment period. In 
                carrying out the previous sentence, the Commissioner 
                may work with other appropriate entities to facilitate 
                such provision of information.
          (3) Automatic enrollment for non-medicaid eligible 
        individuals.--
                  (A) In general.--The Commissioner shall provide for a 
                process under which individuals who are Exchange-
                eligible individuals described in subparagraph (B) are 
                automatically enrolled under an appropriate Exchange-
                participating health benefits plan. Such process may 
                involve a random assignment or some other form of 
                assignment that takes into account the health care 
                providers used by the individual involved or such other 
                relevant factors as the Commissioner may specify.
                  (B) Subsidized individuals described.--An individual 
                described in this subparagraph is an Exchange-eligible 
                individual who is either of the following:
                          (i) Affordability credit eligible 
                        individuals.--The individual--
                                  (I) has applied for, and been 
                                determined eligible for, affordability 
                                credits under subtitle C;
                                  (II) has not opted out from receiving 
                                such affordability credit; and
                                  (III) does not otherwise enroll in 
                                another Exchange-participating health 
                                benefits plan.
                          (ii) Individuals enrolled in a terminated 
                        plan.--The individual is enrolled in an 
                        Exchange-participating health benefits plan 
                        that is terminated (during or at the end of a 
                        plan year) and who does not otherwise enroll in 
                        another Exchange-participating health benefits 
                        plan.
          (4) Direct payment of premiums to plans.--Under the 
        enrollment process, individuals enrolled in an Exchange-
        participating health benefits plan shall pay such plans 
        directly, and not through the Commissioner or the Health 
        Insurance Exchange.
  (c) Coverage Information and Assistance.--
          (1) Coverage information.--The Commissioner shall provide for 
        the broad dissemination of information on Exchange-
        participating health benefits plans offered under this title. 
        Such information shall be provided in a comparative manner, and 
        shall include information on benefits, premiums, cost-sharing, 
        quality, provider networks, and consumer satisfaction.
          (2) Consumer assistance with choice.--To provide assistance 
        to Exchange-eligible individuals and employers, the 
        Commissioner shall--
                  (A) provide for the operation of a toll-free 
                telephone hotline to respond to requests for assistance 
                and maintain an Internet website through which 
                individuals may obtain information on coverage under 
                Exchange-participating health benefits plans and file 
                complaints;
                  (B) develop and disseminate information to Exchange-
                eligible enrollees on their rights and 
                responsibilities;
                  (C) assist Exchange-eligible individuals in selecting 
                Exchange-participating health benefits plans and 
                obtaining benefits through such plans; and
                  (D) ensure that the Internet website described in 
                subparagraph (A) and the information described in 
                subparagraph (B) is developed using plain language (as 
                defined in section 133(a)(2)).
          (3) Use of other entities.--In carrying out this subsection, 
        the Commissioner may work with other appropriate entities to 
        facilitate the dissemination of information under this 
        subsection and to provide assistance as described in paragraph 
        (2).
  (d) Special Duties Related to Medicaid and CHIP.--
          (1) Coverage for certain newborns.--
                  (A) In general.--In the case of a child born in the 
                United States who at the time of birth is not otherwise 
                covered under acceptable coverage, for the period of 
                time beginning on the date of birth and ending on the 
                date the child otherwise is covered under acceptable 
                coverage (or, if earlier, the end of the month in which 
                the 60-day period, beginning on the date of birth, 
                ends), the child shall be deemed--
                          (i) to be a non-traditional Medicaid eligible 
                        individual (as defined in subsection (e)(5)) 
                        for purposes of this division and Medicaid; and
                          (ii) to have elected to enroll in Medicaid 
                        through the application of paragraph (3).
                  (B) Extended treatment as traditional medicaid 
                eligible individual.--In the case of a child described 
                in subparagraph (A) who at the end of the period 
                referred to in such subparagraph is not otherwise 
                covered under acceptable coverage, the child shall be 
                deemed (until such time as the child obtains such 
                coverage or the State otherwise makes a determination 
                of the child's eligibility for medical assistance under 
                its Medicaid plan pursuant to section 1943(c)(1) of the 
                Social Security Act) to be a traditional Medicaid 
                eligible individual described in section 1902(l)(1)(B) 
                of such Act.
          (2) CHIP transition.--A child who, as of the day before the 
        first day of Y1, is eligible for child health assistance under 
        title XXI of the Social Security Act (including a child 
        receiving coverage under an arrangement described in section 
        2101(a)(2) of such Act) is deemed as of such first day to be an 
        Exchange-eligible individual unless the individual is a 
        traditional Medicaid eligible individual as of such day.
          (3) Automatic enrollment of medicaid eligible individuals 
        into medicaid.--The Commissioner shall provide for a process 
        under which an individual who is described in section 202(d)(3) 
        and has not elected to enroll in an Exchange-participating 
        health benefits plan is automatically enrolled under Medicaid.
          (4) Notifications.--The Commissioner shall notify each State 
        in Y1 and for purposes of section 1902(gg)(1) of the Social 
        Security Act (as added by section 1703(a)) whether the Health 
        Insurance Exchange can support enrollment of children described 
        in paragraph (2) in such State in such year.
  (e) Medicaid Coverage for Medicaid Eligible Individuals.--
          (1) In general.--
                  (A) Choice for limited exchange-eligible 
                individuals.--As part of the enrollment process under 
                subsection (b), the Commissioner shall provide the 
                option, in the case of an Exchange-eligible individual 
                described in section 202(d)(3), for the individual to 
                elect to enroll under Medicaid instead of under an 
                Exchange-participating health benefits plan. Such an 
                individual may change such election during an 
                enrollment period under subsection (b)(2).
                  (B) Medicaid enrollment obligation.--An Exchange 
                eligible individual may apply, in the manner described 
                in section 241(b)(1), for a determination of whether 
                the individual is a Medicaid-eligible individual. If 
                the individual is determined to be so eligible, the 
                Commissioner, through the Medicaid memorandum of 
                understanding, shall provide for the enrollment of the 
                individual under the State Medicaid plan in accordance 
                with the Medicaid memorandum of understanding under 
                paragraph (4). In the case of such an enrollment, the 
                State shall provide for the same periodic 
                redetermination of eligibility under Medicaid as would 
                otherwise apply if the individual had directly applied 
                for medical assistance to the State Medicaid agency.
          (2) Non-traditional medicaid eligible individuals.--In the 
        case of a non-traditional Medicaid eligible individual 
        described in section 202(d)(3) who elects to enroll under 
        Medicaid under paragraph (1)(A), the Commissioner shall provide 
        for the enrollment of the individual under the State Medicaid 
        plan in accordance with the Medicaid memorandum of 
        understanding under paragraph (4).
          (3) Coordinated enrollment with state through memorandum of 
        understanding.--The Commissioner, in consultation with the 
        Secretary of Health and Human Services, shall enter into a 
        memorandum of understanding with each State (each in this 
        division referred to as a ``Medicaid memorandum of 
        understanding'') with respect to coordinating enrollment of 
        individuals in Exchange-participating health benefits plans and 
        under the State's Medicaid program consistent with this section 
        and to otherwise coordinate the implementation of the 
        provisions of this division with respect to the Medicaid 
        program. Such memorandum shall permit the exchange of 
        information consistent with the limitations described in 
        section 1902(a)(7) of the Social Security Act. Nothing in this 
        section shall be construed as permitting such memorandum to 
        modify or vitiate any requirement of a State Medicaid plan.
          (4) Medicaid eligible individuals.--For purposes of this 
        division:
                  (A) Medicaid eligible individual.--The term 
                ``Medicaid eligible individual'' means an individual 
                who is eligible for medical assistance under Medicaid.
                  (B) Traditional medicaid eligible individual.--The 
                term ``traditional Medicaid eligible individual'' means 
                a Medicaid eligible individual other than an individual 
                who is--
                          (i) a Medicaid eligible individual by reason 
                        of the application of subclause (VIII) of 
                        section 1902(a)(10)(A)(i) of the Social 
                        Security Act; or
                          (ii) a childless adult not described in 
                        section 1902(a)(10)(A) or (C) of such Act (as 
                        in effect as of the day before the date of the 
                        enactment of this Act).
                  (C) Non-traditional medicaid eligible individual.--
                The term ``non-traditional Medicaid eligible 
                individual'' means a Medicaid eligible individual who 
                is not a traditional Medicaid eligible individual.
  (f) Effective Culturally and Linguistically Appropriate 
Communication.--In carrying out this section, the Commissioner shall 
establish effective methods for communicating in plain language and a 
culturally and linguistically appropriate manner.

SEC. 206. OTHER FUNCTIONS.

  (a) Coordination of Affordability Credits.--The Commissioner shall 
coordinate the distribution of affordability premium and cost-sharing 
credits under subtitle C to QHBP offering entities offering Exchange-
participating health benefits plans.
  (b) Coordination of Risk Pooling.--The Commissioner shall establish a 
mechanism whereby there is an adjustment made of the premium amounts 
payable among QHBP offering entities offering Exchange-participating 
health benefits plans of premiums collected for such plans that takes 
into account (in a manner specified by the Commissioner) the 
differences in the risk characteristics of individuals and employers 
enrolled under the different Exchange-participating health benefits 
plans offered by such entities so as to minimize the impact of adverse 
selection of enrollees among the plans offered by such entities.
  (c) Special Inspector General for the Health Insurance Exchange.--
          (1) Establishment; appointment.--There is hereby established 
        the Office of the Special Inspector General for the Health 
        Insurance Exchange, to be headed by a Special Inspector General 
        for the Health Insurance Exchange (in this subsection referred 
        to as the ``Special Inspector General'') to be appointed by the 
        President, by and with the advice and consent of the Senate. 
        The nomination of an individual as Special Inspector General 
        shall be made as soon as practicable after the establishment of 
        the program under this subtitle.
          (2) Duties.--The Special Inspector General shall--
                  (A) conduct, supervise, and coordinate audits, 
                evaluations and investigations of the Health Insurance 
                Exchange to protect the integrity of the Health 
                Insurance Exchange, as well as the health and welfare 
                of participants in the Exchange;
                  (B) report both to the Commissioner and to the 
                Congress regarding program and management problems and 
                recommendations to correct them;
                  (C) have other duties (described in paragraphs (2) 
                and (3) of section 121 of division A of Public Law 110-
                343) in relation to the duties described in the 
                previous subparagraphs; and
                  (D) have the authorities provided in section 6 of the 
                Inspector General Act of 1978 in carrying out duties 
                under this paragraph.
          (3) Application of other special inspector general 
        provisions.--The provisions of subsections (b) (other than 
        paragraphs (1) and (3)), (d) (other than paragraph (1)), and 
        (e) of section 121 of division A of the Emergency Economic 
        Stabilization Act of 2009 (Public Law 110-343) shall apply to 
        the Special Inspector General under this subsection in the same 
        manner as such provisions apply to the Special Inspector 
        General under such section.
          (4) Reports.--Not later than one year after the confirmation 
        of the Special Inspector General, and annually thereafter, the 
        Special Inspector General shall submit to the appropriate 
        committees of Congress a report summarizing the activities of 
        the Special Inspector General during the one year period ending 
        on the date such report is submitted.
          (5) Termination.--The Office of the Special Inspector General 
        shall terminate five years after the date of the enactment of 
        this Act.

SEC. 207. HEALTH INSURANCE EXCHANGE TRUST FUND.

  (a) Establishment of Health Insurance Exchange Trust Fund.--There is 
created within the Treasury of the United States a trust fund to be 
known as the ``Health Insurance Exchange Trust Fund'' (in this section 
referred to as the ``Trust Fund''), consisting of such amounts as may 
be appropriated or credited to the Trust Fund under this section or any 
other provision of law.
  (b) Payments From Trust Fund.--The Commissioner shall pay from time 
to time from the Trust Fund such amounts as the Commissioner determines 
are necessary to make payments to operate the Health Insurance 
Exchange, including payments under subtitle C (relating to 
affordability credits).
  (c) Transfers to Trust Fund.--
          (1) Dedicated payments.--There is hereby appropriated to the 
        Trust Fund amounts equivalent to the following:
                  (A) Taxes on individuals not obtaining acceptable 
                coverage.--The amounts received in the Treasury under 
                section 59B of the Internal Revenue Code of 1986 
                (relating to requirement of health insurance coverage 
                for individuals).
                  (B) Employment taxes on employers not providing 
                acceptable coverage.--The amounts received in the 
                Treasury under section 3111(c) of the Internal Revenue 
                Code of 1986 (relating to employers electing to not 
                provide health benefits).
                  (C) Excise tax on failures to meet certain health 
                coverage requirements.--The amounts received in the 
                Treasury under section 4980H(b) (relating to excise tax 
                with respect to failure to meet health coverage 
                participation requirements).
          (2) Appropriations to cover government contributions.--There 
        are hereby appropriated, out of any moneys in the Treasury not 
        otherwise appropriated, to the Trust Fund, an amount equivalent 
        to the amount of payments made from the Trust Fund under 
        subsection (b) plus such amounts as are necessary reduced by 
        the amounts deposited under paragraph (1).
  (d) Application of Certain Rules.--Rules similar to the rules of 
subchapter B of chapter 98 of the Internal Revenue Code of 1986 shall 
apply with respect to the Trust Fund.

SEC. 208. OPTIONAL OPERATION OF STATE-BASED HEALTH INSURANCE EXCHANGES.

  (a) In General.--If--
          (1) a State (or group of States, subject to the approval of 
        the Commissioner) applies to the Commissioner for approval of a 
        State-based Health Insurance Exchange to operate in the State 
        (or group of States); and
          (2) the Commissioner approves such State-based Health 
        Insurance Exchange,
then, subject to subsections (c) and (d), the State-based Health 
Insurance Exchange shall operate, instead of the Health Insurance 
Exchange, with respect to such State (or group of States). The 
Commissioner shall approve a State-based Health Insurance Exchange if 
it meets the requirements for approval under subsection (b).
  (b) Requirements for Approval.--The Commissioner may not approve a 
State-based Health Insurance Exchange under this section unless the 
following requirements are met:
          (1) The State-based Health Insurance Exchange must 
        demonstrate the capacity to and provide assurances satisfactory 
        to the Commissioner that the State-based Health Insurance 
        Exchange will carry out the functions specified for the Health 
        Insurance Exchange in the State (or States) involved, 
        including--
                  (A) negotiating and contracting with QHBP offering 
                entities for the offering of Exchange-participating 
                health benefits plan, which satisfy the standards and 
                requirements of this title and title I;
                  (B) enrolling Exchange-eligible individuals and 
                employers in such State in such plans;
                  (C) the establishment of sufficient local offices to 
                meet the needs of Exchange-eligible individuals and 
                employers;
                  (D) administering affordability credits under 
                subtitle B using the same methodologies (and at least 
                the same income verification methods) as would 
                otherwise apply under such subtitle and at a cost to 
                the Federal Government which does exceed the cost to 
                the Federal Government if this section did not apply; 
                and
                  (E) enforcement activities consistent with federal 
                requirements.
          (2) There is no more than one Health Insurance Exchange 
        operating with respect to any one State.
          (3) The State provides assurances satisfactory to the 
        Commissioner that approval of such an Exchange will not result 
        in any net increase in expenditures to the Federal Government.
          (4) The State provides for reporting of such information as 
        the Commissioner determines and assurances satisfactory to the 
        Commissioner that it will vigorously enforce violations of 
        applicable requirements.
          (5) Such other requirements as the Commissioner may specify.
  (c) Ceasing Operation.--
          (1) In general.--A State-based Health Insurance Exchange may, 
        at the option of each State involved, and only after providing 
        timely and reasonable notice to the Commissioner, cease 
        operation as such an Exchange, in which case the Health 
        Insurance Exchange shall operate, instead of such State-based 
        Health Insurance Exchange, with respect to such State (or 
        States).
          (2) Termination; health insurance exchange resumption of 
        functions.--The Commissioner may terminate the approval (for 
        some or all functions) of a State-based Health Insurance 
        Exchange under this section if the Commissioner determines that 
        such Exchange no longer meets the requirements of subsection 
        (b) or is no longer capable of carrying out such functions in 
        accordance with the requirements of this subtitle. In lieu of 
        terminating such approval, the Commissioner may temporarily 
        assume some or all functions of the State-based Health 
        Insurance Exchange until such time as the Commissioner 
        determines the State-based Health Insurance Exchange meets such 
        requirements of subsection (b) and is capable of carrying out 
        such functions in accordance with the requirements of this 
        subtitle.
          (3) Effectiveness.--The ceasing or termination of a State-
        based Health Insurance Exchange under this subsection shall be 
        effective in such time and manner as the Commissioner shall 
        specify.
  (d) Retention of Authority.--
          (1) Authority retained.--Enforcement authorities of the 
        Commissioner shall be retained by the Commissioner.
          (2) Discretion to retain additional authority.--The 
        Commissioner may specify functions of the Health Insurance 
        Exchange that--
                  (A) may not be performed by a State-based Health 
                Insurance Exchange under this section; or
                  (B) may be performed by the Commissioner and by such 
                a State-based Health Insurance Exchange.
  (e) References.--In the case of a State-based Health Insurance 
Exchange, except as the Commissioner may otherwise specify under 
subsection (d), any references in this subtitle to the Health Insurance 
Exchange or to the Commissioner in the area in which the State-based 
Health Insurance Exchange operates shall be deemed a reference to the 
State-based Health Insurance Exchange and the head of such Exchange, 
respectively.
  (f) Funding.--In the case of a State-based Health Insurance Exchange, 
there shall be assistance provided for the operation of such Exchange 
in the form of a matching grant with a State share of expenditures 
required.

               Subtitle B--Public Health Insurance Option

SEC. 221. ESTABLISHMENT AND ADMINISTRATION OF A PUBLIC HEALTH INSURANCE 
                    OPTION AS AN EXCHANGE-QUALIFIED HEALTH BENEFITS 
                    PLAN.

  (a) Establishment.--For years beginning with Y1, the Secretary of 
Health and Human Services (in this subtitle referred to as the 
``Secretary'') shall provide for the offering of an Exchange-
participating health benefits plan (in this division referred to as the 
``public health insurance option'') that ensures choice, competition, 
and stability of affordable, high quality coverage throughout the 
United States in accordance with this subtitle. In designing the 
option, the Secretary's primary responsibility is to create a low-cost 
plan without compromising quality or access to care.
  (b) Offering as an Exchange-participating Health Benefits Plan.--
          (1) Exclusive to the exchange.--The public health insurance 
        option shall only be made available through the Health 
        Insurance Exchange.
          (2) Ensuring a level playing field.--Consistent with this 
        subtitle, the public health insurance option shall comply with 
        requirements that are applicable under this title to an 
        Exchange-participating health benefits plan, including 
        requirements related to benefits, benefit levels, provider 
        networks, notices, consumer protections, and cost sharing.
          (3) Provision of benefit levels.--The public health insurance 
        option--
                  (A) shall offer basic, enhanced, and premium plans; 
                and
                  (B) may offer premium-plus plans.
  (c) Administrative Contracting.--The Secretary may enter into 
contracts for the purpose of performing administrative functions 
(including functions described in subsection (a)(4) of section 1874A of 
the Social Security Act) with respect to the public health insurance 
option in the same manner as the Secretary may enter into contracts 
under subsection (a)(1) of such section. The Secretary has the same 
authority with respect to the public health insurance option as the 
Secretary has under subsections (a)(1) and (b) of section 1874A of the 
Social Security Act with respect to title XVIII of such Act. Contracts 
under this subsection shall not involve the transfer of insurance risk 
to such entity.
  (d) Ombudsman.--The Secretary shall establish an office of the 
ombudsman for the public health insurance option which shall have 
duties with respect to the public health insurance option similar to 
the duties of the Medicare Beneficiary Ombudsman under section 
1808(c)(2) of the Social Security Act.
  (e) Data Collection.--The Secretary shall collect such data as may be 
required to establish premiums and payment rates for the public health 
insurance option and for other purposes under this subtitle, including 
to improve quality and to reduce racial, ethnic, and other disparities 
in health and health care.
  (f) Treatment of Public Health Insurance Option.--With respect to the 
public health insurance option, the Secretary shall be treated as a 
QHBP offering entity offering an Exchange-participating health benefits 
plan.
  (g) Access to Federal Courts.--The provisions of Medicare (and 
related provisions of title II of the Social Security Act) relating to 
access of Medicare beneficiaries to Federal courts for the enforcement 
of rights under Medicare, including with respect to amounts in 
controversy, shall apply to the public health insurance option and 
individuals enrolled under such option under this title in the same 
manner as such provisions apply to Medicare and Medicare beneficiaries.

SEC. 222. PREMIUMS AND FINANCING.

  (a) Establishment of Premiums.--
          (1) In general.--The Secretary shall establish 
        geographically-adjusted premium rates for the public health 
        insurance option in a manner--
                  (A) that complies with the premium rules established 
                by the Commissioner under section 113 for Exchange-
                participating health benefit plans; and
                  (B) at a level sufficient to fully finance the costs 
                of--
                          (i) health benefits provided by the public 
                        health insurance option; and
                          (ii) administrative costs related to 
                        operating the public health insurance option.
          (2) Contingency margin.--In establishing premium rates under 
        paragraph (1), the Secretary shall include an appropriate 
        amount for a contingency margin.
  (b) Account.--
          (1) Establishment.--There is established in the Treasury of 
        the United States an Account for the receipts and disbursements 
        attributable to the operation of the public health insurance 
        option, including the start-up funding under paragraph (2). 
        Section 1854(g) of the Social Security Act shall apply to 
        receipts described in the previous sentence in the same manner 
        as such section applies to payments or premiums described in 
        such section.
          (2) Start-up funding.--
                  (A) In general.--In order to provide for the 
                establishment of the public health insurance option 
                there is hereby appropriated to the Secretary, out of 
                any funds in the Treasury not otherwise appropriated, 
                $2,000,000,000. In order to provide for initial claims 
                reserves before the collection of premiums, there is 
                hereby appropriated to the Secretary, out of any funds 
                in the Treasury not otherwise appropriated, such sums 
                as necessary to cover 90 days worth of claims reserves 
                based on projected enrollment.
                  (B) Amortization of start-up funding.--The Secretary 
                shall provide for the repayment of the startup funding 
                provided under subparagraph (A) to the Treasury in an 
                amortized manner over the 10-year period beginning with 
                Y1.
                  (C) Limitation on funding.--Nothing in this section 
                shall be construed as authorizing any additional 
                appropriations to the Account, other than such amounts 
                as are otherwise provided with respect to other 
                Exchange-participating health benefits plans.

SEC. 223. PAYMENT RATES FOR ITEMS AND SERVICES.

  (a) Rates Established by Secretary.--
          (1) In general.--The Secretary shall establish payment rates 
        for the public health insurance option for services and health 
        care providers consistent with this section and may change such 
        payment rates in accordance with section 224.
          (2) Initial payment rules.--
                  (A) In general.--Except as provided in subparagraph 
                (B) and subsection (b)(1), during Y1, Y2, and Y3, the 
                Secretary shall base the payment rates under this 
                section for services and providers described in 
                paragraph (1) on the payment rates for similar services 
                and providers under parts A and B of Medicare.
                  (B) Exceptions.--
                          (i) Practitioners' services.--Payment rates 
                        for practitioners' services otherwise 
                        established under the fee schedule under 
                        section 1848 of the Social Security Act shall 
                        be applied without regard to the provisions 
                        under subsection (f) of such section and the 
                        update under subsection (d)(4) under such 
                        section for a year as applied under this 
                        paragraph shall be not less than 1 percent.
                          (ii) Adjustments.--The Secretary may 
                        determine the extent to which Medicare 
                        adjustments applicable to base payment rates 
                        under parts A and B of Medicare shall apply 
                        under this subtitle.
          (3) For new services.--The Secretary shall modify payment 
        rates described in paragraph (2) in order to accommodate 
        payments for services, such as well-child visits, that are not 
        otherwise covered under Medicare.
          (4) Prescription drugs.--Payment rates under this section for 
        prescription drugs that are not paid for under part A or part B 
        of Medicare shall be at rates negotiated by the Secretary.
  (b) Incentives for Participating Providers.--
          (1) Initial incentive period.--
                  (A) In general.--The Secretary shall provide, in the 
                case of services described in subparagraph (B) 
                furnished during Y1, Y2, and Y3, for payment rates that 
                are 5 percent greater than the rates established under 
                subsection (a).
                  (B) Services described.--The services described in 
                this subparagraph are items and professional services, 
                under the public health insurance option by a physician 
                or other health care practitioner who participates in 
                both Medicare and the public health insurance option.
                  (C) Special rules.--A pediatrician and any other 
                health care practitioner who is a type of practitioner 
                that does not typically participate in Medicare (as 
                determined by the Secretary) shall also be eligible for 
                the increased payment rates under subparagraph (A).
          (2) Subsequent periods.--Beginning with Y4 and for subsequent 
        years, the Secretary shall continue to use an administrative 
        process to set such rates in order to promote payment accuracy, 
        to ensure adequate beneficiary access to providers, and to 
        promote affordability and the efficient delivery of medical 
        care consistent with section 221(a). Such rates shall not be 
        set at levels expected to increase overall medical costs under 
        the option beyond what would be expected if the process under 
        subsection (a)(2) and paragraph (1) of this subsection were 
        continued.
          (3) Establishment of a provider network.--Health care 
        providers participating under Medicare are participating 
        providers in the public health insurance option unless they opt 
        out in a process established by the Secretary.
  (c) Administrative Process for Setting Rates.--Chapter 5 of title 5, 
United States Code shall apply to the process for the initial 
establishment of payment rates under this section but not to the 
specific methodology for establishing such rates or the calculation of 
such rates.
  (d) Construction.--Nothing in this subtitle shall be construed as 
limiting the Secretary's authority to correct for payments that are 
excessive or deficient, taking into account the provisions of section 
221(a) and the amounts paid for similar health care providers and 
services under other Exchange-participating health benefits plans.
  (e) Construction.--Nothing in this subtitle shall be construed as 
affecting the authority of the Secretary to establish payment rates, 
including payments to provide for the more efficient delivery of 
services, such as the initiatives provided for under section 224.
  (f) Limitations on Review.--There shall be no administrative or 
judicial review of a payment rate or methodology established under this 
section or under section 224.

SEC. 224. MODERNIZED PAYMENT INITIATIVES AND DELIVERY SYSTEM REFORM.

  (a) In General.--For plan years beginning with Y1, the Secretary may 
utilize innovative payment mechanisms and policies to determine 
payments for items and services under the public health insurance 
option. The payment mechanisms and policies under this section may 
include patient-centered medical home and other care management 
payments, accountable care organizations, value-based purchasing, 
bundling of services, differential payment rates, performance or 
utilization based payments, partial capitation, and direct contracting 
with providers.
  (b) Requirements for Innovative Payments.--The Secretary shall design 
and implement the payment mechanisms and policies under this section in 
a manner that--
          (1) seeks to--
                  (A) improve health outcomes;
                  (B) reduce health disparities (including racial, 
                ethnic, and other disparities);
                  (C) provide efficient and affordable care;
                  (D) address geographic variation in the provision of 
                health services; or
                  (E) prevent or manage chronic illness; and
          (2) promotes care that is integrated, patient-centered, 
        quality, and efficient.
  (c) Encouraging the Use of High Value Services.--To the extent 
allowed by the benefit standards applied to all Exchange-participating 
health benefits plans, the public health insurance option may modify 
cost sharing and payment rates to encourage the use of services that 
promote health and value.
  (d) Non-uniformity Permitted.--Nothing in this subtitle shall prevent 
the Secretary from varying payments based on different payment 
structure models (such as accountable care organizations and medical 
homes) under the public health insurance option for different 
geographic areas.

SEC. 225. PROVIDER PARTICIPATION.

  (a) In General.--The Secretary shall establish conditions of 
participation for health care providers under the public health 
insurance option.
  (b) Licensure or Certification.--The Secretary shall not allow a 
health care provider to participate in the public health insurance 
option unless such provider is appropriately licensed or certified 
under State law.
  (c) Payment Terms for Providers.--
          (1) Physicians.--The Secretary shall provide for the annual 
        participation of physicians under the public health insurance 
        option, for which payment may be made for services furnished 
        during the year, in one of 2 classes:
                  (A) Preferred physicians.--Those physicians who agree 
                to accept the payment rate established under section 
                223 (without regard to cost-sharing) as the payment in 
                full.
                  (B) Participating, non-preferred physicians.--Those 
                physicians who agree not to impose charges (in relation 
                to the payment rate described in section 223 for such 
                physicians) that exceed the ratio permitted under 
                section 1848(g)(2)(C) of the Social Security Act.
          (2) Other providers.--The Secretary shall provide for the 
        participation (on an annual or other basis specified by the 
        Secretary) of health care providers (other than physicians) 
        under the public health insurance option under which payment 
        shall only be available if the provider agrees to accept the 
        payment rate established under section 223 (without regard to 
        cost-sharing) as the payment in full.
  (d) Exclusion of Certain Providers.--The Secretary shall exclude from 
participation under the public health insurance option a health care 
provider that is excluded from participation in a Federal health care 
program (as defined in section 1128B(f) of the Social Security Act).

SEC. 226. APPLICATION OF FRAUD AND ABUSE PROVISIONS.

  Provisions of law (other than criminal law provisions) identified by 
the Secretary by regulation, in consultation with the Inspector General 
of the Department of Health and Human Services, that impose sanctions 
with respect to waste, fraud, and abuse under Medicare, such as the 
False Claims Act (31 U.S.C. 3729 et seq.), shall also apply to the 
public health insurance option.

              Subtitle C--Individual Affordability Credits

SEC. 241. AVAILABILITY THROUGH HEALTH INSURANCE EXCHANGE.

  (a) In General.--Subject to the succeeding provisions of this 
subtitle, in the case of an affordable credit eligible individual 
enrolled in an Exchange-participating health benefits plan--
          (1) the individual shall be eligible for, in accordance with 
        this subtitle, affordability credits consisting of--
                  (A) an affordability premium credit under section 243 
                to be applied against the premium for the Exchange-
                participating health benefits plan in which the 
                individual is enrolled; and
                  (B) an affordability cost-sharing credit under 
                section 244 to be applied as a reduction of the cost-
                sharing otherwise applicable to such plan; and
          (2) the Commissioner shall pay the QHBP offering entity that 
        offers such plan from the Health Insurance Exchange Trust Fund 
        the aggregate amount of affordability credits for all 
        affordable credit eligible individuals enrolled in such plan.
  (b) Application.--
          (1) In general.--An Exchange eligible individual may apply to 
        the Commissioner through the Health Insurance Exchange or 
        through another entity under an arrangement made with the 
        Commissioner, in a form and manner specified by the 
        Commissioner. The Commissioner through the Health Insurance 
        Exchange or through another public entity under an arrangement 
        made with the Commissioner shall make a determination as to 
        eligibility of an individual for affordability credits under 
        this subtitle. The Commissioner shall establish a process 
        whereby, on the basis of information otherwise available, 
        individuals may be deemed to be affordable credit eligible 
        individuals. In carrying this subtitle, the Commissioner shall 
        establish effective methods that ensure that individuals with 
        limited English proficiency are able to apply for affordability 
        credits.
          (2) Use of state medicaid agencies.--If the Commissioner 
        determines that a State Medicaid agency has the capacity to 
        make a determination of eligibility for affordability credits 
        under this subtitle and under the same standards as used by the 
        Commissioner, under the Medicaid memorandum of understanding 
        (as defined in section 205(c)(4))--
                  (A) the State Medicaid agency is authorized to 
                conduct such determinations for any Exchange-eligible 
                individual who requests such a determination; and
                  (B) the Commissioner shall reimburse the State 
                Medicaid agency for the costs of conducting such 
                determinations.
          (3) Medicaid screen and enroll obligation.--In the case of an 
        application made under paragraph (1), there shall be a 
        determination of whether the individual is a Medicaid-eligible 
        individual. If the individual is determined to be so eligible, 
        the Commissioner, through the Medicaid memorandum of 
        understanding, shall provide for the enrollment of the 
        individual under the State Medicaid plan in accordance with the 
        Medicaid memorandum of understanding. In the case of such an 
        enrollment, the State shall provide for the same periodic 
        redetermination of eligibility under Medicaid as would 
        otherwise apply if the individual had directly applied for 
        medical assistance to the State Medicaid agency.
  (c) Use of Affordability Credits.--
          (1) In general.--In Y1 and Y2 an affordable credit eligible 
        individual may use an affordability credit only with respect to 
        a basic plan.
          (2) Flexibility in plan enrollment authorized.--Beginning 
        with Y3, the Commissioner shall establish a process to allow an 
        affordability credit to be used for enrollees in enhanced or 
        premium plans. In the case of an affordable credit eligible 
        individual who enrolls in an enhanced or premium plan, the 
        individual shall be responsible for any difference between the 
        premium for such plan and the affordability credit amount 
        otherwise applicable if the individual had enrolled in a basic 
        plan.
  (d) Access to Data.--In carrying out this subtitle, the Commissioner 
shall request from the Secretary of the Treasury consistent with 
section 6103 of the Internal Revenue Code of 1986 such information as 
may be required to carry out this subtitle.
  (e) No Cash Rebates.--In no case shall an affordable credit eligible 
individual receive any cash payment as a result of the application of 
this subtitle.

SEC. 242. AFFORDABLE CREDIT ELIGIBLE INDIVIDUAL.

  (a) Definition.--
          (1) In general.--For purposes of this division, the term 
        ``affordable credit eligible individual'' means, subject to 
        subsection (b), an individual who is lawfully present in a 
        State in the United States (other than as a nonimmigrant 
        described in a subparagraph (excluding subparagraphs (K), (T), 
        (U), and (V)) of section 101(a)(15) of the Immigration and 
        Nationality Act)--
                  (A) who is enrolled under an Exchange-participating 
                health benefits plan and is not enrolled under such 
                plan as an employee (or dependent of an employee) 
                through an employer qualified health benefits plan that 
                meets the requirements of section 312;
                  (B) with family income below 400 percent of the 
                Federal poverty level for a family of the size 
                involved; and
                  (C) who is not a Medicaid eligible individual, other 
                than an individual described in section 202(d)(3) or an 
                individual during a transition period under section 
                202(d)(4)(B)(ii).
          (2) Treatment of family.--Except as the Commissioner may 
        otherwise provide, members of the same family who are 
        affordable credit eligible individuals shall be treated as a 
        single affordable credit individual eligible for the applicable 
        credit for such a family under this subtitle.
  (b) Limitations on Employee and Dependent Disqualification.--
          (1) In general.--Subject to paragraph (2), the term 
        ``affordable credit eligible individual'' does not include a 
        full-time employee of an employer if the employer offers the 
        employee coverage (for the employee and dependents) as a full-
        time employee under a group health plan if the coverage and 
        employer contribution under the plan meet the requirements of 
        section 312.
          (2) Exceptions.--
                  (A) For certain family circumstances.--The 
                Commissioner shall establish such exceptions and 
                special rules in the case described in paragraph (1) as 
                may be appropriate in the case of a divorced or 
                separated individual or such a dependent of an employee 
                who would otherwise be an affordable credit eligible 
                individual.
                  (B) For unaffordable employer coverage.--Beginning in 
                Y2, in the case of full-time employees for which the 
                cost of the employee premium for coverage under a group 
                health plan would exceed 11 percent of current family 
                income (determined by the Commissioner on the basis of 
                verifiable documentation and without regard to section 
                245), paragraph (1) shall not apply.
  (c) Income Defined.--
          (1) In general.--In this title, the term ``income'' means 
        modified adjusted gross income (as defined in section 59B of 
        the Internal Revenue Code of 1986).
          (2) Study of income disregards.--The Commissioner shall 
        conduct a study that examines the application of income 
        disregards for purposes of this subtitle. Not later than the 
        first day of Y2, the Commissioner shall submit to Congress a 
        report on such study and shall include such recommendations as 
        the Commissioner determines appropriate.
  (d) Clarification of Treatment of Affordability Credits.--
Affordability credits under this subtitle shall not be treated, for 
purposes of title IV of the Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996, to be a benefit provided under 
section 403 of such title.

SEC. 243. AFFORDABILITY PREMIUM CREDIT.

  (a) In General.--The affordability premium credit under this section 
for an affordable credit eligible individual enrolled in an Exchange-
participating health benefits plan is in an amount equal to the amount 
(if any) by which the premium for the plan (or, if less, the reference 
premium amount specified in subsection (c)), exceeds the affordable 
premium amount specified in subsection (b) for the individual.
  (b) Affordable Premium Amount.--
          (1) In general.--The affordable premium amount specified in 
        this subsection for an individual for monthly premium in a plan 
        year shall be equal to \1/12\ of the product of--
                  (A) the premium percentage limit specified in 
                paragraph (2) for the individual based upon the 
                individual's family income for the plan year; and
                  (B) the individual's family income for such plan 
                year.
          (2) Premium percentage limits based on table.--The 
        Commissioner shall establish premium percentage limits so that 
        for individuals whose family income is within an income tier 
        specified in the table in subsection (d) such percentage limits 
        shall increase, on a sliding scale in a linear manner, from the 
        initial premium percentage to the final premium percentage 
        specified in such table for such income tier.
  (c) Reference Premium Amount.--The reference premium amount specified 
in this subsection for a plan year for an individual in a premium 
rating area is equal to the average premium for the 3 basic plans in 
the area for the plan year with the lowest premium levels. In computing 
such amount the Commissioner may exclude plans with extremely limited 
enrollments.
  (d) Table of Premium Percentage Limits and Actuarial Value 
Percentages Based on Income Tier.--
          (1) In general.--For purposes of this subtitle, the table 
        specified in this subsection is as follows:


   In the case of family income
 (expressed as a percent of FPL)      The initial premium         The final premium        The actuarial value
within the following income tier:       percentage is--            percentage is--           percentage is--

133% through 150%                  1.5%                       3%                        97%
150% through 200%                  3%                         5%                        93%
200% through 250%                  5%                         7%                        85%
250% through 300%                  7%                         9%                        78%
300% through 350%                  9%                         10%                       72%
350% through 400%                  10%                        11%                       70%


          (2) Special rules.--For purposes of applying the table under 
        paragraph (1)--
                  (A) For lowest level of income.--In the case of an 
                individual with income that does not exceed 133 percent 
                of FPL, the individual shall be considered to have 
                income that is 133% of FPL.
                  (B) Application of higher actuarial value percentage 
                at tier transition points.--If two actuarial value 
                percentages may be determined with respect to an 
                individual, the actuarial value percentage shall be the 
                higher of such percentages.

SEC. 244. AFFORDABILITY COST-SHARING CREDIT.

  (a) In General.--The affordability cost-sharing credit under this 
section for an affordable credit eligible individual enrolled in an 
Exchange-participating health benefits plan is in the form of the cost-
sharing reduction described in subsection (b) provided under this 
section for the income tier in which the individual is classified based 
on the individual's family income.
  (b) Cost-sharing Reductions.--The Commissioner shall specify a 
reduction in cost-sharing amounts and the annual limitation on cost-
sharing specified in section 122(c)(2)(B) under a basic plan for each 
income tier specified in the table under section 243(d), with respect 
to a year, in a manner so that, as estimated by the Commissioner, the 
actuarial value of the coverage with such reduced cost-sharing amounts 
(and the reduced annual cost-sharing limit) is equal to the actuarial 
value percentage (specified in the table under section 243(d) for the 
income tier involved) of the full actuarial value if there were no 
cost-sharing imposed under the plan.
  (c) Determination and Payment of Cost-sharing Affordability Credit.--
In the case of an affordable credit eligible individual in a tier 
enrolled in an Exchange-participating health benefits plan offered by a 
QHBP offering entity, the Commissioner shall provide for payment to the 
offering entity of an amount equivalent to the increased actuarial 
value of the benefits under the plan provided under section 
203(c)(2)(B) resulting from the reduction in cost-sharing described in 
subsection (b).

SEC. 245. INCOME DETERMINATIONS.

  (a) In General.--In applying this subtitle for an affordability 
credit for an individual for a plan year, the individual's income shall 
be the income (as defined in section 242(c)) for the individual for the 
most recent taxable year (as determined in accordance with rules of the 
Commissioner). The Federal poverty level applied shall be such level in 
effect as of the date of the application.
  (b) Program Integrity; Income Verification Procedures.--
          (1) Program integrity.--The Commissioner shall take such 
        steps as may be appropriate to ensure the accuracy of 
        determinations and redeterminations under this subtitle.
          (2) Income verification.--
                  (A) In general.--Upon an initial application of an 
                individual for an affordability credit under this 
                subtitle (or in applying section 242(b)) or upon an 
                application for a change in the affordability credit 
                based upon a significant change in family income 
                described in subparagraph (A)--
                          (i) the Commissioner shall request from the 
                        Secretary of the Treasury the disclosure to the 
                        Commissioner of such information as may be 
                        permitted to verify the information contained 
                        in such application; and
                          (ii) the Commissioner shall use the 
                        information so disclosed to verify such 
                        information.
                  (B) Alternative procedures.--The Commissioner shall 
                establish procedures for the verification of income for 
                purposes of this subtitle if no income tax return is 
                available for the most recent completed tax year.
  (c) Special Rules.--
          (1) Changes in income as a percent of fpl.--In the case that 
        an individual's income (expressed as a percentage of the 
        Federal poverty level for a family of the size involved) for a 
        plan year is expected (in a manner specified by the 
        Commissioner) to be significantly different from the income (as 
        so expressed) used under subsection (a), the Commissioner shall 
        establish rules requiring an individual to report, consistent 
        with the mechanism established under paragraph (2), significant 
        changes in such income (including a significant change in 
        family composition) to the Commissioner and requiring the 
        substitution of such income for the income otherwise 
        applicable.
          (2) Reporting of significant changes in income.--The 
        Commissioner shall establish rules under which an individual 
        determined to be an affordable credit eligible individual would 
        be required to inform the Commissioner when there is a 
        significant change in the family income of the individual 
        (expressed as a percentage of the FPL for a family of the size 
        involved) and of the information regarding such change. Such 
        mechanism shall provide for guidelines that specify the 
        circumstances that qualify as a significant change, the 
        verifiable information required to document such a change, and 
        the process for submission of such information. If the 
        Commissioner receives new information from an individual 
        regarding the family income of the individual, the Commissioner 
        shall provide for a redetermination of the individual's 
        eligibility to be an affordable credit eligible individual.
          (3) Transition for chip.--In the case of a child described in 
        section 202(d)(2), the Commissioner shall establish rules under 
        which the family income of the child is deemed to be no greater 
        than the family income of the child as most recently determined 
        before Y1 by the State under title XXI of the Social Security 
        Act.
          (4) Study of geographic variation in application of fpl.--The 
        Commissioner shall examine the feasibility and implication of 
        adjusting the application of the Federal poverty level under 
        this subtitle for different geographic areas so as to reflect 
        the variations in cost-of-living among different areas within 
        the United States. If the Commissioner determines that an 
        adjustment is feasible, the study should include a methodology 
        to make such an adjustment. Not later than the first day of Y2, 
        the Commissioner shall submit to Congress a report on such 
        study and shall include such recommendations as the 
        Commissioner determines appropriate.
  (d) Penalties for Misrepresentation.--In the case of an individual 
intentionally misrepresents family income or the individual fails 
(without regard to intent) to disclose to the Commissioner a 
significant change in family income under subsection (c) in a manner 
that results in the individual becoming an affordable credit eligible 
individual when the individual is not or in the amount of the 
affordability credit exceeding the correct amount--
          (1) the individual is liable for repayment of the amount of 
        the improper affordability credit; ;and
          (2) in the case of such an intentional misrepresentation or 
        other egregious circumstances specified by the Commissioner, 
        the Commissioner may impose an additional penalty.

SEC. 246. NO FEDERAL PAYMENT FOR UNDOCUMENTED ALIENS.

  Nothing in this subtitle shall allow Federal payments for 
affordability credits on behalf of individuals who are not lawfully 
present in the United States.

                    TITLE III--SHARED RESPONSIBILITY

                 Subtitle A--Individual Responsibility

SEC. 301. INDIVIDUAL RESPONSIBILITY.

  For an individual's responsibility to obtain acceptable coverage, see 
section 59B of the Internal Revenue Code of 1986 (as added by section 
401 of this Act).

                  Subtitle B--Employer Responsibility

           PART 1--HEALTH COVERAGE PARTICIPATION REQUIREMENTS

SEC. 311. HEALTH COVERAGE PARTICIPATION REQUIREMENTS.

  An employer meets the requirements of this section if such employer 
does all of the following:
          (1) Offer of coverage.--The employer offers each employee 
        individual and family coverage under a qualified health 
        benefits plan (or under a current employment-based health plan 
        (within the meaning of section 102(b))) in accordance with 
        section 312.
          (2) Contribution towards coverage.--If an employee accepts 
        such offer of coverage, the employer makes timely contributions 
        towards such coverage in accordance with section 312.
          (3) Contribution in lieu of coverage.--Beginning with Y2, if 
        an employee declines such offer but otherwise obtains coverage 
        in an Exchange-participating health benefits plan (other than 
        by reason of being covered by family coverage as a spouse or 
        dependent of the primary insured), the employer shall make a 
        timely contribution to the Health Insurance Exchange with 
        respect to each such employee in accordance with section 313.

SEC. 312. EMPLOYER RESPONSIBILITY TO CONTRIBUTE TOWARDS EMPLOYEE AND 
                    DEPENDENT COVERAGE.

  (a) In General.--An employer meets the requirements of this section 
with respect to an employee if the following requirements are met:
          (1) Offering of coverage.--The employer offers the coverage 
        described in section 311(1) either through an Exchange-
        participating health benefits plan or other than through such a 
        plan.
          (2) Employer required contribution.--The employer timely pays 
        to the issuer of such coverage an amount not less than the 
        employer required contribution specified in subsection (b) for 
        such coverage.
          (3) Provision of information.--The employer provides the 
        Health Choices Commissioner, the Secretary of Labor, the 
        Secretary of Health and Human Services, and the Secretary of 
        the Treasury, as applicable, with such information as the 
        Commissioner may require to ascertain compliance with the 
        requirements of this section.
          (4) Autoenrollment of employees.--The employer provides for 
        autoenrollment of the employee in accordance with subsection 
        (c).
  (b) Reduction of Employee Premiums Through Minimum Employer 
Contribution.--
          (1) Full-time employees.--The minimum employer contribution 
        described in this subsection for coverage of a full-time 
        employee (and, if any, the employee's spouse and qualifying 
        children (as defined in section 152(c) of the Internal Revenue 
        Code of 1986) under a qualified health benefits plan (or 
        current employment-based health plan) is equal to--
                  (A) in case of individual coverage, not less than 
                72.5 percent of the applicable premium (as defined in 
                section 4980B(f)(4) of such Code, subject to paragraph 
                (2)) of the lowest cost plan offered by the employer 
                that is a qualified health benefits plan (or is such 
                current employment-based health plan); and
                  (B) in the case of family coverage which includes 
                coverage of such spouse and children, not less 65 
                percent of such applicable premium of such lowest cost 
                plan.
          (2) Applicable premium for exchange coverage.--In this 
        subtitle, the amount of the applicable premium of the lowest 
        cost plan with respect to coverage of an employee under an 
        Exchange-participating health benefits plan is the reference 
        premium amount under section 243(c) for individual coverage 
        (or, if elected, family coverage) for the premium rating area 
        in which the individual or family resides.
          (3) Minimum employer contribution for employees other than 
        full-time employees.--In the case of coverage for an employee 
        who is not a full-time employee, the amount of the minimum 
        employer contribution under this subsection shall be a 
        proportion (as determined in accordance with rules of the 
        Health Choices Commissioner, the Secretary of Labor, the 
        Secretary of Health and Human Services, and the Secretary of 
        the Treasury, as applicable) of the minimum employer 
        contribution under this subsection with respect to a full-time 
        employee that reflects the proportion of--
                  (A) the average weekly hours of employment of the 
                employee by the employer, to
                  (B) the minimum weekly hours specified by the 
                Commissioner for an employee to be a full-time 
                employee.
          (4) Salary reductions not treated as employer 
        contributions.--For purposes of this section, any contribution 
        on behalf of an employee with respect to which there is a 
        corresponding reduction in the compensation of the employee 
        shall not be treated as an amount paid by the employer.
  (c) Automatic Enrollment for Employer Sponsored Health Benefits.--
          (1) In general.--The requirement of this subsection with 
        respect to an employer and an employee is that the employer 
        automatically enroll such employee into the employment-based 
        health benefits plan for individual coverage under the plan 
        option with the lowest applicable employee premium.
          (2) Opt-out.--In no case may an employer automatically enroll 
        an employee in a plan under paragraph (1) if such employee 
        makes an affirmative election to opt out of such plan or to 
        elect coverage under an employment-based health benefits plan 
        offered by such employer. An employer shall provide an employee 
        with a 30-day period to make such an affirmative election 
        before the employer may automatically enroll the employee in 
        such a plan.
          (3) Notice requirements.--
                  (A) In general.--Each employer described in paragraph 
                (1) who automatically enrolls an employee into a plan 
                as described in such paragraph shall provide the 
                employees, within a reasonable period before the 
                beginning of each plan year (or, in the case of new 
                employees, within a reasonable period before the end of 
                the enrollment period for such a new employee), written 
                notice of the employees' rights and obligations 
                relating to the automatic enrollment requirement under 
                such paragraph. Such notice must be comprehensive and 
                understood by the average employee to whom the 
                automatic enrollment requirement applies.
                  (B) Inclusion of specific information.--The written 
                notice under subparagraph (A) must explain an 
                employee's right to opt out of being automatically 
                enrolled in a plan and in the case that more than one 
                level of benefits or employee premium level is offered 
                by the employer involved, the notice must explain which 
                level of benefits and employee premium level the 
                employee will be automatically enrolled in the absence 
                of an affirmative election by the employee.

SEC. 313. EMPLOYER CONTRIBUTIONS IN LIEU OF COVERAGE.

  (a) In General.--A contribution is made in accordance with this 
section with respect to an employee if such contribution is equal to an 
amount equal to 8 percent of the average wages paid by the employer 
during the period of enrollment (determined by taking into account all 
employees of the employer and in such manner as the Commissioner 
provides, including rules providing for the appropriate aggregation of 
related employers). Any such contribution--
          (1) shall be paid to the Health Choices Commissioner for 
        deposit into the Health Insurance Exchange Trust Fund, and
          (2) shall not be applied against the premium of the employee 
        under the Exchange-participating health benefits plan in which 
        the employee is enrolled.
  (b) Special Rules for Small Employers.--
          (1) In general.--In the case of any employer who is a small 
        employer for any calendar year, subsection (a) shall be applied 
        by substituting the applicable percentage determined in 
        accordance with the following table for ``8 percent'':

If the annual payroll of such employer   The applicable percentage is:
 for the preceding calendar year:
  Does not exceed $250,000.............  0 percent
  Exceeds $250,000, but does not exceed  2 percent
   $300,000.
  Exceeds $300,000, but does not exceed  4 percent
   $350,000.
  Exceeds $350,000, but does not exceed  6 percent
   $400,000.


          (2) Small employer.--For purposes of this subsection, the 
        term ``small employer'' means any employer for any calendar 
        year if the annual payroll of such employer for the preceding 
        calendar year does not exceed $400,000.
          (3) Annual payroll.--For purposes of this paragraph, the term 
        ``annual payroll'' means, with respect to any employer for any 
        calendar year, the aggregate wages paid by the employer during 
        such calendar year.
          (4) Aggregation rules.--Related employers and predecessors 
        shall be treated as a single employer for purposes of this 
        subsection.

SEC. 314. AUTHORITY RELATED TO IMPROPER STEERING.

  The Health Choices Commissioner (in coordination with the Secretary 
of Labor, the Secretary of Health and Human Services, and the Secretary 
of the Treasury) shall have authority to set standards for determining 
whether employers or insurers are undertaking any actions to affect the 
risk pool within the Health Insurance Exchange by inducing individuals 
to decline coverage under a qualified health benefits plan (or current 
employment-based health plan (within the meaning of section 102(b)) 
offered by the employer and instead to enroll in an Exchange-
participating health benefits plan. An employer violating such 
standards shall be treated as not meeting the requirements of this 
section.

   PART 2--SATISFACTION OF HEALTH COVERAGE PARTICIPATION REQUIREMENTS

SEC. 321. SATISFACTION OF HEALTH COVERAGE PARTICIPATION REQUIREMENTS 
                    UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT 
                    OF 1974.

  (a) In General.--Subtitle B of title I of the Employee Retirement 
Income Security Act of 1974 is amended by adding at the end the 
following new part:

     ``PART 8--NATIONAL HEALTH COVERAGE PARTICIPATION REQUIREMENTS

``SEC. 801. ELECTION OF EMPLOYER TO BE SUBJECT TO NATIONAL HEALTH 
                    COVERAGE PARTICIPATION REQUIREMENTS.

  ``(a) In General.--An employer may make an election with the 
Secretary to be subject to the health coverage participation 
requirements.
  ``(b) Time and Manner.--An election under subsection (a) may be made 
at such time and in such form and manner as the Secretary may 
prescribe.

``SEC. 802. TREATMENT OF COVERAGE RESULTING FROM ELECTION.

  ``(a) In General.--If an employer makes an election to the Secretary 
under section 801--
          ``(1) such election shall be treated as the establishment and 
        maintenance of a group health plan (as defined in section 
        733(a)) for purposes of this title, subject to section 151 of 
        the America's Affordable Health Choices Act of 2009, and
          ``(2) the health coverage participation requirements shall be 
        deemed to be included as terms and conditions of such plan.
  ``(b) Periodic Investigations to Discover Noncompliance.--The 
Secretary shall regularly audit a representative sampling of employers 
and group health plans and conduct investigations and other activities 
under section 504 with respect to such sampling of plans so as to 
discover noncompliance with the health coverage participation 
requirements in connection with such plans. The Secretary shall 
communicate findings of noncompliance made by the Secretary under this 
subsection to the Secretary of the Treasury and the Health Choices 
Commissioner. The Secretary shall take such timely enforcement action 
as appropriate to achieve compliance.

``SEC. 803. HEALTH COVERAGE PARTICIPATION REQUIREMENTS.

  ``For purposes of this part, the term `health coverage participation 
requirements' means the requirements of part 1 of subtitle B of title 
III of division A of America's Affordable Health Choices Act of 2009 
(as in effect on the date of the enactment of such Act).

``SEC. 804. RULES FOR APPLYING REQUIREMENTS.

  ``(a) Affiliated Groups.--In the case of any employer which is part 
of a group of employers who are treated as a single employer under 
subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue 
Code of 1986, the election under section 801 shall be made by such 
employer as the Secretary may provide. Any such election, once made, 
shall apply to all members of such group.
  ``(b) Separate Elections.--Under regulations prescribed by the 
Secretary, separate elections may be made under section 801 with 
respect to--
          ``(1) separate lines of business, and
          ``(2) full-time employees and employees who are not full-time 
        employees.

``SEC. 805. TERMINATION OF ELECTION IN CASES OF SUBSTANTIAL 
                    NONCOMPLIANCE.

  ``The Secretary may terminate the election of any employer under 
section 801 if the Secretary (in coordination with the Health Choices 
Commissioner) determines that such employer is in substantial 
noncompliance with the health coverage participation requirements and 
shall refer any such determination to the Secretary of the Treasury as 
appropriate.

``SEC. 806. REGULATIONS.

  ``The Secretary may promulgate such regulations as may be necessary 
or appropriate to carry out the provisions of this part, in accordance 
with section 324(a) of the America's Affordable Health Choices Act of 
2009. The Secretary may promulgate any interim final rules as the 
Secretary determines are appropriate to carry out this part.''.
  (b) Enforcement of Health Coverage Participation Requirements.--
Section 502 of such Act (29 U.S.C. 1132) is amended--
          (1) in subsection (a)(6), by striking ``paragraph'' and all 
        that follows through ``subsection (c)'' and inserting 
        ``paragraph (2), (4), (5), (6), (7), (8), (9), (10), or (11) of 
        subsection (c)''; and
          (2) in subsection (c), by redesignating the second paragraph 
        (10) as paragraph (12) and by inserting after the first 
        paragraph (10) the following new paragraph:
          ``(11) Health coverage participation requirements.--
                  ``(A) Civil penalties.--In the case of any employer 
                who fails (during any period with respect to which an 
                election under section 801(a) is in effect) to satisfy 
                the health coverage participation requirements with 
                respect to any employee, the Secretary may assess a 
                civil penalty against the employer of $100 for each day 
                in the period beginning on the date such failure first 
                occurs and ending on the date such failure is 
                corrected.
                  ``(B) Health coverage participation requirements.--
                For purposes of this paragraph, the term `health 
                coverage participation requirements' has the meaning 
                provided in section 803.
                  ``(C) Limitations on amount of penalty.--
                          ``(i) Penalty not to apply where failure not 
                        discovered exercising reasonable diligence.--No 
                        penalty shall be assessed under subparagraph 
                        (A) with respect to any failure during any 
                        period for which it is established to the 
                        satisfaction of the Secretary that the employer 
                        did not know, or exercising reasonable 
                        diligence would not have known, that such 
                        failure existed.
                          ``(ii) Penalty not to apply to failures 
                        corrected within 30 days.--No penalty shall be 
                        assessed under subparagraph (A) with respect to 
                        any failure if--
                                  ``(I) such failure was due to 
                                reasonable cause and not to willful 
                                neglect, and
                                  ``(II) such failure is corrected 
                                during the 30-day period beginning on 
                                the 1st date that the employer knew, or 
                                exercising reasonable diligence would 
                                have known, that such failure existed.
                          ``(iii) Overall limitation for unintentional 
                        failures.--In the case of failures which are 
                        due to reasonable cause and not to willful 
                        neglect, the penalty assessed under 
                        subparagraph (A) for failures during any 1-year 
                        period shall not exceed the amount equal to the 
                        lesser of--
                                  ``(I) 10 percent of the aggregate 
                                amount paid or incurred by the employer 
                                (or predecessor employer) during the 
                                preceding 1-year period for group 
                                health plans, or
                                  ``(II) $500,000.
                  ``(D) Advance notification of failure prior to 
                assessment.--Before a reasonable time prior to the 
                assessment of any penalty under this paragraph with 
                respect to any failure by an employer, the Secretary 
                shall inform the employer in writing of such failure 
                and shall provide the employer information regarding 
                efforts and procedures which may be undertaken by the 
                employer to correct such failure.
                  ``(E) Coordination with excise tax.--Under 
                regulations prescribed in accordance with section 324 
                of the America's Affordable Health Choices Act of 2009, 
                the Secretary and the Secretary of the Treasury shall 
                coordinate the assessment of penalties under this 
                section in connection with failures to satisfy health 
                coverage participation requirements with the imposition 
                of excise taxes on such failures under section 4980H(b) 
                of the Internal Revenue Code of 1986 so as to avoid 
                duplication of penalties with respect to such failures.
                  ``(F) Deposit of penalty collected.--Any amount of 
                penalty collected under this paragraph shall be 
                deposited as miscellaneous receipts in the Treasury of 
                the United States.''.
  (c) Clerical Amendments.--The table of contents in section 1 of such 
Act is amended by inserting after the item relating to section 734 the 
following new items:

     ``Part 8--National Health Coverage Participation Requirements

``Sec. 801. Election of employer to be subject to national health 
coverage participation requirements.
``Sec. 802. Treatment of coverage resulting from election.
``Sec. 803. Health coverage participation requirements.
``Sec. 804. Rules for applying requirements.
``Sec. 805. Termination of election in cases of substantial 
noncompliance.
``Sec. 806. Regulations.''.

  (d) Effective Date.--The amendments made by this section shall apply 
to periods beginning after December 31, 2012.

SEC. 322. SATISFACTION OF HEALTH COVERAGE PARTICIPATION REQUIREMENTS 
                    UNDER THE INTERNAL REVENUE CODE OF 1986.

  (a) Failure to Elect, or Substantially Comply With, Health Coverage 
Participation Requirements.--For employment tax on employers who fail 
to elect, or substantially comply with, the health coverage 
participation requirements described in part 1, see section 3111(c) of 
the Internal Revenue Code of 1986 (as added by section 412 of this 
Act).
  (b) Other Failures.--For excise tax on other failures of electing 
employers to comply with such requirements, see section 4980H of the 
Internal Revenue Code of 1986 (as added by section 411 of this Act).

SEC. 323. SATISFACTION OF HEALTH COVERAGE PARTICIPATION REQUIREMENTS 
                    UNDER THE PUBLIC HEALTH SERVICE ACT.

  (a) In General.--Part C of title XXVII of the Public Health Service 
Act is amended by adding at the end the following new section:

``SEC. 2793. NATIONAL HEALTH COVERAGE PARTICIPATION REQUIREMENTS.

  ``(a) Election of Employer to Be Subject to National Health Coverage 
Participation Requirements.--
          ``(1) In general.--An employer may make an election with the 
        Secretary to be subject to the health coverage participation 
        requirements.
          ``(2) Time and manner.--An election under paragraph (1) may 
        be made at such time and in such form and manner as the 
        Secretary may prescribe.
  ``(b) Treatment of Coverage Resulting From Election.--
          ``(1) In general.--If an employer makes an election to the 
        Secretary under subsection (a)--
                  ``(A) such election shall be treated as the 
                establishment and maintenance of a group health plan 
                for purposes of this title, subject to section 151 of 
                the America's Affordable Health Choices Act of 2009, 
                and
                  ``(B) the health coverage participation requirements 
                shall be deemed to be included as terms and conditions 
                of such plan.
          ``(2) Periodic investigations to determine compliance with 
        health coverage participation requirements.--The Secretary 
        shall regularly audit a representative sampling of employers 
        and conduct investigations and other activities with respect to 
        such sampling of employers so as to discover noncompliance with 
        the health coverage participation requirements in connection 
        with such employers (during any period with respect to which an 
        election under subsection (a) is in effect). The Secretary 
        shall communicate findings of noncompliance made by the 
        Secretary under this subsection to the Secretary of the 
        Treasury and the Health Choices Commissioner. The Secretary 
        shall take such timely enforcement action as appropriate to 
        achieve compliance.
  ``(c) Health Coverage Participation Requirements.--For purposes of 
this section, the term `health coverage participation requirements' 
means the requirements of part 1 of subtitle B of title III of division 
A of the America's Affordable Health Choices Act of 2009 (as in effect 
on the date of the enactment of this section).
  ``(d) Separate Elections.--Under regulations prescribed by the 
Secretary, separate elections may be made under subsection (a) with 
respect to full-time employees and employees who are not full-time 
employees.
  ``(e) Termination of Election in Cases of Substantial 
Noncompliance.--The Secretary may terminate the election of any 
employer under subsection (a) if the Secretary (in coordination with 
the Health Choices Commissioner) determines that such employer is in 
substantial noncompliance with the health coverage participation 
requirements and shall refer any such determination to the Secretary of 
the Treasury as appropriate.
  ``(f) Enforcement of Health Coverage Participation Requirements.--
          ``(1) Civil penalties.--In the case of any employer who fails 
        (during any period with respect to which the election under 
        subsection (a) is in effect) to satisfy the health coverage 
        participation requirements with respect to any employee, the 
        Secretary may assess a civil penalty against the employer of 
        $100 for each day in the period beginning on the date such 
        failure first occurs and ending on the date such failure is 
        corrected.
          ``(2) Limitations on amount of penalty.--
                  ``(A) Penalty not to apply where failure not 
                discovered exercising reasonable diligence.--No penalty 
                shall be assessed under paragraph (1) with respect to 
                any failure during any period for which it is 
                established to the satisfaction of the Secretary that 
                the employer did not know, or exercising reasonable 
                diligence would not have known, that such failure 
                existed.
                  ``(B) Penalty not to apply to failures corrected 
                within 30 days.--No penalty shall be assessed under 
                paragraph (1) with respect to any failure if--
                          ``(i) such failure was due to reasonable 
                        cause and not to willful neglect, and
                          ``(ii) such failure is corrected during the 
                        30-day period beginning on the 1st date that 
                        the employer knew, or exercising reasonable 
                        diligence would have known, that such failure 
                        existed.
                  ``(C) Overall limitation for unintentional 
                failures.--In the case of failures which are due to 
                reasonable cause and not to willful neglect, the 
                penalty assessed under paragraph (1) for failures 
                during any 1-year period shall not exceed the amount 
                equal to the lesser of--
                          ``(i) 10 percent of the aggregate amount paid 
                        or incurred by the employer (or predecessor 
                        employer) during the preceding taxable year for 
                        group health plans, or
                          ``(ii) $500,000.
          ``(3) Advance notification of failure prior to assessment.--
        Before a reasonable time prior to the assessment of any penalty 
        under paragraph (1) with respect to any failure by an employer, 
        the Secretary shall inform the employer in writing of such 
        failure and shall provide the employer information regarding 
        efforts and procedures which may be undertaken by the employer 
        to correct such failure.
          ``(4) Actions to enforce assessments.--The Secretary may 
        bring a civil action in any District Court of the United States 
        to collect any civil penalty under this subsection.
          ``(5) Coordination with excise tax.--Under regulations 
        prescribed in accordance with section 324 of the America's 
        Affordable Health Choices Act of 2009, the Secretary and the 
        Secretary of the Treasury shall coordinate the assessment of 
        penalties under paragraph (1) in connection with failures to 
        satisfy health coverage participation requirements with the 
        imposition of excise taxes on such failures under section 
        4980H(b) of the Internal Revenue Code of 1986 so as to avoid 
        duplication of penalties with respect to such failures.
          ``(6) Deposit of penalty collected.--Any amount of penalty 
        collected under this subsection shall be deposited as 
        miscellaneous receipts in the Treasury of the United States.
  ``(g) Regulations.--The Secretary may promulgate such regulations as 
may be necessary or appropriate to carry out the provisions of this 
section, in accordance with section 324(a) of the America's Affordable 
Health Choices Act of 2009. The Secretary may promulgate any interim 
final rules as the Secretary determines are appropriate to carry out 
this section.''.
  (b) Effective Date.--The amendments made by subsection (a) shall 
apply to periods beginning after December 31, 2012.

SEC. 324. ADDITIONAL RULES RELATING TO HEALTH COVERAGE PARTICIPATION 
                    REQUIREMENTS.

  (a) Assuring Coordination.--The officers consisting of the Secretary 
of Labor, the Secretary of the Treasury, the Secretary of Health and 
Human Services, and the Health Choices Commissioner shall ensure, 
through the execution of an interagency memorandum of understanding 
among such officers, that--
          (1) regulations, rulings, and interpretations issued by such 
        officers relating to the same matter over which two or more of 
        such officers have responsibility under subpart B of part 6 of 
        subtitle B of title I of the Employee Retirement Income 
        Security Act of 1974, section 4980H of the Internal Revenue 
        Code of 1986, and section 2793 of the Public Health Service Act 
        are administered so as to have the same effect at all times; 
        and
          (2) coordination of policies relating to enforcing the same 
        requirements through such officers in order to have a 
        coordinated enforcement strategy that avoids duplication of 
        enforcement efforts and assigns priorities in enforcement.
  (b) Multiemployer Plans.--In the case of a group health plan that is 
a multiemployer plan (as defined in section 3(37) of the Employee 
Retirement Income Security Act of 1974), the regulations prescribed in 
accordance with subsection (a) by the officers referred to in 
subsection (a) shall provide for the application of the health coverage 
participation requirements to the plan sponsor and contributing 
sponsors of such plan.

         TITLE IV--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986

                   Subtitle A--Shared Responsibility

                   PART 1--INDIVIDUAL RESPONSIBILITY

SEC. 401. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE COVERAGE.

  (a) In General.--Subchapter A of chapter 1 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new part:

                 ``PART VIII--HEALTH CARE RELATED TAXES

    ``subpart a. tax on individuals without acceptable health care 
                               coverage.

``Subpart A--Tax on Individuals Without Acceptable Health Care Coverage

``Sec. 59B. Tax on individuals without acceptable health care coverage.

``SEC. 59B. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE COVERAGE.

  ``(a) Tax Imposed.--In the case of any individual who does not meet 
the requirements of subsection (d) at any time during the taxable year, 
there is hereby imposed a tax equal to 2.5 percent of the excess of--
          ``(1) the taxpayer's modified adjusted gross income for the 
        taxable year, over
          ``(2) the amount of gross income specified in section 
        6012(a)(1) with respect to the taxpayer.
  ``(b) Limitations.--
          ``(1) Tax limited to average premium.--
                  ``(A) In general.--The tax imposed under subsection 
                (a) with respect to any taxpayer for any taxable year 
                shall not exceed the applicable national average 
                premium for such taxable year.
                  ``(B) Applicable national average premium.--
                          ``(i) In general.--For purposes of 
                        subparagraph (A), the `applicable national 
                        average premium' means, with respect to any 
                        taxable year, the average premium (as 
                        determined by the Secretary, in coordination 
                        with the Health Choices Commissioner) for self-
                        only coverage under a basic plan which is 
                        offered in a Health Insurance Exchange for the 
                        calendar year in which such taxable year 
                        begins.
                          ``(ii) Failure to provide coverage for more 
                        than one individual.--In the case of any 
                        taxpayer who fails to meet the requirements of 
                        subsection (e) with respect to more than one 
                        individual during the taxable year, clause (i) 
                        shall be applied by substituting `family 
                        coverage' for `self-only coverage'.
          ``(2) Proration for part year failures.--The tax imposed 
        under subsection (a) with respect to any taxpayer for any 
        taxable year shall not exceed the amount which bears the same 
        ratio to the amount of tax so imposed (determined without 
        regard to this paragraph and after application of paragraph 
        (1)) as--
                  ``(A) the aggregate periods during such taxable year 
                for which such individual failed to meet the 
                requirements of subsection (d), bears to
                  ``(B) the entire taxable year.
  ``(c) Exceptions.--
          ``(1) Dependents.--Subsection (a) shall not apply to any 
        individual for any taxable year if a deduction is allowable 
        under section 151 with respect to such individual to another 
        taxpayer for any taxable year beginning in the same calendar 
        year as such taxable year.
          ``(2) Nonresident aliens.--Subsection (a) shall not apply to 
        any individual who is a nonresident alien.
          ``(3) Individuals residing outside united states.--Any 
        qualified individual (as defined in section 911(d)) (and any 
        qualifying child residing with such individual) shall be 
        treated for purposes of this section as covered by acceptable 
        coverage during the period described in subparagraph (A) or (B) 
        of section 911(d)(1), whichever is applicable.
          ``(4) Individuals residing in possessions of the united 
        states.--Any individual who is a bona fide resident of any 
        possession of the United States (as determined under section 
        937(a)) for any taxable year (and any qualifying child residing 
        with such individual) shall be treated for purposes of this 
        section as covered by acceptable coverage during such taxable 
        year.
          ``(5) Religious conscience exemption.--
                  ``(A) In general.--Subsection (a) shall not apply to 
                any individual (and any qualifying child residing with 
                such individual) for any period if such individual has 
                in effect an exemption which certifies that such 
                individual is a member of a recognized religious sect 
                or division thereof described in section 1402(g)(1) and 
                an adherent of established tenets or teachings of such 
                sect or division as described in such section.
                  ``(B) Exemption.--An application for the exemption 
                described in subparagraph (A) shall be filed with the 
                Secretary at such time and in such form and manner as 
                the Secretary may prescribe. Any such exemption granted 
                by the Secretary shall be effective for such period as 
                the Secretary determines appropriate.
  ``(d) Acceptable Coverage Requirement.--
          ``(1) In general.--The requirements of this subsection are 
        met with respect to any individual for any period if such 
        individual (and each qualifying child of such individual) is 
        covered by acceptable coverage at all times during such period.
          ``(2) Acceptable coverage.--For purposes of this section, the 
        term `acceptable coverage' means any of the following:
                  ``(A) Qualified health benefits plan coverage.--
                Coverage under a qualified health benefits plan (as 
                defined in section 100(c) of the America's Affordable 
                Health Choices Act of 2009).
                  ``(B) Grandfathered health insurance coverage; 
                coverage under grandfathered employment-based health 
                plan.--Coverage under a grandfathered health insurance 
                coverage (as defined in subsection (a) of section 102 
                of the America's Affordable Health Choices Act of 2009) 
                or under a current employment-based health plan (within 
                the meaning of subsection (b) of such section).
                  ``(C) Medicare.--Coverage under part A of title XVIII 
                of the Social Security Act.
                  ``(D) Medicaid.--Coverage for medical assistance 
                under title XIX of the Social Security Act.
                  ``(E) Members of the armed forces and dependents 
                (including tricare).--Coverage under chapter 55 of 
                title 10, United States Code, including similar 
                coverage furnished under section 1781 of title 38 of 
                such Code.
                  ``(F) VA.--Coverage under the veteran's health care 
                program under chapter 17 of title 38, United States 
                Code, but only if the coverage for the individual 
                involved is determined by the Secretary in coordination 
                with the Health Choices Commissioner to be not less 
                than the level specified by the Secretary of the 
                Treasury, in coordination with the Secretary of 
                Veteran's Affairs and the Health Choices Commissioner, 
                based on the individual's priority for services as 
                provided under section 1705(a) of such title.
                  ``(G) Other coverage.--Such other health benefits 
                coverage as the Secretary, in coordination with the 
                Health Choices Commissioner, recognizes for purposes of 
                this subsection.
  ``(e) Other Definitions and Special Rules.--
          ``(1) Qualifying child.--For purposes of this section, the 
        term `qualifying child' has the meaning given such term by 
        section 152(c). With respect to any period during which health 
        coverage for a child must be provided by an individual pursuant 
        to a child support order, such child shall be treated as a 
        qualifying child of such individual (and not as a qualifying 
        child of any other individual).
          ``(2) Basic plan.--For purposes of this section, the term 
        `basic plan' has the meaning given such term under section 
        100(c) of the America's Affordable Health Choices Act of 2009.
          ``(3) Health insurance exchange.--For purposes of this 
        section, the term `Health Insurance Exchange' has the meaning 
        given such term under section 100(c) of the America's 
        Affordable Health Choices Act of 2009, including any State-
        based health insurance exchange approved for operation under 
        section 208 of such Act.
          ``(4) Family coverage.--For purposes of this section, the 
        term `family coverage' means any coverage other than self-only 
        coverage.
          ``(5) Modified adjusted gross income.--For purposes of this 
        section, the term `modified adjusted gross income' means 
        adjusted gross income--
                  ``(A) determined without regard to section 911, and
                  ``(B) increased by the amount of interest received or 
                accrued by the taxpayer during the taxable year which 
                is exempt from tax.
          ``(6) Not treated as tax imposed by this chapter for certain 
        purposes.--The tax imposed under this section shall not be 
        treated as tax imposed by this chapter for purposes of 
        determining the amount of any credit under this chapter or for 
        purposes of section 55.
  ``(f) Regulations.--The Secretary shall prescribe such regulations or 
other guidance as may be necessary or appropriate to carry out the 
purposes of this section, including regulations or other guidance 
(developed in coordination with the Health Choices Commissioner) which 
provide--
          ``(1) exemption from the tax imposed under subsection (a) in 
        cases of de minimis lapses of acceptable coverage, and
          ``(2) a process for applying for a waiver of the application 
        of subsection (a) in cases of hardship.''.
  (b) Information Reporting.--
          (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 of such Code is amended by inserting after section 
        6050W the following new section:

``SEC. 6050X. RETURNS RELATING TO HEALTH INSURANCE COVERAGE.

  ``(a) Requirement of Reporting.--Every person who provides acceptable 
coverage (as defined in section 59B(d)) to any individual during any 
calendar year shall, at such time as the Secretary may prescribe, make 
the return described in subsection (b) with respect to such individual.
  ``(b) Form and Manner of Returns.--A return is described in this 
subsection if such return--
          ``(1) is in such form as the Secretary may prescribe, and
          ``(2) contains--
                  ``(A) the name, address, and TIN of the primary 
                insured and the name of each other individual obtaining 
                coverage under the policy,
                  ``(B) the period for which each such individual was 
                provided with the coverage referred to in subsection 
                (a), and
                  ``(C) such other information as the Secretary may 
                require.
  ``(c) Statements to Be Furnished to Individuals With Respect to Whom 
Information Is Required.--Every person required to make a return under 
subsection (a) shall furnish to each primary insured whose name is 
required to be set forth in such return a written statement showing--
          ``(1) the name and address of the person required to make 
        such return and the phone number of the information contact for 
        such person, and
          ``(2) the information required to be shown on the return with 
        respect to such individual.
The written statement required under the preceding sentence shall be 
furnished on or before January 31 of the year following the calendar 
year for which the return under subsection (a) is required to be made.
  ``(d) Coverage Provided by Governmental Units.--In the case of 
coverage provided by any governmental unit or any agency or 
instrumentality thereof, the officer or employee who enters into the 
agreement to provide such coverage (or the person appropriately 
designated for purposes of this section) shall make the returns and 
statements required by this section.''.
          (2) Penalty for failure to file.--
                  (A) Return.--Subparagraph (B) of section 6724(d)(1) 
                of such Code is amended by striking ``or'' at the end 
                of clause (xxii), by striking ``and'' at the end of 
                clause (xxiii) and inserting ``or'', and by adding at 
                the end the following new clause:
                          ``(xxiv) section 6050X (relating to returns 
                        relating to health insurance coverage), and''.
                  (B) Statement.--Paragraph (2) of section 6724(d) of 
                such Code is amended by striking ``or'' at the end of 
                subparagraph (EE), by striking the period at the end of 
                subparagraph (FF) and inserting ``, or'', and by 
                inserting after subparagraph (FF) the following new 
                subparagraph:
                  ``(GG) section 6050X (relating to returns relating to 
                health insurance coverage).''.
  (c) Return Requirement.--Subsection (a) of section 6012 of such Code 
is amended by inserting after paragraph (9) the following new 
paragraph:
          ``(10) Every individual to whom section 59B(a) applies and 
        who fails to meet the requirements of section 59B(d) with 
        respect to such individual or any qualifying child (as defined 
        in section 152(c)) of such individual.''.
  (d) Clerical Amendments.--
          (1) The table of parts for subchapter A of chapter 1 of the 
        Internal Revenue Code of 1986 is amended by adding at the end 
        the following new item:

               ``Part VIII. Health Care Related Taxes.''.

          (2) The table of sections for subpart B of part III of 
        subchapter A of chapter 61 is amended by adding at the end the 
        following new item:

``Sec. 6050X. Returns relating to health insurance coverage.''.

  (e) Section 15 Not to Apply.--The amendment made by subsection (a) 
shall not be treated as a change in a rate of tax for purposes of 
section 15 of the Internal Revenue Code of 1986.
  (f) Effective Date.--
          (1) In general.--The amendments made by this section shall 
        apply to taxable years beginning after December 31, 2012.
          (2) Returns.--The amendments made by subsection (b) shall 
        apply to calendar years beginning after December 31, 2012.

                    PART 2--EMPLOYER RESPONSIBILITY

SEC. 411. ELECTION TO SATISFY HEALTH COVERAGE PARTICIPATION 
                    REQUIREMENTS.

  (a) In General.--Chapter 43 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new section:

``SEC. 4980H. ELECTION WITH RESPECT TO HEALTH COVERAGE PARTICIPATION 
                    REQUIREMENTS.

  ``(a) Election of Employer Responsibility to Provide Health 
Coverage.--
          ``(1) In general.--Subsection (b) shall apply to any employer 
        with respect to whom an election under paragraph (2) is in 
        effect.
          ``(2) Time and manner.--An employer may make an election 
        under this paragraph at such time and in such form and manner 
        as the Secretary may prescribe.
          ``(3) Affiliated groups.--In the case of any employer which 
        is part of a group of employers who are treated as a single 
        employer under subsection (b), (c), (m), or (o) of section 414, 
        the election under paragraph (2) shall be made by such person 
        as the Secretary may provide. Any such election, once made, 
        shall apply to all members of such group.
          ``(4) Separate elections.--Under regulations prescribed by 
        the Secretary, separate elections may be made under paragraph 
        (2) with respect to--
                  ``(A) separate lines of business, and
                  ``(B) full-time employees and employees who are not 
                full-time employees.
          ``(5) Termination of election in cases of substantial 
        noncompliance.--The Secretary may terminate the election of any 
        employer under paragraph (2) if the Secretary (in coordination 
        with the Health Choices Commissioner) determines that such 
        employer is in substantial noncompliance with the health 
        coverage participation requirements.
  ``(b) Excise Tax With Respect to Failure to Meet Health Coverage 
Participation Requirements.--
          ``(1) In general.--In the case of any employer who fails 
        (during any period with respect to which the election under 
        subsection (a) is in effect) to satisfy the health coverage 
        participation requirements with respect to any employee to whom 
        such election applies, there is hereby imposed on each such 
        failure with respect to each such employee a tax of $100 for 
        each day in the period beginning on the date such failure first 
        occurs and ending on the date such failure is corrected.
          ``(2) Limitations on amount of tax.--
                  ``(A) Tax not to apply where failure not discovered 
                exercising reasonable diligence.--No tax shall be 
                imposed by paragraph (1) on any failure during any 
                period for which it is established to the satisfaction 
                of the Secretary that the employer neither knew, nor 
                exercising reasonable diligence would have known, that 
                such failure existed.
                  ``(B) Tax not to apply to failures corrected within 
                30 days.--No tax shall be imposed by paragraph (1) on 
                any failure if--
                          ``(i) such failure was due to reasonable 
                        cause and not to willful neglect, and
                          ``(ii) such failure is corrected during the 
                        30-day period beginning on the 1st date that 
                        the employer knew, or exercising reasonable 
                        diligence would have known, that such failure 
                        existed.
                  ``(C) Overall limitation for unintentional 
                failures.--In the case of failures which are due to 
                reasonable cause and not to willful neglect, the tax 
                imposed by subsection (a) for failures during the 
                taxable year of the employer shall not exceed the 
                amount equal to the lesser of--
                          ``(i) 10 percent of the aggregate amount paid 
                        or incurred by the employer (or predecessor 
                        employer) during the preceding taxable year for 
                        employment-based health plans, or
                          ``(ii) $500,000.
                  ``(D) Coordination with other enforcement 
                provisions.--The tax imposed under paragraph (1) with 
                respect to any failure shall be reduced (but not below 
                zero) by the amount of any civil penalty collected 
                under section 502(c)(11) of the Employee Retirement 
                Income Security Act of 1974 or section 2793(g) of the 
                Public Health Service Act with respect to such failure.
  ``(c) Health Coverage Participation Requirements.--For purposes of 
this section, the term `health coverage participation requirements' 
means the requirements of part I of subtitle B of title III of the 
America's Affordable Health Choices Act of 2009 (as in effect on the 
date of the enactment of this section).''.
  (b) Clerical Amendment.--The table of sections for chapter 43 of such 
Code is amended by adding at the end the following new item:

``Sec. 4980H. Election with respect to health coverage participation 
requirements.''.

  (c) Effective Date.--The amendments made by this section shall apply 
to periods beginning after December 31, 2012.

SEC. 412. RESPONSIBILITIES OF NONELECTING EMPLOYERS.

  (a) In General.--Section 3111 of the Internal Revenue Code of 1986 is 
amended by redesignating subsection (c) as subsection (d) and by 
inserting after subsection (b) the following new subsection:
  ``(c) Employers Electing to Not Provide Health Benefits.--
          ``(1) In general.--In addition to other taxes, there is 
        hereby imposed on every nonelecting employer an excise tax, 
        with respect to having individuals in his employ, equal to 8 
        percent of the wages (as defined in section 3121(a)) paid by 
        him with respect to employment (as defined in section 3121(b)).
          ``(2) Special rules for small employers.--
                  ``(A) In general.--In the case of any employer who is 
                small employer for any calendar year, paragraph (1) 
                shall be applied by substituting the applicable 
                percentage determined in accordance with the following 
                table for `8 percent':

``If the annual payroll of such          The applicable percentage is:
 employer for the preceding calendar
 year:
  Does not exceed $250,000.............  0 percent
  Exceeds $250,000, but does not exceed  2 percent
   $300,000.
  Exceeds $300,000, but does not exceed  4 percent
   $350,000.
  Exceeds $350,000, but does not exceed  6 percent
   $400,000.


                  ``(B) Small employer.--For purposes of this 
                paragraph, the term `small employer' means any employer 
                for any calendar year if the annual payroll of such 
                employer for the preceding calendar year does not 
                exceed $400,000.
                  ``(C) Annual payroll.--For purposes of this 
                paragraph, the term `annual payroll' means, with 
                respect to any employer for any calendar year, the 
                aggregate wages (as defined in section 3121(a)) paid by 
                him with respect to employment (as defined in section 
                3121(b)) during such calendar year.
          ``(3) Nonelecting employer.--For purposes of paragraph (1), 
        the term `nonelecting employer' means any employer for any 
        period with respect to which such employer does not have an 
        election under section 4980H(a) in effect.
          ``(4) Special rule for separate elections.--In the case of an 
        employer who makes a separate election described in section 
        4980H(a)(4) for any period, paragraph (1) shall be applied for 
        such period by taking into account only the wages paid to 
        employees who are not subject to such election.
          ``(5) Aggregation; predecessors.--For purposes of this 
        subsection--
                  ``(A) all persons treated as a single employer under 
                subsection (b), (c), (m), or (o) of section 414 shall 
                be treated as 1 employer, and
                  ``(B) any reference to any person shall be treated as 
                including a reference to any predecessor of such 
                person.''.
  (b) Definitions.--Section 3121 of such Code is amended by adding at 
the end the following new subsection:
  ``(aa) Special Rules for Tax on Employers Electing Not to Provide 
Health Benefits.--For purposes of section 3111(c)--
          ``(1) Paragraphs (1), (5), and (19) of subsection (b) shall 
        not apply.
          ``(2) Paragraph (7) of subsection (b) shall apply by treating 
        all services as not covered by the retirement systems referred 
        to in subparagraphs (C) and (F) thereof.
          ``(3) Subsection (e) shall not apply and the term `State' 
        shall include the District of Columbia.''.
  (c) Conforming Amendment.--Subsection (d) of section 3111 of such 
Code, as redesignated by this section, is amended by striking ``this 
section'' and inserting ``subsections (a) and (b)''.
  (d) Application to Railroads.--
          (1) In general.--Section 3221 of such Code is amended by 
        redesignating subsection (c) as subsection (d) and by inserting 
        after subsection (b) the following new subsection:
  ``(c) Employers Electing to Not Provide Health Benefits.--
          ``(1) In general.--In addition to other taxes, there is 
        hereby imposed on every nonelecting employer an excise tax, 
        with respect to having individuals in his employ, equal to 8 
        percent of the compensation paid during any calendar year by 
        such employer for services rendered to such employer.
          ``(2) Exception for small employers.--Rules similar to the 
        rules of section 3111(c)(2) shall apply for purposes of this 
        subsection.
          ``(3) Nonelecting employer.--For purposes of paragraph (1), 
        the term `nonelecting employer' means any employer for any 
        period with respect to which such employer does not have an 
        election under section 4980H(a) in effect.
          ``(4) Special rule for separate elections.--In the case of an 
        employer who makes a separate election described in section 
        4980H(a)(4) for any period, subsection (a) shall be applied for 
        such period by taking into account only the wages paid to 
        employees who are not subject to such election.''.
          (2) Definitions.--Subsection (e) of section 3231 of such Code 
        is amended by adding at the end the following new paragraph:
          ``(13) Special rules for tax on employers electing not to 
        provide health benefits.--For purposes of section 3221(c)--
                  ``(A) Paragraph (1) shall be applied without regard 
                to the third sentence thereof.
                  ``(B) Paragraph (2) shall not apply.''.
          (3) Conforming amendment.--Subsection (d) of section 3221 of 
        such Code, as redesignated by this section, is amended by 
        striking ``subsections (a) and (b), see section 3231(e)(2)'' 
        and inserting ``this section, see paragraphs (2) and (13)(B) of 
        section 3231(e)''.
  (e) Effective Date.--The amendments made by this section shall apply 
to periods beginning after December 31, 2012.

Subtitle B--Credit for Small Business Employee Health Coverage Expenses

SEC. 421. CREDIT FOR SMALL BUSINESS EMPLOYEE HEALTH COVERAGE EXPENSES.

  (a) In General.--Subpart D of part IV of subchapter A of chapter 1 of 
the Internal Revenue Code of 1986 (relating to business-related 
credits) is amended by adding at the end the following new section:

``SEC. 45R. SMALL BUSINESS EMPLOYEE HEALTH COVERAGE CREDIT.

  ``(a) In General.--For purposes of section 38, in the case of a 
qualified small employer, the small business employee health coverage 
credit determined under this section for the taxable year is an amount 
equal to the applicable percentage of the qualified employee health 
coverage expenses of such employer for such taxable year.
  ``(b) Applicable Percentage.--
          ``(1) In general.--For purposes of this section, the 
        applicable percentage is 50 percent.
          ``(2) Phaseout based on average compensation of employees.--
        In the case of an employer whose average annual employee 
        compensation for the taxable year exceeds $20,000, the 
        percentage specified in paragraph (1) shall be reduced by a 
        number of percentage points which bears the same ratio to 50 as 
        such excess bears to $20,000.
  ``(c) Limitations.--
          ``(1) Phaseout based on employer size.--In the case of an 
        employer who employs more than 10 qualified employees during 
        the taxable year, the credit determined under subsection (a) 
        shall be reduced by an amount which bears the same ratio to the 
        amount of such credit (determined without regard to this 
        paragraph and after the application of the other provisions of 
        this section) as--
                  ``(A) the excess of--
                          ``(i) the number of qualified employees 
                        employed by the employer during the taxable 
                        year, over
                          ``(ii) 10, bears to
                  ``(B) 15.
          ``(2) Credit not allowed with respect to certain highly 
        compensated employees.--No credit shall be allowed under 
        subsection (a) with respect to qualified employee health 
        coverage expenses paid or incurred with respect to any employee 
        for any taxable year if the aggregate compensation paid by the 
        employer to such employee during such taxable year exceeds 
        $80,000.
  ``(d) Qualified Employee Health Coverage Expenses.--For purposes of 
this section--
          ``(1) In general.--The term `qualified employee health 
        coverage expenses' means, with respect to any employer for any 
        taxable year, the aggregate amount paid or incurred by such 
        employer during such taxable year for coverage of any qualified 
        employee of the employer (including any family coverage which 
        covers such employee) under qualified health coverage.
          ``(2) Qualified health coverage.--The term `qualified health 
        coverage' means acceptable coverage (as defined in section 
        59B(d)) which--
                  ``(A) is provided pursuant to an election under 
                section 4980H(a), and
                  ``(B) satisfies the requirements referred to in 
                section 4980H(c).
  ``(e) Other Definitions.--For purposes of this section--
          ``(1) Qualified small employer.--For purposes of this 
        section, the term `qualified small employer' means any employer 
        for any taxable year if--
                  ``(A) the number of qualified employees employed by 
                such employer during the taxable year does not exceed 
                25, and
                  ``(B) the average annual employee compensation of 
                such employer for such taxable year does not exceed the 
                sum of the dollar amounts in effect under subsection 
                (b)(2).
          ``(2) Qualified employee.--The term `qualified employee' 
        means any employee of an employer for any taxable year of the 
        employer if such employee received at least $5,000 of 
        compensation from such employer for services performed in the 
        trade or business of such employer during such taxable year.
          ``(3) Average annual employee compensation.--The term 
        `average annual employee compensation' means, with respect to 
        any employer for any taxable year, the average amount of 
        compensation paid by such employer to qualified employees of 
        such employer during such taxable year.
          ``(4) Compensation.--The term `compensation' has the meaning 
        given such term in section 408(p)(6)(A).
          ``(5) Family coverage.--The term `family coverage' means any 
        coverage other than self-only coverage.
  ``(f) Special Rules.--For purposes of this section--
          ``(1) Special rule for partnerships and self-employed.--In 
        the case of a partnership (or a trade or business carried on by 
        an individual) which has one or more qualified employees 
        (determined without regard to this paragraph) with respect to 
        whom the election under 4980H(a) applies, each partner (or, in 
        the case of a trade or business carried on by an individual, 
        such individual) shall be treated as an employee.
          ``(2) Aggregation rule.--All persons treated as a single 
        employer under subsection (b), (c), (m), or (o) of section 414 
        shall be treated as 1 employer.
          ``(3) Denial of double benefit.--Any deduction otherwise 
        allowable with respect to amounts paid or incurred for health 
        insurance coverage to which subsection (a) applies shall be 
        reduced by the amount of the credit determined under this 
        section.
          ``(4) Inflation adjustment.--In the case of any taxable year 
        beginning after 2013, each of the dollar amounts in subsections 
        (b)(2), (c)(2), and (e)(2) shall be increased by an amount 
        equal to--
                  ``(A) such dollar amount, multiplied by
                  ``(B) the cost of living adjustment determined under 
                section 1(f)(3) for the calendar year in which the 
                taxable year begins determined by substituting 
                `calendar year 2012' for `calendar year 1992' in 
                subparagraph (B) thereof.
        If any increase determined under this paragraph is not a 
        multiple of $50, such increase shall be rounded to the next 
        lowest multiple of $50.''.
  (b) Credit to Be Part of General Business Credit.--Subsection (b) of 
section 38 of such Code (relating to general business credit) is 
amended by striking ``plus'' at the end of paragraph (34), by striking 
the period at the end of paragraph (35) and inserting ``, plus'' , and 
by adding at the end the following new paragraph:
          ``(36) in the case of a qualified small employer (as defined 
        in section 45R(e)), the small business employee health coverage 
        credit determined under section 45R(a).''.
  (c) Clerical Amendment.--The table of sections for subpart D of part 
IV of subchapter A of chapter 1 of such Code is amended by inserting 
after the item relating to section 45Q the following new item:

``Sec. 45R. Small business employee health coverage credit.''.

  (d) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 2012.

    Subtitle C--Disclosures to Carry Out Health Insurance Exchange 
                               Subsidies

SEC. 431. DISCLOSURES TO CARRY OUT HEALTH INSURANCE EXCHANGE SUBSIDIES.

  (a) In General.--Subsection (l) of section 6103 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
paragraph:
          ``(21) Disclosure of return information to carry out health 
        insurance exchange subsidies.--
                  ``(A) In general.--The Secretary, upon written 
                request from the Health Choices Commissioner or the 
                head of a State-based health insurance exchange 
                approved for operation under section 208 of the 
                America's Affordable Health Choices Act of 2009, shall 
                disclose to officers and employees of the Health 
                Choices Administration or such State-based health 
                insurance exchange, as the case may be, return 
                information of any taxpayer whose income is relevant in 
                determining any affordability credit described in 
                subtitle C of title II of the America's Affordable 
                Health Choices Act of 2009. Such return information 
                shall be limited to--
                          ``(i) taxpayer identity information with 
                        respect to such taxpayer,
                          ``(ii) the filing status of such taxpayer,
                          ``(iii) the modified adjusted gross income of 
                        such taxpayer (as defined in section 
                        59B(e)(5)),
                          ``(iv) the number of dependents of the 
                        taxpayer,
                          ``(v) such other information as is prescribed 
                        by the Secretary by regulation as might 
                        indicate whether the taxpayer is eligible for 
                        such affordability credits (and the amount 
                        thereof), and
                          ``(vi) the taxable year with respect to which 
                        the preceding information relates or, if 
                        applicable, the fact that such information is 
                        not available.
                  ``(B) Restriction on use of disclosed information.--
                Return information disclosed under subparagraph (A) may 
                be used by officers and employees of the Health Choices 
                Administration or such State-based health insurance 
                exchange, as the case may be, only for the purposes of, 
                and to the extent necessary in, establishing and 
                verifying the appropriate amount of any affordability 
                credit described in subtitle C of title II of the 
                America's Affordable Health Choices Act of 2009 and 
                providing for the repayment of any such credit which 
                was in excess of such appropriate amount.''.
  (b) Procedures and Recordkeeping Related to Disclosures.--Paragraph 
(4) of section 6103(p) of such Code is amended--
          (1) by inserting ``, or any entity described in subsection 
        (l)(21),'' after ``or (20)'' in the matter preceding 
        subparagraph (A),
          (2) by inserting ``or any entity described in subsection 
        (l)(21),'' after ``or (o)(1)(A),'' in subparagraph (F)(ii), and
          (3) by inserting ``or any entity described in subsection 
        (l)(21),'' after ``or (20),'' both places it appears in the 
        matter after subparagraph (F).
  (c) Unauthorized Disclosure or Inspection.--Paragraph (2) of section 
7213(a) of such Code is amended by striking ``or (20)'' and inserting 
``(20), or (21)''.

                  Subtitle D--Other Revenue Provisions

                       PART 1--GENERAL PROVISIONS

SEC. 441. SURCHARGE ON HIGH INCOME INDIVIDUALS.

  (a) In General.--Part VIII of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986, as added by this title, is amended by 
adding at the end the following new subpart:

           ``Subpart B--Surcharge on High Income Individuals

``Sec. 59C. Surcharge on high income individuals.

``SEC. 59C. SURCHARGE ON HIGH INCOME INDIVIDUALS.

  ``(a) General Rule.--In the case of a taxpayer other than a 
corporation, there is hereby imposed (in addition to any other tax 
imposed by this subtitle) a tax equal to--
          ``(1) 1 percent of so much of the modified adjusted gross 
        income of the taxpayer as exceeds $350,000 but does not exceed 
        $500,000,
          ``(2) 1.5 percent of so much of the modified adjusted gross 
        income of the taxpayer as exceeds $500,000 but does not exceed 
        $1,000,000, and
          ``(3) 5.4 percent of so much of the modified adjusted gross 
        income of the taxpayer as exceeds $1,000,000.
  ``(b) Taxpayers Not Making a Joint Return.--In the case of any 
taxpayer other than a taxpayer making a joint return under section 6013 
or a surviving spouse (as defined in section 2(a)), subsection (a) 
shall be applied by substituting for each of the dollar amounts therein 
(after any increase determined under subsection (e)) a dollar amount 
equal to--
          ``(1) 50 percent of the dollar amount so in effect in the 
        case of a married individual filing a separate return, and
          ``(2) 80 percent of the dollar amount so in effect in any 
        other case.
  ``(c) Adjustments Based on Federal Health Reform Savings.--
          ``(1) In general.--Except as provided in paragraph (2), in 
        the case of any taxable year beginning after December 31, 2012, 
        subsection (a) shall be applied--
                  ``(A) by substituting `2 percent' for `1 percent', 
                and
                  ``(B) by substituting `3 percent' for `1.5 percent'.
          ``(2) Adjustments based on excess federal health reform 
        savings.--
                  ``(A) Exception if federal health reform savings 
                significantly exceeds base amount.--If the excess 
                Federal health reform savings is more than 
                $150,000,000,000 but not more than $175,000,000,000, 
                paragraph (1) shall not apply.
                  ``(B) Further adjustment for additional federal 
                health reform savings.--If the excess Federal health 
                reform savings is more than $175,000,000,000, 
                paragraphs (1) and (2) of subsection (a) (and paragraph 
                (1) of this subsection) shall not apply to any taxable 
                year beginning after December 31, 2012.
                  ``(C) Excess federal health reform savings.--For 
                purposes of this subsection, the term `excess Federal 
                health reform savings' means the excess of--
                          ``(i) the Federal health reform savings, over
                          ``(ii) $525,000,000,000.
                  ``(D) Federal health reform savings.--The term 
                `Federal health reform savings' means the sum of the 
                amounts described in subparagraphs (A) and (B) of 
                paragraph (3).
          ``(3) Determination of federal health reform savings.--Not 
        later than December 1, 2012, the Director of the Office of 
        Management and Budget shall--
                  ``(A) determine, on the basis of the study conducted 
                under paragraph (4), the aggregate reductions in 
                Federal expenditures which have been achieved as a 
                result of the provisions of, and amendments made by, 
                division B of the America's Affordable Health Choices 
                Act of 2009 during the period beginning on October 1, 
                2009, and ending with the latest date with respect to 
                which the Director has sufficient data to make such 
                determination, and
                  ``(B) estimate, on the basis of such study and the 
                determination under subparagraph (A), the aggregate 
                reductions in Federal expenditures which will be 
                achieved as a result of such provisions and amendments 
                during so much of the period beginning with fiscal year 
                2010 and ending with fiscal year 2019 as is not taken 
                into account under subparagraph (A).
          ``(4) Study of federal health reform savings.--The Director 
        of the Office of Management and Budget shall conduct a study of 
        the reductions in Federal expenditures during fiscal years 2010 
        through 2019 which are attributable to the provisions of, and 
        amendments made by, division B of the America's Affordable 
        Health Choices Act of 2009. The Director shall complete such 
        study not later than December 1, 2012.
          ``(5) Reductions in federal expenditures determined without 
        regard to program investments.--For purposes of paragraphs (3) 
        and (4), reductions in Federal expenditures shall be determined 
        without regard to section 1121 of the America's Affordable 
        Health Choices Act of 2009 and other program investments under 
        division B thereof.
  ``(d) Modified Adjusted Gross Income.--For purposes of this section, 
the term `modified adjusted gross income' means adjusted gross income 
reduced by any deduction (not taken into account in determining 
adjusted gross income) allowed for investment interest (as defined in 
section 163(d)). In the case of an estate or trust, adjusted gross 
income shall be determined as provided in section 67(e).
  ``(e) Inflation Adjustments.--
          ``(1) In general.--In the case of taxable years beginning 
        after 2011, the dollar amounts in subsection (a) shall be 
        increased by an amount equal to--
                  ``(A) such dollar amount, multiplied by
                  ``(B) the cost-of-living adjustment determined under 
                section 1(f)(3) for the calendar year in which the 
                taxable year begins, by substituting `calendar year 
                2010' for `calendar year 1992' in subparagraph (B) 
                thereof.
          ``(2) Rounding.--If any amount as adjusted under paragraph 
        (1) is not a multiple of $5,000, such amount shall be rounded 
        to the next lowest multiple of $5,000.
  ``(f) Special Rules.--
          ``(1) Nonresident alien.--In the case of a nonresident alien 
        individual, only amounts taken into account in connection with 
        the tax imposed under section 871(b) shall be taken into 
        account under this section.
          ``(2) Citizens and residents living abroad.--The dollar 
        amounts in effect under subsection (a) (after the application 
        of subsections (b) and (e)) shall be decreased by the excess 
        of--
                  ``(A) the amounts excluded from the taxpayer's gross 
                income under section 911, over
                  ``(B) the amounts of any deductions or exclusions 
                disallowed under section 911(d)(6) with respect to the 
                amounts described in subparagraph (A).
          ``(3) Charitable trusts.--Subsection (a) shall not apply to a 
        trust all the unexpired interests in which are devoted to one 
        or more of the purposes described in section 170(c)(2)(B).
          ``(4) Not treated as tax imposed by this chapter for certain 
        purposes.--The tax imposed under this section shall not be 
        treated as tax imposed by this chapter for purposes of 
        determining the amount of any credit under this chapter or for 
        purposes of section 55.''.
  (b) Clerical Amendment.--The table of subparts for part VIII of 
subchapter A of chapter 1 of such Code, as added by this title, is 
amended by inserting after the item relating to subpart A the following 
new item:

         ``subpart b. surcharge on high income individuals.''.

  (c) Section 15 Not to Apply.--The amendment made by subsection (a) 
shall not be treated as a change in a rate of tax for purposes of 
section 15 of the Internal Revenue Code of 1986.
  (d) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 2010.

SEC. 442. DISTRIBUTIONS FOR MEDICINE QUALIFIED ONLY IF FOR PRESCRIBED 
                    DRUG OR INSULIN.

  (a) HSAs.--Subparagraph (A) of section 223(d)(2) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following: 
``Such term shall include an amount paid for medicine or a drug only if 
such medicine or drug is a prescribed drug or is insulin.''.
  (b) Archer MSAs.--Subparagraph (A) of section 220(d)(2) of such Code 
is amended by adding at the end the following: ``Such term shall 
include an amount paid for medicine or a drug only if such medicine or 
drug is a prescribed drug or is insulin.''.
  (c) Health Flexible Spending Arrangements and Health Reimbursement 
Arrangements.--Section 106 of such Code is amended by adding at the end 
the following new subsection:
  ``(f) Reimbursements for Medicine Restricted to Prescribed Drugs and 
Insulin.--For purposes of this section and section 105, reimbursement 
for expenses incurred for a medicine or a drug shall be treated as a 
reimbursement for medical expenses only if such medicine or drug is a 
prescribed drug or is insulin.''.
  (d) Effective Dates.--The amendment made by this section shall apply 
to expenses incurred after December 31, 2009.

SEC. 443. DELAY IN APPLICATION OF WORLDWIDE ALLOCATION OF INTEREST.

  (a) In General.--Paragraphs (5)(D) and (6) of section 864(f) of the 
Internal Revenue Code of 1986 are each amended by striking ``December 
31, 2010'' and inserting ``December 31, 2019''.
  (b) Transition.--Subsection (f) of section 864 of such Code is 
amended by striking paragraph (7).

                  PART 2--PREVENTION OF TAX AVOIDANCE

SEC. 451. LIMITATION ON TREATY BENEFITS FOR CERTAIN DEDUCTIBLE 
                    PAYMENTS.

  (a) In General.--Section 894 of the Internal Revenue Code of 1986 
(relating to income affected by treaty) is amended by adding at the end 
the following new subsection:
  ``(d) Limitation on Treaty Benefits for Certain Deductible 
Payments.--
          ``(1) In general.--In the case of any deductible related-
        party payment, any withholding tax imposed under chapter 3 (and 
        any tax imposed under subpart A or B of this part) with respect 
        to such payment may not be reduced under any treaty of the 
        United States unless any such withholding tax would be reduced 
        under a treaty of the United States if such payment were made 
        directly to the foreign parent corporation.
          ``(2) Deductible related-party payment.--For purposes of this 
        subsection, the term `deductible related-party payment' means 
        any payment made, directly or indirectly, by any person to any 
        other person if the payment is allowable as a deduction under 
        this chapter and both persons are members of the same foreign 
        controlled group of entities.
          ``(3) Foreign controlled group of entities.--For purposes of 
        this subsection--
                  ``(A) In general.--The term `foreign controlled group 
                of entities' means a controlled group of entities the 
                common parent of which is a foreign corporation.
                  ``(B) Controlled group of entities.--The term 
                `controlled group of entities' means a controlled group 
                of corporations as defined in section 1563(a)(1), 
                except that--
                          ``(i) `more than 50 percent' shall be 
                        substituted for `at least 80 percent' each 
                        place it appears therein, and
                          ``(ii) the determination shall be made 
                        without regard to subsections (a)(4) and (b)(2) 
                        of section 1563.
                A partnership or any other entity (other than a 
                corporation) shall be treated as a member of a 
                controlled group of entities if such entity is 
                controlled (within the meaning of section 954(d)(3)) by 
                members of such group (including any entity treated as 
                a member of such group by reason of this sentence).
          ``(4) Foreign parent corporation.--For purposes of this 
        subsection, the term `foreign parent corporation' means, with 
        respect to any deductible related-party payment, the common 
        parent of the foreign controlled group of entities referred to 
        in paragraph (3)(A).
          ``(5) Regulations.--The Secretary may prescribe such 
        regulations or other guidance as are necessary or appropriate 
        to carry out the purposes of this subsection, including 
        regulations or other guidance which provide for--
                  ``(A) the treatment of two or more persons as members 
                of a foreign controlled group of entities if such 
                persons would be the common parent of such group if 
                treated as one corporation, and
                  ``(B) the treatment of any member of a foreign 
                controlled group of entities as the common parent of 
                such group if such treatment is appropriate taking into 
                account the economic relationships among such 
                entities.''.
  (b) Effective Date.--The amendment made by this section shall apply 
to payments made after the date of the enactment of this Act.

SEC. 452. CODIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.

  (a) In General.--Section 7701 of the Internal Revenue Code of 1986 is 
amended by redesignating subsection (o) as subsection (p) and by 
inserting after subsection (n) the following new subsection:
  ``(o) Clarification of Economic Substance Doctrine.--
          ``(1) Application of doctrine.--In the case of any 
        transaction to which the economic substance doctrine is 
        relevant, such transaction shall be treated as having economic 
        substance only if--
                  ``(A) the transaction changes in a meaningful way 
                (apart from Federal income tax effects) the taxpayer's 
                economic position, and
                  ``(B) the taxpayer has a substantial purpose (apart 
                from Federal income tax effects) for entering into such 
                transaction.
          ``(2) Special rule where taxpayer relies on profit 
        potential.--
                  ``(A) In general.--The potential for profit of a 
                transaction shall be taken into account in determining 
                whether the requirements of subparagraphs (A) and (B) 
                of paragraph (1) are met with respect to the 
                transaction only if the present value of the reasonably 
                expected pre-tax profit from the transaction is 
                substantial in relation to the present value of the 
                expected net tax benefits that would be allowed if the 
                transaction were respected.
                  ``(B) Treatment of fees and foreign taxes.--Fees and 
                other transaction expenses and foreign taxes shall be 
                taken into account as expenses in determining pre-tax 
                profit under subparagraph (A).
          ``(3) State and local tax benefits.--For purposes of 
        paragraph (1), any State or local income tax effect which is 
        related to a Federal income tax effect shall be treated in the 
        same manner as a Federal income tax effect.
          ``(4) Financial accounting benefits.--For purposes of 
        paragraph (1)(B), achieving a financial accounting benefit 
        shall not be taken into account as a purpose for entering into 
        a transaction if the origin of such financial accounting 
        benefit is a reduction of Federal income tax.
          ``(5) Definitions and special rules.--For purposes of this 
        subsection--
                  ``(A) Economic substance doctrine.--The term 
                `economic substance doctrine' means the common law 
                doctrine under which tax benefits under subtitle A with 
                respect to a transaction are not allowable if the 
                transaction does not have economic substance or lacks a 
                business purpose.
                  ``(B) Exception for personal transactions of 
                individuals.--In the case of an individual, paragraph 
                (1) shall apply only to transactions entered into in 
                connection with a trade or business or an activity 
                engaged in for the production of income.
                  ``(C) Other common law doctrines not affected.--
                Except as specifically provided in this subsection, the 
                provisions of this subsection shall not be construed as 
                altering or supplanting any other rule of law, and the 
                requirements of this subsection shall be construed as 
                being in addition to any such other rule of law.
                  ``(D) Determination of application of doctrine not 
                affected.--The determination of whether the economic 
                substance doctrine is relevant to a transaction (or 
                series of transactions) shall be made in the same 
                manner as if this subsection had never been enacted.
          ``(6) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary or appropriate to carry out the 
        purposes of this subsection.''.
  (b) Effective Date.--The amendments made by this section shall apply 
to transactions entered into after the date of the enactment of this 
Act.

SEC. 453. PENALTIES FOR UNDERPAYMENTS.

  (a) Penalty for Underpayments Attributable to Transactions Lacking 
Economic Substance.--
          (1) In general.--Subsection (b) of section 6662 of the 
        Internal Revenue Code of 1986 is amended by inserting after 
        paragraph (5) the following new paragraph:
          ``(6) Any disallowance of claimed tax benefits by reason of a 
        transaction lacking economic substance (within the meaning of 
        section 7701(o)) or failing to meet the requirements of any 
        similar rule of law.''.
          (2) Increased penalty for nondisclosed transactions.--Section 
        6662 of such Code is amended by adding at the end the following 
        new subsection:
  ``(i) Increase in Penalty in Case of Nondisclosed Noneconomic 
Substance Transactions.--
          ``(1) In general.--In the case of any portion of an 
        underpayment which is attributable to one or more nondisclosed 
        noneconomic substance transactions, subsection (a) shall be 
        applied with respect to such portion by substituting `40 
        percent' for `20 percent'.
          ``(2) Nondisclosed noneconomic substance transactions.--For 
        purposes of this subsection, the term `nondisclosed noneconomic 
        substance transaction' means any portion of a transaction 
        described in subsection (b)(6) with respect to which the 
        relevant facts affecting the tax treatment are not adequately 
        disclosed in the return nor in a statement attached to the 
        return.
          ``(3) Special rule for amended returns.--Except as provided 
        in regulations, in no event shall any amendment or supplement 
        to a return of tax be taken into account for purposes of this 
        subsection if the amendment or supplement is filed after the 
        earlier of the date the taxpayer is first contacted by the 
        Secretary regarding the examination of the return or such other 
        date as is specified by the Secretary.''.
          (3) Conforming amendment.--Subparagraph (B) of section 
        6662A(e)(2) of such Code is amended--
                  (A) by striking ``section 6662(h)'' and inserting 
                ``subsections (h) or (i) of section 6662'', and
                  (B) by striking ``gross valuation misstatement 
                penalty'' in the heading and inserting ``certain 
                increased underpayment penalties''.
  (b) Reasonable Cause Exception Not Applicable to Noneconomic 
Substance Transactions, Tax Shelters, and Certain Large or Publicly 
Traded Persons.--Subsection (c) of section 6664 of such Code is 
amended--
          (1) by redesignating paragraphs (2) and (3) as paragraphs (3) 
        and (4), respectively,
          (2) by striking ``paragraph (2)'' in paragraph (4)(A), as so 
        redesignated, and inserting ``paragraph (3)'', and
          (3) by inserting after paragraph (1) the following new 
        paragraph:
          ``(2) Exception.--Paragraph (1) shall not apply to--
                  ``(A) to any portion of an underpayment which is 
                attributable to one or more tax shelters (as defined in 
                section 6662(d)(2)(C)) or transactions described in 
                section 6662(b)(6), and
                  ``(B) to any taxpayer if such taxpayer is a specified 
                person (as defined in section 6662(d)(2)(D)(ii)).''.
  (c) Application of Penalty for Erroneous Claim for Refund or Credit 
to Noneconomic Substance Transactions.--Section 6676 of such Code is 
amended by redesignating subsection (c) as subsection (d) and inserting 
after subsection (b) the following new subsection:
  ``(c) Noneconomic Substance Transactions Treated as Lacking 
Reasonable Basis.--For purposes of this section, any excessive amount 
which is attributable to any transaction described in section 
6662(b)(6) shall not be treated as having a reasonable basis.''.
  (d) Special Understatement Reduction Rule for Certain Large or 
Publicly Traded Persons.--
          (1) In general.--Paragraph (2) of section 6662(d) of such 
        Code is amended by adding at the end the following new 
        subparagraph:
                  ``(D) Special reduction rule for certain large or 
                publicly traded persons.--
                          ``(i) In general.--In the case of any 
                        specified person--
                                  ``(I) subparagraph (B) shall not 
                                apply, and
                                  ``(II) the amount of the 
                                understatement under subparagraph (A) 
                                shall be reduced by that portion of the 
                                understatement which is attributable to 
                                any item with respect to which the 
                                taxpayer has a reasonable belief that 
                                the tax treatment of such item by the 
                                taxpayer is more likely than not the 
                                proper tax treatment of such item.
                          ``(ii) Specified person.--For purposes of 
                        this subparagraph, the term `specified person' 
                        means--
                                  ``(I) any person required to file 
                                periodic or other reports under section 
                                13 of the Securities Exchange Act of 
                                1934, and
                                  ``(II) any corporation with gross 
                                receipts in excess of $100,000,000 for 
                                the taxable year involved.
                        All persons treated as a single employer under 
                        section 52(a) shall be treated as one person 
                        for purposes of subclause (II).''.
          (2) Conforming amendment.--Subparagraph (C) of section 
        6662(d)(2) of such Code is amended by striking ``Subparagraph 
        (B)'' and inserting ``Subparagraphs (B) and (D)(i)(II)''.
  (e) Effective Date.--The amendments made by this section shall apply 
to transactions entered into after the date of the enactment of this 
Act.

                   PART 3--PARITY IN HEALTH BENEFITS

SEC. 461. CERTAIN HEALTH RELATED BENEFITS APPLICABLE TO SPOUSES AND 
                    DEPENDENTS EXTENDED TO ELIGIBLE BENEFICIARIES.

  (a) Application of Accident and Health Plans to Eligible 
Beneficiaries.--
          (1) Exclusion of contributions.--Section 106 of the Internal 
        Revenue Code of 1986, as amended by section 442, (relating to 
        contributions by employer to accident and health plans) is 
        amended by adding at the end the following new subsection:
  ``(g) Coverage Provided for Eligible Beneficiaries of Employees.--
          ``(1) In general.--Subsection (a) shall apply with respect to 
        any eligible beneficiary of the employee.
          ``(2) Eligible beneficiary.--For purposes of this subsection, 
        the term `eligible beneficiary' means any individual who is 
        eligible to receive benefits or coverage under an accident or 
        health plan.''.
          (2) Exclusion of amounts expended for medical care.--The 
        first sentence of section 105(b) of such Code (relating to 
        amounts expended for medical care) is amended--
                  (A) by striking ``and his dependents'' and inserting 
                ``his dependents'', and
                  (B) by inserting before the period the following: 
                ``and any eligible beneficiary (within the meaning of 
                section 106(f)) with respect to the taxpayer''.
          (3) Payroll taxes.--
                  (A) Section 3121(a)(2) of such Code is amended--
                          (i) by striking ``or any of his dependents'' 
                        in the matter preceding subparagraph (A) and 
                        inserting ``, any of his dependents, or any 
                        eligible beneficiary (within the meaning of 
                        section 106(g)) with respect to the employee'',
                          (ii) by striking ``or any of his 
                        dependents,'' in subparagraph (A) and inserting 
                        ``, any of his dependents, or any eligible 
                        beneficiary (within the meaning of section 
                        106(g)) with respect to the employee,'', and
                          (iii) by striking ``and their dependents'' 
                        both places it appears and inserting ``and such 
                        employees' dependents and eligible 
                        beneficiaries (within the meaning of section 
                        106(g))''.
                  (B) Section 3231(e)(1) of such Code is amended--
                          (i) by striking ``or any of his dependents'' 
                        and inserting ``, any of his dependents, or any 
                        eligible beneficiary (within the meaning of 
                        section 106(g)) with respect to the 
                        employee,'', and
                          (ii) by striking ``and their dependents'' 
                        both places it appears and inserting ``and such 
                        employees' dependents and eligible 
                        beneficiaries (within the meaning of section 
                        106(g))''.
                  (C) Section 3306(b)(2) of such Code is amended--
                          (i) by striking ``or any of his dependents'' 
                        in the matter preceding subparagraph (A) and 
                        inserting ``, any of his dependents, or any 
                        eligible beneficiary (within the meaning of 
                        section 106(g)) with respect to the 
                        employee,'',
                          (ii) by striking ``or any of his dependents'' 
                        in subparagraph (A) and inserting ``, any of 
                        his dependents, or any eligible beneficiary 
                        (within the meaning of section 106(g)) with 
                        respect to the employee'', and
                          (iii) by striking ``and their dependents'' 
                        both places it appears and inserting ``and such 
                        employees' dependents and eligible 
                        beneficiaries (within the meaning of section 
                        106(g))''.
                  (D) Section 3401(a) of such Code is amended by 
                striking ``or'' at the end of paragraph (22), by 
                striking the period at the end of paragraph (23) and 
                inserting ``; or'', and by inserting after paragraph 
                (23) the following new paragraph:
          ``(24) for any payment made to or for the benefit of an 
        employee or any eligible beneficiary (within the meaning of 
        section 106(g)) if at the time of such payment it is reasonable 
        to believe that the employee will be able to exclude such 
        payment from income under section 106 or under section 105 by 
        reference in section 105(b) to section 106(g).''.
  (b) Expansion of Dependency for Purposes of Deduction for Health 
Insurance Costs of Self-employed Individuals.--
          (1) In general.--Paragraph (1) of section 162(l) of the 
        Internal Revenue Code of 1986 (relating to special rules for 
        health insurance costs of self-employed individuals) is amended 
        to read as follows:
          ``(1) Allowance of deduction.--In the case of a taxpayer who 
        is an employee within the meaning of section 401(c)(1), there 
        shall be allowed as a deduction under this section an amount 
        equal to the amount paid during the taxable year for insurance 
        which constitutes medical care for--
                  ``(A) the taxpayer,
                  ``(B) the taxpayer's spouse,
                  ``(C) the taxpayer's dependents, and
                  ``(D) any individual who--
                          ``(i) satisfies the age requirements of 
                        section 152(c)(3)(A),
                          ``(ii) bears a relationship to the taxpayer 
                        described in section 152(d)(2)(H), and
                          ``(iii) meets the requirements of section 
                        152(d)(1)(C), and
                  ``(E) one individual who--
                          ``(i) does not satisfy the age requirements 
                        of section 152(c)(3)(A),
                          ``(ii) bears a relationship to the taxpayer 
                        described in section 152(d)(2)(H),
                          ``(iii) meets the requirements of section 
                        152(d)(1)(D), and
                          ``(iv) is not the spouse of the taxpayer and 
                        does not bear any relationship to the taxpayer 
                        described in subparagraphs (A) through (G) of 
                        section 152(d)(2).''.
          (2) Conforming amendment.--Subparagraph (B) of section 
        162(l)(2) of such Code is amended by inserting ``, any 
        dependent, or individual described in subparagraph (D) or (E) 
        of paragraph (1) with respect to'' after ``spouse''.
  (c) Extension to Eligible Beneficiaries of Sick and Accident Benefits 
Provided to Members of a Voluntary Employees' Beneficiary Association 
and Their Dependents.--Section 501(c)(9) of the Internal Revenue Code 
of 1986 (relating to list of exempt organizations) is amended by adding 
at the end the following new sentence: ``For purposes of providing for 
the payment of sick and accident benefits to members of such an 
association and their dependents, the term `dependents' shall include 
any individual who is an eligible beneficiary (within the meaning of 
section 106(f)), as determined under the terms of a medical benefit, 
health insurance, or other program under which members and their 
dependents are entitled to sick and accident benefits.''.
  (d) Flexible Spending Arrangements and Health Reimbursement 
Arrangements.--The Secretary of Treasury shall issue guidance of 
general applicability providing that medical expenses that otherwise 
qualify--
          (1) for reimbursement from a flexible spending arrangement 
        under regulations in effect on the date of the enactment of 
        this Act may be reimbursed from an employee's flexible spending 
        arrangement, notwithstanding the fact that such expenses are 
        attributable to any individual who is not the employee's spouse 
        or dependent (within the meaning of section 105(b) of the 
        Internal Revenue Code of 1986) but is an eligible beneficiary 
        (within the meaning of section 106(f) of such Code) under the 
        flexible spending arrangement with respect to the employee, and
          (2) for reimbursement from a health reimbursement arrangement 
        under regulations in effect on the date of the enactment of 
        this Act may be reimbursed from an employee's health 
        reimbursement arrangement, notwithstanding the fact that such 
        expenses are attributable to an individual who is not a spouse 
        or dependent (within the meaning of section 105(b) of such 
        Code) but is an eligible beneficiary (within the meaning of 
        section 106(f) of such Code) under the health reimbursement 
        arrangement with respect to the employee.
  (e) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 2009.

             DIVISION B--MEDICARE AND MEDICAID IMPROVEMENTS

SEC. 1001. TABLE OF CONTENTS OF DIVISION.

  The table of contents for this division is as follows:

             DIVISION B--MEDICARE AND MEDICAID IMPROVEMENTS

Sec. 1001. Table of contents of division.

                  TITLE I--IMPROVING HEALTH CARE VALUE

           Subtitle A--Provisions Related to Medicare Part A

                     Part 1--Market Basket Updates

Sec. 1101. Skilled nursing facility payment update.
Sec. 1102. Inpatient rehabilitation facility payment update.
Sec. 1103. Incorporating productivity improvements into market basket 
updates that do not already incorporate such improvements.

                Part 2--Other Medicare Part A Provisions

Sec. 1111. Payments to skilled nursing facilities.
Sec. 1112. Medicare DSH report and payment adjustments in response to 
coverage expansion.
Sec. 1113. Extension of hospice regulation moratorium.

                Subtitle B--Provisions Related to Part B

                      Part 1--Physicians' Services

Sec. 1121. Sustainable growth rate reform.
Sec. 1122. Misvalued codes under the physician fee schedule.
Sec. 1123. Payments for efficient areas.
Sec. 1124. Modifications to the Physician Quality Reporting Initiative 
(PQRI).
Sec. 1125. Adjustment to Medicare payment localities.

                     Part 2--Market Basket Updates

Sec. 1131. Incorporating productivity improvements into market basket 
updates that do not already incorporate such improvements.

                        Part 3--Other Provisions

Sec. 1141. Rental and purchase of power-driven wheelchairs.
Sec. 1142. Extension of payment rule for brachytherapy.
Sec. 1143. Home infusion therapy report to congress.
Sec. 1144. Require ambulatory surgical centers (ASCs) to submit cost 
data and other data.
Sec. 1145. Treatment of certain cancer hospitals.
Sec. 1146. Medicare Improvement Fund.
Sec. 1147. Payment for imaging services.
Sec. 1148. Durable medical equipment program improvements.
Sec. 1149. MedPAC study and report on bone mass measurement.

        Subtitle C--Provisions Related to Medicare Parts A and B

Sec. 1151. Reducing potentially preventable hospital readmissions.
Sec. 1152. Post acute care services payment reform plan and bundling 
pilot program.
Sec. 1153. Home health payment update for 2010.
Sec. 1154. Payment adjustments for home health care.
Sec. 1155. Incorporating productivity improvements into market basket 
update for home health services.
Sec. 1156. Limitation on Medicare exceptions to the prohibition on 
certain physician referrals made to hospitals.
Sec. 1157. Institute of Medicine study of geographic adjustment factors 
under Medicare.
Sec. 1158. Revision of medicare payment systems to address geographic 
inequities.
Sec. 1159. Institute of Medicine study of geographic variation in 
health care spending and promoting high-value health care.

                 Subtitle D--Medicare Advantage Reforms

                   Part 1--Payment and Administration

Sec. 1161. Phase-in of payment based on fee-for-service costs.
Sec. 1162. Quality bonus payments.
Sec. 1163. Extension of Secretarial coding intensity adjustment 
authority.
Sec. 1164. Simplification of annual beneficiary election periods.
Sec. 1165. Extension of reasonable cost contracts.
Sec. 1166. Limitation of waiver authority for employer group plans.
Sec. 1167. Improving risk adjustment for payments.
Sec. 1168. Elimination of MA Regional Plan Stabilization Fund.

             Part 2--Beneficiary Protections and Anti-Fraud

Sec. 1171. Limitation on cost-sharing for individual health services.
Sec. 1172. Continuous open enrollment for enrollees in plans with 
enrollment suspension.
Sec. 1173. Information for beneficiaries on MA plan administrative 
costs.
Sec. 1174. Strengthening audit authority.
Sec. 1175. Authority to deny plan bids.

                Part 3--Treatment of Special Needs Plans

Sec. 1176. Limitation on enrollment outside open enrollment period of 
individuals into chronic care specialized MA plans for special needs 
individuals.
Sec. 1177. Extension of authority of special needs plans to restrict 
enrollment.

              Subtitle E--Improvements to Medicare Part D

Sec. 1181. Elimination of coverage gap.
Sec. 1182. Discounts for certain part D drugs in original coverage gap.
Sec. 1183. Repeal of provision relating to submission of claims by 
pharmacies located in or contracting with long-term care facilities.
Sec. 1184. Including costs incurred by AIDS drug assistance programs 
and Indian Health Service in providing prescription drugs toward the 
annual out-of-pocket threshold under part D.
Sec. 1185. Permitting mid-year changes in enrollment for formulary 
changes that adversely impact an enrollee.

             Subtitle F--Medicare Rural Access Protections

Sec. 1191. Telehealth expansion and enhancements.
Sec. 1192. Extension of outpatient hold harmless provision.
Sec. 1193. Extension of section 508 hospital reclassifications.
Sec. 1194. Extension of geographic floor for work.
Sec. 1195. Extension of payment for technical component of certain 
physician pathology services.
Sec. 1196. Extension of ambulance add-ons.

              TITLE II--MEDICARE BENEFICIARY IMPROVEMENTS

  Subtitle A--Improving and Simplifying Financial Assistance for Low 
                     Income Medicare Beneficiaries

Sec. 1201. Improving assets tests for Medicare Savings Program and low-
income subsidy program.
Sec. 1202. Elimination of part D cost-sharing for certain non-
institutionalized full-benefit dual eligible individuals.
Sec. 1203. Eliminating barriers to enrollment.
Sec. 1204. Enhanced oversight relating to reimbursements for 
retroactive low income subsidy enrollment.
Sec. 1205. Intelligent assignment in enrollment.
Sec. 1206. Special enrollment period and automatic enrollment process 
for certain subsidy eligible individuals.
Sec. 1207. Application of MA premiums prior to rebate in calculation of 
low income subsidy benchmark.

                Subtitle B--Reducing Health Disparities

Sec. 1221. Ensuring effective communication in Medicare.
Sec. 1222. Demonstration to promote access for Medicare beneficiaries 
with limited English proficiency by providing reimbursement for 
culturally and linguistically appropriate services.
Sec. 1223. IOM report on impact of language access services.
Sec. 1224. Definitions.

                 Subtitle C--Miscellaneous Improvements

Sec. 1231. Extension of therapy caps exceptions process.
Sec. 1232. Extended months of coverage of immunosuppressive drugs for 
kidney transplant patients and other renal dialysis provisions.
Sec. 1233. Advance care planning consultation.
Sec. 1234. Part B special enrollment period and waiver of limited 
enrollment penalty for TRICARE beneficiaries.
Sec. 1235. Exception for use of more recent tax year in case of gains 
from sale of primary residence in computing part B income-related 
premium.
Sec. 1236. Demonstration program on use of patient decisions aids.

    TITLE III--PROMOTING PRIMARY CARE, MENTAL HEALTH SERVICES, AND 
                            COORDINATED CARE

Sec. 1301. Accountable Care Organization pilot program.
Sec. 1302. Medical home pilot program.
Sec. 1303. Payment incentive for selected primary care services.
Sec. 1304. Increased reimbursement rate for certified nurse-midwives.
Sec. 1305. Coverage and waiver of cost-sharing for preventive services.
Sec. 1306. Waiver of deductible for colorectal cancer screening tests 
regardless of coding, subsequent diagnosis, or ancillary tissue 
removal.
Sec. 1307. Excluding clinical social worker services from coverage 
under the medicare skilled nursing facility prospective payment system 
and consolidated payment.
Sec. 1308. Coverage of marriage and family therapist services and 
mental health counselor services.
Sec. 1309. Extension of physician fee schedule mental health add-on.
Sec. 1310. Expanding access to vaccines.
Sec. 1311. Expansion of Medicare-Covered Preventive Services at 
Federally Qualified Health Centers.

                           TITLE IV--QUALITY

             Subtitle A--Comparative Effectiveness Research

Sec. 1401. Comparative effectiveness research.

                 Subtitle B--Nursing Home Transparency

   Part 1--Improving Transparency of Information on Skilled Nursing 
                   Facilities and Nursing Facilities

Sec. 1411. Required disclosure of ownership and additional disclosable 
parties information.
Sec. 1412. Accountability requirements.
Sec. 1413. Nursing home compare Medicare website.
Sec. 1414. Reporting of expenditures.
Sec. 1415. Standardized complaint form.
Sec. 1416. Ensuring staffing accountability.

                     Part 2--Targeting Enforcement

Sec. 1421. Civil money penalties.
Sec. 1422. National independent monitor pilot program.
Sec. 1423. Notification of facility closure.

                    Part 3--Improving Staff Training

Sec. 1431. Dementia and abuse prevention training.
Sec. 1432. Study and report on training required for certified nurse 
aides and supervisory staff.

                    Subtitle C--Quality Measurements

Sec. 1441. Establishment of national priorities for quality 
improvement.
Sec. 1442. Development of new quality measures; GAO evaluation of data 
collection process for quality measurement.
Sec. 1443. Multi-stakeholder pre-rulemaking input into selection of 
quality measures.
Sec. 1444. Application of quality measures.
Sec. 1445. Consensus-based entity funding.

           Subtitle D--Physician Payments Sunshine Provision

Sec. 1451. Reports on financial relationships between manufacturers and 
distributors of covered drugs, devices, biologicals, or medical 
supplies under Medicare, Medicaid, or CHIP and physicians and other 
health care entities and between physicians and other health care 
entities.

   Subtitle E--Public Reporting on Health Care-Associated Infections

Sec. 1461. Requirement for public reporting by hospitals and ambulatory 
surgical centers on health care-associated infections.

              TITLE V--MEDICARE GRADUATE MEDICAL EDUCATION

Sec. 1501. Distribution of unused residency positions.
Sec. 1502. Increasing training in nonprovider settings.
Sec. 1503. Rules for counting resident time for didactic and scholarly 
activities and other activities.
Sec. 1504. Preservation of resident cap positions from closed 
hospitals.
Sec. 1505. Improving accountability for approved medical residency 
training.

                      TITLE VI--PROGRAM INTEGRITY

     Subtitle A--Increased Funding to Fight Waste, Fraud, and Abuse

Sec. 1601. Increased funding and flexibility to fight fraud and abuse.

           Subtitle B--Enhanced Penalties for Fraud and Abuse

Sec. 1611. Enhanced penalties for false statements on provider or 
supplier enrollment applications.
Sec. 1612. Enhanced penalties for submission of false statements 
material to a false claim.
Sec. 1613. Enhanced penalties for delaying inspections.
Sec. 1614. Enhanced hospice program safeguards.
Sec. 1615. Enhanced penalties for individuals excluded from program 
participation.
Sec. 1616. Enhanced penalties for provision of false information by 
Medicare Advantage and part D plans.
Sec. 1617. Enhanced penalties for Medicare Advantage and part D 
marketing violations.
Sec. 1618. Enhanced penalties for obstruction of program audits.
Sec. 1619. Exclusion of certain individuals and entities from 
participation in Medicare and State health care programs.

         Subtitle C--Enhanced Program and Provider Protections

Sec. 1631. Enhanced CMS program protection authority.
Sec. 1632. Enhanced Medicare, Medicaid, and CHIP program disclosure 
requirements relating to previous affiliations.
Sec. 1633. Required inclusion of payment modifier for certain 
evaluation and management services.
Sec. 1634. Evaluations and reports required under Medicare Integrity 
Program.
Sec. 1635. Require providers and suppliers to adopt programs to reduce 
waste, fraud, and abuse.
Sec. 1636. Maximum period for submission of Medicare claims reduced to 
not more than 12 months.
Sec. 1637. Physicians who order durable medical equipment or home 
health services required to be Medicare enrolled physicians or eligible 
professionals.
Sec. 1638. Requirement for physicians to provide documentation on 
referrals to programs at high risk of waste and abuse.
Sec. 1639. Face to face encounter with patient required before 
physicians may certify eligibility for home health services or durable 
medical equipment under Medicare.
Sec. 1640. Extension of testimonial subpoena authority to program 
exclusion investigations.
Sec. 1641. Required repayments of Medicare and Medicaid overpayments.
Sec. 1642. Expanded application of hardship waivers for OIG exclusions 
to beneficiaries of any Federal health care program.
Sec. 1643. Access to certain information on renal dialysis facilities.
Sec. 1644. Billing agents, clearinghouses, or other alternate payees 
required to register under Medicare.
Sec. 1645. Conforming civil monetary penalties to False Claims Act 
amendments.

 Subtitle D--Access to Information Needed to Prevent Fraud, Waste, and 
                                 Abuse

Sec. 1651. Access to Information Necessary to Identify Fraud, Waste, 
and Abuse.
Sec. 1652. Elimination of duplication between the Healthcare Integrity 
and Protection Data Bank and the National Practitioner Data Bank.
Sec. 1653. Compliance with HIPAA privacy and security standards.

  [FOR ITEMS RELATING TO TITLE VII OF DIVISION B, SEE COPY OF BILL AS 
                      INTRODUCED ON JULY 14, 2009]

                 TITLE VIII--REVENUE-RELATED PROVISIONS

Sec. 1801. Disclosures to facilitate identification of individuals 
likely to be ineligible for the low-income assistance under the 
Medicare prescription drug program to assist Social Security 
Administration's outreach to eligible individuals.
Sec. 1802. Comparative Effectiveness Research Trust Fund; financing for 
Trust Fund.

                   TITLE IX--MISCELLANEOUS PROVISIONS

Sec. 1901. Repeal of trigger provision.
Sec. 1902. Repeal of comparative cost adjustment (CCA) program.
Sec. 1903. Extension of gainsharing demonstration.
Sec. 1904. Grants to States for quality home visitation programs for 
families with young children and families expecting children.
Sec. 1905. Improved coordination and protection for dual eligibles.
Sec. 1906. Assessment of Medicare cost-intensive diseases and 
conditions.

                  TITLE I--IMPROVING HEALTH CARE VALUE

           Subtitle A--Provisions Related to Medicare Part A

                     PART 1--MARKET BASKET UPDATES

SEC. 1101. SKILLED NURSING FACILITY PAYMENT UPDATE.

  (a) In General.--Section 1888(e)(4)(E)(ii) of the Social Security Act 
(42 U.S.C. 1395yy(e)(4)(E)(ii)) is amended--
          (1) in subclause (III), by striking ``and'' at the end;
          (2) by redesignating subclause (IV) as subclause (VI); and
          (3) by inserting after subclause (III) the following new 
        subclauses:
                                  ``(IV) for each of fiscal years 2004 
                                through 2009, the rate computed for the 
                                previous fiscal year increased by the 
                                skilled nursing facility market basket 
                                percentage change for the fiscal year 
                                involved;
                                  ``(V) for fiscal year 2010, the rate 
                                computed for the previous fiscal year; 
                                and''.
  (b) Delayed Effective Date.--Section 1888(e)(4)(E)(ii)(V) of the 
Social Security Act, as inserted by subsection (a)(3), shall not apply 
to payment for days before January 1, 2010.

SEC. 1102. INPATIENT REHABILITATION FACILITY PAYMENT UPDATE.

  (a) In General.--Section 1886(j)(3)(C) of the Social Security Act (42 
U.S.C. 1395ww(j)(3)(C)) is amended by striking ``and 2009'' and 
inserting ``through 2010''.
  (b) Delayed Effective Date.--The amendment made by subsection (a) 
shall not apply to payment units occurring before January 1, 2010.

SEC. 1103. INCORPORATING PRODUCTIVITY IMPROVEMENTS INTO MARKET BASKET 
                    UPDATES THAT DO NOT ALREADY INCORPORATE SUCH 
                    IMPROVEMENTS.

  (a) Inpatient Acute Hospitals.--Section 1886(b)(3)(B) of the Social 
Security Act (42 U.S.C. 1395ww(b)(3)(B)) is amended--
          (1) in clause (iii)--
                  (A) by striking ``(iii) For purposes of this 
                subparagraph,'' and inserting ``(iii)(I) For purposes 
                of this subparagraph, subject to the productivity 
                adjustment described in subclause (II),''; and
                  (B) by adding at the end the following new subclause:
  ``(II) The productivity adjustment described in this subclause, with 
respect to an increase or change for a fiscal year or year or cost 
reporting period, or other annual period, is a productivity offset 
equal to the percentage change in the 10-year moving average of annual 
economy-wide private nonfarm business multi-factor productivity (as 
recently published before the promulgation of such increase for the 
year or period involved). Except as otherwise provided, any reference 
to the increase described in this clause shall be a reference to the 
percentage increase described in subclause (I) minus the percentage 
change under this subclause.'';
          (2) in the first sentence of clause (viii)(I), by inserting 
        ``(but not below zero)'' after ``shall be reduced''; and
          (3) in the first sentence of clause (ix)(I)--
                  (A) by inserting ``(determined without regard to 
                clause (iii)(II)'' after ``clause (i)'' the second time 
                it appears; and
                  (B) by inserting ``(but not below zero)'' after 
                ``reduced''.
  (b) Skilled Nursing Facilities.--Section 1888(e)(5)(B) of such Act 
(42 U.S.C. 1395yy(e)(5))(B) is amended by inserting ``subject to the 
productivity adjustment described in section 1886(b)(3)(B)(iii)(II)'' 
after ``as calculated by the Secretary''.
  (c) Long Term Care Hospitals.--Section 1886(m) of the Social Security 
Act (42 U.S.C. 1395ww(m)) is amended by adding at the end the following 
new paragraph:
          ``(3) Productivity adjustment.--In implementing the system 
        described in paragraph (1) for discharges occurring during the 
        rate year ending in 2010 or any subsequent rate year for a 
        hospital, to the extent that an annual percentage increase 
        factor applies to a base rate for such discharges for the 
        hospital, such factor shall be subject to the productivity 
        adjustment described in subsection (b)(3)(B)(iii)(II).''.
  (d) Inpatient Rehabilitation Facilities.--The second sentence of 
section 1886(j)(3)(C) of the Social Security Act (42 U.S.C. 
1395ww(j)(3)(C)) is amended by inserting ``(subject to the productivity 
adjustment described in subsection (b)(3)(B)(iii)(II))'' after 
``appropriate percentage increase''.
  (e) Psychiatric Hospitals.--Section 1886 of the Social Security Act 
(42 U.S.C. 1395ww) is amended by adding at the end the following new 
subsection:
  ``(o) 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) Productivity adjustment.--In implementing the system 
        described in paragraph (1) for discharges occurring during the 
        rate year ending in 2011 or any subsequent rate year for a 
        psychiatric hospital or unit described in such paragraph, to 
        the extent that an annual percentage increase factor applies to 
        a base rate for such discharges for the hospital or unit, 
        respectively, such factor shall be subject to the productivity 
        adjustment described in subsection (b)(3)(B)(iii)(II).''.
  (f) Hospice Care.--Subclause (VII) of section 1814(i)(1)(C)(ii) of 
the Social Security Act (42 U.S.C. 1395f(i)(1)(C)(ii)) is amended by 
inserting after ``the market basket percentage increase'' the 
following: ``(which is subject to the productivity adjustment described 
in section 1886(b)(3)(B)(iii)(II))''.
  (g) Effective Date.--The amendments made by subsections (a), (b), 
(d), and (f) shall apply to annual increases effected for fiscal years 
beginning with fiscal year 2010.

                PART 2--OTHER MEDICARE PART A PROVISIONS

SEC. 1111. PAYMENTS TO SKILLED NURSING FACILITIES.

  (a) Change in Recalibration Factor.--
          (1) Analysis.--The Secretary of Health and Human Services 
        shall conduct, using calendar year 2006 claims data, an initial 
        analysis comparing total payments under title XVIII of the 
        Social Security Act for skilled nursing facility services under 
        the RUG-53 and under the RUG-44 classification systems.
          (2) Adjustment in recalibration factor.--Based on the initial 
        analysis under paragraph (1), the Secretary shall adjust the 
        case mix indexes under section 1888(e)(4)(G)(i) of the Social 
        Security Act (42 U.S.C. 1395yy(e)(4)(G)(i)) for fiscal year 
        2010 by the appropriate recalibration factor as proposed in the 
        proposed rule for Medicare skilled nursing facilities issued by 
        such Secretary on May 12, 2009 (74 Federal Register 22214 et 
        seq.).
  (b) Change in Payment for Nontherapy Ancillary (NTA) Services and 
Therapy Services.--
          (1) Changes under current snf classification system.--
                  (A) In general.--Subject to subparagraph (B), the 
                Secretary of Health and Human Services shall, under the 
                system for payment of skilled nursing facility services 
                under section 1888(e) of the Social Security Act (42 
                U.S.C. 1395yy(e)), increase payment by 10 percent for 
                non-therapy ancillary services (as specified by the 
                Secretary in the notice issued on November 27, 1998 (63 
                Federal Register 65561 et seq.)) and shall decrease 
                payment for the therapy case mix component of such 
                rates by 5.5 percent.
                  (B) Effective date.--The changes in payment described 
                in subparagraph (A) shall apply for days on or after 
                January 1, 2010, and until the Secretary implements an 
                alternative case mix classification system for payment 
                of skilled nursing facility services under section 
                1888(e) of the Social Security Act (42 U.S.C. 
                1395yy(e)).
                  (C) Implementation.--Notwithstanding any other 
                provision of law, the Secretary may implement by 
                program instruction or otherwise the provisions of this 
                paragraph.
          (2) Changes under a future snf case mix classification 
        system.--
                  (A) Analysis.--
                          (i) In general.--The Secretary of Health and 
                        Human Services shall analyze payments for non-
                        therapy ancillary services under a future 
                        skilled nursing facility classification system 
                        to ensure the accuracy of payment for non-
                        therapy ancillary services. Such analysis shall 
                        consider use of appropriate predictors which 
                        may include age, physical and mental status, 
                        ability to perform activities of daily living, 
                        prior nursing home stay, diagnoses, broad RUG 
                        category, and a proxy for length of stay.
                          (ii) Application.--Such analysis shall be 
                        conducted in a manner such that the future 
                        skilled nursing facility classification system 
                        is implemented to apply to services furnished 
                        during a fiscal year beginning with fiscal year 
                        2011.
                  (B) Consultation.--In conducting the analysis under 
                subparagraph (A), the Secretary shall consult with 
                interested parties, including the Medicare Payment 
                Advisory Commission and other interested stakeholders, 
                to identify appropriate predictors of nontherapy 
                ancillary costs.
                  (C) Rulemaking.--The Secretary shall include the 
                result of the analysis under subparagraph (A) in the 
                fiscal year 2011 rulemaking cycle for purposes of 
                implementation beginning for such fiscal year.
                  (D) Implementation.--Subject to subparagraph (E) and 
                consistent with subparagraph (A)(ii), the Secretary 
                shall implement changes to payments for non-therapy 
                ancillary services (which shall include a separate rate 
                component for non-therapy ancillary services and may 
                include use of a model that predicts payment amounts 
                applicable for non-therapy ancillary services) under 
                such future skilled nursing facility services 
                classification system as the Secretary determines 
                appropriate based on the analysis conducted pursuant to 
                subparagraph (A).
                  (E) Budget neutrality.--The Secretary shall implement 
                changes described in subparagraph (D) in a manner such 
                that the estimated expenditures under such future 
                skilled nursing facility services classification system 
                for a fiscal year beginning with fiscal year 2011 with 
                such changes would be equal to the estimated 
                expenditures that would otherwise occur under title 
                XVIII of the Social Security Act under such future 
                skilled nursing facility services classification system 
                for such year without such changes.
  (c) Outlier Policy for NTA and Therapy.--Section 1888(e) of the 
Social Security Act (42 U.S.C. 1395yy(e)) is amended by adding at the 
end the following new paragraph:
          ``(13) Outliers for nta and therapy.--
                  ``(A) In general.--With respect to outliers because 
                of unusual variations in the type or amount of 
                medically necessary care, beginning with October 1, 
                2010, the Secretary--
                          ``(i) shall provide for an addition or 
                        adjustment to the payment amount otherwise made 
                        under this section with respect to non-therapy 
                        ancillary services in the case of such 
                        outliers; and
                          ``(ii) may provide for such an addition or 
                        adjustment to the payment amount otherwise made 
                        under this section with respect to therapy 
                        services in the case of such outliers.
                  ``(B) Outliers based on aggregate costs.--Outlier 
                adjustments or additional payments described in 
                subparagraph (A) shall be based on aggregate costs 
                during a stay in a skilled nursing facility and not on 
                the number of days in such stay.
                  ``(C) Budget neutrality.--The Secretary shall reduce 
                estimated payments that would otherwise be made under 
                the prospective payment system under this subsection 
                with respect to a fiscal year by 2 percent. The total 
                amount of the additional payments or payment 
                adjustments for outliers made under this paragraph with 
                respect to a fiscal year may not exceed 2 percent of 
                the total payments projected or estimated to be made 
                based on the prospective payment system under this 
                subsection for the fiscal year.''.
  (d) Conforming Amendments.--Section 1888(e)(8) of such Act (42 U.S.C. 
1395yy(e)(8)) is amended--
          (1) in subparagraph (A)--
                  (A) by striking ``and'' before ``adjustments''; and
                  (B) by inserting ``, and adjustment under section 
                1111(b) of the America's Affordable Health Choices Act 
                of 2009'' before the semicolon at the end;
          (2) in subparagraph (B), by striking ``and'';
          (3) in subparagraph (C), by striking the period and inserting 
        ``; and''; and
          (4) by adding at the end the following new subparagraph:
                  ``(D) the establishment of outliers under paragraph 
                (13).''.

SEC. 1112. MEDICARE DSH REPORT AND PAYMENT ADJUSTMENTS IN RESPONSE TO 
                    COVERAGE EXPANSION.

  (a) DSH Report.--
          (1) In general.--Not later than January 1, 2016, the 
        Secretary of Health and Human Services shall submit to Congress 
        a report on Medicare DSH taking into account the impact of the 
        health care reforms carried out under division A in reducing 
        the number of uninsured individuals. The report shall include 
        recommendations relating to the following:
                  (A) The appropriate amount, targeting, and 
                distribution of Medicare DSH to compensate for higher 
                Medicare costs associated with serving low-income 
                beneficiaries (taking into account variations in the 
                empirical justification for Medicare DSH attributable 
                to hospital characteristics, including bed size), 
                consistent with the original intent of Medicare DSH.
                  (B) The appropriate amount, targeting, and 
                distribution of Medicare DSH to hospitals given their 
                continued uncompensated care costs, to the extent such 
                costs remain.
          (2) Coordination with medicaid dsh report.--The Secretary 
        shall coordinate the report under this subsection with the 
        report on Medicaid DSH under section 1704(a).
  (b) Payment Adjustments in Response to Coverage Expansion.--
          (1) In general.--If there is a significant decrease in the 
        national rate of uninsurance as a result of this Act (as 
        determined under paragraph (2)(A)), then the Secretary of 
        Health and Human Services shall, beginning in fiscal year 2017, 
        implement the following adjustments to Medicare DSH:
                  (A) In lieu of the amount of Medicare DSH payment 
                that would otherwise be made under section 
                1886(d)(5)(F) of the Social Security Act, the amount of 
                Medicare DSH payment shall be an amount based on the 
                recommendations of the report under subsection 
                (a)(1)(A) and shall take into account variations in the 
                empirical justification for Medicare DSH attributable 
                to hospital characteristics, including bed size.
                  (B) Subject to paragraph (3), make an additional 
                payment to a hospital by an amount that is estimated 
                based on the amount of uncompensated care provided by 
                the hospital based on criteria for uncompensated care 
                as determined by the Secretary, which shall exclude bad 
                debt.
          (2) Significant decrease in national rate of uninsurance as a 
        result of this act.--For purposes of this subsection--
                  (A) In general.--There is a ``significant decrease in 
                the national rate of uninsurance as a result of this 
                Act'' if there is a decrease in the national rate of 
                uninsurance (as defined in subparagraph (B)) from 2012 
                to 2014 that exceeds 8 percentage points.
                  (B) National rate of uninsurance defined.--The term 
                ``national rate of uninsurance'' means, for a year, 
                such rate for the under-65 population for the year as 
                determined and published by the Bureau of the Census in 
                its Current Population Survey in or about September of 
                the succeeding year.
          (3) Uncompensated care increase.--
                  (A) Computation of dsh savings.--For each fiscal year 
                (beginning with fiscal year 2017), the Secretary shall 
                estimate the aggregate reduction in the amount of 
                Medicare DSH payment that would be expected to result 
                from the adjustment under paragraph (1)(A).
                  (B) Structure of payment increase.--The Secretary 
                shall compute the additional payment to a hospital as 
                described in paragraph (1)(B) for a fiscal year in 
                accordance with a formula established by the Secretary 
                that provides that--
                          (i) the estimated aggregate amount of such 
                        increase for the fiscal year does not exceed 50 
                        percent of the aggregate reduction in Medicare 
                        DSH estimated by the Secretary for such fiscal 
                        year; and
                          (ii) hospitals with higher levels of 
                        uncompensated care receive a greater increase.
  (c) Medicare DSH.--In this section, the term ``Medicare DSH'' means 
adjustments in payments under section 1886(d)(5)(F) of the Social 
Security Act (42 U.S.C. 1395ww(d)(5)(F)) for inpatient hospital 
services furnished by disproportionate share hospitals.

SEC. 1113. EXTENSION OF HOSPICE REGULATION MORATORIUM.

  Section 4301(a) of division B of the American Recovery and 
Reinvestment Act of 2009 (Public Law 111-5) is amended--
          (1) by striking ``October 1, 2009'' and inserting ``October 
        1, 2010''; and
          (2) by striking ``for fiscal year 2009'' and inserting ``for 
        fiscal years 2009 and 2010''.

                Subtitle B--Provisions Related to Part B

                      PART 1--PHYSICIANS' SERVICES

SEC. 1121. SUSTAINABLE GROWTH RATE REFORM.

  (a) Transitional Update for 2010.--Section 1848(d) of the Social 
Security Act (42 U.S.C. 1395w-4(d)) is amended by adding at the end the 
following new paragraph:
          ``(10) Update for 2010.--The update to the single conversion 
        factor established in paragraph (1)(C) for 2010 shall be the 
        percentage increase in the MEI (as defined in section 
        1842(i)(3)) for that year.''.
  (b) Rebasing SGR Using 2009; Limitation on Cumulative Adjustment 
Period.--Section 1848(d)(4) of such Act (42 U.S.C. 1395w-4(d)(4)) is 
amended--
          (1) in subparagraph (B), by striking ``subparagraph (D)'' and 
        inserting ``subparagraphs (D) and (G)''; and
          (2) by adding at the end the following new subparagraph:
                  ``(G) Rebasing using 2009 for future update 
                adjustments.--In determining the update adjustment 
                factor under subparagraph (B) for 2011 and subsequent 
                years--
                          ``(i) the allowed expenditures for 2009 shall 
                        be equal to the amount of the actual 
                        expenditures for physicians' services during 
                        2009; and
                          ``(ii) the reference in subparagraph 
                        (B)(ii)(I) to `April 1, 1996' shall be treated 
                        as a reference to `January 1, 2009 (or, if 
                        later, the first day of the fifth year before 
                        the year involved)'.''.
  (c) Limitation on Physicians' Services Included in Target Growth Rate 
Computation to Services Covered Under Physician Fee Schedule.--
Effective for services furnished on or after January 1, 2009, section 
1848(f)(4)(A) of such Act is amended by striking ``(such as clinical'' 
and all that follows through ``in a physician's office'' and inserting 
``for which payment under this part is made under the fee schedule 
under this section, for services for practitioners described in section 
1842(b)(18)(C) on a basis related to such fee schedule, or for services 
described in section 1861(p) (other than such services when furnished 
in the facility of a provider of services)''.
  (d) Establishment of Separate Target Growth Rates for Categories of 
Services.--
          (1) Establishment of service categories.--Subsection (j) of 
        section 1848 of the Social Security Act (42 U.S.C. 1395w-4) is 
        amended by adding at the end the following new paragraph:
          ``(5) Service categories.--For services furnished on or after 
        January 1, 2009, each of the following categories of 
        physicians' services (as defined in paragraph (3)) shall be 
        treated as a separate `service category':
                  ``(A) Evaluation and management services that are 
                procedure codes (for services covered under this title) 
                for--
                          ``(i) services in the category designated 
                        Evaluation and Management in the Health Care 
                        Common Procedure Coding System (established by 
                        the Secretary under subsection (c)(5) as of 
                        December 31, 2009, and as subsequently modified 
                        by the Secretary); and
                          ``(ii) preventive services (as defined in 
                        section 1861(iii)) for which payment is made 
                        under this section.
                  ``(B) All other services not described in 
                subparagraph (A).
        Service categories established under this paragraph shall apply 
        without regard to the specialty of the physician furnishing the 
        service.''.
          (2) Establishment of separate conversion factors for each 
        service category.--Subsection (d)(1) of section 1848 of the 
        Social Security Act (42 U.S.C. 1395w-4) is amended--
                  (A) in subparagraph (A)--
                          (i) by designating the sentence beginning 
                        ``The conversion factor'' as clause (i) with 
                        the heading ``Application of single conversion 
                        factor.--'' and with appropriate indentation;
                          (ii) by striking ``The conversion factor'' 
                        and inserting ``Subject to clause (ii), the 
                        conversion factor''; and
                          (iii) by adding at the end the following new 
                        clause:
                          ``(ii) Application of multiple conversion 
                        factors beginning with 2011.--
                                  ``(I) In general.--In applying clause 
                                (i) for years beginning with 2011, 
                                separate conversion factors shall be 
                                established for each service category 
                                of physicians' services (as defined in 
                                subsection (j)(5)) and any reference in 
                                this section to a conversion factor for 
                                such years shall be deemed to be a 
                                reference to the conversion factor for 
                                each of such categories.
                                  ``(II) Initial conversion factors.--
                                Such factors for 2011 shall be based 
                                upon the single conversion factor for 
                                the previous year multiplied by the 
                                update established under paragraph (11) 
                                for such category for 2011.
                                  ``(III) Updating of conversion 
                                factors.--Such factor for a service 
                                category for a subsequent year shall be 
                                based upon the conversion factor for 
                                such category for the previous year and 
                                adjusted by the update established for 
                                such category under paragraph (11) for 
                                the year involved.''; and
                  (B) in subparagraph (D), by striking ``other 
                physicians' services'' and inserting ``for physicians' 
                services described in the service category described in 
                subsection (j)(5)(B)''.
          (3) Establishing updates for conversion factors for service 
        categories.--Section 1848(d) of the Social Security Act (42 
        U.S.C. 1395w-4(d)), as amended by subsection (a), is amended--
                  (A) in paragraph (4)(C)(iii), by striking ``The 
                allowed'' and inserting ``Subject to paragraph (11)(B), 
                the allowed''; and
                  (B) by adding at the end the following new paragraph:
          ``(11) Updates for service categories beginning with 2011.--
                  ``(A) In general.--In applying paragraph (4) for a 
                year beginning with 2011, the following rules apply:
                          ``(i) Application of separate update 
                        adjustments for each service category.--
                        Pursuant to paragraph (1)(A)(ii)(I), the update 
                        shall be made to the conversion factor for each 
                        service category (as defined in subsection 
                        (j)(5)) based upon an update adjustment factor 
                        for the respective category and year and the 
                        update adjustment factor shall be computed, for 
                        a year, separately for each service category.
                          ``(ii) Computation of allowed and actual 
                        expenditures based on service categories.--In 
                        computing the prior year adjustment component 
                        and the cumulative adjustment component under 
                        clauses (i) and (ii) of paragraph (4)(B), the 
                        following rules apply:
                                  ``(I) Application based on service 
                                categories.--The allowed expenditures 
                                and actual expenditures shall be the 
                                allowed and actual expenditures for the 
                                service category, as determined under 
                                subparagraph (B).
                                  ``(II) Application of category 
                                specific target growth rate.--The 
                                growth rate applied under clause 
                                (ii)(II) of such paragraph shall be the 
                                target growth rate for the service 
                                category involved under subsection 
                                (f)(5).
                  ``(B) Determination of allowed expenditures.--In 
                applying paragraph (4) for a year beginning with 2010, 
                notwithstanding subparagraph (C)(iii) of such 
                paragraph, the allowed expenditures for a service 
                category for a year is an amount computed by the 
                Secretary as follows:
                          ``(i) For 2010.--For 2010:
                                  ``(I) Total 2009 actual expenditures 
                                for all services included in sgr 
                                computation for each service 
                                category.--Compute total actual 
                                expenditures for physicians' services 
                                (as defined in subsection (f)(4)(A)) 
                                for 2009 for each service category.
                                  ``(II) Increase by growth rate to 
                                obtain 2010 allowed expenditures for 
                                service category.--Compute allowed 
                                expenditures for the service category 
                                for 2010 by increasing the allowed 
                                expenditures for the service category 
                                for 2009 computed under subclause (I) 
                                by the target growth rate for such 
                                service category under subsection (f) 
                                for 2010.
                          ``(ii) For subsequent years.--For a 
                        subsequent year, take the amount of allowed 
                        expenditures for such category for the 
                        preceding year (under clause (i) or this 
                        clause) and increase it by the target growth 
                        rate determined under subsection (f) for such 
                        category and year.''.
          (4) Application of separate target growth rates for each 
        category.--
                  (A) In general.--Section 1848(f) of the Social 
                Security Act (42 U.S.C. 1395w-4(f)) is amended by 
                adding at the end the following new paragraph:
          ``(5) Application of separate target growth rates for each 
        service category beginning with 2010.--The target growth rate 
        for a year beginning with 2010 shall be computed and applied 
        separately under this subsection for each service category (as 
        defined in subsection (j)(5)) and shall be computed using the 
        same method for computing the target growth rate except that 
        the factor described in paragraph (2)(C) for--
                  ``(A) the service category described in subsection 
                (j)(5)(A) shall be increased by 0.02; and
                  ``(B) the service category described in subsection 
                (j)(5)(B) shall be increased by 0.01.''.
                  (B) Use of target growth rates.--Section 1848 of such 
                Act is further amended--
                          (i) in subsection (d)--
                                  (I) in paragraph (1)(E)(ii), by 
                                inserting ``or target'' after 
                                ``sustainable''; and
                                  (II) in paragraph (4)(B)(ii)(II), by 
                                inserting ``or target'' after 
                                ``sustainable''; and
                          (ii) in the heading of subsection (f), by 
                        inserting ``and Target Growth Rate'' after 
                        ``Sustainable Growth Rate'';
                          (iii) in subsection (f)(1)--
                                  (I) by striking ``and'' at the end of 
                                subparagraph (A);
                                  (II) in subparagraph (B), by 
                                inserting ``before 2010'' after ``each 
                                succeeding year'' and by striking the 
                                period at the end and inserting ``; 
                                and''; and
                                  (III) by adding at the end the 
                                following new subparagraph:
                  ``(C) November 1 of each succeeding year the target 
                growth rate for such succeeding year and each of the 2 
                preceding years.''; and
                          (iv) in subsection (f)(2), in the matter 
                        before subparagraph (A), by inserting after 
                        ``beginning with 2000'' the following: ``and 
                        ending with 2009''.
  (e) Application to Accountable Care Organization Pilot Program.--In 
applying the target growth rate under subsections (d) and (f) of 
section 1848 of the Social Security Act to services furnished by a 
practitioner to beneficiaries who are attributable to an accountable 
care organization under the pilot program provided under section 1866D 
of such Act, the Secretary of Health and Human Services shall develop, 
not later than January 1, 2012, for application beginning with 2012, a 
method that--
          (1) allows each such organization to have its own expenditure 
        targets and updates for such practitioners, with respect to 
        beneficiaries who are attributable to that organization, that 
        are consistent with the methodologies described in such 
        subsection (f); and
          (2) provides that the target growth rate applicable to other 
        physicians shall not apply to such physicians to the extent 
        that the physicians' services are furnished through the 
        accountable care organization.
In applying paragraph (1), the Secretary of Health and Human Services 
may apply the difference in the update under such paragraph on a claim-
by-claim or lump sum basis and such a payment shall be taken into 
account under the pilot program.

SEC. 1122. MISVALUED CODES UNDER THE PHYSICIAN FEE SCHEDULE.

  (a) In General.--Section 1848(c)(2) of the Social Security Act (42 
U.S.C. 1395w-4(c)(2)) is amended by adding at the end the following new 
subparagraphs:
                  ``(K) Potentially misvalued codes.--
                          ``(i) In general.--The Secretary shall--
                                  ``(I) periodically identify services 
                                as being potentially misvalued using 
                                criteria specified in clause (ii); and
                                  ``(II) review and make appropriate 
                                adjustments to the relative values 
                                established under this paragraph for 
                                services identified as being 
                                potentially misvalued under subclause 
                                (I).
                          ``(ii) Identification of potentially 
                        misvalued codes.--For purposes of identifying 
                        potentially misvalued services pursuant to 
                        clause (i)(I), the Secretary shall examine (as 
                        the Secretary determines to be appropriate) 
                        codes (and families of codes as appropriate) 
                        for which there has been the fastest growth; 
                        codes (and families of codes as appropriate) 
                        that have experienced substantial changes in 
                        practice expenses; codes for new technologies 
                        or services within an appropriate period (such 
                        as three years) after the relative values are 
                        initially established for such codes; multiple 
                        codes that are frequently billed in conjunction 
                        with furnishing a single service; codes with 
                        low relative values, particularly those that 
                        are often billed multiple times for a single 
                        treatment; codes which have not been subject to 
                        review since the implementation of the RBRVS 
                        (the so-called `Harvard-valued codes'); and 
                        such other codes determined to be appropriate 
                        by the Secretary.
                          ``(iii) Review and adjustments.--
                                  ``(I) The Secretary may use existing 
                                processes to receive recommendations on 
                                the review and appropriate adjustment 
                                of potentially misvalued services 
                                described clause (i)(II).
                                  ``(II) The Secretary may conduct 
                                surveys, other data collection 
                                activities, studies, or other analyses 
                                as the Secretary determines to be 
                                appropriate to facilitate the review 
                                and appropriate adjustment described in 
                                clause (i)(II).
                                  ``(III) The Secretary may use 
                                analytic contractors to identify and 
                                analyze services identified under 
                                clause (i)(I), conduct surveys or 
                                collect data, and make recommendations 
                                on the review and appropriate 
                                adjustment of services described in 
                                clause (i)(II).
                                  ``(IV) The Secretary may coordinate 
                                the review and appropriate adjustment 
                                described in clause (i)(II) with the 
                                periodic review described in 
                                subparagraph (B).
                                  ``(V) As part of the review and 
                                adjustment described in clause (i)(II), 
                                including with respect to codes with 
                                low relative values described in clause 
                                (ii), the Secretary may make 
                                appropriate coding revisions (including 
                                using existing processes for 
                                consideration of coding changes) which 
                                may include consolidation of individual 
                                services into bundled codes for payment 
                                under the fee schedule under subsection 
                                (b).
                                  ``(VI) The provisions of subparagraph 
                                (B)(ii)(II) shall apply to adjustments 
                                to relative value units made pursuant 
                                to this subparagraph in the same manner 
                                as such provisions apply to adjustments 
                                under subparagraph (B)(ii)(II).
                  ``(L) Validating relative value units.--
                          ``(i) In general.--The Secretary shall 
                        establish a process to validate relative value 
                        units under the fee schedule under subsection 
                        (b).
                          ``(ii) Components and elements of work.--The 
                        process described in clause (i) may include 
                        validation of work elements (such as time, 
                        mental effort and professional judgment, 
                        technical skill and physical effort, and stress 
                        due to risk) involved with furnishing a service 
                        and may include validation of the pre, post, 
                        and intra-service components of work.
                          ``(iii) Scope of codes.--The validation of 
                        work relative value units shall include a 
                        sampling of codes for services that is the same 
                        as the codes listed under subparagraph (K)(ii)
                          ``(iv) Methods.--The Secretary may conduct 
                        the validation under this subparagraph using 
                        methods described in subclauses (I) through (V) 
                        of subparagraph (K)(iii) as the Secretary 
                        determines to be appropriate.
                          ``(v) Adjustments.--The Secretary shall make 
                        appropriate adjustments to the work relative 
                        value units under the fee schedule under 
                        subsection (b). The provisions of subparagraph 
                        (B)(ii)(II) shall apply to adjustments to 
                        relative value units made pursuant to this 
                        subparagraph in the same manner as such 
                        provisions apply to adjustments under 
                        subparagraph (B)(ii)(II).''.
  (b) Implementation.--
          (1) Funding.--For purposes of carrying out the provisions of 
        subparagraphs (K) and (L) of 1848(c)(2) of the Social Security 
        Act, as added by subsection (a), in addition to funds otherwise 
        available, out of any funds in the Treasury not otherwise 
        appropriated, there are appropriated to the Secretary of Health 
        and Human Services for the Center for Medicare & Medicaid 
        Services Program Management Account $20,000,000 for fiscal year 
        2010 and each subsequent fiscal year. Amounts appropriated 
        under this paragraph for a fiscal year shall be available until 
        expended.
          (2) Administration.--
                  (A) Chapter 35 of title 44, United States Code and 
                the provisions of the Federal Advisory Committee Act (5 
                U.S.C. App.) shall not apply to this section or the 
                amendment made by this section.
                  (B) Notwithstanding any other provision of law, the 
                Secretary may implement subparagraphs (K) and (L) of 
                1848(c)(2) of the Social Security Act, as added by 
                subsection (a), by program instruction or otherwise.
                  (C) Section 4505(d) of the Balanced Budget Act of 
                1997 is repealed.
                  (D) Except for provisions related to confidentiality 
                of information, the provisions of the Federal 
                Acquisition Regulation shall not apply to this section 
                or the amendment made by this section.
          (3) Focusing cms resources on potentially overvalued codes.--
        Section 1868(a) of the Social Security Act (42 1395ee(a)) is 
        repealed.

SEC. 1123. PAYMENTS FOR EFFICIENT AREAS.

  Section 1833 of the Social Security Act (42 U.S.C. 1395l) is amended 
by adding at the end the following new subsection:
  ``(x) Incentive Payments for Efficient Areas.--
          ``(1) In general.--In the case of services furnished under 
        the physician fee schedule under section 1848 on or after 
        January 1, 2011, and before January 1, 2013, by a supplier that 
        is paid under such fee schedule in an efficient area (as 
        identified under paragraph (2)), in addition to the amount of 
        payment that would otherwise be made for such services under 
        this part, there also shall be paid (on a monthly or quarterly 
        basis) an amount equal to 5 percent of the payment amount for 
        the services under this part.
          ``(2) Identification of efficient areas.--
                  ``(A) In general.--Based upon available data, the 
                Secretary shall identify those counties or equivalent 
                areas in the United States in the lowest fifth 
                percentile of utilization based on per capita spending 
                under this part and part A for services provided in the 
                most recent year for which data are available as of the 
                date of the enactment of this subsection, as 
                standardized to eliminate the effect of geographic 
                adjustments in payment rates.
                  ``(B) Identification of counties where service is 
                furnished.--For purposes of paying the additional 
                amount specified in paragraph (1), if the Secretary 
                uses the 5-digit postal ZIP Code where the service is 
                furnished, the dominant county of the postal ZIP Code 
                (as determined by the United States Postal Service, or 
                otherwise) shall be used to determine whether the 
                postal ZIP Code is in a county described in 
                subparagraph (A).
                  ``(C) Limitation on review.--There shall be no 
                administrative or judicial review under section 1869, 
                1878, or otherwise, respecting--
                          ``(i) the identification of a county or other 
                        area under subparagraph (A); or
                          ``(ii) the assignment of a postal ZIP Code to 
                        a county or other area under subparagraph (B).
                  ``(D) Publication of list of counties; posting on 
                website.--With respect to a year for which a county or 
                area is identified under this paragraph, the Secretary 
                shall identify such counties or areas as part of the 
                proposed and final rule to implement the physician fee 
                schedule under section 1848 for the applicable year. 
                The Secretary shall post the list of counties 
                identified under this paragraph on the Internet website 
                of the Centers for Medicare & Medicaid Services.''.

SEC. 1124. MODIFICATIONS TO THE PHYSICIAN QUALITY REPORTING INITIATIVE 
                    (PQRI).

  (a) Feedback.--Section 1848(m)(5) of the Social Security Act (42 
U.S.C. 1395w-4(m)(5)) is amended by adding at the end the following new 
subparagraph:
                  ``(H) Feedback.--The Secretary shall provide timely 
                feedback to eligible professionals on the performance 
                of the eligible professional with respect to 
                satisfactorily submitting data on quality measures 
                under this subsection.''.
  (b) Appeals.--Such section is further amended--
          (1) in subparagraph (E), by striking ``There shall be'' and 
        inserting ``Subject to subparagraph (I), there shall be''; and
          (2) by adding at the end the following new subparagraph:
                  ``(I) Informal appeals process.--Notwithstanding 
                subparagraph (E), by not later than January 1, 2011, 
                the Secretary shall establish and have in place an 
                informal process for eligible professionals to appeal 
                the determination that an eligible professional did not 
                satisfactorily submit data on quality measures under 
                this subsection.''.
  (c) Integration of Physician Quality Reporting and EHR Reporting.--
Section 1848(m) of such Act is amended by adding at the end the 
following new paragraph:
          ``(7) Integration of physician quality reporting and ehr 
        reporting.--Not later than January 1, 2012, the Secretary shall 
        develop a plan to integrate clinical reporting on quality 
        measures under this subsection with reporting requirements 
        under subsection (o) relating to the meaningful use of 
        electronic health records. Such integration shall consist of 
        the following:
                  ``(A) The development of measures, the reporting of 
                which would both demonstrate--
                          ``(i) meaningful use of an electronic health 
                        record for purposes of subsection (o); and
                          ``(ii) clinical quality of care furnished to 
                        an individual.
                  ``(B) The collection of health data to identify 
                deficiencies in the quality and coordination of care 
                for individuals eligible for benefits under this part.
                  ``(C) Such other activities as specified by the 
                Secretary.''.
  (d) Extension of Incentive Payments.--Section 1848(m)(1) of such Act 
(42 U.S.C. 1395w-4(m)(1)) is amended--
          (1) in subparagraph (A), by striking ``2010'' and inserting 
        ``2012''; and
          (2) in subparagraph (B)(ii), by striking ``2009 and 2010'' 
        and inserting ``for each of the years 2009 through 2012''.

SEC. 1125. ADJUSTMENT TO MEDICARE PAYMENT LOCALITIES.

  (a) In General.--Section 1848(e) of the Social Security Act (42 
U.S.C.1395w-4(e)) is amended by adding at the end the following new 
paragraph:
          ``(6) Transition to use of msas as fee schedule areas in 
        california.--
                  ``(A) In general.--
                          ``(i) Revision.--Subject to clause (ii) and 
                        notwithstanding the previous provisions of this 
                        subsection, for services furnished on or after 
                        January 1, 2011, the Secretary shall revise the 
                        fee schedule areas used for payment under this 
                        section applicable to the State of California 
                        using the Metropolitan Statistical Area (MSA) 
                        iterative Geographic Adjustment Factor 
                        methodology as follows:
                                  ``(I) The Secretary shall configure 
                                the physician fee schedule areas using 
                                the Core-Based Statistical Areas-
                                Metropolitan Statistical Areas (each in 
                                this paragraph referred to as an 
                                `MSA'), as defined by the Director of 
                                the Office of Management and Budget, as 
                                the basis for the fee schedule areas. 
                                The Secretary shall employ an iterative 
                                process to transition fee schedule 
                                areas. First, the Secretary shall list 
                                all MSAs within the State by Geographic 
                                Adjustment Factor described in 
                                paragraph (2) (in this paragraph 
                                referred to as a `GAF') in descending 
                                order. In the first iteration, the 
                                Secretary shall compare the GAF of the 
                                highest cost MSA in the State to the 
                                weighted-average GAF of the group of 
                                remaining MSAs in the State. If the 
                                ratio of the GAF of the highest cost 
                                MSA to the weighted-average GAF of the 
                                rest of State is 1.05 or greater then 
                                the highest cost MSA becomes a separate 
                                fee schedule area.
                                  ``(II) In the next iteration, the 
                                Secretary shall compare the MSA of the 
                                second-highest GAF to the weighted-
                                average GAF of the group of remaining 
                                MSAs. If the ratio of the second-
                                highest MSA's GAF to the weighted-
                                average of the remaining lower cost 
                                MSAs is 1.05 or greater, the second-
                                highest MSA becomes a separate fee 
                                schedule area. The iterative process 
                                continues until the ratio of the GAF of 
                                the highest-cost remaining MSA to the 
                                weighted-average of the remaining 
                                lower-cost MSAs is less than 1.05, and 
                                the remaining group of lower cost MSAs 
                                form a single fee schedule area, If two 
                                MSAs have identical GAFs, they shall be 
                                combined in the iterative comparison.
                          ``(ii) Transition.--For services furnished on 
                        or after January 1, 2011, and before January 1, 
                        2016, in the State of California, after 
                        calculating the work, practice expense, and 
                        malpractice geographic indices described in 
                        clauses (i), (ii), and (iii) of paragraph 
                        (1)(A) that would otherwise apply through 
                        application of this paragraph, the Secretary 
                        shall increase any such index to the county-
                        based fee schedule area value on December 31, 
                        2009, if such index would otherwise be less 
                        than the value on January 1, 2010.
                  ``(B) Subsequent revisions.--
                          ``(i) Periodic review and adjustments in fee 
                        schedule areas.--Subsequent to the process 
                        outlined in paragraph (1)(C), not less often 
                        than every three years, the Secretary shall 
                        review and update the California Rest-of-State 
                        fee schedule area using MSAs as defined by the 
                        Director of the Office of Management and Budget 
                        and the iterative methodology described in 
                        subparagraph (A)(i).
                          ``(ii) Link with geographic index data 
                        revision.--The revision described in clause (i) 
                        shall be made effective concurrently with the 
                        application of the periodic review of the 
                        adjustment factors required under paragraph 
                        (1)(C) for California for 2012 and subsequent 
                        periods. Upon request, the Secretary shall make 
                        available to the public any county-level or MSA 
                        derived data used to calculate the geographic 
                        practice cost index.
                  ``(C) References to fee schedule areas.--Effective 
                for services furnished on or after January 1, 2010, for 
                the State of California, any reference in this section 
                to a fee schedule area shall be deemed a reference to 
                an MSA in the State.''.
  (b) Conforming Amendment to Definition of Fee Schedule Area.--Section 
1848(j)(2) of the Social Security Act (42 U.S.C. 1395w(j)(2)) is 
amended by striking ``The term'' and inserting ``Except as provided in 
subsection (e)(6)(C), the term''.

                     PART 2--MARKET BASKET UPDATES

SEC. 1131. INCORPORATING PRODUCTIVITY IMPROVEMENTS INTO MARKET BASKET 
                    UPDATES THAT DO NOT ALREADY INCORPORATE SUCH 
                    IMPROVEMENTS.

  (a) Outpatient Hospitals.--
          (1) In general.--The first sentence of section 
        1833(t)(3)(C)(iv) of the Social Security Act (42 U.S.C. 
        1395l(t)(3)(C)(iv)) is amended--
                  (A) by inserting ``(which is subject to the 
                productivity adjustment described in subclause (II) of 
                such section)'' after ``1886(b)(3)(B)(iii)''; and
                  (B) by inserting ``(but not below 0)'' after 
                ``reduced''.
          (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to increase factors for services furnished in years 
        beginning with 2010.
  (b) Ambulance Services.--Section 1834(l)(3)(B) of such Act (42 U.S.C. 
1395m(l)(3)(B))) is amended by inserting before the period at the end 
the following: ``and, in the case of years beginning with 2010, subject 
to the productivity adjustment described in section 
1886(b)(3)(B)(iii)(II)''.
  (c) Ambulatory Surgical Center Services.--Section 1833(i)(2)(D) of 
such Act (42 U.S.C. 1395l(i)(2)(D)) is amended--
          (1) by redesignating clause (v) as clause (vi); and
          (2) by inserting after clause (iv) the following new clause:
  ``(v) In implementing the system described in clause (i), for 
services furnished during 2010 or any subsequent year, to the extent 
that an annual percentage change factor applies, such factor shall be 
subject to the productivity adjustment described in section 
1886(b)(3)(B)(iii)(II).''.
  (d) Laboratory Services.--Section 1833(h)(2)(A) of such Act (42 
U.S.C. 1395l(h)(2)(A)) is amended--
          (1) in clause (i), by striking ``for each of the years 2009 
        through 2013'' and inserting ``for 2009''; and
          (2) clause (ii)--
                  (A) by striking ``and'' at the end of subclause 
                (III);
                  (B) by striking the period at the end of subclause 
                (IV) and inserting ``; and''; and
                  (C) by adding at the end the following new subclause:
          ``(V) the annual adjustment in the fee schedules determined 
        under clause (i) for years beginning with 2010 shall be subject 
        to the productivity adjustment described in section 
        1886(b)(3)(B)(iii)(II).''.
  (e) Certain Durable Medical Equipment.--Section 1834(a)(14) of such 
Act (42 U.S.C. 1395m(a)(14)) is amended--
          (1) in subparagraph (K), by inserting before the semicolon at 
        the end the following: ``, subject to the productivity 
        adjustment described in section 1886(b)(3)(B)(iii)(II)'';
          (2) in subparagraph (L)(i), by inserting after ``June 2013,'' 
        the following: ``subject to the productivity adjustment 
        described in section 1886(b)(3)(B)(iii)(II),'';
          (3) in subparagraph (L)(ii), by inserting after ``June 2013'' 
        the following: ``, subject to the productivity adjustment 
        described in section 1886(b)(3)(B)(iii)(II)''; and
          (4) in subparagraph (M), by inserting before the period at 
        the end the following: ``, subject to the productivity 
        adjustment described in section 1886(b)(3)(B)(iii)(II)''.

                        PART 3--OTHER PROVISIONS

SEC. 1141. RENTAL AND PURCHASE OF POWER-DRIVEN WHEELCHAIRS.

  (a) In General.--Section 1834(a)(7)(A)(iii) of the Social Security 
Act (42 U.S.C. 1395m(a)(7)(A)(iii)) is amended--
          (1) in the heading, by inserting ``certain complex 
        rehabilitative'' after ``option for''; and
          (2) by striking ``power-driven wheelchair'' and inserting 
        ``complex rehabilitative power-driven wheelchair recognized by 
        the Secretary as classified within group 3 or higher''.
  (b) Effective Date.--The amendments made by subsection (a) shall take 
effect on January 1, 2011, and shall apply to power-driven wheelchairs 
furnished on or after such date. Such amendments shall not apply to 
contracts entered into under section 1847 of the Social Security Act 
(42 U.S.C. 1395w-3) pursuant to a bid submitted under such section 
before October 1, 2010, under subsection (a)(1)(B)(i)(I) of such 
section.

SEC. 1142. EXTENSION OF PAYMENT RULE FOR BRACHYTHERAPY.

   Section 1833(t)(16)(C) of the Social Security Act (42 U.S.C. 
1395l(t)(16)(C)), as amended by section 142 of the Medicare 
Improvements for Patients and Providers Act of 2008 (Public Law 110-
275), is amended by striking, the first place it appears, ``January 1, 
2010'' and inserting ``January 1, 2012''.

SEC. 1143. HOME INFUSION THERAPY REPORT TO CONGRESS.

  Not later than 12 months after the date of enactment of this Act, the 
Medicare Payment Advisory Commission shall submit to Congress a report 
on the following:
          (1) The scope of coverage for home infusion therapy in the 
        fee-for-service Medicare program under title XVIII of the 
        Social Security Act, Medicare Advantage under part C of such 
        title, the veteran's health care program under chapter 17 of 
        title 38, United States Code, and among private payers, 
        including an analysis of the scope of services provided by home 
        infusion therapy providers to their patients in such programs.
          (2) The benefits and costs of providing such coverage under 
        the Medicare program, including a calculation of the potential 
        savings achieved through avoided or shortened hospital and 
        nursing home stays as a result of Medicare coverage of home 
        infusion therapy.
          (3) An assessment of sources of data on the costs of home 
        infusion therapy that might be used to construct payment 
        mechanisms in the Medicare program.
          (4) Recommendations, if any, on the structure of a payment 
        system under the Medicare program for home infusion therapy, 
        including an analysis of the payment methodologies used under 
        Medicare Advantage plans and private health plans for the 
        provision of home infusion therapy and their applicability to 
        the Medicare program.

SEC. 1144. REQUIRE AMBULATORY SURGICAL CENTERS (ASCS) TO SUBMIT COST 
                    DATA AND OTHER DATA.

  (a) Cost Reporting.--
          (1) In general.--Section 1833(i) of the Social Security Act 
        (42 U.S.C. 1395l(i)) is amended by adding at the end the 
        following new paragraph:
  ``(8) The Secretary shall require, as a condition of the agreement 
described in section 1832(a)(2)(F)(i), the submission of such cost 
report as the Secretary may specify, taking into account the 
requirements for such reports under section 1815 in the case of a 
hospital.''.
          (2) Development of cost report.--Not later than 3 years after 
        the date of the enactment of this Act, the Secretary of Health 
        and Human Services shall develop a cost report form for use 
        under section 1833(i)(8) of the Social Security Act, as added 
        by paragraph (1).
          (3) Audit requirement.--The Secretary shall provide for 
        periodic auditing of cost reports submitted under section 
        1833(i)(8) of the Social Security Act, as added by paragraph 
        (1).
          (4) Effective date.--The amendment made by paragraph (1) 
        shall apply to agreements applicable to cost reporting periods 
        beginning 18 months after the date the Secretary develops the 
        cost report form under paragraph (2).
  (b) Additional Data on Quality.--
          (1) In general.--Section 1833(i)(7) of such Act (42 U.S.C. 
        1395l(i)(7)) is amended--
                  (A) in subparagraph (B), by inserting ``subject to 
                subparagraph (C),'' after ``may otherwise provide,''; 
                and
                  (B) by adding at the end the following new 
                subparagraph:
  ``(C) Under subparagraph (B) the Secretary shall require the 
reporting of such additional data relating to quality of services 
furnished in an ambulatory surgical facility, including data on health 
care associated infections, as the Secretary may specify.''.
          (2) Effective date.--The amendment made by paragraph (1) 
        shall to reporting for years beginning with 2012.

SEC. 1145. TREATMENT OF CERTAIN CANCER HOSPITALS.

  Section 1833(t) of the Social Security Act (42 U.S.C. 1395l(t)) is 
amended by adding at the end the following new paragraph:
          ``(18) Authorization of adjustment for cancer hospitals.--
                  ``(A) Study.--The Secretary shall conduct a study to 
                determine if, under the system under this subsection, 
                costs incurred by hospitals described in section 
                1886(d)(1)(B)(v) with respect to ambulatory payment 
                classification groups exceed those costs incurred by 
                other hospitals furnishing services under this 
                subsection (as determined appropriate by the 
                Secretary).
                  ``(B) Authorization of adjustment.--Insofar as the 
                Secretary determines under subparagraph (A) that costs 
                incurred by hospitals described in section 
                1886(d)(1)(B)(v) exceed those costs incurred by other 
                hospitals furnishing services under this subsection, 
                the Secretary shall provide for an appropriate 
                adjustment under paragraph (2)(E) to reflect those 
                higher costs effective for services furnished on or 
                after January 1, 2011.''.

SEC. 1146. MEDICARE IMPROVEMENT FUND.

  Section 1898(b)(1)(A) of the Social Security Act (42 U.S.C. 
1395iii(b)(1)(A)) is amended to read as follows:
                  ``(A) the period beginning with fiscal year 2011 and 
                ending with fiscal year 2019, $8,000,000,000; and''.

SEC. 1147. PAYMENT FOR IMAGING SERVICES.

  (a) Adjustment in Practice Expense to Reflect Higher Presumed 
Utilization.--Section 1848 of the Social Security Act (42 U.S.C. 1395w) 
is amended--
          (1) in subsection (b)(4)--
                  (A) in subparagraph (B), by striking ``subparagraph 
                (A)'' and inserting ``this paragraph''; and
                  (B) by adding at the end the following new 
                subparagraph:
                  ``(C) Adjustment in practice expense to reflect 
                higher presumed utilization.--In computing the number 
                of practice expense relative value units under 
                subsection (c)(2)(C)(ii) with respect to advanced 
                diagnostic imaging services (as defined in section 
                1834(e)(1)(B)), the Secretary shall adjust such number 
                of units so it reflects a 75 percent (rather than 50 
                percent) presumed rate of utilization of imaging 
                equipment.''; and
          (2) in subsection (c)(2)(B)(v)(II), by inserting ``and other 
        provisions'' after ``OPD payment cap''.
  (b) Adjustment in Technical Component ``discount'' on Single-session 
Imaging to Consecutive Body Parts.--Section 1848(b)(4) of such Act is 
further amended by adding at the end the following new subparagraph:
                  ``(D) Adjustment in technical component discount on 
                single-session imaging involving consecutive body 
                parts.--The Secretary shall increase the reduction in 
                expenditures attributable to the multiple procedure 
                payment reduction applicable to the technical component 
                for imaging under the final rule published by the 
                Secretary in the Federal Register on November 21, 2005 
                (part 405 of title 42, Code of Federal Regulations) 
                from 25 percent to 50 percent.''.
  (c) Effective Date.--Except as otherwise provided, this section, and 
the amendments made by this section, shall apply to services furnished 
on or after January 1, 2011.

SEC. 1148. DURABLE MEDICAL EQUIPMENT PROGRAM IMPROVEMENTS.

  (a) Waiver of Surety Bond Requirement.--Section 1834(a)(16) of the 
Social Security Act (42 U.S.C. 1395m(a)(16)) is amended by adding at 
the end the following: ``The requirement for a surety bond described in 
subparagraph (B) shall not apply in the case of a pharmacy (i) that has 
been enrolled under section 1866(j) as a supplier of durable medical 
equipment, prosthetics, orthotics, and supplies and has been issued 
(which may include renewal of) a provider number (as described in the 
first sentence of this paragraph) for at least 5 years, and (ii) for 
which a final adverse action (as defined in section 424.57(a) of title 
42, Code of Federal Regulations) has never been imposed.''.
  (b) Ensuring Supply of Oxygen Equipment .--
          (1) In general.--Section 1834(a)(5)(F) of the Social Security 
        Act (42 U.S.C. 1395m(a)(5)(F)) is amended--
                  (A) in clause (ii), by striking ``After the'' and 
                inserting ``Except as provided in clause (iii), after 
                the''; and
                  (B) by adding at the end the following new clause:
                          ``(iii) Continuation of supply.--In the case 
                        of a supplier furnishing such equipment to an 
                        individual under this subsection as of the 27th 
                        month of the 36 months described in clause (i), 
                        the supplier furnishing such equipment as of 
                        such month shall continue to furnish such 
                        equipment to such individual (either directly 
                        or though arrangements with other suppliers of 
                        such equipment) during any subsequent period of 
                        medical need for the remainder of the 
                        reasonable useful lifetime of the equipment, as 
                        determined by the Secretary, regardless of the 
                        location of the individual, unless another 
                        supplier has accepted responsibility for 
                        continuing to furnish such equipment during the 
                        remainder of such period.''.
          (2) Effective date.--The amendments made by paragraph (1) 
        shall take effect as of the date of the enactment of this Act 
        and shall apply to the furnishing of equipment to individuals 
        for whom the 27th month of a continuous period of use of oxygen 
        equipment described in section 1834(a)(5)(F) of the Social 
        Security Act occurs on or after July 1, 2010.
  (c) Treatment of Current Accreditation Applications.--Section 
1834(a)(20)(F) of such Act (42 U.S.C. 1395m(a)(20)(F)) is amended--
          (1) in clause (i)--
                  (A) by striking ``clause (ii)'' and inserting 
                ``clauses (ii) and (iii)''; and
                  (B) by striking ``and'' at the end;
          (2) by striking the period at the end of clause (ii)(II) and 
        by inserting ``; and'';
          (3) by inserting after clause (ii) the following new clause:
                          ``(iii) the requirement for accreditation 
                        described in clause (i) shall not apply for 
                        purposes of supplying diabetic testing 
                        supplies, canes, and crutches in the case of a 
                        pharmacy that is enrolled under section 1866(j) 
                        as a supplier of durable medical equipment, 
                        prosthetics, orthotics, and supplies.''; and
          (4) by adding after and below clause (iii) the following:
                ``Any supplier that has submitted an application for 
                accreditation before August 1, 2009, shall be deemed as 
                meeting applicable standards and accreditation 
                requirement under this subparagraph until such time as 
                the independent accreditation organization takes action 
                on the supplier's application.''.
  (d) Restoring 36-month Oxygen Rental Period in Case of Supplier 
Bankruptcy for Certain Individuals.--Section 1834(a)(5)(F) of such Act 
(42 U.S.C. 1395m(a)(5)(F)), as amended by subsection (b), is further 
amended by adding at the end the following new clause:
                          ``(iv) Exception for bankruptcy.--If a 
                        supplier who furnishes oxygen and oxygen 
                        equipment to an individual is declared bankrupt 
                        and its assets are liquidated and at the time 
                        of such declaration and liquidation more than 
                        24 months of rental payments have been made, 
                        such individual may begin a new 36-month rental 
                        period under this subparagraph with another 
                        supplier of oxygen.''.

SEC. 1149. MEDPAC STUDY AND REPORT ON BONE MASS MEASUREMENT.

  (a) In General.--The Medicare Payment Advisory Commission shall 
conduct a study regarding bone mass measurement, including computed 
tomography, duel-energy x-ray absorptriometry, and vertebral fracture 
assessment. The study shall focus on the following:
          (1) An assessment of the adequacy of Medicare payment rates 
        for such services, taking into account costs of acquiring the 
        necessary equipment, professional work time, and practice 
        expense costs.
          (2) The impact of Medicare payment changes since 2006 on 
        beneficiary access to bone mass measurement benefits in general 
        and in rural and minority communities specifically.
          (3) A review of the clinically appropriate and recommended 
        use among Medicare beneficiaries and how usage rates among such 
        beneficiaries compares to such recommendations.
          (4) In conjunction with the findings under (3), 
        recommendations, if necessary, regarding methods for reaching 
        appropriate use of bone mass measurement studies among Medicare 
        beneficiaries.
  (b) Report.--The Commission shall submit a report to the Congress, 
not later than 9 months after the date of the enactment of this Act, 
containing a description of the results of the study conducted under 
subsection (a) and the conclusions and recommendations, if any, 
regarding each of the issues described in paragraphs (1), (2) (3) and 
(4) of such subsection.

        Subtitle C--Provisions Related to Medicare Parts A and B

SEC. 1151. REDUCING POTENTIALLY PREVENTABLE HOSPITAL READMISSIONS.

  (a) Hospitals.--
          (1) In general.--Section 1886 of the Social Security Act (42 
        U.S.C. 1395ww), as amended by section 1103(a), is amended by 
        adding at the end the following new subsection:
  ``(p) Adjustment to Hospital Payments for Excess Readmissions.--
          ``(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, 
        2011, in order to account for excess readmissions in the 
        hospital, the Secretary shall reduce the payments that would 
        otherwise be made to such hospital under subsection (d) (or 
        section 1814(b)(3), as the case may be) for such a discharge by 
        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.--
                  ``(A) In general.--Except as provided in subparagraph 
                (B), for purposes of this subsection, the term `base 
                operating DRG payment amount' means, with respect to a 
                hospital for a fiscal year, the payment amount that 
                would otherwise be made under subsection (d) for a 
                discharge if this subsection did not apply, reduced by 
                any portion of such amount that is attributable to 
                payments under subparagraphs (B) and (F) of paragraph 
                (5).
                  ``(B) Adjustments.--For purposes of subparagraph (A), 
                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.
          ``(3) Adjustment factor.--
                  ``(A) In general.--For purposes of paragraph (1), 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 2012 is 0.99;
                          ``(ii) fiscal year 2013 is 0.98;
                          ``(iii) fiscal year 2014 is 0.97; or
                          ``(iv) a subsequent fiscal year is 0.95.
          ``(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 a fiscal year, 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 fiscal year for such 
                        condition;
                          ``(ii) the number of admissions for such 
                        condition for such hospital for such fiscal 
                        year; and
                          ``(iii) the excess readmissions ratio (as 
                        defined in subparagraph (C)) for such hospital 
                        for the applicable period for such fiscal year 
                        minus 1.
                  ``(B) Aggregate payments for all discharges.--The 
                term `aggregate payments for all discharges' means, for 
                a hospital for a fiscal year, the sum of the base 
                operating DRG payment amounts for all discharges for 
                all conditions from such hospital for such fiscal year.
                  ``(C) Excess readmission ratio.--
                          ``(i) In general.--Subject to clauses (ii) 
                        and (iii), 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 the 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.
                          ``(iii) Adjustment.--In order to promote a 
                        reduction over time in the overall rate of 
                        readmissions for applicable conditions, the 
                        Secretary may provide, beginning with 
                        discharges for fiscal year 2014, for the 
                        determination of the excess readmissions ratio 
                        under subparagraph (C) to be based on a ranking 
                        of hospitals by readmission ratios (from lower 
                        to higher readmission ratios) normalized to a 
                        benchmark that is lower than the 50th 
                        percentile.
          ``(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 
                                appropriate 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 2013, the Secretary shall 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 so identified by the Medicare Payment 
                Advisory Commission in its report to Congress in June 
                2007 and to other conditions and procedures which may 
                include an all-condition measure of readmissions, 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.
                  ``(C) Applicable hospital.--The term `applicable 
                hospital' means a subsection (d) hospital or a hospital 
                that is paid under section 1814(b)(3).
                  ``(D) Applicable period.--The term `applicable 
                period' means, with respect to a fiscal year, such 
                period as the Secretary shall specify for purposes of 
                determining excess readmissions.
                  ``(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) Limitations on review.--There shall be no 
        administrative or judicial review under section 1869, section 
        1878, or otherwise of--
                  ``(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); and
                  ``(D) the determination of a targeted hospital under 
                paragraph (8)(B)(i), the increase in payment under 
                paragraph (8)(B)(ii), the aggregate cap under paragraph 
                (8)(C)(i), the hospital-specific limit under paragraph 
                (8)(C)(ii), and the form of payment made by the 
                Secretary under paragraph (8)(D).
          ``(7) Monitoring inappropriate changes in admissions 
        practices.--The Secretary shall monitor the activities of 
        applicable hospitals to determine if such hospitals have taken 
        steps to avoid patients at risk in order to reduce the 
        likelihood of increasing readmissions for applicable 
        conditions. If the Secretary determines that such a hospital 
        has taken such a step, after notice to the hospital and 
        opportunity for the hospital to undertake action to alleviate 
        such steps, the Secretary may impose an appropriate sanction.
          ``(8) Assistance to certain hospitals.--
                  ``(A) In general.--For purposes of providing funds to 
                applicable hospitals to take steps described in 
                subparagraph (E) to address factors that may impact 
                readmissions of individuals who are discharged from 
                such a hospital, for fiscal years beginning on or after 
                October 1, 2011, the Secretary shall make a payment 
                adjustment for a hospital described in subparagraph 
                (B), with respect to each such fiscal year, by a 
                percent estimated by the Secretary to be consistent 
                with subparagraph (C).
                  ``(B) Targeted hospitals.--Subparagraph (A) shall 
                apply to an applicable hospital that--
                          ``(i) received (or, in the case of an 
                        1814(b)(3) hospital, otherwise would have been 
                        eligible to receive) $10,000,000 or more in 
                        disproportionate share payments using the 
                        latest available data as estimated by the 
                        Secretary; and
                          ``(ii) provides assurances satisfactory to 
                        the Secretary that the increase in payment 
                        under this paragraph shall be used for purposes 
                        described in subparagraph (E).
                  ``(C) Caps.--
                          ``(i) Aggregate cap.--The aggregate amount of 
                        the payment adjustment under this paragraph for 
                        a fiscal year shall not exceed 5 percent of the 
                        estimated difference in the spending that would 
                        occur for such fiscal year with and without 
                        application of the adjustment factor described 
                        in paragraph (3) and applied pursuant to 
                        paragraph (1).
                          ``(ii) Hospital-specific limit.--The 
                        aggregate amount of the payment adjustment for 
                        a hospital under this paragraph shall not 
                        exceed the estimated difference in spending 
                        that would occur for such fiscal year for such 
                        hospital with and without application of the 
                        adjustment factor described in paragraph (3) 
                        and applied pursuant to paragraph (1).
                  ``(D) Form of payment.--The Secretary may make the 
                additional payments under this paragraph on a lump sum 
                basis, a periodic basis, a claim by claim basis, or 
                otherwise.
                  ``(E) Use of additional payment.--Funding under this 
                paragraph shall be used by targeted hospitals for 
                transitional care activities designed to address the 
                patient noncompliance issues that result in higher than 
                normal readmission rates, such as one or more of the 
                following:
                          ``(i) Providing care coordination services to 
                        assist in transitions from the targeted 
                        hospital to other settings.
                          ``(ii) Hiring translators and interpreters.
                          ``(iii) Increasing services offered by 
                        discharge planners.
                          ``(iv) Ensuring that individuals receive a 
                        summary of care and medication orders upon 
                        discharge.
                          ``(v) Developing a quality improvement plan 
                        to assess and remedy preventable readmission 
                        rates.
                          ``(vi) Assigning discharged individuals to a 
                        medical home.
                          ``(vii) Doing other activities as determined 
                        appropriate by the Secretary.
                  ``(F) GAO report on use of funds.--Not later than 3 
                years after the date on which funds are first made 
                available under this paragraph, the Comptroller General 
                of the United States shall submit to Congress a report 
                on the use of such funds.
                  ``(G) Disproportionate share hospital payment.--In 
                this paragraph, the term `disproportionate share 
                hospital payment' means an additional payment amount 
                under subsection (d)(5)(F).''.
  (b) Application to Critical Access Hospitals.--Section 1814(l) of the 
Social Security Act (42 U.S.C. 1395f(l)) is amended--
          (1) in paragraph (5)--
                  (A) by striking ``and'' at the end of subparagraph 
                (C);
                  (B) by striking the period at the end of subparagraph 
                (D) and inserting ``; and'';
                  (C) by inserting at the end the following new 
                subparagraph:
          ``(E) the methodology for determining the adjustment factor 
        under paragraph (5), including the determination of aggregate 
        payments for actual and expected readmissions, applicable 
        periods, applicable conditions and measures of readmissions.''; 
        and
                  (D) by redesignating such paragraph as paragraph (6); 
                and
          (2) by inserting after paragraph (4) the following new 
        paragraph:
  ``(5) The adjustment factor described in section 1886(p)(3) shall 
apply to payments with respect to a critical access hospital with 
respect to a cost reporting period beginning in fiscal year 2012 and 
each subsequent fiscal year (after application of paragraph (4) of this 
subsection) in a manner similar to the manner in which such section 
applies with respect to a fiscal year to an applicable hospital as 
described in section 1886(p)(2).''.
  (c) Post Acute Care Providers.--
          (1) Interim policy.--
                  (A) In general.--With respect to a readmission to an 
                applicable hospital or a critical access hospital (as 
                described in section 1814(l) of the Social Security 
                Act) from a post acute care provider (as defined in 
                paragraph (3)) and such a readmission is not governed 
                by section 412.531 of title 42, Code of Federal 
                Regulations, if the claim submitted by such a post-
                acute care provider under title XVIII of the Social 
                Security Act indicates that the individual was 
                readmitted to a hospital from such a post-acute care 
                provider or admitted from home and under the care of a 
                home health agency within 30 days of an initial 
                discharge from an applicable hospital or critical 
                access hospital, the payment under such title on such 
                claim shall be the applicable percent specified in 
                subparagraph (B) of the payment that would otherwise be 
                made under the respective payment system under such 
                title for such post-acute care provider if this 
                subsection did not apply.
                  (B) Applicable percent defined.--For purposes of 
                subparagraph (A), the applicable percent is--
                          (i) for fiscal or rate year 2012 is 0.996;
                          (ii) for fiscal or rate year 2013 is 0.993; 
                        and
                          (iii) for fiscal or rate year 2014 is 0.99.
                  (C) Effective date.--Subparagraph (1) shall apply to 
                discharges or services furnished (as the case may be 
                with respect to the applicable post acute care 
                provider) on or after the first day of the fiscal year 
                or rate year, beginning on or after October 1, 2011, 
                with respect to the applicable post acute care 
                provider.
          (2) Development and application of performance measures.--
                  (A) In general.--The Secretary of Health and Human 
                Services shall develop appropriate measures of 
                readmission rates for post acute care providers. The 
                Secretary shall seek endorsement of such measures by 
                the entity with a contract under section 1890(a) of the 
                Social Security Act but may adopt and apply such 
                measures under this paragraph without such an 
                endorsement. The Secretary shall expand such measures 
                in a manner similar to the manner in which applicable 
                conditions are expanded under paragraph (5)(B) of 
                section 1886(p) of the Social Security Act, as added by 
                subsection (a).
                  (B) Implementation.--The Secretary shall apply, on or 
                after October 1, 2014, with respect to post acute care 
                providers, policies similar to the policies applied 
                with respect to applicable hospitals and critical 
                access hospitals under the amendments made by 
                subsection (a). The provisions of paragraph (1) shall 
                apply with respect to any period on or after October 1, 
                2014, and before such application date described in the 
                previous sentence in the same manner as such provisions 
                apply with respect to fiscal or rate year 2014.
                  (C) Monitoring and penalties.--The provisions of 
                paragraph (7) of such section 1886(p) shall apply to 
                providers under this paragraph in the same manner as 
                they apply to hospitals under such section.
          (3) Definitions.--For purposes of this subsection:
                  (A) Post acute care provider.--The term ``post acute 
                care provider'' means--
                          (i) a skilled nursing facility (as defined in 
                        section 1819(a) of the Social Security Act);
                          (ii) an inpatient rehabilitation facility 
                        (described in section 1886(h)(1)(A) of such 
                        Act);
                          (iii) a home health agency (as defined in 
                        section 1861(o) of such Act); and
                          (iv) a long term care hospital (as defined in 
                        section 1861(ccc) of such Act).
                  (B) Other terms .--The terms ``applicable 
                condition'', ``applicable hospital'', and 
                ``readmission'' have the meanings given such terms in 
                section 1886(p)(5) of the Social Security Act, as added 
                by subsection (a)(1).
  (d) Physicians.--
          (1) Study.--The Secretary of Health and Human Services shall 
        conduct a study to determine how the readmissions policy 
        described in the previous subsections could be applied to 
        physicians.
          (2) Considerations.--In conducting the study, the Secretary 
        shall consider approaches such as--
                  (A) creating a new code (or codes) and payment amount 
                (or amounts) under the fee schedule in section 1848 of 
                the Social Security Act (in a budget neutral manner) 
                for services furnished by an appropriate physician who 
                sees an individual within the first week after 
                discharge from a hospital or critical access hospital;
                  (B) developing measures of rates of readmission for 
                individuals treated by physicians;
                  (C) applying a payment reduction for physicians who 
                treat the patient during the initial admission that 
                results in a readmission; and
                  (D) methods for attributing payments or payment 
                reductions to the appropriate physician or physicians.
          (3) Report.--The Secretary shall issue a public report on 
        such study not later than the date that is one year after the 
        date of the enactment of this Act.
  (e) Funding.--For purposes of carrying out the provisions of this 
section, in addition to funds otherwise available, out of any funds in 
the Treasury not otherwise appropriated, there are appropriated to the 
Secretary of Health and Human Services for the Center for Medicare & 
Medicaid Services Program Management Account $25,000,000 for each 
fiscal year beginning with 2010. Amounts appropriated under this 
subsection for a fiscal year shall be available until expended.

SEC. 1152. POST ACUTE CARE SERVICES PAYMENT REFORM PLAN AND BUNDLING 
                    PILOT PROGRAM.

  (a) Plan.--
          (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall 
        develop a detailed plan to reform payment for post acute care 
        (PAC) services under the Medicare program under title XVIII of 
        the Social Security Act (in this section referred to as the 
        ``Medicare program)''. The goals of such payment reform are 
        to--
                  (A) improve the coordination, quality, and efficiency 
                of such services; and
                  (B) improve outcomes for individuals such as reducing 
                the need for readmission to hospitals from providers of 
                such services.
          (2) Bundling post acute services.--The plan described in 
        paragraph (1) shall include detailed specifications for a 
        bundled payment for post acute services (in this section 
        referred to as the ``post acute care bundle''), and may include 
        other approaches determined appropriate by the Secretary.
          (3) Post acute services.--For purposes of this section, the 
        term ``post acute services'' means services for which payment 
        may be made under the Medicare program that are furnished by 
        skilled nursing facilities, inpatient rehabilitation 
        facilities, long term care hospitals, hospital based outpatient 
        rehabilitation facilities and home health agencies to an 
        individual after discharge of such individual from a hospital, 
        and such other services determined appropriate by the 
        Secretary.
  (b) Details.--The plan described in subsection (a)(1) shall include 
consideration of the following issues:
          (1) The nature of payments under a post acute care bundle, 
        including the type of provider or entity to whom payment should 
        be made, the scope of activities and services included in the 
        bundle, whether payment for physicians' services should be 
        included in the bundle, and the period covered by the bundle.
          (2) Whether the payment should be consolidated with the 
        payment under the inpatient prospective system under section 
        1886 of the Social Security Act (in this section referred to as 
        MS-DRGs) or a separate payment should be established for such 
        bundle, and if a separate payment is established, whether it 
        should be made only upon use of post acute care services or for 
        every discharge.
          (3) Whether the bundle should be applied across all 
        categories of providers of inpatient services (including 
        critical access hospitals) and post acute care services or 
        whether it should be limited to certain categories of 
        providers, services, or discharges, such as high volume or high 
        cost MS-DRGs.
          (4) The extent to which payment rates could be established to 
        achieve offsets for efficiencies that could be expected to be 
        achieved with a bundle payment, whether such rates should be 
        established on a national basis or for different geographic 
        areas, should vary according to discharge, case mix, outliers, 
        and geographic differences in wages or other appropriate 
        adjustments, and how to update such rates.
          (5) The nature of protections needed for individuals under a 
        system of bundled payments to ensure that individuals receive 
        quality care, are furnished the level and amount of services 
        needed as determined by an appropriate assessment instrument, 
        are offered choice of provider, and the extent to which 
        transitional care services would improve quality of care for 
        individuals and the functioning of a bundled post-acute system.
          (6) The nature of relationships that may be required between 
        hospitals and providers of post acute care services to 
        facilitate bundled payments, including the application of 
        gainsharing, anti-referral, anti-kickback, and anti-trust laws.
          (7) Quality measures that would be appropriate for reporting 
        by hospitals and post acute providers (such as measures that 
        assess changes in functional status and quality measures 
        appropriate for each type of post acute services provider 
        including how the reporting of such quality measures could be 
        coordinated with other reporting of such quality measures by 
        such providers otherwise required).
          (8) How cost-sharing for a post acute care bundle should be 
        treated relative to current rules for cost-sharing for 
        inpatient hospital, home health, skilled nursing facility, and 
        other services.
          (9) How other programmatic issues should be treated in a post 
        acute care bundle, including rules specific to various types of 
        post-acute providers such as the post-acute transfer policy, 
        three-day hospital stay to qualify for services furnished by 
        skilled nursing facilities, and the coordination of payments 
        and care under the Medicare program and the Medicaid program.
          (10) Such other issues as the Secretary deems appropriate.
  (c) Consultations and Analysis.--
          (1) Consultation with stakeholders.--In developing the plan 
        under subsection (a)(1), the Secretary shall consult with 
        relevant stakeholders and shall consider experience with such 
        research studies and demonstrations that the Secretary 
        determines appropriate.
          (2) Analysis and data collection.--In developing such plan, 
        the Secretary shall--
                  (A) analyze the issues described in subsection (b) 
                and other issues that the Secretary determines 
                appropriate;
                  (B) analyze the impacts (including geographic 
                impacts) of post acute service reform approaches, 
                including bundling of such services on individuals, 
                hospitals, post acute care providers, and physicians;
                  (C) use existing data (such as data submitted on 
                claims) and collect such data as the Secretary 
                determines are appropriate to develop such plan 
                required in this section; and
                  (D) if patient functional status measures are 
                appropriate for the analysis, to the extent practical, 
                build upon the CARE tool being developed pursuant to 
                section 5008 of the Deficit Reduction Act of 2005.
  (d) Administration.--
          (1) Funding.--For purposes of carrying out the provisions of 
        this section, in addition to funds otherwise available, out of 
        any funds in the Treasury not otherwise appropriated, there are 
        appropriated to the Secretary for the Center for Medicare & 
        Medicaid Services Program Management Account $15,000,000 for 
        each of the fiscal years 2010 through 2012. Amounts 
        appropriated under this paragraph for a fiscal year shall be 
        available until expended.
          (2) Expedited data collection.--Chapter 35 of title 44, 
        United States Code shall not apply to this section.
  (e) Public Reports.--
          (1) Interim reports.--The Secretary shall issue interim 
        public reports on a periodic basis on the plan described in 
        subsection (a)(1), the issues described in subsection (b), and 
        impact analyses as the Secretary determines appropriate.
          (2) Final report.--Not later than the date that is 3 years 
        after the date of the enactment of this Act, the Secretary 
        shall issue a final public report on such plan, including 
        analysis of issues described in subsection (b) and impact 
        analyses.
  (f) Conversion of Acute Care Episode Demonstration to Pilot Program 
and Expansion to Include Post Acute Services.--
          (1) In general.--Part E of title XVIII of the Social Security 
        Act is amended by inserting after section 1866C the following 
        new section:
 ``conversion of acute care episode demonstration to pilot program and 
                expansion to include post acute services
  ``Sec. 1866D.  (a) Conversion and Expansion.--
          ``(1) In general.--By not later than January 1, 2011, the 
        Secretary shall, for the purpose of promoting the use of 
        bundled payments to promote efficient and high quality delivery 
        of care--
                  ``(A) convert the acute care episode demonstration 
                program conducted under section 1866C to a pilot 
                program; and
                  ``(B) subject to subsection (c), expand such program 
                as so converted to include post acute services and such 
                other services the Secretary determines to be 
                appropriate, which may include transitional services.
          ``(2) Bundled payment structures.--
                  ``(A) In general.--In carrying out paragraph (1), the 
                Secretary may apply bundled payments with respect to--
                          ``(i) hospitals and physicians;
                          ``(ii) hospitals and post-acute care 
                        providers;
                          ``(iii) hospitals, physicians, and post-acute 
                        care providers; or
                          ``(iv) combinations of post-acute providers.
                  ``(B) Further application.--
                          ``(i) In general.--In carrying out paragraph 
                        (1), the Secretary shall apply bundled payments 
                        in a manner so as to include collaborative care 
                        networks and continuing care hospitals.
                          ``(ii) Collaborative care network defined.--
                        For purposes of this subparagraph, the term 
                        `collaborative care network' means a consortium 
                        of health care providers that provides a 
                        comprehensive range of coordinated and 
                        integrated health care services to low-income 
                        patient populations (including the uninsured) 
                        which may include coordinated and comprehensive 
                        care by safety net providers to reduce any 
                        unnecessary use of items and services furnished 
                        in emergency departments, manage chronic 
                        conditions, improve quality and efficiency of 
                        care, increase preventive services, and promote 
                        adherence to post-acute and follow-up care 
                        plans.
                          ``(iii) Continuing care hospital defined.--
                        For purposes of this subparagraph, the term 
                        `continuing care hospital' means an entity that 
                        has demonstrated the ability to meet patient 
                        care and patient safety standards and that 
                        provides under common management the medical 
                        and rehabilitation services provided in 
                        inpatient rehabilitation hospitals and units 
                        (as defined in section 1886(d)(1)(B)(ii)), 
                        long-term care hospitals (as defined in section 
                        1886(d)(1)(B)(iv)(I)), and skilled nursing 
                        facilities (as defined in section 1819(a)) that 
                        are located in a hospital described in section 
                        1886(d).
  ``(b) Scope.--The pilot program under subsection (a) may include 
additional geographic areas and additional conditions which account for 
significant program spending, as defined by the Secretary. Nothing in 
this subsection shall be construed as limiting the number of hospital 
and physician groups or the number of hospital and post-acute provider 
groups that may participate in the pilot program.
  ``(c) Limitation.--The Secretary shall only expand the pilot program 
under subsection (a) if the Secretary finds that--
          ``(1) the demonstration program under section 1866C and pilot 
        program under this section maintain or increase the quality of 
        care received by individuals enrolled under this title; and
          ``(2) such demonstration program and pilot program reduce 
        program expenditures and, based on the certification under 
        subsection (d), that the expansion of such pilot program would 
        result in estimated spending that would be less than what 
        spending would otherwise be in the absence of this section.
  ``(d) Certification.--For purposes of subsection (c), the Chief 
Actuary of the Centers for Medicare & Medicaid Services shall certify 
whether expansion of the pilot program under this section would result 
in estimated spending that would be less than what spending would 
otherwise be in the absence of this section.
  ``(e) Voluntary Participation.--Nothing in this paragraph shall be 
construed as requiring the participation of an entity in the pilot 
program under this section.
  ``(f) Evaluation on Cost and Quality of Care.--The Secretary shall 
conduct an evaluation of the pilot program under subsection (a) to 
study the effect of such program on costs and quality of care. The 
findings of such evaluation shall be included in the final report 
required under section 1152(e)(2) of America's Affordable Health 
Choices Act of 2009.
  ``(g) Study of Additional Bundling and Episode-based Payment for 
Physicians' Services.--
          ``(1) In general.--The Secretary shall provide for a study of 
        and development of a plan for testing additional ways to 
        increase bundling of payments for physicians in connection with 
        an episode of care, such as in connection with outpatient 
        hospital services or services rendered in physicians' offices, 
        other than those provided under the pilot program.
          ``(2) Application.--The Secretary may implement such a plan 
        through a demonstration program.''.
          (2) Conforming amendment.--Section 1866C(b) of the Social 
        Security Act (42 U.S.C. 1395cc-3(b)) is amended by striking 
        ``The Secretary'' and inserting ``Subject to section 1866D, the 
        Secretary''.

SEC. 1153. HOME HEALTH PAYMENT UPDATE FOR 2010.

  Section 1895(b)(3)(B)(ii) of the Social Security Act (42 U.S.C. 
1395fff(b)(3)(B)(ii)) is amended--
          (1) in subclause (IV), by striking ``and'';
          (2) by redesignating subclause (V) as subclause (VII); and
          (3) by inserting after subclause (IV) the following new 
        subclauses:
                                  ``(V) 2007, 2008, and 2009, subject 
                                to clause (v), the home health market 
                                basket percentage increase;
                                  ``(VI) 2010, subject to clause (v), 0 
                                percent; and''.

SEC. 1154. PAYMENT ADJUSTMENTS FOR HOME HEALTH CARE.

  (a) Acceleration of Adjustment for Case Mix Changes.--Section 
1895(b)(3)(B) of the Social Security Act (42 U.S.C. 1395fff(b)(3)(B)) 
is amended--
          (1) in clause (iv), by striking ``Insofar as'' and inserting 
        ``Subject to clause (vi), insofar as''; and
          (2) by adding at the end the following new clause:
                          ``(vi) Special rule for case mix changes for 
                        2011.--
                                  ``(I) In general.--With respect to 
                                the case mix adjustments established in 
                                section 484.220(a) of title 42, Code of 
                                Federal Regulations, the Secretary 
                                shall apply, in 2010, the adjustment 
                                established in paragraph (3) of such 
                                section for 2011, in addition to 
                                applying the adjustment established in 
                                paragraph (2) for 2010.
                                  ``(II) Construction.--Nothing in this 
                                clause shall be construed as limiting 
                                the amount of adjustment for case mix 
                                for 2010 or 2011 if more recent data 
                                indicate an appropriate adjustment that 
                                is greater than the amount established 
                                in the section described in subclause 
                                (I).''.
  (b) Rebasing Home Health Prospective Payment Amount.--Section 
1895(b)(3)(A) of the Social Security Act (42 U.S.C. 1395fff(b)(3)(A)) 
is amended--
          (1) in clause (i)--
                  (A) in subclause (III), by inserting ``and before 
                2011'' after ``after the period described in subclause 
                (II)''; and
                  (B) by inserting after subclause (III) the following 
                new subclauses:
                                  ``(IV) Subject to clause (iii)(I), 
                                for 2011, such amount (or amounts) 
                                shall be adjusted by a uniform 
                                percentage determined to be appropriate 
                                by the Secretary based on analysis of 
                                factors such as changes in the average 
                                number and types of visits in an 
                                episode, the change in intensity of 
                                visits in an episode, growth in cost 
                                per episode, and other factors that the 
                                Secretary considers to be relevant.
                                  ``(V) Subject to clause (iii)(II), 
                                for a year after 2011, such a amount 
                                (or amounts) shall be equal to the 
                                amount (or amounts) determined under 
                                this clause for the previous year, 
                                updated under subparagraph (B).''; and
          (2) by adding at the end the following new clause:
                          ``(iii) Special rule in case of inability to 
                        effect timely rebasing.--
                                  ``(I) Application of proxy amount for 
                                2011.--If the Secretary is not able to 
                                compute the amount (or amounts) under 
                                clause (i)(IV) so as to permit, on a 
                                timely basis, the application of such 
                                clause for 2011, the Secretary shall 
                                substitute for such amount (or amounts) 
                                95 percent of the amount (or amounts) 
                                that would otherwise be specified under 
                                clause (i)(III) if it applied for 2011.
                                  ``(II) Adjustment for subsequent 
                                years based on data.--If the Secretary 
                                applies subclause (I), the Secretary 
                                before July 1, 2011, shall compare the 
                                amount (or amounts) applied under such 
                                subclause with the amount (or amounts) 
                                that should have been applied under 
                                clause (i)(IV). The Secretary shall 
                                decrease or increase the prospective 
                                payment amount (or amounts) under 
                                clause (i)(V) for 2012 (or, at the 
                                Secretary's discretion, over a period 
                                of several years beginning with 2012) 
                                by the amount (if any) by which the 
                                amount (or amounts) applied under 
                                subclause (I) is greater or less, 
                                respectively, than the amount (or 
                                amounts) that should have been applied 
                                under clause (i)(IV).''.

SEC. 1155. INCORPORATING PRODUCTIVITY IMPROVEMENTS INTO MARKET BASKET 
                    UPDATE FOR HOME HEALTH SERVICES.

  (a) In General.--Section 1895(b)(3)(B) of the Social Security Act (42 
U.S.C. 1395fff(b)(3)(B)) is amended--
          (1) in clause (iii), by inserting ``(including being subject 
        to the productivity adjustment described in section 
        1886(b)(3)(B)(iii)(II))'' after ``in the same manner''; and
          (2) in clause (v)(I), by inserting ``(but not below 0)'' 
        after ``reduced''.
  (b) Effective Date.--The amendment made by subsection (a) shall apply 
to home health market basket percentage increases for years beginning 
with 2010.

SEC. 1156. LIMITATION ON MEDICARE EXCEPTIONS TO THE PROHIBITION ON 
                    CERTAIN PHYSICIAN REFERRALS MADE TO HOSPITALS.

  (a) In General.--Section 1877 of the Social Security Act (42 U.S.C. 
1395nn) is amended--
          (1) in subsection (d)(2)--
                  (A) in subparagraph (A), by striking ``and'' at the 
                end;
                  (B) in subparagraph (B), by striking the period at 
                the end and inserting ``; and''; and
                  (C) by adding at the end the following new 
                subparagraph:
                  ``(C) in the case where the entity is a hospital, the 
                hospital meets the requirements of paragraph (3)(D).'';
          (2) in subsection (d)(3)--
                  (A) in subparagraph (B), by striking ``and'' at the 
                end;
                  (B) in subparagraph (C), by striking the period at 
                the end and inserting ``; and''; and
                  (C) by adding at the end the following new 
                subparagraph:
                  ``(D) the hospital meets the requirements described 
                in subsection (i)(1).'';
          (3) by amending subsection (f) to read as follows:
  ``(f) Reporting and Disclosure Requirements.--
          ``(1) In general.--Each entity providing covered items or 
        services for which payment may be made under this title shall 
        provide the Secretary with the information concerning the 
        entity's ownership, investment, and compensation arrangements, 
        including--
                  ``(A) the covered items and services provided by the 
                entity, and
                  ``(B) the names and unique physician identification 
                numbers of all physicians with an ownership or 
                investment interest (as described in subsection 
                (a)(2)(A)), or with a compensation arrangement (as 
                described in subsection (a)(2)(B)), in the entity, or 
                whose immediate relatives have such an ownership or 
                investment interest or who have such a compensation 
                relationship with the entity.
        Such information shall be provided in such form, manner, and at 
        such times as the Secretary shall specify. The requirement of 
        this subsection shall not apply to designated health services 
        provided outside the United States or to entities which the 
        Secretary determines provide services for which payment may be 
        made under this title very infrequently.
          ``(2) Requirements for hospitals with physician ownership or 
        investment.--In the case of a hospital that meets the 
        requirements described in subsection (i)(1), the hospital 
        shall--
                  ``(A) submit to the Secretary an initial report, and 
                periodic updates at a frequency determined by the 
                Secretary, containing a detailed description of the 
                identity of each physician owner and physician investor 
                and any other owners or investors of the hospital;
                  ``(B) require that any referring physician owner or 
                investor discloses to the individual being referred, by 
                a time that permits the individual to make a meaningful 
                decision regarding the receipt of services, as 
                determined by the Secretary, the ownership or 
                investment interest, as applicable, of such referring 
                physician in the hospital; and
                  ``(C) disclose the fact that the hospital is 
                partially or wholly owned by one or more physicians or 
                has one or more physician investors--
                          ``(i) on any public website for the hospital; 
                        and
                          ``(ii) in any public advertising for the 
                        hospital.
        The information to be reported or disclosed under this 
        paragraph shall be provided in such form, manner, and at such 
        times as the Secretary shall specify. The requirements of this 
        paragraph shall not apply to designated health services 
        furnished outside the United States or to entities which the 
        Secretary determines provide services for which payment may be 
        made under this title very infrequently.
          ``(3) Publication of information.--The Secretary shall 
        publish, and periodically update, the information submitted by 
        hospitals under paragraph (2)(A) on the public Internet website 
        of the Centers for Medicare & Medicaid Services.'';
          (4) by amending subsection (g)(5) to read as follows:
          ``(5) Failure to report or disclose information.--
                  ``(A) Reporting.--Any person who is required, but 
                fails, to meet a reporting requirement of paragraphs 
                (1) and (2)(A) of subsection (f) is subject to a civil 
                money penalty of not more than $10,000 for each day for 
                which reporting is required to have been made.
                  ``(B) Disclosure.--Any physician who is required, but 
                fails, to meet a disclosure requirement of subsection 
                (f)(2)(B) or a hospital that is required, but fails, to 
                meet a disclosure requirement of subsection (f)(2)(C) 
                is subject to a civil money penalty of not more than 
                $10,000 for each case in which disclosure is required 
                to have been made.
                  ``(C) Application.--The provisions of section 1128A 
                (other than the first sentence of subsection (a) and 
                other than subsection (b)) shall apply to a civil money 
                penalty under subparagraphs (A) and (B) in the same 
                manner as such provisions apply to a penalty or 
                proceeding under section 1128A(a).''; and
          (5) by adding at the end the following new subsection:
  ``(i) Requirements To Qualify for Rural Provider and Hospital 
Ownership Exceptions to Self-referral Prohibition.--
          ``(1) Requirements described.--For purposes of subsection 
        (d)(3)(D), the requirements described in this paragraph are as 
        follows:
                  ``(A) Provider agreement.--The hospital had--
                          ``(i) physician ownership or investment on 
                        January 1, 2009; and
                          ``(ii) a provider agreement under section 
                        1866 in effect on such date.
                  ``(B) Prohibition on physician ownership or 
                investment.--The percentage of the total value of the 
                ownership or investment interests held in the hospital, 
                or in an entity whose assets include the hospital, by 
                physician owners or investors in the aggregate does not 
                exceed such percentage as of the date of enactment of 
                this subsection.
                  ``(C) Prohibition on expansion of facility 
                capacity.--Except as provided in paragraph (2), the 
                number of operating rooms, procedure rooms, or beds of 
                the hospital at any time on or after the date of the 
                enactment of this subsection are no greater than the 
                number of operating rooms, procedure rooms, or beds, 
                respectively, as of such date.
                  ``(D) Ensuring bona fide ownership and investment.--
                          ``(i) Any ownership or investment interests 
                        that the hospital offers to a physician are not 
                        offered on more favorable terms than the terms 
                        offered to a person who is not in a position to 
                        refer patients or otherwise generate business 
                        for the hospital.
                          ``(ii) The hospital (or any investors in the 
                        hospital) does not directly or indirectly 
                        provide loans or financing for any physician 
                        owner or investor in the hospital.
                          ``(iii) The hospital (or any investors in the 
                        hospital) does not directly or indirectly 
                        guarantee a loan, make a payment toward a loan, 
                        or otherwise subsidize a loan, for any 
                        physician owner or investor or group of 
                        physician owners or investors that is related 
                        to acquiring any ownership or investment 
                        interest in the hospital.
                          ``(iv) Ownership or investment returns are 
                        distributed to each owner or investor in the 
                        hospital in an amount that is directly 
                        proportional to the ownership or investment 
                        interest of such owner or investor in the 
                        hospital.
                          ``(v) The investment interest of the owner or 
                        investor is directly proportional to the 
                        owner's or investor's capital contributions 
                        made at the time the ownership or investment 
                        interest is obtained.
                          ``(vi) Physician owners and investors do not 
                        receive, directly or indirectly, any guaranteed 
                        receipt of or right to purchase other business 
                        interests related to the hospital, including 
                        the purchase or lease of any property under the 
                        control of other owners or investors in the 
                        hospital or located near the premises of the 
                        hospital.
                          ``(vii) The hospital does not offer a 
                        physician owner or investor the opportunity to 
                        purchase or lease any property under the 
                        control of the hospital or any other owner or 
                        investor in the hospital on more favorable 
                        terms than the terms offered to a person that 
                        is not a physician owner or investor.
                          ``(viii) The hospital does not condition any 
                        physician ownership or investment interests 
                        either directly or indirectly on the physician 
                        owner or investor making or influencing 
                        referrals to the hospital or otherwise 
                        generating business for the hospital.
                  ``(E) Patient safety.--In the case of a hospital that 
                does not offer emergency services, the hospital has the 
                capacity to--
                          ``(i) provide assessment and initial 
                        treatment for medical emergencies; and
                          ``(ii) if the hospital lacks additional 
                        capabilities required to treat the emergency 
                        involved, refer and transfer the patient with 
                        the medical emergency to a hospital with the 
                        required capability.
                  ``(F) Limitation on application to certain converted 
                facilities.--The hospital was not converted from an 
                ambulatory surgical center to a hospital on or after 
                the date of enactment of this subsection.
          ``(2) Exception to prohibition on expansion of facility 
        capacity.--
                  ``(A) Process.--
                          ``(i) Establishment.--The Secretary shall 
                        establish and implement a process under which a 
                        hospital may apply for an exception from the 
                        requirement under paragraph (1)(C).
                          ``(ii) Opportunity for community input.--The 
                        process under clause (i) shall provide persons 
                        and entities in the community in which the 
                        hospital applying for an exception is located 
                        with the opportunity to provide input with 
                        respect to the application.
                          ``(iii) Timing for implementation.--The 
                        Secretary shall implement the process under 
                        clause (i) on the date that is one month after 
                        the promulgation of regulations described in 
                        clause (iv).
                          ``(iv) Regulations.--Not later than the first 
                        day of the month beginning 18 months after the 
                        date of the enactment of this subsection, the 
                        Secretary shall promulgate regulations to carry 
                        out the process under clause (i). The Secretary 
                        may issue such regulations as interim final 
                        regulations.
                  ``(B) Frequency.--The process described in 
                subparagraph (A) shall permit a hospital to apply for 
                an exception up to once every 2 years.
                  ``(C) Permitted increase.--
                          ``(i) In general.--Subject to clause (ii) and 
                        subparagraph (D), a hospital granted an 
                        exception under the process described in 
                        subparagraph (A) may increase the number of 
                        operating rooms, procedure rooms, or beds of 
                        the hospital above the baseline number of 
                        operating rooms, procedure rooms, or beds, 
                        respectively, of the hospital (or, if the 
                        hospital has been granted a previous exception 
                        under this paragraph, above the number of 
                        operating rooms, procedure rooms, or beds, 
                        respectively, of the hospital after the 
                        application of the most recent increase under 
                        such an exception).
                          ``(ii) 100 percent increase limitation.--The 
                        Secretary shall not permit an increase in the 
                        number of operating rooms, procedure rooms, or 
                        beds of a hospital under clause (i) to the 
                        extent such increase would result in the number 
                        of operating rooms, procedure rooms, or beds of 
                        the hospital exceeding 200 percent of the 
                        baseline number of operating rooms, procedure 
                        rooms, or beds of the hospital.
                          ``(iii) Baseline number of operating rooms, 
                        procedure rooms, or beds.--In this paragraph, 
                        the term `baseline number of operating rooms, 
                        procedure rooms, or beds' means the number of 
                        operating rooms, procedure rooms, or beds of a 
                        hospital as of the date of enactment of this 
                        subsection.
                  ``(D) Increase limited to facilities on the main 
                campus of the hospital.--Any increase in the number of 
                operating rooms, procedure rooms, or beds of a hospital 
                pursuant to this paragraph may only occur in facilities 
                on the main campus of the hospital.
                  ``(E) Conditions for approval of an increase in 
                facility capacity.--The Secretary may grant an 
                exception under the process described in subparagraph 
                (A) only to a hospital--
                          ``(i) that is located in a county in which 
                        the percentage increase in the population 
                        during the most recent 5-year period for which 
                        data are available is estimated to be at least 
                        150 percent of the percentage increase in the 
                        population growth of the State in which the 
                        hospital is located during that period, as 
                        estimated by Bureau of the Census and available 
                        to the Secretary;
                          ``(ii) whose annual percent of total 
                        inpatient admissions that represent inpatient 
                        admissions under the program under title XIX is 
                        estimated to be equal to or greater than the 
                        average percent with respect to such admissions 
                        for all hospitals located in the county in 
                        which the hospital is located;
                          ``(iii) that does not discriminate against 
                        beneficiaries of Federal health care programs 
                        and does not permit physicians practicing at 
                        the hospital to discriminate against such 
                        beneficiaries;
                          ``(iv) that is located in a State in which 
                        the average bed capacity in the State is 
                        estimated to be less than the national average 
                        bed capacity;
                          ``(v) that has an average bed occupancy rate 
                        that is estimated to be greater than the 
                        average bed occupancy rate in the State in 
                        which the hospital is located; and
                          ``(vi) that meets other conditions as 
                        determined by the Secretary.
                  ``(F) Procedure rooms.--In this subsection, the term 
                `procedure rooms' includes rooms in which 
                catheterizations, angiographies, angiograms, and 
                endoscopies are furnished, but such term shall not 
                include emergency rooms or departments (except for 
                rooms in which catheterizations, angiographies, 
                angiograms, and endoscopies are furnished).
                  ``(G) Publication of final decisions.--Not later than 
                120 days after receiving a complete application under 
                this paragraph, the Secretary shall publish on the 
                public Internet website of the Centers for Medicare & 
                Medicaid Services the final decision with respect to 
                such application.
                  ``(H) Limitation on review.--There shall be no 
                administrative or judicial review under section 1869, 
                section 1878, or otherwise of the exception process 
                under this paragraph, including the establishment of 
                such process, and any determination made under such 
                process.
          ``(3) Physician owner or investor defined.--For purposes of 
        this subsection and subsection (f)(2), the term `physician 
        owner or investor' means a physician (or an immediate family 
        member of such physician) with a direct or an indirect 
        ownership or investment interest in the hospital.
          ``(4) Patient safety requirement.--In the case of a hospital 
        to which the requirements of paragraph (1) apply, insofar as 
        the hospital admits a patient and does not have any physician 
        available on the premises 24 hours per day, 7 days per week, 
        before admitting the patient--
                  ``(A) the hospital shall disclose such fact to the 
                patient; and
                  ``(B) following such disclosure, the hospital shall 
                receive from the patient a signed acknowledgment that 
                the patient understands such fact.
          ``(5) Clarification.--Nothing in this subsection shall be 
        construed as preventing the Secretary from terminating a 
        hospital's provider agreement if the hospital is not in 
        compliance with regulations pursuant to section 1866.''.
  (b) Verifying Compliance.--The Secretary of Health and Human Services 
shall establish policies and procedures to verify compliance with the 
requirements described in subsections (i)(1) and (i)(4) of section 1877 
of the Social Security Act, as added by subsection (a)(5). The 
Secretary may use unannounced site reviews of hospitals and audits to 
verify compliance with such requirements.
  (c) Implementation.--
          (1) Funding.--For purposes of carrying out the amendments 
        made by subsection (a) and the provisions of subsection (b), in 
        addition to funds otherwise available, out of any funds in the 
        Treasury not otherwise appropriated there are appropriated to 
        the Secretary of Health and Human Services for the Centers for 
        Medicare & Medicaid Services Program Management Account 
        $5,000,000 for each fiscal year beginning with fiscal year 
        2010. Amounts appropriated under this paragraph for a fiscal 
        year shall be available until expended.
          (2) Administration.--Chapter 35 of title 44, United States 
        Code, shall not apply to the amendments made by subsection (a) 
        and the provisions of subsection (b).

SEC. 1157. INSTITUTE OF MEDICINE STUDY OF GEOGRAPHIC ADJUSTMENT FACTORS 
                    UNDER MEDICARE.

  (a) In General.--The Secretary of Health and Human Services shall 
enter into a contract with the Institute of Medicine of the National 
Academy of Science to conduct a comprehensive empirical study, and 
provide recommendations as appropriate, on the accuracy of the 
geographic adjustment factors established under sections 1848(e) and 
1886(d)(3)(E) of the Social Security Act (42 U.S.C. 1395w-4(e), 
11395ww(d)(3)).
  (b) Matters Included.--Such study shall include an evaluation and 
assessment of the following with respect to such adjustment factors:
          (1) Empirical validity of the adjustment factors.
          (2) Methodology used to determine the adjustment factors.
          (3) Measures used for the adjustment factors, taking into 
        account--
                  (A) timeliness of data and frequency of revisions to 
                such data;
                  (B) sources of data and the degree to which such data 
                are representative of costs; and
                  (C) operational costs of providers who participate in 
                Medicare.
  (c) Evaluation.--Such study shall, within the context of the United 
States health care marketplace, evaluate and consider the following:
          (1) The effect of the adjustment factors on the level and 
        distribution of the health care workforce and resources, 
        including--
                  (A) recruitment and retention that takes into account 
                workforce mobility between urban and rural areas;
                  (B) ability of hospitals and other facilities to 
                maintain an adequate and skilled workforce; and
                  (C) patient access to providers and needed medical 
                technologies.
          (2) The effect of the adjustment factors on population health 
        and quality of care.
          (3) The effect of the adjustment factors on the ability of 
        providers to furnish efficient, high value care.
  (d) Report.--The contract under subsection (a) shall provide for the 
Institute of Medicine to submit, not later than one year after the date 
of the enactment of this Act, to the Secretary and the Congress a 
report containing results and recommendations of the study conducted 
under this section.
  (e) Funding.--There are authorized to be appropriated to carry out 
this section such sums as may be necessary.

SEC. 1158. REVISION OF MEDICARE PAYMENT SYSTEMS TO ADDRESS GEOGRAPHIC 
                    INEQUITIES.

  (a) Revision of Medicare Payment Systems.--Taking into account the 
recommendations described in the report under section 1157, and 
notwithstanding the geographic adjustments that would otherwise apply 
under section 1848(e) and section 1886(d)(3)(E) of the Social Security 
Act ((42 U.S.C. 1395w-4, 1395ww(d)), the Secretary of Health and Human 
Services shall include in proposed rules applicable to the rulemaking 
cycle for payment systems for physicians' services and inpatient 
hospital services under sections 1848 and section 1886(d) of such Act, 
respectively, proposals (as the Secretary determines to be appropriate) 
to revise the geographic adjustment factors used in such systems. Such 
proposals' rules shall be contained in the next rulemaking cycle 
following the submission to the Secretary of the report described in 
section 1157.
  (b) Payment Adjustments.--
          (1) Funding for improvements.--The Secretary shall use funds 
        as provided under subsection (c) in making changes to the 
        geographic adjustment factors pursuant to subsection (a). In 
        making such changes to such geographic adjustment factors, the 
        Secretary shall ensure that the estimated increased 
        expenditures resulting from such changes does not exceed the 
        amounts provided under subsection (c).
          (2) Ensuring fairness.--In carrying out this subsection, the 
        Secretary shall not reduce the geographic adjustment below the 
        factor that applied for such payment system in the payment year 
        before such changes.
  (c) Funding.--Amounts in the Medicare Improvement Fund under section 
1898, as amended by section 1146, shall be available to the Secretary 
to make changes to the geographic adjustments factors as described in 
subsections (a) and (b) with respect to services furnished before 
January 1, 2014.   No more than one-half of such amounts shall be 
available with respect to services furnished in any one payment year.

SEC. 1159. INSTITUTE OF MEDICINE STUDY OF GEOGRAPHIC VARIATION IN 
                    HEALTH CARE SPENDING AND PROMOTING HIGH-VALUE 
                    HEALTH CARE.

  (a) In General.--The Secretary of Health and Human Services shall 
enter into an agreement with the Institutes of Medicine of the National 
Academies (referred to in this section as the ``Institute'') to conduct 
a study on geographic variation in per capita health care spending 
among both the Medicare and privately insured populations. Such study 
shall include each of the following:
          (1) An evaluation of the extent and range of such variation 
        using various units of geographic measurement.
          (2) The extent to which geographic variation can be 
        attributed to differences in input prices, practice patterns, 
        access to medical services, supply of medical services, socio-
        economic factors, and provider organizational models.
          (3) The extent to which variations in spending are correlated 
        with patient access to care, distribution of health care 
        resources, and consensus-based measures of health care quality.
          (4) The extent to which variation can be attributed to 
        physician and practitioner discretion in making treatment 
        decisions, and the degree to which discretionary treatment 
        decisions are made that could be characterized as different 
        from the best available medical evidence.
          (5) An assessment of the degree to which variation cannot be 
        explained by empirical evidence.
          (6) Other factors the Institute deems appropriate.
  (b) Recommendations.--Taking into account the findings under 
subsection (a), the Institute shall recommend strategies for addressing 
variation in per capita spending by promoting high-value care (as 
defined in subsection (e)). In making such recommendations, the 
Institute shall consider each of the following:
          (1) Measurement and reporting on quality and population 
        health.
          (2) Reducing fragmented and duplicative care.
          (3) Promoting the practice of evidence-based medicine.
          (4) Empowering patients to make value-based care decisions.
          (5) Leveraging the use of health information technology.
          (6) The role of financial and other incentives.
          (7) Other topics the Institute deems appropriate.
  (c) Specific Considerations.--In making the recommendations under 
subsection (b), the Institute shall specifically address whether 
payment systems under title XVIII of the Social Security Act for 
physicians and hospitals should be further modified to incentivize 
high-value care. In so doing, the Institute shall consider the adoption 
of a value index based on a composite of appropriate measures of 
quality and cost that would adjust provider payments on a regional or 
provider-level basis. If the Institute finds that application of such a 
value index would significantly incentivize providers to furnish high-
value care, it shall make specific recommendations on how such an index 
would be designed and implemented. In so doing, it should identify 
specific measures of quality and cost appropriate for use in such an 
index, and include a thorough analysis (including on a geographic 
basis) of how payments and spending under such title would be affected 
by such an index.
  (d) Report.-- Not later than three years after the date of the 
enactment of this Act, the Institute shall submit to Congress a report 
containing findings and recommendations of the study conducted under 
this section.
  (e) High-value Care Defined.--For purposes of this section, the term 
``high-value care'' means the efficient delivery of high quality, 
evidence-based, patient-centered care.
  (f) Authorization of Appropriations.--There is authorized to be 
appropriated such sums as are necessary to carry out this section. Such 
sums are authorized to remain available until expended.

                 Subtitle D--Medicare Advantage Reforms

                   PART 1--PAYMENT AND ADMINISTRATION

SEC. 1161. PHASE-IN OF PAYMENT BASED ON FEE-FOR-SERVICE COSTS.

  Section 1853 of the Social Security Act (42 U.S.C. 1395w-23) is 
amended--
          (1) in subsection (j)(1)(A)--
                  (A) by striking ``beginning with 2007'' and inserting 
                ``for 2007, 2008, 2009, and 2010''; and
                  (B) by inserting after ``(k)(1)'' the following: ``, 
                or, beginning with 2011, \1/12\ of the blended 
                benchmark amount determined under subsection (n)(1)''; 
                and
          (2) by adding at the end the following new subsection:
  ``(n) Determination of Blended Benchmark Amount.--
          ``(1) In general.--For purposes of subsection (j), subject to 
        paragraphs (3) and (4), the term `blended benchmark amount' 
        means for an area--
                  ``(A) for 2011 the sum of--
                          ``(i) \2/3\ of the applicable amount (as 
                        defined in subsection (k)) for the area and 
                        year; and
                          ``(ii) \1/3\ of the amount specified in 
                        paragraph (2) for the area and year;
                  ``(B) for 2012 the sum of--
                          ``(i) \1/3\ of the applicable amount for the 
                        area and year; and
                          ``(ii) \2/3\ of the amount specified in 
                        paragraph (2) for the area and year; and
                  ``(C) for a subsequent year the amount specified in 
                paragraph (2) for the area and year.
          ``(2) Specified amount.--The amount specified in this 
        paragraph for an area and year is the amount specified in 
        subsection (c)(1)(D)(i) for the area and year adjusted (in a 
        manner specified by the Secretary) to take into account the 
        phase-out in the indirect costs of medical education from 
        capitation rates described in subsection (k)(4).
          ``(3) Fee-for-service payment floor.--In no case shall the 
        blended benchmark amount for an area and year be less than the 
        amount specified in paragraph (2).
          ``(4) Exception for pace plans.--This subsection shall not 
        apply to payments to a PACE program under section 1894.''.

SEC. 1162. QUALITY BONUS PAYMENTS.

  (a) In General.--Section 1853 of the Social Security Act (42 U.S.C. 
1395w-23), as amended by section 1161, is amended--
          (1) in subsection (j), by inserting ``subject to subsection 
        (o),'' after ``For purposes of this part,''; and
          (2) by adding at the end the following new subsection:
  ``(o) Quality Based Payment Adjustment.--
          ``(1) In general.--In the case of a qualifying plan in a 
        qualifying county with respect to a year beginning with 2011, 
        the blended benchmark amount under subsection (n)(1) shall be 
        increased--
                  ``(A) for 2011, by 2.6 percent;
                  ``(B) for 2012, by 5.3 percent; and
                  ``(C) for a subsequent year, by 8.0 percent.
          ``(2) Qualifying plan and qualifying county defined.--For 
        purposes of this subsection:
                  ``(A) Qualifying plan.--The term `qualifying plan' 
                means, for a year and subject to paragraph (4), a plan 
                that, in a preceding year specified by the Secretary, 
                had a quality ranking (based on the quality ranking 
                system established by the Centers for Medicare & 
                Medicaid Services for Medicare Advantage plans) of 4 
                stars or higher.
                  ``(B) Qualifying county.--The term `qualifying 
                county' means, for a year, a county--
                          ``(i) that ranked within the lowest quartile 
                        of counties in the amount specified in 
                        subsection (n)(2) for the year specified by the 
                        Secretary under subparagraph (A); and
                          ``(ii) for which, as of June of such 
                        specified year, of the Medicare Advantage 
                        eligible individuals residing in the county--
                                  ``(I) at least 50 percent of such 
                                individuals were enrolled in Medicare 
                                Advantage plans; and
                                  ``(II) of the residents so enrolled 
                                at least 50 percent of such individuals 
                                were enrolled in such plans with a 
                                quality ranking (based on the quality 
                                ranking system established by the 
                                Centers for Medicare & Medicaid 
                                Services for Medicare Advantage plans) 
                                of 4 stars or higher.
          ``(3) Notification.--The Secretary, in the annual 
        announcement required under subsection (b)(1)(B) in 2010 and 
        each succeeding year, shall notify the Medicare Advantage 
        organization that is offering a qualifying plan in a qualifying 
        county of such identification for the year. The Secretary shall 
        provide for publication on the website for the Medicare program 
        of the information described in the previous sentence.
          ``(4) Authority to disqualify deficient plans.--The Secretary 
        may determine that a Medicare Advantage plan is not a 
        qualifying plan if the Secretary has identified deficiencies in 
        the plan's compliance with rules for Medicare Advantage plans 
        under this part.''.

SEC. 1163. EXTENSION OF SECRETARIAL CODING INTENSITY ADJUSTMENT 
                    AUTHORITY.

  Section 1853(a)(1)(C)(ii) of the Social Security Act (42 U.S.C. 
1395w-23(a)(1)(C)(ii) is amended--
          (1) in the matter before subclause (I), by striking ``through 
        2010'' and inserting ``and each subsequent year''; and
          (2) in subclause (II)--
                  (A) by inserting ``periodically'' before ``conduct an 
                analysis'';
                  (B) by inserting ``on a timely basis'' after ``are 
                incorporated''; and
                  (C) by striking ``only for 2008, 2009, and 2010'' and 
                inserting ``for 2008 and subsequent years''.

SEC. 1164. SIMPLIFICATION OF ANNUAL BENEFICIARY ELECTION PERIODS.

  (a) 2 Week Processing Period for Annual Enrollment Period (AEP).--
Paragraph (3)(B) of section 1851(e) of the Social Security Act (42 
U.S.C. 1395w-21(e)) is amended--
          (1) by striking ``and'' at the end of clause (iii);
          (2) in clause (iv)--
                  (A) by striking ``and succeeding years'' and 
                inserting ``, 2008, 2009, and 2010''; and
                  (B) by striking the period at the end and inserting 
                ``; and''; and
          (3) by adding at the end the following new clause:
                          ``(v) with respect to 2011 and succeeding 
                        years, the period beginning on November 1 and 
                        ending on December 15 of the year before such 
                        year.''.
  (b) Elimination of 3-month Additional Open Enrollment Period (OEP).--
Effective for plan years beginning with 2011, paragraph (2) of such 
section is amended by striking subparagraph (C).

SEC. 1165. EXTENSION OF REASONABLE COST CONTRACTS.

  Section 1876(h)(5)(C) of the Social Security Act (42 U.S.C. 
1395mm(h)(5)(C)) is amended--
          (1) in clause (ii), by striking ``January 1, 2010'' and 
        inserting ``January 1, 2012''; and
          (2) in clause (iii), by striking ``the service area for the 
        year'' and inserting ``the portion of the plan's service area 
        for the year that is within the service area of a reasonable 
        cost reimbursement contract''.

SEC. 1166. LIMITATION OF WAIVER AUTHORITY FOR EMPLOYER GROUP PLANS.

  (a) In General.--The first sentence of paragraph (2) of section 
1857(i) of the Social Security Act (42 U.S.C. 1395w-27(i)) is amended 
by inserting before the period at the end the following: ``, but only 
if 90 percent of the Medicare Advantage eligible individuals enrolled 
under such plan reside in a county in which the MA organization offers 
an MA local plan''.
  (b) Effective Date.--The amendment made by subsection (a) shall apply 
for plan years beginning on or after January 1, 2011, and shall not 
apply to plans which were in effect as of December 31, 2010.

SEC. 1167. IMPROVING RISK ADJUSTMENT FOR PAYMENTS.

  (a) Report to Congress.--Not later than 1 year after the date of the 
enactment of this Act, the Secretary of Health and Human Services shall 
submit to Congress a report that evaluates the adequacy of the risk 
adjustment system under section 1853(a)(1)(C) of the Social Security 
Act (42 U.S.C. 1395-23(a)(1)(C)) in predicting costs for beneficiaries 
with chronic or co-morbid conditions, beneficiaries dually-eligible for 
Medicare and Medicaid, and non-Medicaid eligible low-income 
beneficiaries; and the need and feasibility of including further 
gradations of diseases or conditions and multiple years of beneficiary 
data.
  (b) Improvements to Risk Adjustment.--Not later than January 1, 2012, 
the Secretary shall implement necessary improvements to the risk 
adjustment system under section 1853(a)(1)(C) of the Social Security 
Act (42 U.S.C. 1395-23(a)(1)(C)), taking into account the evaluation 
under subsection (a).

SEC. 1168. ELIMINATION OF MA REGIONAL PLAN STABILIZATION FUND.

  (a) In General.--Section 1858 of the Social Security Act (42 U.S.C. 
1395w-27a) is amended by striking subsection (e).
  (b) Transition.--Any amount contained in the MA Regional Plan 
Stabilization Fund as of the date of the enactment of this Act shall be 
transferred to the Federal Supplementary Medical Insurance Trust Fund.

             PART 2--BENEFICIARY PROTECTIONS AND ANTI-FRAUD

SEC. 1171. LIMITATION ON COST-SHARING FOR INDIVIDUAL HEALTH SERVICES.

  (a) In General.--Section 1852(a)(1) of the Social Security Act (42 
U.S.C. 1395w-22(a)(1)) is amended--
          (1) in subparagraph (A), by inserting before the period at 
        the end the following: ``with cost-sharing that is no greater 
        (and may be less) than the cost-sharing that would otherwise be 
        imposed under such program option'';
          (2) in subparagraph (B)(i), by striking ``or an actuarially 
        equivalent level of cost-sharing as determined in this part''; 
        and
          (3) by amending clause (ii) of subparagraph (B) to read as 
        follows:
                          ``(ii) Permitting use of flat copayment or 
                        per diem rate.--Nothing in clause (i) shall be 
                        construed as prohibiting a Medicare Advantage 
                        plan from using a flat copayment or per diem 
                        rate, in lieu of the cost-sharing that would be 
                        imposed under part A or B, so long as the 
                        amount of the cost-sharing imposed does not 
                        exceed the amount of the cost-sharing that 
                        would be imposed under the respective part if 
                        the individual were not enrolled in a plan 
                        under this part.''.
  (b) Limitation for Dual Eligibles and Qualified Medicare 
Beneficiaries.--Section 1852(a)(7) of such Act is amended to read as 
follows:
          ``(7) Limitation on cost-sharing for dual eligibles and 
        qualified medicare beneficiaries.--In the case of a individual 
        who is a full-benefit dual eligible individual (as defined in 
        section 1935(c)(6)) or a qualified medicare beneficiary (as 
        defined in section 1905(p)(1)) who is enrolled in a Medicare 
        Advantage plan, the plan may not impose cost-sharing that 
        exceeds the amount of cost-sharing that would be permitted with 
        respect to the individual under this title and title XIX if the 
        individual were not enrolled with such plan.''.
  (c) Effective Dates.--
          (1) The amendments made by subsection (a) shall apply to plan 
        years beginning on or after January 1, 2011.
          (2) The amendments made by subsection (b) shall apply to plan 
        years beginning on or after January 1, 2011.

SEC. 1172. CONTINUOUS OPEN ENROLLMENT FOR ENROLLEES IN PLANS WITH 
                    ENROLLMENT SUSPENSION.

  Section 1851(e)(4) of the Social Security Act (42 U.S.C. 1395w(e)(4)) 
is amended--
          (1) in subparagraph (C), by striking at the end ``or'';
          (2) in subparagraph (D)--
                  (A) by inserting ``, taking into account the health 
                or well-being of the individual'' before the period; 
                and
                  (B) by redesignating such subparagraph as 
                subparagraph (E); and
          (3) by inserting after subparagraph (C) the following new 
        subparagraph:
                  ``(D) the individual is enrolled in an MA plan and 
                enrollment in the plan is suspended under paragraph 
                (2)(B) or (3)(C) of section 1857(g) because of a 
                failure of the plan to meet applicable requirements; 
                or''.

SEC. 1173. INFORMATION FOR BENEFICIARIES ON MA PLAN ADMINISTRATIVE 
                    COSTS.

  (a) Disclosure of Medical Loss Ratios and Other Expense Data.--
Section 1851 of the Social Security Act (42 U.S.C. 1395w-21), as 
previously amended by this subtitle, is amended by adding at the end 
the following new subsection:
  ``(p) Publication of Medical Loss Ratios and Other Cost-related 
Information.--
          ``(1) In general.--The Secretary shall publish, not later 
        than November 1 of each year (beginning with 2011), for each MA 
        plan contract, the medical loss ratio of the plan in the 
        previous year.
          ``(2) Submission of data.--
                  ``(A) In general.--Each MA organization shall submit 
                to the Secretary, in a form and manner specified by the 
                Secretary, data necessary for the Secretary to publish 
                the medical loss ratio on a timely basis.
                  ``(B) Data for 2010 and 2011.--The data submitted 
                under subparagraph (A) for 2010 and for 2011 shall be 
                consistent in content with the data reported as part of 
                the MA plan bid in June 2009 for 2010.
                  ``(C) Use of standardized elements and definitions.--
                The data to be submitted under subparagraph (A) 
                relating to medical loss ratio for a year, beginning 
                with 2012, shall be submitted based on the standardized 
                elements and definitions developed under paragraph (3).
          ``(3) Development of data reporting standards.--
                  ``(A) In general.--The Secretary shall develop and 
                implement standardized data elements and definitions 
                for reporting under this subsection, for contract years 
                beginning with 2012, of data necessary for the 
                calculation of the medical loss ratio for MA plans. Not 
                later than December 31, 2010, the Secretary shall 
                publish a report describing the elements and 
                definitions so developed.
                  ``(B) Consultation.--The Secretary shall consult with 
                the Health Choices Commissioner, representatives of MA 
                organizations, experts on health plan accounting 
                systems, and representatives of the National 
                Association of Insurance Commissioners, in the 
                development of such data elements and definitions.
          ``(4) Medical loss ratio to be defined.--For purposes of this 
        part, the term `medical loss ratio' has the meaning given such 
        term by the Secretary, taking into account the meaning given 
        such term by the Health Choices Commissioner under section 116 
        of the America's Affordable Health Choices Act of 2009.''.
  (b) Minimum Medical Loss Ratio.--Section 1857(e) of the Social 
Security Act (42 U.S.C. 1395w-27(e)) is amended by adding at the end 
the following new paragraph:
          ``(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 (as 
        defined in section 1851(p)(4)) of at least .85--
                  ``(A) the Secretary shall require the Medicare 
                Advantage organization offering the plan to give 
                enrollees a rebate (in the second succeeding contract 
                year) of premiums under this part (or part B or part D, 
                if applicable) by such amount as would provide for a 
                benefits ratio of at least .85;
                  ``(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.''.

SEC. 1174. STRENGTHENING AUDIT AUTHORITY.

  (a) For Part C Payments Risk Adjustment.--Section 1857(d)(1) of the 
Social Security Act (42 U.S.C. 1395w-27(d)(1)) is amended by inserting 
after ``section 1858(c))'' the following: ``, and data submitted with 
respect to risk adjustment under section 1853(a)(3)''.
  (b) Enforcement of Audits and Deficiencies.--
          (1) In general.--Section 1857(e) of such Act, as amended by 
        section 1173, is amended by adding at the end the following new 
        paragraph:
          ``(5) Enforcement of audits and deficiencies.--
                  ``(A) Information in contract.--The Secretary shall 
                require that each contract with an MA organization 
                under this section shall include terms that inform the 
                organization of the provisions in subsection (d).
                  ``(B) Enforcement authority.--The Secretary is 
                authorized, in connection with conducting audits and 
                other activities under subsection (d), to take such 
                actions, including pursuit of financial recoveries, 
                necessary to address deficiencies identified in such 
                audits or other activities.''.
          (2) Application under part d.--For provision applying the 
        amendment made by paragraph (1) to prescription drug plans 
        under part D, see section 1860D-12(b)(3)(D) of the Social 
        Security Act.
  (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act and shall apply to 
audits and activities conducted for contract years beginning on or 
after January 1, 2011.

SEC. 1175. AUTHORITY TO DENY PLAN BIDS.

  (a) In General.--Section 1854(a)(5) of the Social Security Act (42 
U.S.C. 1395w-24(a)(5)) is amended by adding at the end the following 
new subparagraph:
                  ``(C) Rejection of bids.--Nothing in this section 
                shall be construed as requiring the Secretary to accept 
                any or every bid by an MA organization under this 
                subsection.''.
  (b) Application Under Part D.--Section 1860D-11(d) of such Act (42 
U.S.C. 1395w-111(d)) is amended by adding at the end the following new 
paragraph:
          ``(3) Rejection of bids.--Paragraph (5)(C) of section 1854(a) 
        shall apply with respect to bids under this section in the same 
        manner as it applies to bids by an MA organization under such 
        section.''.
  (c) Effective Date.--The amendments made by this section shall apply 
to bids for contract years beginning on or after January 1, 2011.

                PART 3--TREATMENT OF SPECIAL NEEDS PLANS

SEC. 1176. LIMITATION ON ENROLLMENT OUTSIDE OPEN ENROLLMENT PERIOD OF 
                    INDIVIDUALS INTO CHRONIC CARE SPECIALIZED MA PLANS 
                    FOR SPECIAL NEEDS INDIVIDUALS.

  Section 1859(f)(4) of the Social Security Act (42 U.S.C. 1395w-
28(f)(4)) is amended by adding at the end the following new 
subparagraph:
                  ``(C) The plan does not enroll an individual on or 
                after January 1, 2011, other than during an annual, 
                coordinated open enrollment period or when at the time 
                of the diagnosis of the disease or condition that 
                qualifies the individual as an individual described in 
                subsection (b)(6)(B)(iii).''.

SEC. 1177. EXTENSION OF AUTHORITY OF SPECIAL NEEDS PLANS TO RESTRICT 
                    ENROLLMENT.

  (a) In General.--Section 1859(f)(1) of the Social Security Act (42 
U.S.C. 1395w-28(f)(1)) is amended by striking ``January 1, 2011'' and 
inserting ``January 1, 2013 (or January 1, 2016, in the case of a plan 
described in section 1177(b)(1) of the America's Affordable Health 
Choices Act of 2009)''.
  (b) Grandfathering of Certain Plans.--
          (1) Plans described.--For purposes of section 1859(f)(1) of 
        the Social Security Act (42 U.S.C. 1395w-28(f)(1)), a plan 
        described in this paragraph is a plan that had a contract with 
        a State that had a State program to operate an integrated 
        Medicaid-Medicare program that had been approved by the Centers 
        for Medicare & Medicaid Services as of January 1, 2004.
          (2) Analysis; report.--The Secretary of Health and Human 
        Services shall provide, through a contract with an independent 
        health services evaluation organization, for an analysis of the 
        plans described in paragraph (1) with regard to the impact of 
        such plans on cost, quality of care, patient satisfaction, and 
        other subjects as specified by the Secretary. Not later than 
        December 31, 2011, the Secretary shall submit to Congress a 
        report on such analysis and shall include in such report such 
        recommendations with regard to the treatment of such plans as 
        the Secretary deems appropriate.

              Subtitle E--Improvements to Medicare Part D

SEC. 1181. ELIMINATION OF COVERAGE GAP.

  (a) In General.--Section 1860D-2(b) of such Act (42 U.S.C. 1395w-
102(b)) is amended--
          (1) in paragraph (3)(A), by striking ``paragraph (4)'' and 
        inserting ``paragraphs (4) and (7)'';
          (2) in paragraph (4)(B)(i), by inserting ``subject to 
        paragraph (7)'' after ``purposes of this part''; and
          (3) by adding at the end the following new paragraph:
          ``(7) Phased-in elimination of coverage gap.--
                  ``(A) In general.--For each year beginning with 2011, 
                the Secretary shall consistent with this paragraph 
                progressively increase the initial coverage limit 
                (described in subsection (b)(3)) and decrease the 
                annual out-of-pocket threshold from the amounts 
                otherwise computed until there is a continuation of 
                coverage from the initial coverage limit for 
                expenditures incurred through the total amount of 
                expenditures at which benefits are available under 
                paragraph (4).
                  ``(B) Increase in initial coverage limit.--For a year 
                beginning with 2011, the initial coverage limit 
                otherwise computed without regard to this paragraph 
                shall be increased by \1/2\ of the cumulative phase-in 
                percentage (as defined in subparagraph (D)(ii) for the 
                year) times the out-of-pocket gap amount (as defined in 
                subparagraph (E)) for the year.
                  ``(C) Decrease in annual out-of-pocket threshold.--
                For a year beginning with 2011, the annual out-of-
                pocket threshold otherwise computed without regard to 
                this paragraph shall be decreased by \1/2\ of the 
                cumulative phase-in percentage of the out-of-pocket gap 
                amount for the year multiplied by 1.75.
                  ``(D) Phase-in.--For purposes of this paragraph:
                          ``(i) Annual phase-in percentage.--The term 
                        `annual phase-in percentage' means--
                                  ``(I) for 2011, 13 percent;
                                  ``(II) for 2012, 2013, 2014, and 
                                2015, 5 percent;
                                  ``(III) for 2016 through 2018, 7.5 
                                percent; and
                                  ``(IV) for 2019 and each subsequent 
                                year, 10 percent.
                          ``(ii) Cumulative phase-in percentage.--The 
                        term `cumulative phase-in percentage' means for 
                        a year the sum of the annual phase-in 
                        percentage for the year and the annual phase-in 
                        percentages for each previous year beginning 
                        with 2011, but in no case more than 100 
                        percent.
                  ``(E) Out-of-pocket gap amount.--For purposes of this 
                paragraph, the term `out-of-pocket gap amount' means 
                for a year the amount by which--
                          ``(i) the annual out-of-pocket threshold 
                        specified in paragraph (4)(B) for the year (as 
                        determined as if this paragraph did not apply), 
                        exceeds
                          ``(ii) the sum of--
                                  ``(I) the annual deductible under 
                                paragraph (1) for the year; and
                                  ``(II) \1/4\ of the amount by which 
                                the initial coverage limit under 
                                paragraph (3) for the year (as 
                                determined as if this paragraph did not 
                                apply) exceeds such annual 
                                deductible.''.
  (b) Requiring Drug Manufacturers to Provide Drug Rebates for Full-
benefit Dual Eligibles.--
          (1) In general.--Section 1860D-2 of the Social Security Act 
        (42 U.S.C. 1396r-8) is amended--
                  (A) in subsection (e)(1), in the matter before 
                subparagraph (A), by inserting ``and subsection (f)'' 
                after ``this subsection''; and
                  (B) by adding at the end the following new 
                subsection:
  ``(f) Prescription Drug Rebate Agreement for Full-benefit Dual 
Eligible Individuals.--
          ``(1) In general.--In this part, the term `covered part D 
        drug' does not include any drug or biologic that is 
        manufactured by a manufacturer that has not entered into and 
        have in effect a rebate agreement described in paragraph (2).
          ``(2) Rebate agreement.--A rebate agreement under this 
        subsection shall require the manufacturer to provide to the 
        Secretary a rebate for each rebate period (as defined in 
        paragraph (6)(B)) ending after December 31, 2010, in the amount 
        specified in paragraph (3) for any covered part D drug of the 
        manufacturer dispensed after December 31, 2010, to any full-
        benefit dual eligible individual (as defined in paragraph 
        (6)(A)) for which payment was made by a PDP sponsor under part 
        D or a MA organization under part C for such period. Such 
        rebate shall be paid by the manufacturer to the Secretary not 
        later than 30 days after the date of receipt of the information 
        described in section 1860D-12(b)(7), including as such section 
        is applied under section 1857(f)(3).
          ``(3) Rebate for full-benefit dual eligible medicare drug 
        plan enrollees.--
                  ``(A) In general.--The amount of the rebate specified 
                under this paragraph for a manufacturer for a rebate 
                period, with respect to each dosage form and strength 
                of any covered part D drug provided by such 
                manufacturer and dispensed to a full-benefit dual 
                eligible individual, shall be equal to the product of--
                          ``(i) the total number of units of such 
                        dosage form and strength of the drug so 
                        provided and dispensed for which payment was 
                        made by a PDP sponsor under part D or a MA 
                        organization under part C for the rebate period 
                        (as reported under section 1860D-12(b)(7), 
                        including as such section is applied under 
                        section 1857(f)(3)); and
                          ``(ii) the amount (if any) by which--
                                  ``(I) the Medicaid rebate amount (as 
                                defined in subparagraph (B)) for such 
                                form, strength, and period, exceeds
                                  ``(II) the average Medicare drug 
                                program full-benefit dual eligible 
                                rebate amount (as defined in 
                                subparagraph (C)) for such form, 
                                strength, and period.
                  ``(B) Medicaid rebate amount.--For purposes of this 
                paragraph, the term `Medicaid rebate amount' means, 
                with respect to each dosage form and strength of a 
                covered part D drug provided by the manufacturer for a 
                rebate period--
                          ``(i) in the case of a single source drug or 
                        an innovator multiple source drug, the amount 
                        specified in paragraph (1)(A)(ii) of section 
                        1927(b) plus the amount, if any, specified in 
                        paragraph (2)(A)(ii) of such section, for such 
                        form, strength, and period; or
                          ``(ii) in the case of any other covered 
                        outpatient drug, the amount specified in 
                        paragraph (3)(A)(i) of such section for such 
                        form, strength, and period.
                  ``(C) Average medicare drug program full-benefit dual 
                eligible rebate amount.--For purposes of this 
                subsection, the term `average Medicare drug program 
                full-benefit dual eligible rebate amount' means, with 
                respect to each dosage form and strength of a covered 
                part D drug provided by a manufacturer for a rebate 
                period, the sum, for all PDP sponsors under part D and 
                MA organizations administering a MA-PD plan under part 
                C, of--
                          ``(i) the product, for each such sponsor or 
                        organization, of--
                                  ``(I) the sum of all rebates, 
                                discounts, or other price concessions 
                                (not taking into account any rebate 
                                provided under paragraph (2) for such 
                                dosage form and strength of the drug 
                                dispensed, calculated on a per-unit 
                                basis, but only to the extent that any 
                                such rebate, discount, or other price 
                                concession applies equally to drugs 
                                dispensed to full-benefit dual eligible 
                                Medicare drug plan enrollees and drugs 
                                dispensed to PDP and MA-PD enrollees 
                                who are not full-benefit dual eligible 
                                individuals; and
                                  ``(II) the number of the units of 
                                such dosage and strength of the drug 
                                dispensed during the rebate period to 
                                full-benefit dual eligible individuals 
                                enrolled in the prescription drug plans 
                                administered by the PDP sponsor or the 
                                MA-PD plans administered by the MA-PD 
                                organization; divided by
                          ``(ii) the total number of units of such 
                        dosage and strength of the drug dispensed 
                        during the rebate period to full-benefit dual 
                        eligible individuals enrolled in all 
                        prescription drug plans administered by PDP 
                        sponsors and all MA-PD plans administered by 
                        MA-PD organizations.
          ``(4) Length of agreement.--The provisions of paragraph (4) 
        of section 1927(b) (other than clauses (iv) and (v) of 
        subparagraph (B)) shall apply to rebate agreements under this 
        subsection in the same manner as such paragraph applies to a 
        rebate agreement under such section.
          ``(5) Other terms and conditions.--The Secretary shall 
        establish other terms and conditions of the rebate agreement 
        under this subsection, including terms and conditions related 
        to compliance, that are consistent with this subsection.
          ``(6) Definitions.--In this subsection and section 1860D-
        12(b)(7):
                  ``(A) Full-benefit dual eligible individual.--The 
                term `full-benefit dual eligible individual' has the 
                meaning given such term in section 1935(c)(6).
                  ``(B) Rebate period.--The term `rebate period' has 
                the meaning given such term in section 1927(k)(8).''.
          (2) Reporting requirement for the determination and payment 
        of rebates by manufactures related to rebate for full-benefit 
        dual eligible medicare drug plan enrollees.--
                  (A) Requirements for pdp sponsors.--Section 1860D-
                12(b) of the Social Security Act (42 U.S.C. 1395w-
                112(b)) is amended by adding at the end the following 
                new paragraph:
          ``(7) Reporting requirement for the determination and payment 
        of rebates by manufacturers related to rebate for full-benefit 
        dual eligible medicare drug plan enrollees.--
                  ``(A) In general.--For purposes of the rebate under 
                section 1860D-2(f) for contract years beginning on or 
                after January 1, 2011, each contract entered into with 
                a PDP sponsor under this part with respect to a 
                prescription drug plan shall require that the sponsor 
                comply with subparagraphs (B) and (C).
                  ``(B) Report form and contents.--Not later than 60 
                days after the end of each rebate period (as defined in 
                section 1860D-2(f)(6)(B)) within such a contract year 
                to which such section applies, a PDP sponsor of a 
                prescription drug plan under this part shall report to 
                each manufacturer--
                          ``(i) information (by National Drug Code 
                        number) on the total number of units of each 
                        dosage, form, and strength of each drug of such 
                        manufacturer dispensed to full-benefit dual 
                        eligible Medicare drug plan enrollees under any 
                        prescription drug plan operated by the PDP 
                        sponsor during the rebate period;
                          ``(ii) information on the price discounts, 
                        price concessions, and rebates for such drugs 
                        for such form, strength, and period;
                          ``(iii) information on the extent to which 
                        such price discounts, price concessions, and 
                        rebates apply equally to full-benefit dual 
                        eligible Medicare drug plan enrollees and PDP 
                        enrollees who are not full-benefit dual 
                        eligible Medicare drug plan enrollees; and
                          ``(iv) any additional information that the 
                        Secretary determines is necessary to enable the 
                        Secretary to calculate the average Medicare 
                        drug program full-benefit dual eligible rebate 
                        amount (as defined in paragraph (3)(C) of such 
                        section), and to determine the amount of the 
                        rebate required under this section, for such 
                        form, strength, and period.
                Such report shall be in a form consistent with a 
                standard reporting format established by the Secretary.
                  ``(C) Submission to secretary.--Each PDP sponsor 
                shall promptly transmit a copy of the information 
                reported under subparagraph (B) to the Secretary for 
                the purpose of audit oversight and evaluation.
                  ``(D) Confidentiality of information.--The provisions 
                of subparagraph (D) of section 1927(b)(3), relating to 
                confidentiality of information, shall apply to 
                information reported by PDP sponsors under this 
                paragraph in the same manner that such provisions apply 
                to information disclosed by manufacturers or 
                wholesalers under such section, except--
                          ``(i) that any reference to `this section' in 
                        clause (i) of such subparagraph shall be 
                        treated as being a reference to this section;
                          ``(ii) the reference to the Director of the 
                        Congressional Budget Office in clause (iii) of 
                        such subparagraph shall be treated as including 
                        a reference to the Medicare Payment Advisory 
                        Commission; and
                          ``(iii) clause (iv) of such subparagraph 
                        shall not apply.
                  ``(E) Oversight.--Information reported under this 
                paragraph may be used by the Inspector General of the 
                Department of Health and Human Services for the 
                statutorily authorized purposes of audit, 
                investigation, and evaluations.
                  ``(F) Penalties for failure to provide timely 
                information and provision of false information.--In the 
                case of a PDP sponsor--
                          ``(i) that fails to provide information 
                        required under subparagraph (B) on a timely 
                        basis, the sponsor is subject to a civil money 
                        penalty in the amount of $10,000 for each day 
                        in which such information has not been 
                        provided; or
                          ``(ii) that knowingly (as defined in section 
                        1128A(i)) provides false information under such 
                        subparagraph, the sponsor is subject to a civil 
                        money penalty in an amount not to exceed 
                        $100,000 for each item of false information.
                Such civil money penalties are in addition to other 
                penalties as may be prescribed by law. The provisions 
                of section 1128A (other than subsections (a) and (b)) 
                shall apply to a civil money penalty under this 
                subparagraph in the same manner as such provisions 
                apply to a penalty or proceeding under section 
                1128A(a).''.
                  (B) Application to ma organizations.--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:
                  ``(D) Reporting requirement related to rebate for 
                full-benefit dual eligible medicare drug plan 
                enrollees.--Section 1860D-12(b)(7).''.
          (3) Deposit of rebates into medicare prescription drug 
        account.--Section 1860D-16(c) of such Act (42 U.S.C. 1395w-
        116(c)) is amended by adding at the end the following new 
        paragraph:
          ``(6) Rebate for full-benefit dual eligible medicare drug 
        plan enrollees.--Amounts paid under a rebate agreement under 
        section 1860D-2(f) shall be deposited into the Account and 
        shall be used to pay for all or part of the gradual elimination 
        of the coverage gap under section 1860D-2(b)(7).''.

SEC. 1182. DISCOUNTS FOR CERTAIN PART D DRUGS IN ORIGINAL COVERAGE GAP.

  Section 1860D-2 of the Social Security Act (42 U.S.C. 1395w-102), as 
amended by section 1181, is amended--
          (1) in subsection (b)(4)(C)(ii), by inserting ``subject to 
        subsection (g)(2)(C),'' after ``(ii)'';
          (2) in subsection (e)(1), in the matter before subparagraph 
        (A), by striking ``subsection (f)'' and inserting ``subsections 
        (f) and (g)'' after ``this subsection''; and
          (3) by adding at the end the following new subsection:
  ``(g) Requirement for Manufacturer Discount Agreement for Certain 
Qualifying Drugs.--
          ``(1) In general.--In this part, the term `covered part D 
        drug' does not include any drug or biologic that is 
        manufactured by a manufacturer that has not entered into and 
        have in effect for all qualifying drugs (as defined in 
        paragraph (5)(A)) a discount agreement described in paragraph 
        (2).
          ``(2) Discount agreement.--
                  ``(A) Periodic discounts.--A discount agreement under 
                this paragraph shall require the manufacturer involved 
                to provide, to each PDP sponsor with respect to a 
                prescription drug plan or each MA organization with 
                respect to each MA-PD plan, a discount in an amount 
                specified in paragraph (3) for qualifying drugs (as 
                defined in paragraph (5)(A)) of the manufacturer 
                dispensed to a qualifying enrollee after December 31, 
                2010, insofar as the individual is in the original gap 
                in coverage (as defined in paragraph (5)(E)).
                  ``(B) Discount agreement.--Insofar as not 
                inconsistent with this subsection, the Secretary shall 
                establish terms and conditions of such agreement, 
                including terms and conditions relating to compliance, 
                similar to the terms and conditions for rebate 
                agreements under paragraphs (2), (3), and (4) of 
                section 1927(b), except that--
                          ``(i) discounts shall be applied under this 
                        subsection to prescription drug plans and MA-PD 
                        plans instead of State plans under title XIX;
                          ``(ii) PDP sponsors and MA organizations 
                        shall be responsible, instead of States, for 
                        provision of necessary utilization information 
                        to drug manufacturers; and
                          ``(iii) sponsors and MA organizations shall 
                        be responsible for reporting information on 
                        drug-component negotiated price, instead of 
                        other manufacturer prices.
                  ``(C) Counting discount toward true out-of-pocket 
                costs.--Under the discount agreement, in applying 
                subsection (b)(4), with regard to subparagraph (C)(i) 
                of such subsection, if a qualified enrollee purchases 
                the qualified drug insofar as the enrollee is in an 
                actual gap of coverage (as defined in paragraph 
                (5)(D)), the amount of the discount under the agreement 
                shall be treated and counted as costs incurred by the 
                plan enrollee.
          ``(3) Discount amount.--The amount of the discount specified 
        in this paragraph for a discount period for a plan is equal to 
        50 percent of the amount of the drug-component negotiated price 
        (as defined in paragraph (5)(C)) for qualifying drugs for the 
        period involved.
          ``(4) Additional terms.--In the case of a discount provided 
        under this subsection with respect to a prescription drug plan 
        offered by a PDP sponsor or an MA-PD plan offered by an MA 
        organization, if a qualified enrollee purchases the qualified 
        drug--
                  ``(A) insofar as the enrollee is in an actual gap of 
                coverage (as defined in paragraph (5)(D)), the sponsor 
                or plan shall provide the discount to the enrollee at 
                the time the enrollee pays for the drug; and
                  ``(B) insofar as the enrollee is in the portion of 
                the original gap in coverage (as defined in paragraph 
                (5)(E)) that is not in the actual gap in coverage, the 
                discount shall not be applied against the negotiated 
                price (as defined in subsection (d)(1)(B)) for the 
                purpose of calculating the beneficiary payment.
          ``(5) Definitions.--In this subsection:
                  ``(A) Qualifying drug.--The term `qualifying drug' 
                means, with respect to a prescription drug plan or MA-
                PD plan, a drug or biological product that--
                          ``(i)(I) is a drug produced or distributed 
                        under an original new drug application approved 
                        by the Food and Drug Administration, including 
                        a drug product marketed by any cross-licensed 
                        producers or distributors operating under the 
                        new drug application;
                          ``(II) is a drug that was originally marketed 
                        under an original new drug application approved 
                        by the Food and Drug Administration; or
                          ``(III) is a biological product as approved 
                        under Section 351(a) of the Public Health 
                        Services Act;
                          ``(ii) is covered under the formulary of the 
                        plan; and
                          ``(iii) is dispensed to an individual who is 
                        in the original gap in coverage.
                  ``(B) Qualifying enrollee.--The term `qualifying 
                enrollee' means an individual enrolled in a 
                prescription drug plan or MA-PD plan other than such an 
                individual who is a subsidy-eligible individual (as 
                defined in section 1860D-14(a)(3)).
                  ``(C) Drug-component negotiated price.--The term 
                `drug-component negotiated price' means, with respect 
                to a qualifying drug, the negotiated price (as defined 
                in subsection (d)(1)(B)), as determined without regard 
                to any dispensing fee, of the drug under the 
                prescription drug plan or MA-PD plan involved.
                  ``(D) Actual gap in coverage.--The term `actual gap 
                in coverage' means the gap in prescription drug 
                coverage that occurs between the initial coverage limit 
                (as modified under subparagraph (B) of subsection 
                (b)(7)) and the annual out-of-pocket threshold (as 
                modified under subparagraph (C) of such subsection).
                  ``(E) Original gap in coverage.--The term `original 
                in gap coverage' means the gap in prescription drug 
                coverage that would occur between the initial coverage 
                limit (described in subsection (b)(3)) and the out-of-
                pocket threshold (as defined in subsection (b)(4))(B) 
                if subsection (b)(7) did not apply.''.

SEC. 1183. REPEAL OF PROVISION RELATING TO SUBMISSION OF CLAIMS BY 
                    PHARMACIES LOCATED IN OR CONTRACTING WITH LONG-TERM 
                    CARE FACILITIES.

  (a) Part D Submission.--Section 1860D-12(b) of the Social Security 
Act (42 U.S.C. 1395w-112(b)), as amended by section 172(a)(1) of Public 
Law 110-275, is amended by striking paragraph (5) and redesignating 
paragraph (6) and paragraph (7), as added by section 1181(b)(2), as 
paragraph (5) and paragraph (6), respectively.
  (b) Submission to MA-PD Plans.--Section 1857(f)(3) of the Social 
Security Act (42 U.S.C. 1395w-27(f)(3)), as added by section 171(b) of 
Public Law 110-275 and amended by section 172(a)(2) of such Public Law 
and section 1181 of this Act, is amended by striking subparagraph (B) 
and redesignating subparagraphs (C) and (D) as subparagraphs (B) and 
(C) respectively.
  (c) Effective Date.--The amendments made by this section shall apply 
for contract years beginning with 2010.

SEC. 1184. INCLUDING COSTS INCURRED BY AIDS DRUG ASSISTANCE PROGRAMS 
                    AND INDIAN HEALTH SERVICE IN PROVIDING PRESCRIPTION 
                    DRUGS TOWARD THE ANNUAL OUT-OF-POCKET THRESHOLD 
                    UNDER PART D.

  (a) In General.--Section 1860D-2(b)(4)(C) of the Social Security Act 
(42 U.S.C. 1395w-102(b)(4)(C)) is amended--
          (1) in clause (i), by striking ``and'' at the end;
          (2) in clause (ii)--
                  (A) by striking ``such costs shall be treated as 
                incurred only if'' and inserting ``subject to clause 
                (iii), such costs shall be treated as incurred only 
                if'';
                  (B) by striking ``, under section 1860D-14, or under 
                a State Pharmaceutical Assistance Program''; and
                  (C) by striking the period at the end and inserting 
                ``; and''; and
          (3) by inserting after clause (ii) the following new clause:
                          ``(iii) such costs shall be treated as 
                        incurred and shall not be considered to be 
                        reimbursed under clause (ii) if such costs are 
                        borne or paid--
                                  ``(I) under section 1860D-14;
                                  ``(II) under a State Pharmaceutical 
                                Assistance Program;
                                  ``(III) by the Indian Health Service, 
                                an Indian tribe or tribal organization, 
                                or an urban Indian organization (as 
                                defined in section 4 of the Indian 
                                Health Care Improvement Act); or
                                  ``(IV) under an AIDS Drug Assistance 
                                Program under part B of title XXVI of 
                                the Public Health Service Act.''.
  (b) Effective Date.--The amendments made by subsection (a) shall 
apply to costs incurred on or after January 1, 2011.

SEC. 1185. PERMITTING MID-YEAR CHANGES IN ENROLLMENT FOR FORMULARY 
                    CHANGES THAT ADVERSELY IMPACT AN ENROLLEE.

  (a) In General.--Section 1860D-1(b)(3) of the Social Security Act (42 
U.S.C. 1395w-101(b)(3)) is amended by adding at the end the following 
new subparagraph:
                  ``(F) Change in formulary resulting in increase in 
                cost-sharing.--
                          ``(i) In general.--Except as provided in 
                        clause (ii), in the case of an individual 
                        enrolled in a prescription drug plan (or MA-PD 
                        plan) who has been prescribed and is using a 
                        covered part D drug while so enrolled, if the 
                        formulary of the plan is materially changed 
                        (other than at the end of a contract year) so 
                        to reduce the coverage (or increase the cost-
                        sharing) of the drug under the plan.
                          ``(ii) Exception.--Clause (i) shall not apply 
                        in the case that a drug is removed from the 
                        formulary of a plan because of a recall or 
                        withdrawal of the drug issued by the Food and 
                        Drug Administration, because the drug is 
                        replaced with a generic drug that is a 
                        therapeutic equivalent, or because of 
                        utilization management applied to--
                                  ``(I) a drug whose labeling includes 
                                a boxed warning required by the Food 
                                and Drug Administration under section 
                                210.57(c)(1) of title 21, Code of 
                                Federal Regulations (or a successor 
                                regulation); or
                                  ``(II) a drug required under 
                                subsection (c)(2) of section 505-1 of 
                                the Federal Food, Drug, and Cosmetic 
                                Act to have a Risk Evaluation and 
                                Management Strategy that includes 
                                elements under subsection (f) of such 
                                section.''.
  (b) Effective Date.--The amendment made by subsection (a) shall apply 
to contract years beginning on or after January 1, 2011.

             Subtitle F--Medicare Rural Access Protections

SEC. 1191. TELEHEALTH EXPANSION AND ENHANCEMENTS. .

   (a) Additional Telehealth Site.--
          (1) In general.--Paragraph (4)(C)(ii) of section 1834(m) of 
        the Social Security Act (42 U.S.C. 1395m(m)) is amended by 
        adding at the end the following new subclause:
                                  ``(IX) A renal dialysis facility.''
          (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to services furnished on or after January 1, 2011.
  (b) Telehealth Advisory Committee.--
          (1) Establishment.--Section 1868 of the Social Security Act 
        (42 U.S.C. 1395ee) is amended--
                  (A) in the heading, by adding at the end the 
                following: ``telehealth advisory committee''; and
                  (B) by adding at the end the following new 
                subsection:
  ``(c) Telehealth Advisory Committee.--
          ``(1) In general.--The Secretary shall appoint a Telehealth 
        Advisory Committee (in this subsection referred to as the 
        `Advisory Committee') to make recommendations to the Secretary 
        on policies of the Centers for Medicare & Medicaid Services 
        regarding telehealth services as established under section 
        1834(m), including the appropriate addition or deletion of 
        services (and HCPCS codes) to those specified in paragraphs 
        (4)(F)(i) and (4)(F)(ii) of such section and for authorized 
        payment under paragraph (1) of such section.
          ``(2) Membership; terms.--
                  ``(A) Membership.--
                          ``(i) In general.--The Advisory Committee 
                        shall be composed of 9 members, to be appointed 
                        by the Secretary, of whom--
                                  ``(I) 5 shall be practicing 
                                physicians;
                                  ``(II) 2 shall be practicing non-
                                physician health care practitioners; 
                                and
                                  ``(III) 2 shall be administrators of 
                                telehealth programs.
                          ``(ii) Requirements for appointing members.--
                        In appointing members of the Advisory 
                        Committee, the Secretary shall--
                                  ``(I) ensure that each member has 
                                prior experience with the practice of 
                                telemedicine or telehealth;
                                  ``(II) give preference to individuals 
                                who are currently providing 
                                telemedicine or telehealth services or 
                                who are involved in telemedicine or 
                                telehealth programs;
                                  ``(III) ensure that the membership of 
                                the Advisory Committee represents a 
                                balance of specialties and geographic 
                                regions; and
                                  ``(IV) take into account the 
                                recommendations of stakeholders.
                  ``(B) Terms.--The members of the Advisory Committee 
                shall serve for such term as the Secretary may specify.
                  ``(C) Conflicts of interest.--An advisory committee 
                member may not participate with respect to a particular 
                matter considered in an advisory committee meeting if 
                such member (or an immediate family member of such 
                member) has a financial interest that could be affected 
                by the advice given to the Secretary with respect to 
                such matter.
          ``(3) Meetings.--The Advisory Committee shall meet twice each 
        calendar year and at such other times as the Secretary may 
        provide.
          ``(4) Permanent committee.--Section 14 of the Federal 
        Advisory Committee Act (5 U.S.C. App.) shall not apply to the 
        Advisory Committee.''
          (2) Following recommendations.--Section 1834(m)(4)(F) of such 
        Act (42 U.S.C. 1395m(m)(4)(F)) is amended by adding at the end 
        the following new clause:
                          ``(iii) Recommendations of the telehealth 
                        advisory committee.--In making determinations 
                        under clauses (i) and (ii), the Secretary shall 
                        take into account the recommendations of the 
                        Telehealth Advisory Committee (established 
                        under section 1868(c)) when adding or deleting 
                        services (and HCPCS codes) and in establishing 
                        policies of the Centers for Medicare & Medicaid 
                        Services regarding the delivery of telehealth 
                        services. If the Secretary does not implement 
                        such a recommendation, the Secretary shall 
                        publish in the Federal Register a statement 
                        regarding the reason such recommendation was 
                        not implemented.''
          (3) Waiver of administrative limitation.--The Secretary of 
        Health and Human Services shall establish the Telehealth 
        Advisory Committee under the amendment made by paragraph (1) 
        notwithstanding any limitation that may apply to the number of 
        advisory committees that may be established (within the 
        Department of Health and Human Services or otherwise).
  (c) Credentialing Telemedicine Practitioners.--Section 1834(m) of 
such Act (42 U.S.C. 1395m(m)) is amended by adding at the end the 
following new paragraph:
          ``(5) Hospital credentialing of telemedicine practitioners.--
        A telemedicine practitioner that is credentialed by a hospital 
        in compliance with the Joint Commission Standards for 
        Telemedicine shall be considered in compliance with conditions 
        of participation and reimbursement credentialing requirements 
        under this title for telemedicine services.''.

SEC. 1192. EXTENSION OF OUTPATIENT HOLD HARMLESS PROVISION.

   Section 1833(t)(7)(D)(i) of the Social Security Act (42 U.S.C. 
1395l(t)(7)(D)(i)) is amended--
          (1) in subclause (II)--
                  (A) in the first sentence, by striking ```2010'' and 
                inserting ``2012''; and
                  (B) in the second sentence, by striking ``or 2009'' 
                and inserting ``, 2009, 2010, or 2011''; and
          (2) in subclause (III), by striking ``January 1, 2010'' and 
        inserting ``January 1, 2012''.

SEC. 1193. EXTENSION OF SECTION 508 HOSPITAL RECLASSIFICATIONS.

  Subsection (a) of section 106 of division B of the Tax Relief and 
Health Care Act of 2006 (42 U.S.C. 1395 note), as amended by section 
117 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Public 
Law 110-173) and section 124 of the Medicare Improvements for Patients 
and Providers Act of 2008 (Public Law 110-275), is amended by striking 
``September 30, 2009'' and inserting ``September 30, 2011''.

SEC. 1194. EXTENSION OF GEOGRAPHIC FLOOR FOR WORK.

  Section 1848(e)(1)(E) of the Social Security Act (42 U.S.C. 1395w-
4(e)(1)(E)) is amended by striking ``before January 1, 2010'' and 
inserting ``before January 1, 2012''.

SEC. 1195. EXTENSION OF PAYMENT FOR TECHNICAL COMPONENT OF CERTAIN 
                    PHYSICIAN PATHOLOGY SERVICES.

  Section 542(c) of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000 (as enacted into law by section 
1(a)(6) of Public Law 106-554), as amended by section 732 of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(42 U.S.C. 1395w-4 note), section 104 of division B of the Tax Relief 
and Health Care Act of 2006 (42 U.S.C. 1395w-4 note), section 104 of 
the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Public Law 
110-173), and section 136 of the Medicare Improvements for Patients and 
Providers Act of 1008 (Public Law 110-275), is amended by striking 
``and 2009'' and inserting ``2009, 2010, and 2011''.

SEC. 1196. EXTENSION OF AMBULANCE ADD-ONS.

  (a) In General.--Section 1834(l)(13) of the Social Security Act (42 
U.S.C. 1395m(l)(13)) is amended--
          (1) in subparagraph (A)--
                  (A) in the matter preceding clause (i), by striking 
                ``before January 1, 2010'' and inserting ``before 
                January 1, 2012''; and
                  (B) in each of clauses (i) and (ii), by striking 
                ``before January 1, 2010'' and inserting ``before 
                January 1, 2012''.
  (b) Air Ambulance Improvements.--Section 146(b)(1) of the Medicare 
Improvements for Patients and Providers Act of 2008 (Public Law 110-
275) is amended by striking ``ending on December 31, 2009'' and 
inserting ``ending on December 31, 2011''.

              TITLE II--MEDICARE BENEFICIARY IMPROVEMENTS

  Subtitle A--Improving and Simplifying Financial Assistance for Low 
                     Income Medicare Beneficiaries

SEC. 1201. IMPROVING ASSETS TESTS FOR MEDICARE SAVINGS PROGRAM AND LOW-
                    INCOME SUBSIDY PROGRAM.

  (a) Application of Highest Level Permitted Under LIS to All Subsidy 
Eligible Individuals.--
          (1) In general.--Section 1860D-14(a)(1) of the Social 
        Security Act (42 U.S.C. 1395w-114(a)(1)) is amended in the 
        matter before subparagraph (A), by inserting ``(or, beginning 
        with 2012, paragraph (3)(E))'' after ``paragraph (3)(D)''.
          (2) Annual increase in lis resource test.--Section 1860D-
        14(a)(3)(E)(i) of such Act (42 U.S.C. 1395w-114(a)(3)(E)(i)) is 
        amended--
                  (A) by striking ``and'' at the end of subclause (I);
                  (B) in subclause (II), by inserting ``(before 2012)'' 
                after ``subsequent year'';
                  (C) by striking the period at the end of subclause 
                (II) and inserting a semicolon;
                  (D) by inserting after subclause (II) the following 
                new subclauses:
                                  ``(III) for 2012, $17,000 (or $34,000 
                                in the case of the combined value of 
                                the individual's assets or resources 
                                and the assets or resources of the 
                                individual's spouse); and
                                  ``(IV) for a subsequent year, the 
                                dollar amounts specified in this 
                                subclause (or subclause (III)) for the 
                                previous year increased by the annual 
                                percentage increase in the consumer 
                                price index (all items; U.S. city 
                                average) as of September of such 
                                previous year.''; and
                  (E) in the last sentence, by inserting ``or (IV)'' 
                after ``subclause (II)''.
          (3) Application of lis test under medicare savings program.--
        Section 1905(p)(1)(C) of such Act (42 U.S.C. 1396d(p)(1)(C)) is 
        amended--
                  (A) by striking ``effective beginning with January 1, 
                2010'' and inserting ``effective for the period 
                beginning with January 1, 2010, and ending with 
                December 31, 2011''; and
                  (B) by inserting before the period at the end the 
                following: ``or, effective beginning with January 1, 
                2012, whose resources (as so determined) do not exceed 
                the maximum resource level applied for the year under 
                subparagraph (E) of section 1860D-14(a)(3) (determined 
                without regard to the life insurance policy exclusion 
                provided under subparagraph (G) of such section) 
                applicable to an individual or to the individual and 
                the individual's spouse (as the case may be)''.
  (b) Effective Date.--The amendments made by subsection (a) shall 
apply to eligibility determinations for income-related subsidies and 
medicare cost-sharing furnished for periods beginning on or after 
January 1, 2012.

SEC. 1202. ELIMINATION OF PART D COST-SHARING FOR CERTAIN NON-
                    INSTITUTIONALIZED FULL-BENEFIT DUAL ELIGIBLE 
                    INDIVIDUALS.

  (a) In General.--Section 1860D-14(a)(1)(D)(i) of the Social Security 
Act (42 U.S.C. 1395w-114(a)(1)(D)(i)) is amended--
          (1) by striking ``Institutionalized individuals.--In'' and 
        inserting ``Elimination of cost-sharing for certain full-
        benefit dual eligible individuals.--
                                  ``(I) Institutionalized 
                                individuals.--In''; and
          (2) by adding at the end the following new subclause:
                                  ``(II) Certain other individuals.--In 
                                the case of an individual who is a 
                                full-benefit dual eligible individual 
                                and with respect to whom there has been 
                                a determination that but for the 
                                provision of home and community based 
                                care (whether under section 1915, 1932, 
                                or under a waiver under section 1115) 
                                the individual would require the level 
                                of care provided in a hospital or a 
                                nursing facility or intermediate care 
                                facility for the mentally retarded the 
                                cost of which could be reimbursed under 
                                the State plan under title XIX, the 
                                elimination of any beneficiary 
                                coinsurance described in section 1860D-
                                2(b)(2) (for all amounts through the 
                                total amount of expenditures at which 
                                benefits are available under section 
                                1860D-2(b)(4)).''.
  (b) Effective Date.--The amendments made by subsection (a) shall 
apply to drugs dispensed on or after January 1, 2011.

SEC. 1203. ELIMINATING BARRIERS TO ENROLLMENT.

  (a) Administrative Verification of Income and Resources Under the 
Low-income Subsidy Program.--
          (1) In general.--Clause (iii) of section 1860D-14(a)(3)(E) of 
        the Social Security Act (42 U.S.C. 1395w-114(a)(3)(E)) is 
        amended to read as follows:
                          ``(iii) Certification of income and 
                        resources.--For purposes of applying this 
                        section--
                                  ``(I) an individual shall be 
                                permitted to apply on the basis of 
                                self-certification of income and 
                                resources; and
                                  ``(II) matters attested to in the 
                                application shall be subject to 
                                appropriate methods of verification 
                                without the need of the individual to 
                                provide additional documentation, 
                                except in extraordinary situations as 
                                determined by the Commissioner.''.
          (2) Effective date.--The amendment made by paragraph (1) 
        shall apply beginning January 1, 2010.
  (b) Disclosures To Facilitate Identification of Individuals Likely To 
Be Ineligible for the Low-income Assistance Under the Medicare 
Prescription Drug Program To Assist Social Security Administration's 
Outreach to Eligible Individuals.--For provision authorizing disclosure 
of return information to facilitate identification of individuals 
likely to be ineligible for low-income subsidies under Medicare 
prescription drug program, see section 1801.

SEC. 1204. ENHANCED OVERSIGHT RELATING TO REIMBURSEMENTS FOR 
                    RETROACTIVE LOW INCOME SUBSIDY ENROLLMENT.

  (a) In General.--In the case of a retroactive LIS enrollment 
beneficiary who is enrolled under a prescription drug plan under part D 
of title XVIII of the Social Security Act (or an MA-PD plan under part 
C of such title), the beneficiary (or any eligible third party) is 
entitled to reimbursement by the plan for covered drug costs incurred 
by the beneficiary during the retroactive coverage period of the 
beneficiary in accordance with subsection (b) and in the case of such a 
beneficiary described in subsection (c)(4)(A)(i), such reimbursement 
shall be made automatically by the plan upon receipt of appropriate 
notice the beneficiary is eligible for assistance described in such 
subsection (c)(4)(A)(i) without further information required to be 
filed with the plan by the beneficiary.
  (b) Administrative Requirements Relating to Reimbursements.--
          (1) Line-item description.--Each reimbursement made by a 
        prescription drug plan or MA-PD plan under subsection (a) shall 
        include a line-item description of the items for which the 
        reimbursement is made.
          (2) Timing of reimbursements.--A prescription drug plan or 
        MA-PD plan must make a reimbursement under subsection (a) to a 
        retroactive LIS enrollment beneficiary, with respect to a 
        claim, not later than 45 days after--
                  (A) in the case of a beneficiary described in 
                subsection (c)(4)(A)(i), the date on which the plan 
                receives notice from the Secretary that the beneficiary 
                is eligible for assistance described in such 
                subsection; or
                  (B) in the case of a beneficiary described in 
                subsection (c)(4)(A)(ii), the date on which the 
                beneficiary files the claim with the plan.
          (3) Reporting requirement.--For each month beginning with 
        January 2011, each prescription drug plan and each MA-PD plan 
        shall report to the Secretary the following:
                  (A) The number of claims the plan has readjudicated 
                during the month due to a beneficiary becoming 
                retroactively eligible for subsidies available under 
                section 1860D-14 of the Social Security Act.
                  (B) The total value of the readjudicated claim amount 
                for the month.
                  (C) The Medicare Health Insurance Claims Number of 
                beneficiaries for whom claims were readjudicated.
                  (D) For the claims described in subparagraphs (A) and 
                (B), an attestation to the Administrator of the Centers 
                for Medicare & Medicaid Services of the total amount of 
                reimbursement the plan has provided to beneficiaries 
                for premiums and cost-sharing that the beneficiary 
                overpaid for which the plan received payment from the 
                Centers for Medicare & Medicaid Services.
  (c) Definitions.--For purposes of this section:
          (1) Covered drug costs.--The term ``covered drug costs'' 
        means, with respect to a retroactive LIS enrollment beneficiary 
        enrolled under a prescription drug plan under part D of title 
        XVIII of the Social Security Act (or an MA-PD plan under part C 
        of such title), the amount by which--
                  (A) the costs incurred by such beneficiary during the 
                retroactive coverage period of the beneficiary for 
                covered part D drugs, premiums, and cost-sharing under 
                such title; exceeds
                  (B) such costs that would have been incurred by such 
                beneficiary during such period if the beneficiary had 
                been both enrolled in the plan and recognized by such 
                plan as qualified during such period for the low income 
                subsidy under section 1860D-14 of the Social Security 
                Act to which the individual is entitled.
          (2) Eligible third party.--The term ``eligible third party'' 
        means, with respect to a retroactive LIS enrollment 
        beneficiary, an organization or other third party that is owed 
        payment on behalf of such beneficiary for covered drug costs 
        incurred by such beneficiary during the retroactive coverage 
        period of such beneficiary.
          (3) Retroactive coverage period.--The term ``retroactive 
        coverage period'' means--
                  (A) with respect to a retroactive LIS enrollment 
                beneficiary described in paragraph (4)(A)(i), the 
                period--
                          (i) beginning on the effective date of the 
                        assistance described in such paragraph for 
                        which the individual is eligible; and
                          (ii) ending on the date the plan effectuates 
                        the status of such individual as so eligible; 
                        and
                  (B) with respect to a retroactive LIS enrollment 
                beneficiary described in paragraph (4)(A)(ii), the 
                period--
                          (i) beginning on the date the individual is 
                        both entitled to benefits under part A, or 
                        enrolled under part B, of title XVIII of the 
                        Social Security Act and eligible for medical 
                        assistance under a State plan under title XIX 
                        of such Act; and
                          (ii) ending on the date the plan effectuates 
                        the status of such individual as a full-benefit 
                        dual eligible individual (as defined in section 
                        1935(c)(6) of such Act).
          (4) Retroactive lis enrollment beneficiary.--
                  (A) In general.--The term ``retroactive LIS 
                enrollment beneficiary'' means an individual who--
                          (i) is enrolled in a prescription drug plan 
                        under part D of title XVIII of the Social 
                        Security Act (or an MA-PD plan under part C of 
                        such title) and subsequently becomes eligible 
                        as a full-benefit dual eligible individual (as 
                        defined in section 1935(c)(6) of such Act), an 
                        individual receiving a low-income subsidy under 
                        section 1860D-14 of such Act, an individual 
                        receiving assistance under the Medicare Savings 
                        Program implemented under clauses (i), (iii), 
                        and (iv) of section 1902(a)(10)(E) of such Act, 
                        or an individual receiving assistance under the 
                        supplemental security income program under 
                        section 1611 of such Act; or
                          (ii) subject to subparagraph (B)(i), is a 
                        full-benefit dual eligible individual (as 
                        defined in section 1935(c)(6) of such Act) who 
                        is automatically enrolled in such a plan under 
                        section 1860D-1(b)(1)(C) of such Act.
                  (B) Exception for beneficiaries enrolled in rfp 
                plan.--
                          (i) In general.--In no case shall an 
                        individual described in subparagraph (A)(ii) 
                        include an individual who is enrolled, pursuant 
                        to a RFP contract described in clause (ii), in 
                        a prescription drug plan offered by the sponsor 
                        of such plan awarded such contract.
                          (ii) RFP contract described.--The RFP 
                        contract described in this section is a 
                        contract entered into between the Secretary and 
                        a sponsor of a prescription drug plan pursuant 
                        to the Centers for Medicare & Medicaid 
                        Services' request for proposals issued on 
                        February 17, 2009, relating to Medicare part D 
                        retroactive coverage for certain low income 
                        beneficiaries, or a similar subsequent request 
                        for proposals.

SEC. 1205. INTELLIGENT ASSIGNMENT IN ENROLLMENT.

  (a) In General.--Section 1860D-1(b)(1)(C) of the Social Security Act 
(42 U.S.C. 1395w-101(b)(1)(C)) is amended by adding after ``PDP 
region'' the following: ``or through use of an intelligent assignment 
process that is designed to maximize the access of such individual to 
necessary prescription drugs while minimizing costs to such individual 
and to the program under this part to the greatest extent possible. In 
the case the Secretary enrolls such individuals through use of an 
intelligent assignment process, such process shall take into account 
the extent to which prescription drugs necessary for the individual are 
covered in the case of a PDP sponsor of a prescription drug plan that 
uses a formulary, the use of prior authorization or other restrictions 
on access to coverage of such prescription drugs by such a sponsor, and 
the overall quality of a prescription drug plan as measured by quality 
ratings established by the Secretary''
  (b) Effective Date.--The amendment made by subsection (a) shall take 
effect for contract years beginning with 2012.

SEC. 1206. SPECIAL ENROLLMENT PERIOD AND AUTOMATIC ENROLLMENT PROCESS 
                    FOR CERTAIN SUBSIDY ELIGIBLE INDIVIDUALS.

  (a) Special Enrollment Period.--Section 1860D-1(b)(3)(D) of the 
Social Security Act (42 U.S.C. 1395w-101(b)(3)(D)) is amended to read 
as follows:
                  ``(D) Subsidy eligible individuals.--In the case of 
                an individual (as determined by the Secretary) who is 
                determined under subparagraph (B) of section 1860D-
                14(a)(3) to be a subsidy eligible individual.''.
  (b) Automatic Enrollment.--Section 1860D-1(b)(1) of the Social 
Security Act (42 U.S.C. 1395w-101(b)(1)) is amended by adding at the 
end the following new subparagraph:
                  ``(D) Special rule for subsidy eligible 
                individuals.--The process established under 
                subparagraph (A) shall include, in the case of an 
                individual described in section 1860D-1(b)(3)(D) who 
                fails to enroll in a prescription drug plan or an MA-PD 
                plan during the special enrollment established under 
                such section applicable to such individual, the 
                application of the assignment process described in 
                subparagraph (C) to such individual in the same manner 
                as such assignment process applies to a part D eligible 
                individual described in such subparagraph (C). Nothing 
                in the previous sentence shall prevent an individual 
                described in such sentence from declining enrollment in 
                a plan determined appropriate by the Secretary (or in 
                the program under this part) or from changing such 
                enrollment.''.
  (c) Effective Date.--The amendments made by this section shall apply 
to subsidy determinations made for months beginning with January 2011.

SEC. 1207. APPLICATION OF MA PREMIUMS PRIOR TO REBATE IN CALCULATION OF 
                    LOW INCOME SUBSIDY BENCHMARK.

  (a) In General.--Section 1860D-14(b)(2)(B)(iii) of the Social 
Security Act (42 U.S.C. 1395w-114(b)(2)(B)(iii)) is amended by 
inserting before the period the following: ``before the application of 
the monthly rebate computed under section 1854(b)(1)(C)(i) for that 
plan and year involved''.
  (b) Effective Date.--The amendment made by subsection (a) shall apply 
to subsidy determinations made for months beginning with January 2011.

                Subtitle B--Reducing Health Disparities

SEC. 1221. ENSURING EFFECTIVE COMMUNICATION IN MEDICARE.

  (a) Ensuring Effective Communication by the Centers for Medicare & 
Medicaid Services.--
          (1) Study on medicare payments for language services.--The 
        Secretary of Health and Human Services shall conduct a study 
        that examines the extent to which Medicare service providers 
        utilize, offer, or make available language services for 
        beneficiaries who are limited English proficient and ways that 
        Medicare should develop payment systems for language services.
          (2) Analyses.--The study shall include an analysis of each of 
        the following:
                  (A) How to develop and structure appropriate payment 
                systems for language services for all Medicare service 
                providers.
                  (B) The feasibility of adopting a payment methodology 
                for on-site interpreters, including interpreters who 
                work as independent contractors and interpreters who 
                work for agencies that provide on-site interpretation, 
                pursuant to which such interpreters could directly bill 
                Medicare for services provided in support of physician 
                office services for an LEP Medicare patient.
                  (C) The feasibility of Medicare contracting directly 
                with agencies that provide off-site interpretation 
                including telephonic and video interpretation pursuant 
                to which such contractors could directly bill Medicare 
                for the services provided in support of physician 
                office services for an LEP Medicare patient.
                  (D) The feasibility of modifying the existing 
                Medicare resource-based relative value scale (RBRVS) by 
                using adjustments (such as multipliers or add-ons) when 
                a patient is LEP.
                  (E) How each of options described in a previous 
                paragraph would be funded and how such funding would 
                affect physician payments, a physician's practice, and 
                beneficiary cost-sharing.
                  (F) The extent to which providers under parts A and B 
                of title XVIII of the Social Security Act, MA 
                organizations offering Medicare Advantage plans under 
                part C of such title and PDP sponsors of a prescription 
                drug plan under part D of such title utilize, offer, or 
                make available language services for beneficiaries with 
                limited English proficiency.
                  (G) The nature and type of language services provided 
                by States under title XIX of the Social Security Act 
                and the extent to which such services could be utilized 
                by beneficiaries and providers under title XVIII of 
                such Act.
          (3) Variation in payment system described.--The payment 
        systems described in paragraph (2)(A) may allow variations 
        based upon types of service providers, available delivery 
        methods, and costs for providing language services including 
        such factors as--
                  (A) the type of language services provided (such as 
                provision of health care or health care related 
                services directly in a non-English language by a 
                bilingual provider or use of an interpreter);
                  (B) type of interpretation services provided (such as 
                in-person, telephonic, video interpretation);
                  (C) the methods and costs of providing language 
                services (including the costs of providing language 
                services with internal staff or through contract with 
                external independent contractors or agencies, or both);
                  (D) providing services for languages not frequently 
                encountered in the United States; and
                  (E) providing services in rural areas.
          (4) Report.--The Secretary shall submit a report on the study 
        conducted under subsection (a) to appropriate committees of 
        Congress not later than 12 months after the date of the 
        enactment of this Act.
          (5) Exemption from paperwork reduction act.--Chapter 35 of 
        title 44, United States Code (commonly known as the ``Paperwork 
        Reduction Act'' ), shall not apply for purposes of carrying out 
        this subsection.
          (6) Authorization of appropriations.--There is authorized to 
        be appropriated to carry out this subsection such sums as are 
        necessary.
  (b) Health Plans.--Section 1857(g)(1) of the Social Security Act (42 
U.S.C. 1395w-27(g)(1)) is amended--
          (1) by striking ``or'' at the end of subparagraph (F);
          (2) by adding ``or'' at the end of subparagraph (G); and
          (3) by inserting after subparagraph (G) the following new 
        subparagraph:
                  ``(H) fails substantially to provide language 
                services to limited English proficient beneficiaries 
                enrolled in the plan that are required under law;''.

SEC. 1222. DEMONSTRATION TO PROMOTE ACCESS FOR MEDICARE BENEFICIARIES 
                    WITH LIMITED ENGLISH PROFICIENCY BY PROVIDING 
                    REIMBURSEMENT FOR CULTURALLY AND LINGUISTICALLY 
                    APPROPRIATE SERVICES.

  (a) In General.--Not later than 6 months after the date of the 
completion of the study described in section 1221(a), the Secretary, 
acting through the Centers for Medicare & Medicaid Services, shall 
carry out a demonstration program under which the Secretary shall award 
not fewer than 24 3-year grants to eligible Medicare service providers 
(as described in subsection (b)(1)) to improve effective communication 
between such providers and Medicare beneficiaries who are living in 
communities where racial and ethnic minorities, including populations 
that face language barriers, are underserved with respect to such 
services. In designing and carrying out the demonstration the Secretary 
shall take into consideration the results of the study conducted under 
section 1221(a) and adjust, as appropriate, the distribution of grants 
so as to better target Medicare beneficiaries who are in the greatest 
need of language services. The Secretary shall not authorize a grant 
larger than $500,000 over three years for any grantee.
  (b) Eligibility; Priority.--
          (1) Eligibility.--To be eligible to receive a grant under 
        subsection (a) an entity shall--
                  (A) be--
                          (i) a provider of services under part A of 
                        title XVIII of the Social Security Act;
                          (ii) a service provider under part B of such 
                        title;
                          (iii) a part C organization offering a 
                        Medicare part C plan under part C of such 
                        title; or
                          (iv) a PDP sponsor of a prescription drug 
                        plan under part D of such title; and
                  (B) prepare and submit to the Secretary an 
                application, at such time, in such manner, and 
                accompanied by such additional information as the 
                Secretary may require.
          (2) Priority.--
                  (A) Distribution.--To the extent feasible, in 
                awarding grants under this section, the Secretary shall 
                award--
                          (i) at least 6 grants to providers of 
                        services described in paragraph (1)(A)(i);
                          (ii) at least 6 grants to service providers 
                        described in paragraph (1)(A)(ii);
                          (iii) at least 6 grants to organizations 
                        described in paragraph (1)(A)(iii); and
                          (iv) at least 6 grants to sponsors described 
                        in paragraph (1)(A)(iv).
                  (B) For community organizations.--The Secretary shall 
                give priority to applicants that have developed 
                partnerships with community organizations or with 
                agencies with experience in language access.
                  (C) Variation in grantees.--The Secretary shall also 
                ensure that the grantees under this section represent, 
                among other factors, variations in--
                          (i) different types of language services 
                        provided and of service providers and 
                        organizations under parts A through D of title 
                        XVIII of the Social Security Act;
                          (ii) languages needed and their frequency of 
                        use;
                          (iii) urban and rural settings;
                          (iv) at least two geographic regions, as 
                        defined by the Secretary; and
                          (v) at least two large metropolitan 
                        statistical areas with diverse populations.
  (c) Use of Funds.--
          (1) In general.--A grantee shall use grant funds received 
        under this section to pay for the provision of competent 
        language services to Medicare beneficiaries who are limited 
        English proficient. Competent interpreter services may be 
        provided through on-site interpretation, telephonic 
        interpretation, or video interpretation or direct provision of 
        health care or health care related services by a bilingual 
        health care provider. A grantee may use bilingual providers, 
        staff, or contract interpreters. A grantee may use grant funds 
        to pay for competent translation services. A grantee may use up 
        to 10 percent of the grant funds to pay for administrative 
        costs associated with the provision of competent language 
        services and for reporting required under subsection (e).
          (2) Organizations.--Grantees that are part C organizations or 
        PDP sponsors must ensure that their network providers receive 
        at least 50 percent of the grant funds to pay for the provision 
        of competent language services to Medicare beneficiaries who 
        are limited English proficient, including physicians and 
        pharmacies.
          (3) Determination of payments for language services.--
        Payments to grantees shall be calculated based on the estimated 
        numbers of limited English proficient Medicare beneficiaries in 
        a grantee's service area utilizing--
                  (A) data on the numbers of limited English proficient 
                individuals who speak English less than ``very well'' 
                from the most recently available data from the Bureau 
                of the Census or other State-based study the Secretary 
                determines likely to yield accurate data regarding the 
                number of such individuals served by the grantee; or
                  (B) the grantee's own data if the grantee routinely 
                collects data on Medicare beneficiaries' primary 
                language in a manner determined by the Secretary to 
                yield accurate data and such data shows greater numbers 
                of limited English proficient individuals than the data 
                listed in subparagraph (A).
          (4) Limitations.--
                  (A) Reporting.--Payments shall only be provided under 
                this section to grantees that report their costs of 
                providing language services as required under 
                subsection (e) and may be modified annually at the 
                discretion of the Secretary. If a grantee fails to 
                provide the reports under such section for the first 
                year of a grant, the Secretary may terminate the grant 
                and solicit applications from new grantees to 
                participate in the subsequent two years of the 
                demonstration program.
                  (B) Type of services.--
                          (i) In general.--Subject to clause (ii), 
                        payments shall be provided under this section 
                        only to grantees that utilize competent 
                        bilingual staff or competent interpreter or 
                        translation services which--
                                  (I) if the grantee operates in a 
                                State that has statewide health care 
                                interpreter standards, meet the State 
                                standards currently in effect; or
                                  (II) if the grantee operates in a 
                                State that does not have statewide 
                                health care interpreter standards, 
                                utilizes competent interpreters who 
                                follow the National Council on 
                                Interpreting in Health Care's Code of 
                                Ethics and Standards of Practice.
                          (ii) Exemptions.--The requirements of clause 
                        (i) shall not apply--
                                  (I) in the case of a Medicare 
                                beneficiary who is limited English 
                                proficient (who has been informed in 
                                the beneficiary's primary language of 
                                the availability of free interpreter 
                                and translation services) and who 
                                requests the use of family, friends, or 
                                other persons untrained in 
                                interpretation or translation and the 
                                grantee documents the request in the 
                                beneficiary's record; and
                                  (II) in the case of a medical 
                                emergency where the delay directly 
                                associated with obtaining a competent 
                                interpreter or translation services 
                                would jeopardize the health of the 
                                patient.
                        Nothing in clause (ii)(II) shall be construed 
                        to exempt emergency rooms or similar entities 
                        that regularly provide health care services in 
                        medical emergencies from having in place 
                        systems to provide competent interpreter and 
                        translation services without undue delay.
  (d) Assurances.--Grantees under this section shall--
          (1) ensure that appropriate clinical and support staff 
        receive ongoing education and training in linguistically 
        appropriate service delivery;
          (2) ensure the linguistic competence of bilingual providers;
          (3) offer and provide appropriate language services at no 
        additional charge to each patient with limited English 
        proficiency at all points of contact, in a timely manner during 
        all hours of operation;
          (4) notify Medicare beneficiaries of their right to receive 
        language services in their primary language;
          (5) post signage in the languages of the commonly encountered 
        group or groups present in the service area of the 
        organization; and
          (6) ensure that--
                  (A) primary language data are collected for 
                recipients of language services; and
                  (B) consistent with the privacy protections provided 
                under the regulations promulgated pursuant to section 
                264(c) of the Health Insurance Portability and 
                Accountability Act of 1996 (42 U.S.C. 1320d-2 note), if 
                the recipient of language services is a minor or is 
                incapacitated, the primary language of the parent or 
                legal guardian is collected and utilized.
  (e) Reporting Requirements.--Grantees under this section shall 
provide the Secretary with reports at the conclusion of the each year 
of a grant under this section. Each report shall include at least the 
following information:
          (1) The number of Medicare beneficiaries to whom language 
        services are provided.
          (2) The languages of those Medicare beneficiaries.
          (3) The types of language services provided (such as 
        provision of services directly in non-English language by a 
        bilingual health care provider or use of an interpreter).
          (4) Type of interpretation (such as in-person, telephonic, or 
        video interpretation).
          (5) The methods of providing language services (such as staff 
        or contract with external independent contractors or agencies).
          (6) The length of time for each interpretation encounter.
          (7) The costs of providing language services (which may be 
        actual or estimated, as determined by the Secretary).
  (f) No Cost Sharing.--Limited English proficient Medicare 
beneficiaries shall not have to pay cost-sharing or co-pays for 
language services provided through this demonstration program.
  (g) Evaluation and Report.--The Secretary shall conduct an evaluation 
of the demonstration program under this section and shall submit to the 
appropriate committees of Congress a report not later than 1 year after 
the completion of the program. The report shall include the following:
          (1) An analysis of the patient outcomes and costs of 
        furnishing care to the limited English proficient Medicare 
        beneficiaries participating in the project as compared to such 
        outcomes and costs for limited English proficient Medicare 
        beneficiaries not participating.
          (2) The effect of delivering culturally and linguistically 
        appropriate services on beneficiary access to care, utilization 
        of services, efficiency and cost-effectiveness of health care 
        delivery, patient satisfaction, and select health outcomes.
          (3) Recommendations, if any, regarding the extension of such 
        project to the entire Medicare program.
  (h) General Provisions.--Nothing in this section shall be construed 
to limit otherwise existing obligations of recipients of Federal 
financial assistance under title VI of the Civil Rights Act of 1964 (42 
U.S.C. 2000(d) et seq.) or any other statute.
  (i) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $16,000,000 for each fiscal year 
of the demonstration program.

SEC. 1223. IOM REPORT ON IMPACT OF LANGUAGE ACCESS SERVICES.

  (a) In General.--The Secretary of Health and Human Services shall 
enter into an arrangement with the Institute of Medicine under which 
the Institute will prepare and publish, not later than 3 years after 
the date of the enactment of this Act, a report on the impact of 
language access services on the health and health care of limited 
English proficient populations.
  (b) Contents.--Such report shall include--
          (1) recommendations on the development and implementation of 
        policies and practices by health care organizations and 
        providers for limited English proficient patient populations;
          (2) a description of the effect of providing language access 
        services on quality of health care and access to care and 
        reduced medical error; and
          (3) a description of the costs associated with or savings 
        related to provision of language access services.

SEC. 1224. DEFINITIONS.

  In this subtitle:
          (1) Bilingual.--The term ``bilingual'' with respect to an 
        individual means a person who has sufficient degree of 
        proficiency in two languages and can ensure effective 
        communication can occur in both languages.
          (2) Competent interpreter services.--The term ``competent 
        interpreter services'' means a trans-language rendition of a 
        spoken message in which the interpreter comprehends the source 
        language and can speak comprehensively in the target language 
        to convey the meaning intended in the source language. The 
        interpreter knows health and health-related terminology and 
        provides accurate interpretations by choosing equivalent 
        expressions that convey the best matching and meaning to the 
        source language and captures, to the greatest possible extent, 
        all nuances intended in the source message.
          (3) Competent translation services.--The term ``competent 
        translation services'' means a trans-language rendition of a 
        written document in which the translator comprehends the source 
        language and can write comprehensively in the target language 
        to convey the meaning intended in the source language. The 
        translator knows health and health-related terminology and 
        provides accurate translations by choosing equivalent 
        expressions that convey the best matching and meaning to the 
        source language and captures, to the greatest possible extent, 
        all nuances intended in the source document.
          (4) Effective communication.--The term ``effective 
        communication'' means an exchange of information between the 
        provider of health care or health care-related services and the 
        limited English proficient recipient of such services that 
        enables limited English proficient individuals to access, 
        understand, and benefit from health care or health care-related 
        services.
          (5) Interpreting/interpretation.--The terms ``interpreting'' 
        and ``interpretation'' mean the transmission of a spoken 
        message from one language into another, faithfully, accurately, 
        and objectively.
          (6) Health care services.--The term ``health care services'' 
        means services that address physical as well as mental health 
        conditions in all care settings.
          (7) Health care-related services.--The term ``health care-
        related services'' means human or social services programs or 
        activities that provide access, referrals or links to health 
        care.
          (8) Language access.--The term ``language access'' means the 
        provision of language services to an LEP individual designed to 
        enhance that individual's access to, understanding of or 
        benefit from health care or health care-related services.
          (9) Language services.--The term ``language services'' means 
        provision of health care services directly in a non-English 
        language, interpretation, translation, and non-English signage.
          (10) Limited english proficient.--The term ``limited English 
        proficient'' or ``LEP'' with respect to an individual means an 
        individual who speaks a primary language other than English and 
        who cannot speak, read, write or understand the English 
        language at a level that permits the individual to effectively 
        communicate with clinical or nonclinical staff at an entity 
        providing health care or health care related services.
          (11) Medicare beneficiary.--The term ``Medicare beneficiary'' 
        means an individual entitled to benefits under part A of title 
        XVIII of the Social Security Act or enrolled under part B of 
        such title.
          (12) Medicare program.--The term ``Medicare program'' means 
        the programs under parts A through D of title XVIII of the 
        Social Security Act.
          (13) Service provider.--The term ``service provider'' 
        includes all suppliers, providers of services, or entities 
        under contract to provide coverage, items or services under any 
        part of title XVIII of the Social Security Act.

                 Subtitle C--Miscellaneous Improvements

SEC. 1231. EXTENSION OF THERAPY CAPS EXCEPTIONS PROCESS.

   Section 1833(g)(5) of the Social Security Act (42 U.S.C. 
1395l(g)(5)), as amended by section 141 of the Medicare Improvements 
for Patients and Providers Act of 2008 (Public Law 110-275), is amended 
by striking ``December 31, 2009'' and inserting ``December 31, 2011''.

SEC. 1232. EXTENDED MONTHS OF COVERAGE OF IMMUNOSUPPRESSIVE DRUGS FOR 
                    KIDNEY TRANSPLANT PATIENTS AND OTHER RENAL DIALYSIS 
                    PROVISIONS.

  (a) Provision of Appropriate Coverage of Immunosuppressive Drugs 
Under the Medicare Program for Kidney Transplant Recipients.--
          (1) Continued entitlement to immunosuppressive drugs.--
                  (A) Kidney transplant recipients.--Section 226A(b)(2) 
                of the Social Security Act (42 U.S.C. 426-1(b)(2)) is 
                amended by inserting ``(except for coverage of 
                immunosuppressive drugs under section 1861(s)(2)(J))'' 
                before ``, with the thirty-sixth month''.
                  (B) Application.--Section 1836 of such Act (42 U.S.C. 
                1395o) is amended--
                          (i) by striking ``Every individual who'' and 
                        inserting ``(a) In General.--Every individual 
                        who''; and
                          (ii) by adding at the end the following new 
                        subsection:
  ``(b) Special Rules Applicable to Individuals Only Eligible for 
Coverage of Immunosuppressive Drugs.--
          ``(1) In general.--In the case of an individual whose 
        eligibility for benefits under this title has ended on or after 
        January 1, 2012, except for the coverage of immunosuppressive 
        drugs by reason of section 226A(b)(2), the following rules 
        shall apply:
                  ``(A) The individual shall be deemed to be enrolled 
                under this part for purposes of receiving coverage of 
                such drugs.
                  ``(B) The individual shall be responsible for 
                providing for payment of the portion of the premium 
                under section 1839 which is not covered under the 
                Medicare savings program (as defined in section 
                1144(c)(7)) in order to receive such coverage.
                  ``(C) The provision of such drugs shall be subject to 
                the application of--
                          ``(i) the deductible under section 1833(b); 
                        and
                          ``(ii) the coinsurance amount applicable for 
                        such drugs (as determined under this part).
                  ``(D) If the individual is an inpatient of a hospital 
                or other entity, the individual is entitled to receive 
                coverage of such drugs under this part.
          ``(2) Establishment of procedures in order to implement 
        coverage.--The Secretary shall establish procedures for--
                  ``(A) identifying individuals that are entitled to 
                coverage of immunosuppressive drugs by reason of 
                section 226A(b)(2); and
                  ``(B) distinguishing such individuals from 
                individuals that are enrolled under this part for the 
                complete package of benefits under this part.''.
                  (C) Technical amendment to correct duplicate 
                subsection designation.--Subsection (c) of section 226A 
                of such Act (42 U.S.C. 426-1), as added by section 
                201(a)(3)(D)(ii) of the Social Security Independence 
                and Program Improvements Act of 1994 (Public Law 103-
                296; 108 Stat. 1497), is redesignated as subsection 
                (d).
          (2) Extension of secondary payer requirements for esrd 
        beneficiaries.--Section 1862(b)(1)(C) of such Act (42 U.S.C. 
        1395y(b)(1)(C)) is amended by adding at the end the following 
        new sentence: ``With regard to immunosuppressive drugs 
        furnished on or after the date of the enactment of the 
        America's Affordable Health Choices Act of 2009, this 
        subparagraph shall be applied without regard to any time 
        limitation.''.
  (b) Medicare Coverage for ESRD Patients.--Section 1881 of such Act is 
further amended--
          (1) in subsection (b)(14)(B)(iii), by inserting ``, including 
        oral drugs that are not the oral equivalent of an intravenous 
        drug (such as oral phosphate binders and calcimimetics),'' 
        after ``other drugs and biologicals'';
          (2) in subsection (b)(14)(E)(ii)--
                  (A) in the first sentence--
                          (i) by striking ``a one-time election to be 
                        excluded from the phase-in'' and inserting ``an 
                        election, with respect to 2011, 2012, or 2013, 
                        to be excluded from the phase-in (or the 
                        remainder of the phase-in)''; and
                          (ii) by adding before the period at the end 
                        the following: ``for such year and for each 
                        subsequent year during the phase-in described 
                        in clause (i)''; and
                  (B) in the second sentence--
                          (i) by striking ``January 1, 2011'' and 
                        inserting ``the first date of such year''; and
                          (ii) by inserting ``and at a time'' after 
                        ``form and manner''; and
          (3) in subsection (h)(4)(E), by striking ``lesser'' and 
        inserting ``greater''.

SEC. 1233. ADVANCE CARE PLANNING CONSULTATION.

  (a) Medicare.--
          (1) In general.--Section 1861 of the Social Security Act (42 
        U.S.C. 1395x) is amended--
                  (A) in subsection (s)(2)--
                          (i) by striking ``and'' at the end of 
                        subparagraph (DD);
                          (ii) by adding ``and'' at the end of 
                        subparagraph (EE); and
                          (iii) by adding at the end the following new 
                        subparagraph:
          ``(FF) advance care planning consultation (as defined in 
        subsection (hhh)(1));''; and
                  (B) by adding at the end the following new 
                subsection:

                  ``Advance Care Planning Consultation

  ``(hhh)(1) Subject to paragraphs (3) and (4), the term `advance care 
planning consultation' means a consultation between the individual and 
a practitioner described in paragraph (2) regarding advance care 
planning, if, subject to paragraph (3), the individual involved has not 
had such a consultation within the last 5 years. Such consultation 
shall include the following:
          ``(A) An explanation by the practitioner of advance care 
        planning, including key questions and considerations, important 
        steps, and suggested people to talk to.
          ``(B) An explanation by the practitioner of advance 
        directives, including living wills and durable powers of 
        attorney, and their uses.
          ``(C) An explanation by the practitioner of the role and 
        responsibilities of a health care proxy.
          ``(D) The provision by the practitioner of a list of national 
        and State-specific resources to assist consumers and their 
        families with advance care planning, including the national 
        toll-free hotline, the advance care planning clearinghouses, 
        and State legal service organizations (including those funded 
        through the Older Americans Act of 1965).
          ``(E) An explanation by the practitioner of the continuum of 
        end-of-life services and supports available, including 
        palliative care and hospice, and benefits for such services and 
        supports that are available under this title.
          ``(F)(i) Subject to clause (ii), an explanation of orders 
        regarding life sustaining treatment or similar orders, which 
        shall include--
                  ``(I) the reasons why the development of such an 
                order is beneficial to the individual and the 
                individual's family and the reasons why such an order 
                should be updated periodically as the health of the 
                individual changes;
                  ``(II) the information needed for an individual or 
                legal surrogate to make informed decisions regarding 
                the completion of such an order; and
                  ``(III) the identification of resources that an 
                individual may use to determine the requirements of the 
                State in which such individual resides so that the 
                treatment wishes of that individual will be carried out 
                if the individual is unable to communicate those 
                wishes, including requirements regarding the 
                designation of a surrogate decisionmaker (also known as 
                a health care proxy).
          ``(ii) The Secretary shall limit the requirement for 
        explanations under clause (i) to consultations furnished in a 
        State--
                  ``(I) in which all legal barriers have been addressed 
                for enabling orders for life sustaining treatment to 
                constitute a set of medical orders respected across all 
                care settings; and
                  ``(II) that has in effect a program for orders for 
                life sustaining treatment described in clause (iii).
          ``(iii) A program for orders for life sustaining treatment 
        for a States described in this clause is a program that--
                  ``(I) ensures such orders are standardized and 
                uniquely identifiable throughout the State;
                  ``(II) distributes or makes accessible such orders to 
                physicians and other health professionals that (acting 
                within the scope of the professional's authority under 
                State law) may sign orders for life sustaining 
                treatment;
                  ``(III) provides training for health care 
                professionals across the continuum of care about the 
                goals and use of orders for life sustaining treatment; 
                and
                  ``(IV) is guided by a coalition of stakeholders 
                includes representatives from emergency medical 
                services, emergency department physicians or nurses, 
                state long-term care association, state medical 
                association, state surveyors, agency responsible for 
                senior services, state department of health, state 
                hospital association, home health association, state 
                bar association, and state hospice association.
  ``(2) A practitioner described in this paragraph is--
          ``(A) a physician (as defined in subsection (r)(1)); and
          ``(B) a nurse practitioner or physician assistant who has the 
        authority under State law to sign orders for life sustaining 
        treatments.
  ``(3)(A) An initial preventive physical examination under subsection 
(WW), including any related discussion during such examination, shall 
not be considered an advance care planning consultation for purposes of 
applying the 5-year limitation under paragraph (1).
  ``(B) An advance care planning consultation with respect to an 
individual may be conducted more frequently than provided under 
paragraph (1) if there is a significant change in the health condition 
of the individual, including diagnosis of a chronic, progressive, life-
limiting disease, a life-threatening or terminal diagnosis or life-
threatening injury, or upon admission to a skilled nursing facility, a 
long-term care facility (as defined by the Secretary), or a hospice 
program.
  ``(4) A consultation under this subsection may include the 
formulation of an order regarding life sustaining treatment or a 
similar order.
  ``(5)(A) For purposes of this section, the term `order regarding life 
sustaining treatment' means, with respect to an individual, an 
actionable medical order relating to the treatment of that individual 
that--
          ``(i) is signed and dated by a physician (as defined in 
        subsection (r)(1)) or another health care professional (as 
        specified by the Secretary and who is acting within the scope 
        of the professional's authority under State law in signing such 
        an order, including a nurse practitioner or physician 
        assistant) and is in a form that permits it to stay with the 
        individual and be followed by health care professionals and 
        providers across the continuum of care;
          ``(ii) effectively communicates the individual's preferences 
        regarding life sustaining treatment, including an indication of 
        the treatment and care desired by the individual;
          ``(iii) is uniquely identifiable and standardized within a 
        given locality, region, or State (as identified by the 
        Secretary); and
          ``(iv) may incorporate any advance directive (as defined in 
        section 1866(f)(3)) if executed by the individual.
  ``(B) The level of treatment indicated under subparagraph (A)(ii) may 
range from an indication for full treatment to an indication to limit 
some or all or specified interventions. Such indicated levels of 
treatment may include indications respecting, among other items--
          ``(i) the intensity of medical intervention if the patient is 
        pulse less, apneic, or has serious cardiac or pulmonary 
        problems;
          ``(ii) the individual's desire regarding transfer to a 
        hospital or remaining at the current care setting;
          ``(iii) the use of antibiotics; and
          ``(iv) the use of artificially administered nutrition and 
        hydration.''.
          (2) Payment.--Section 1848(j)(3) of such Act (42 U.S.C. 
        1395w-4(j)(3)) is amended by inserting ``(2)(FF),'' after 
        ``(2)(EE),''.
          (3) Frequency limitation.--Section 1862(a) of such Act (42 
        U.S.C. 1395y(a)) is amended--
                  (A) in paragraph (1)--
                          (i) in subparagraph (N), by striking ``and'' 
                        at the end;
                          (ii) in subparagraph (O) by striking the 
                        semicolon at the end and inserting ``, and''; 
                        and
                          (iii) by adding at the end the following new 
                        subparagraph:
                  ``(P) in the case of advance care planning 
                consultations (as defined in section 1861(hhh)(1)), 
                which are performed more frequently than is covered 
                under such section;''; and
                  (B) in paragraph (7), by striking ``or (K)'' and 
                inserting ``(K), or (P)''.
          (4) Effective date.--The amendments made by this subsection 
        shall apply to consultations furnished on or after January 1, 
        2011.
  (b) Expansion of Physician Quality Reporting Initiative for End of 
Life Care.--
          (1) Physician's quality reporting initiative.--Section 
        1848(k)(2) of the Social Security Act (42 U.S.C. 1395w-4(k)(2)) 
        is amended by adding at the end the following new subparagraph:
                  ``(E) Physician's quality reporting initiative.--
                          ``(i) In general.--For purposes of reporting 
                        data on quality measures for covered 
                        professional services furnished during 2011 and 
                        any subsequent year, to the extent that 
                        measures are available, the Secretary shall 
                        include quality measures on end of life care 
                        and advanced care planning that have been 
                        adopted or endorsed by a consensus-based 
                        organization, if appropriate. Such measures 
                        shall measure both the creation of and 
                        adherence to orders for life-sustaining 
                        treatment.
                          ``(ii) Proposed set of measures.--The 
                        Secretary shall publish in the Federal Register 
                        proposed quality measures on end of life care 
                        and advanced care planning that the Secretary 
                        determines are described in subparagraph (A) 
                        and would be appropriate for eligible 
                        professionals to use to submit data to the 
                        Secretary. The Secretary shall provide for a 
                        period of public comment on such set of 
                        measures before finalizing such proposed 
                        measures.''.
  (c) Inclusion of Information in Medicare & You Handbook.--
          (1) Medicare & you handbook.--
                  (A) In general.--Not later than 1 year after the date 
                of the enactment of this Act, the Secretary of Health 
                and Human Services shall update the online version of 
                the Medicare & You Handbook to include the following:
                          (i) An explanation of advance care planning 
                        and advance directives, including--
                                  (I) living wills;
                                  (II) durable power of attorney;
                                  (III) orders of life-sustaining 
                                treatment; and
                                  (IV) health care proxies.
                          (ii) A description of Federal and State 
                        resources available to assist individuals and 
                        their families with advance care planning and 
                        advance directives, including--
                                  (I) available State legal service 
                                organizations to assist individuals 
                                with advance care planning, including 
                                those organizations that receive 
                                funding pursuant to the Older Americans 
                                Act of 1965 (42 U.S.C. 93001 et seq.);
                                  (II) website links or addresses for 
                                State-specific advance directive forms; 
                                and
                                  (III) any additional information, as 
                                determined by the Secretary.
                  (B) Update of paper and subsequent versions.--The 
                Secretary shall include the information described in 
                subparagraph (A) in all paper and electronic versions 
                of the Medicare & You Handbook that are published on or 
                after the date that is 1 year after the date of the 
                enactment of this Act.

SEC. 1234. PART B SPECIAL ENROLLMENT PERIOD AND WAIVER OF LIMITED 
                    ENROLLMENT PENALTY FOR TRICARE BENEFICIARIES.

  (a) Part B Special Enrollment Period.--
          (1) In general.--Section 1837 of the Social Security Act (42 
        U.S.C. 1395p) is amended by adding at the end the following new 
        subsection:
  ``(l)(1) In the case of any individual who is a covered beneficiary 
(as defined in section 1072(5) of title 10, United States Code) at the 
time the individual is entitled to hospital insurance benefits under 
part A under section 226(b) or section 226A and who is eligible to 
enroll but who has elected not to enroll (or to be deemed enrolled) 
during the individual's initial enrollment period, there shall be a 
special enrollment period described in paragraph (2).
  ``(2) The special enrollment period described in this paragraph, with 
respect to an individual, is the 12-month period beginning on the day 
after the last day of the initial enrollment period of the individual 
or, if later, the 12-month period beginning with the month the 
individual is notified of enrollment under this section.
  ``(3) In the case of an individual who enrolls during the special 
enrollment period provided under paragraph (1), the coverage period 
under this part shall begin on the first day of the month in which the 
individual enrolls or, at the option of the individual, on the first 
day of the second month following the last month of the individual's 
initial enrollment period.
  ``(4) The Secretary of Defense shall establish a method for 
identifying individuals described in paragraph (1) and providing notice 
to them of their eligibility for enrollment during the special 
enrollment period described in paragraph (2).''.
          (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to elections made on or after the date of the 
        enactment of this Act.
  (b) Waiver of Increase of Premium.--
          (1) In general.--Section 1839(b) of the Social Security Act 
        (42 U.S.C. 1395r(b)) is amended by striking ``section 
        1837(i)(4)'' and inserting ``subsection (i)(4) or (l) of 
        section 1837''.
          (2) Effective date.--
                  (A) In general.--The amendment made by paragraph (1) 
                shall apply with respect to elections made on or after 
                the date of the enactment of this Act.
                  (B) Rebates for certain disabled and esrd 
                beneficiaries.--
                          (i) In general.--With respect to premiums for 
                        months on or after January 2005 and before the 
                        month of the enactment of this Act, no increase 
                        in the premium shall be effected for a month in 
                        the case of any individual who is a covered 
                        beneficiary (as defined in section 1072(5) of 
                        title 10, United States Code) at the time the 
                        individual is entitled to hospital insurance 
                        benefits under part A of title XVIII of the 
                        Social Security Act under section 226(b) or 
                        226A of such Act, and who is eligible to 
                        enroll, but who has elected not to enroll (or 
                        to be deemed enrolled), during the individual's 
                        initial enrollment period, and who enrolls 
                        under this part within the 12-month period that 
                        begins on the first day of the month after the 
                        month of notification of entitlement under this 
                        part.
                          (ii) Consultation with department of 
                        defense.--The Secretary of Health and Human 
                        Services shall consult with the Secretary of 
                        Defense in identifying individuals described in 
                        this paragraph.
                          (iii) Rebates.--The Secretary of Health and 
                        Human Services shall establish a method for 
                        providing rebates of premium increases paid for 
                        months on or after January 1, 2005, and before 
                        the month of the enactment of this Act for 
                        which a penalty was applied and collected.

SEC. 1235. EXCEPTION FOR USE OF MORE RECENT TAX YEAR IN CASE OF GAINS 
                    FROM SALE OF PRIMARY RESIDENCE IN COMPUTING PART B 
                    INCOME-RELATED PREMIUM.

  (a) In General.--Section 1839(i)(4)(C)(ii)(II) of the Social Security 
Act (42 U.S.C. 1395r(i)(4)(C)(ii)(II)) is amended by inserting ``sale 
of primary residence,'' after ``divorce of such individual,''.
  (b) Effective Date.--The amendment made by subsection (a) shall apply 
to premiums and payments for years beginning with 2011.

SEC. 1236. DEMONSTRATION PROGRAM ON USE OF PATIENT DECISIONS AIDS.

  (a) In General.--The Secretary of Health and Human Services shall 
establish a shared decision making demonstration program (in this 
subsection referred to as the ``program'') under the Medicare program 
using patient decision aids to meet the objective of improving the 
understanding by Medicare beneficiaries of their medical treatment 
options, as compared to comparable Medicare beneficiaries who do not 
participate in a shared decision making process using patient decision 
aids.
  (b) Sites.--
          (1) Enrollment.--The Secretary shall enroll in the program 
        not more than 30 eligible providers who have experience in 
        implementing, and have invested in the necessary infrastructure 
        to implement, shared decision making using patient decision 
        aids.
          (2) Application.--An eligible provider seeking to participate 
        in the program shall submit to the Secretary an application at 
        such time and containing such information as the Secretary may 
        require.
          (3) Preference.--In enrolling eligible providers in the 
        program, the Secretary shall give preference to eligible 
        providers that--
                  (A) have documented experience in using patient 
                decision aids for the conditions identified by the 
                Secretary and in using shared decision making;
                  (B) have the necessary information technology 
                infrastructure to collect the information required by 
                the Secretary for reporting purposes; and
                  (C) are trained in how to use patient decision aids 
                and shared decision making.
  (c) Follow-up Counseling Visit.--
          (1) In general.--An eligible provider participating in the 
        program shall routinely schedule Medicare beneficiaries for a 
        counseling visit after the viewing of such a patient decision 
        aid to answer any questions the beneficiary may have with 
        respect to the medical care of the condition involved and to 
        assist the beneficiary in thinking through how their 
        preferences and concerns relate to their medical care.
          (2) Payment for follow-up counseling visit.--The Secretary 
        shall establish procedures for making payments for such 
        counseling visits provided to Medicare beneficiaries under the 
        program. Such procedures shall provide for the establishment--
                  (A) of a code (or codes) to represent such services; 
                and
                  (B) of a single payment amount for such service that 
                includes the professional time of the health care 
                provider and a portion of the reasonable costs of the 
                infrastructure of the eligible provider such as would 
                be made under the applicable payment systems to that 
                provider for similar covered services.
  (d) Costs of Aids.--An eligible provider participating in the program 
shall be responsible for the costs of selecting, purchasing, and 
incorporating such patient decision aids into the provider's practice, 
and reporting data on quality and outcome measures under the program.
  (e) Funding.--The Secretary shall provide for the transfer from the 
Federal Supplementary Medical Insurance Trust Fund established under 
section 1841 of the Social Security Act (42 U.S.C. 1395t) of such funds 
as are necessary for the costs of carrying out the program.
  (f) Waiver Authority.--The Secretary may waive such requirements of 
titles XI and XVIII of the Social Security Act (42 U.S.C. 1301 et seq. 
and 1395 et seq.) as may be necessary for the purpose of carrying out 
the program.
  (g) Report.--Not later than 12 months after the date of completion of 
the program, the Secretary shall submit to Congress a report on such 
program, together with recommendations for such legislation and 
administrative action as the Secretary determines to be appropriate. 
The final report shall include an evaluation of the impact of the use 
of the program on health quality, utilization of health care services, 
and on improving the quality of life of such beneficiaries.
  (h) Definitions.--In this section:
          (1) Eligible provider.--The term ``eligible provider'' means 
        the following:
                  (A) A primary care practice.
                  (B) A specialty practice.
                  (C) A multispecialty group practice.
                  (D) A hospital.
                  (E) A rural health clinic.
                  (F) A Federally qualified health center (as defined 
                in section 1861(aa)(4) of the Social Security Act (42 
                U.S.C. 1395x(aa)(4)).
                  (G) An integrated delivery system.
                  (H) A State cooperative entity that includes the 
                State government and at least one other health care 
                provider which is set up for the purpose of testing 
                shared decision making and patient decision aids.
          (2) Patient decision aid.--The term ``patient decision aid'' 
        means an educational tool (such as the Internet, a video, or a 
        pamphlet) that helps patients (or, if appropriate, the family 
        caregiver of the patient) understand and communicate their 
        beliefs and preferences related to their treatment options, and 
        to decide with their health care provider what treatments are 
        best for them based on their treatment options, scientific 
        evidence, circumstances, beliefs, and preferences.
          (3) Shared decision making.--The term ``shared decision 
        making'' means a collaborative process between patient and 
        clinician that engages the patient in decision making, provides 
        patients with information about trade-offs among treatment 
        options, and facilitates the incorporation of patient 
        preferences and values into the medical plan.

    TITLE III--PROMOTING PRIMARY CARE, MENTAL HEALTH SERVICES, AND 
                            COORDINATED CARE

SEC. 1301. ACCOUNTABLE CARE ORGANIZATION PILOT PROGRAM.

  Title XVIII of the Social Security Act is amended by inserting after 
section 1866D, as added by section 1152(f) of this Act, the following 
new section:
             ``accountable care organization pilot program
  ``Sec. 1866E.  (a) In General.--The Secretary shall conduct a pilot 
program (in this section referred to as the `pilot program') to test 
different payment incentive models, including (to the extent 
practicable) the specific payment incentive models described in 
subsection (c), designed to reduce the growth of expenditures and 
improve health outcomes in the provision of items and services under 
this title to applicable beneficiaries (as defined in subsection (d)) 
by qualifying accountable care organizations (as defined in subsection 
(b)(1)) in order to--
          ``(1) promote accountability for a patient population and 
        coordinate items and services under parts A and B;
          ``(2) encourage investment in infrastructure and redesigned 
        care processes for high quality and efficient service delivery; 
        and
          ``(3) reward physician practices and other physician 
        organizational models for the provision of high quality and 
        efficient health care services.
  ``(b) Qualifying Accountable Care Organizations (ACOs).--
          ``(1) Qualifying aco defined.--In this section:
                  ``(A) In general.--The terms `qualifying accountable 
                care organization' and `qualifying ACO' mean a group of 
                physicians or other physician organizational model (as 
                defined in subparagraph (D)) that--
                          ``(i) is organized at least in part for the 
                        purpose of providing physicians' services; and
                          ``(ii) meets such criteria as the Secretary 
                        determines to be appropriate to participate in 
                        the pilot program, including the criteria 
                        specified in paragraph (2).
                  ``(B) Inclusion of other providers.--Nothing in this 
                subsection shall be construed as preventing a 
                qualifying ACO from including a hospital or any other 
                provider of services or supplier furnishing items or 
                services for which payment may be made under this title 
                that is affiliated with the ACO under an arrangement 
                structured so that such provider or supplier 
                participates in the pilot program and shares in any 
                incentive payments under the pilot program.
                  ``(C) Physician.--The term `physician' includes, 
                except as the Secretary may otherwise provide, any 
                individual who furnishes services for which payment may 
                be made as physicians' services.
                  ``(D) Other physician organizational model.--The term 
                `other physician organization model' means, with 
                respect to a qualifying ACO any model of organization 
                under which physicians enter into agreements with other 
                providers for the purposes of participation in the 
                pilot program in order to provide high quality and 
                efficient health care services and share in any 
                incentive payments under such program
                  ``(E) Other services.--Nothing in this paragraph 
                shall be construed as preventing a qualifying ACO from 
                furnishing items or services, for which payment may not 
                be made under this title, for purposes of achieving 
                performance goals under the pilot program.
          ``(2) Qualifying criteria.--The following are criteria 
        described in this paragraph for an organized group of 
        physicians to be a qualifying ACO:
                  ``(A) The group has a legal structure that would 
                allow the group to receive and distribute incentive 
                payments under this section.
                  ``(B) The group includes a sufficient number of 
                primary care physicians (regardless of specialty) for 
                the applicable beneficiaries for whose care the group 
                is accountable (as determined by the Secretary).
                  ``(C) The group reports on quality measures in such 
                form, manner, and frequency as specified by the 
                Secretary (which may be for the group, for providers of 
                services and suppliers, or both).
                  ``(D) The group reports to the Secretary (in a form, 
                manner and frequency as specified by the Secretary) 
                such data as the Secretary determines appropriate to 
                monitor and evaluate the pilot program.
                  ``(E) The group provides notice to applicable 
                beneficiaries regarding the pilot program (as 
                determined appropriate by the Secretary).
                  ``(F) The group contributes to a best practices 
                network or website, that shall be maintained by the 
                Secretary for the purpose of sharing strategies on 
                quality improvement, care coordination, and efficiency 
                that the groups believe are effective.
                  ``(G) The group utilizes patient-centered processes 
                of care, including those that emphasize patient and 
                caregiver involvement in planning and monitoring of 
                ongoing care management plan.
                  ``(H) The group meets other criteria determined to be 
                appropriate by the Secretary.
  ``(c) Specific Payment Incentive Models.--The specific payment 
incentive models described in this subsection are the following:
          ``(1) Performance target model.--Under the performance target 
        model under this paragraph (in this paragraph referred to as 
        the `performance target model'):
                  ``(A) In general.--A qualifying ACO qualifies to 
                receive an incentive payment if expenditures for 
                applicable beneficiaries are less than a target 
                spending level or a target rate of growth. The 
                incentive payment shall be made only if savings are 
                greater than would result from normal variation in 
                expenditures for items and services covered under parts 
                A and B.
                  ``(B) Computation of performance target.--
                          ``(i) In general.--The Secretary shall 
                        establish a performance target for each 
                        qualifying ACO comprised of a base amount 
                        (described in clause (ii)) increased to the 
                        current year by an adjustment factor (described 
                        in clause (iii)). Such a target may be 
                        established on a per capita basis, as the 
                        Secretary determines to be appropriate.
                          ``(ii) Base amount.--For purposes of clause 
                        (i), the base amount in this subparagraph is 
                        equal to the average total payments (or allowed 
                        charges) under parts A and B (and may include 
                        part D, if the Secretary determines 
                        appropriate) for applicable beneficiaries for 
                        whom the qualifying ACO furnishes items and 
                        services in a base period determined by the 
                        Secretary. Such base amount may be determined 
                        on a per capita basis.
                          ``(iii) Adjustment factor.--For purposes of 
                        clause (i), the adjustment factor in this 
                        clause may equal an annual per capita amount 
                        that reflects changes in expenditures from the 
                        period of the base amount to the current year 
                        that would represent an appropriate performance 
                        target for applicable beneficiaries (as 
                        determined by the Secretary). Such adjustment 
                        factor may be determined as an amount or rate, 
                        may be determined on a national, regional, 
                        local, or organization-specific basis, and may 
                        be determined on a per capita basis. Such 
                        adjustment factor also may be adjusted for risk 
                        as determined appropriate by the Secretary.
                          ``(iv) Rebasing.--Under this model the 
                        Secretary shall periodically rebase the base 
                        expenditure amount described in clause (ii).
                  ``(C) Meeting target.--
                          ``(i) In general.--Subject to clause (ii), a 
                        qualifying ACO that meet or exceeds annual 
                        quality and performance targets for a year 
                        shall receive an incentive payment for such 
                        year equal to a portion (as determined 
                        appropriate by the Secretary) of the amount by 
                        which payments under this title for such year 
                        relative are estimated to be below the 
                        performance target for such year, as determined 
                        by the Secretary. The Secretary may establish a 
                        cap on incentive payments for a year for a 
                        qualifying ACO.
                          ``(ii) Limitation.-- The Secretary shall 
                        limit incentive payments to each qualifying ACO 
                        under this paragraph as necessary to ensure 
                        that the aggregate expenditures with respect to 
                        applicable beneficiaries for such ACOs under 
                        this title (inclusive of incentive payments 
                        described in this subparagraph) do not exceed 
                        the amount that the Secretary estimates would 
                        be expended for such ACO for such beneficiaries 
                        if the pilot program under this section were 
                        not implemented.
                  ``(D) Reporting and other requirements.--In carrying 
                out such model, the Secretary may (as the Secretary 
                determines to be appropriate) incorporate reporting 
                requirements, incentive payments, and penalties related 
                to the physician quality reporting initiative (PQRI), 
                electronic prescribing, electronic health records, and 
                other similar initiatives under section 1848, and may 
                use alternative criteria than would otherwise apply 
                under such section for determining whether to make such 
                payments. The incentive payments described in this 
                subparagraph shall not be included in the limit 
                described in subparagraph (C)(ii) or in the performance 
                target model described in this paragraph.
          ``(2) Partial capitation model.--
                  ``(A) In general.--Subject to subparagraph (B), a 
                partial capitation model described in this paragraph 
                (in this paragraph referred to as a `partial capitation 
                model') is a model in which a qualifying ACO would be 
                at financial risk for some, but not all, of the items 
                and services covered under parts A and B, such as at 
                risk for some or all physicians' services or all items 
                and services under part B. The Secretary may limit a 
                partial capitation model to ACOs that are highly 
                integrated systems of care and to ACOs capable of 
                bearing risk, as determined to be appropriate by the 
                Secretary.
                  ``(B) No additional program expenditures.--Payments 
                to a qualifying ACO for applicable beneficiaries for a 
                year under the partial capitation model shall be 
                established in a manner that does not result in 
                spending more for such ACO for such beneficiaries than 
                would otherwise be expended for such ACO for such 
                beneficiaries for such year if the pilot program were 
                not implemented, as estimated by the Secretary.
          ``(3) Other payment models.--
                  ``(A) In general.--Subject to subparagraph (B), the 
                Secretary may develop other payment models that meet 
                the goals of this pilot program to improve quality and 
                efficiency.
                  ``(B) No additional program expenditures.--
                Subparagraph (B) of paragraph (2) shall apply to a 
                payment model under subparagraph (A) in a similar 
                manner as such subparagraph (B) applies to the payment 
                model under paragraph (2).
  ``(d) Applicable Beneficiaries.--
          ``(1) In general.--In this section, the term `applicable 
        beneficiary' means, with respect to a qualifying ACO, an 
        individual who--
                  ``(A) is enrolled under part B and entitled to 
                benefits under part A;
                  ``(B) is not enrolled in a Medicare Advantage plan 
                under part C or a PACE program under section 1894; and
                  ``(C) meets such other criteria as the Secretary 
                determines appropriate, which may include criteria 
                relating to frequency of contact with physicians in the 
                ACO
          ``(2) Following applicable beneficiaries.--The Secretary may 
        monitor data on expenditures and quality of services under this 
        title after an applicable beneficiary discontinues receiving 
        services under this title through a qualifying ACO.
  ``(e) Implementation.--
          ``(1) Starting date.--The pilot program shall begin no later 
        than January 1, 2012. An agreement with a qualifying ACO under 
        the pilot program may cover a multi-year period of between 3 
        and 5 years.
          ``(2) Waiver.--The Secretary may waive such provisions of 
        this title (including section 1877) and title XI in the manner 
        the Secretary determines necessary in order implement the pilot 
        program.
          ``(3) Performance results reports.--The Secretary shall 
        report performance results to qualifying ACOs under the pilot 
        program at least annually.
          ``(4) Limitations on review.--There shall be no 
        administrative or judicial review under section 1869, section 
        1878, or otherwise of--
                  ``(A) the elements, parameters, scope, and duration 
                of the pilot program;
                  ``(B) the selection of qualifying ACOs for the pilot 
                program;
                  ``(C) the establishment of targets, measurement of 
                performance, determinations with respect to whether 
                savings have been achieved and the amount of savings;
                  ``(D) determinations regarding whether, to whom, and 
                in what amounts incentive payments are paid; and
                  ``(E) decisions about the extension of the program 
                under subsection (g), expansion of the program under 
                subsection (h) or extensions under subsection (i).
          ``(5) Administration.--Chapter 35 of title 44, United States 
        Code shall not apply to this section.
  ``(f) Evaluation; Monitoring.--
          ``(1) In general.--The Secretary shall evaluate the payment 
        incentive model for each qualifying ACO under the pilot program 
        to assess impacts on beneficiaries, providers of services, 
        suppliers and the program under this title. The Secretary shall 
        make such evaluation publicly available within 60 days of the 
        date of completion of such report.
          ``(2) Monitoring.--The Inspector General of the Department of 
        Health and Human Services shall provide for monitoring of the 
        operation of ACOs under the pilot program with regard to 
        violations of section 1877 (popularly known as the `Stark 
        law').
  ``(g) Extension of Pilot Agreement With Successful Organizations.--
          ``(1) Reports to congress.--Not later than 2 years after the 
        date the first agreement is entered into under this section, 
        and biennially thereafter for six years, the Secretary shall 
        submit to Congress and make publicly available a report on the 
        use of authorities under the pilot program. Each report shall 
        address the impact of the use of those authorities on 
        expenditures, access, and quality under this title.
          ``(2) Extension.--Subject to the report provided under 
        paragraph (1), with respect to a qualifying ACO, the Secretary 
        may extend the duration of the agreement for such ACO under the 
        pilot program as the Secretary determines appropriate if--
                  ``(A) the ACO receives incentive payments with 
                respect to any of the first 4 years of the pilot 
                agreement and is consistently meeting quality standards 
                or
                  ``(B) the ACO is consistently exceeding quality 
                standards and is not increasing spending under the 
                program.
          ``(3) Termination.--The Secretary may terminate an agreement 
        with a qualifying ACO under the pilot program if such ACO did 
        not receive incentive payments or consistently failed to meet 
        quality standards in any of the first 3 years under the 
        program.
  ``(h) Expansion to Additional ACOs.--
          ``(1) Testing and refinement of payment incentive models.--
        Subject to the evaluation described in subsection (f), the 
        Secretary may enter into agreements under the pilot program 
        with additional qualifying ACOs to further test and refine 
        payment incentive models with respect to qualifying ACOs.
          ``(2) Expanding use of successful models to program 
        implementation.--
                  ``(A) In general.--Subject to subparagraph (B), the 
                Secretary may issue regulations to implement, on a 
                permanent basis, 1 or more models if, and to the extent 
                that, such models are beneficial to the program under 
                this title, as determined by the Secretary.
                  ``(B) Certification.--The Chief Actuary of the 
                Centers for Medicare & Medicaid Services shall certify 
                that 1 or more of such models described in subparagraph 
                (A) would result in estimated spending that would be 
                less than what spending would otherwise be estimated to 
                be in the absence of such expansion.
  ``(i) Treatment of Physician Group Practice Demonstration.--
          ``(1) Extension.--The Secretary may enter in to an agreement 
        with a qualifying ACO under the demonstration under section 
        1866A, subject to rebasing and other modifications deemed 
        appropriate by the Secretary, until the pilot program under 
        this section is operational.
          ``(2) Transition.--For purposes of extension of an agreement 
        with a qualifying ACO under subsection (g)(2), the Secretary 
        shall treat receipt of an incentive payment for a year by an 
        organization under the physician group practice demonstration 
        pursuant to section 1866A as a year for which an incentive 
        payment is made under such subsection, as long as such practice 
        group practice organization meets the criteria under subsection 
        (b)(2).
  ``(j) Additional Provisions.--
          ``(1) Authority for separate incentive arrangements.--The 
        Secretary may create separate incentive arrangements (including 
        using multiple years of data, varying thresholds, varying 
        shared savings amounts, and varying shared savings limits) for 
        different categories of qualifying ACOs to reflect natural 
        variations in data availability, variation in average annual 
        attributable expenditures, program integrity, and other matters 
        the Secretary deems appropriate.
          ``(2) Encouragement of participation of smaller 
        organizations.--In order to encourage the participation of 
        smaller accountable care organizations under the pilot program, 
        the Secretary may limit a qualifying ACO's exposure to high 
        cost patients under the program.
          ``(3) Involvement in private payer arrangements.--Nothing in 
        this section shall be construed as preventing qualifying ACOs 
        participating in the pilot program from negotiating similar 
        contracts with private payers.
          ``(4) Antidiscrimination limitation.--The Secretary shall not 
        enter into an agreement with an entity to provide health care 
        items or services under the pilot program, or with an entity to 
        administer the program, unless such entity guarantees that it 
        will not deny, limit, or condition the coverage or provision of 
        benefits under the program, for individuals eligible to be 
        enrolled under such program, based on any health status-related 
        factor described in section 2702(a)(1) of the Public Health 
        Service Act.
          ``(5) Construction.--Nothing in this section shall be 
        construed to compel or require an organization to use an 
        organization-specific target growth rate for an accountable 
        care organization under this section for purposes of section 
        1848.
          ``(6) Funding.--For purposes of administering and carrying 
        out the pilot program, other than for payments for items and 
        services furnished under this title and incentive payments 
        under subsection (c)(1), in addition to funds otherwise 
        appropriated, there are appropriated to the Secretary for the 
        Center for Medicare & Medicaid Services Program Management 
        Account $25,000,000 for each of fiscal years 2010 through 2014 
        and $20,000,000 for fiscal year 2015. Amounts appropriated 
        under this paragraph for a fiscal year shall be available until 
        expended.''.

SEC. 1302. MEDICAL HOME PILOT PROGRAM.

  (a) In General.--Title XVIII of the Social Security Act is amended by 
inserting after section 1866E, as inserted by section 1301, the 
following new section:
                      ``medical home pilot program
  ``Sec. 1866F.  (a) Establishment and Medical Home Models.--
          ``(1) Establishment of pilot program.--The Secretary shall 
        establish a medical home pilot program (in this section 
        referred to as the `pilot program') for the purpose of 
        evaluating the feasibility and advisability of reimbursing 
        qualified patient-centered medical homes for furnishing medical 
        home services (as defined under subsection (b)(1)) to high need 
        beneficiaries (as defined in subsection (d)(1)(C)) and to 
        targeted high need beneficiaries (as defined in subsection 
        (c)(1)(C)).
          ``(2) Scope.--Subject to subsection (g), the pilot program 
        shall include urban, rural, and underserved areas.
          ``(3) Models of medical homes in the pilot program.--The 
        pilot program shall evaluate each of the following medical home 
        models:
                  ``(A) Independent patient-centered medical home 
                model.--Independent patient-centered medical home model 
                under subsection (c).
                  ``(B) Community-based medical home model.--Community-
                based medical home model under subsection (d).
          ``(4) Participation of nurse practitioners and physician 
        assistants.--
                  ``(A) Nothing in this section shall be construed as 
                preventing a nurse practitioner from leading a patient 
                centered medical home so long as--
                          ``(i) all the requirements of this section 
                        are met; and
                          ``(ii) the nurse practitioner is acting 
                        consistently with State law.
                  ``(B) Nothing in this section shall be construed as 
                preventing a physician assistant from participating in 
                a patient centered medical home so long as--
                          ``(i) all the requirements of this section 
                        are met; and
                          ``(ii) the physician assistant is acting 
                        consistently with State law.
  ``(b) Definitions.--For purposes of this section:
          ``(1) Patient-centered medical home services.--The term 
        `patient-centered medical home services' means services that--
                  ``(A) provide beneficiaries with direct and ongoing 
                access to a primary care or principal care by a 
                physician or nurse practitioner who accepts 
                responsibility for providing first contact, continuous 
                and comprehensive care to such beneficiary;
                  ``(B) coordinate the care provided to a beneficiary 
                by a team of individuals at the practice level across 
                office, institutional and home settings led by a 
                primary care or principal care physician or nurse 
                practitioner, as needed and appropriate;
                  ``(C) provide for all the patient's health care needs 
                or take responsibility for appropriately arranging care 
                with other qualified providers for all stages of life;
                  ``(D) provide continuous access to care and 
                communication with participating beneficiaries;
                  ``(E) provide support for patient self-management, 
                proactive and regular patient monitoring, support for 
                family caregivers, use patient-centered processes, and 
                coordination with community resources;
                  ``(F) integrate readily accessible, clinically useful 
                information on participating patients that enables the 
                practice to treat such patients comprehensively and 
                systematically; and
                  ``(G) implement evidence-based guidelines and apply 
                such guidelines to the identified needs of 
                beneficiaries over time and with the intensity needed 
                by such beneficiaries.
          ``(2) Primary care.--The term `primary care' means health 
        care that is provided by a physician, nurse practitioner, or 
        physician assistant who practices in the field of family 
        medicine, general internal medicine, geriatric medicine, or 
        pediatric medicine.
          ``(3) Principal care.--The term `principal care' means 
        integrated, accessible health care that is provided by a 
        physician who is a medical subspecialist that addresses the 
        majority of the personal health care needs of patients with 
        chronic conditions requiring the subspecialist's expertise, and 
        for whom the subspecialist assumes care management.
  ``(c) Independent Patient-centered Medical Home Model.--
          ``(1) In general.--
                  ``(A) Payment authority.--Under the independent 
                patient-centered medical home model under this 
                subsection, the Secretary shall make payments for 
                medical home services furnished by an independent 
                patient-centered medical home (as defined in 
                subparagraph (B)) pursuant to paragraph (3)(B) for a 
                targeted high need beneficiaries (as defined in 
                subparagraph (C)).
                  ``(B) Independent patient-centered medical home 
                defined.--In this section, the term `independent 
                patient-centered medical home' means a physician-
                directed or nurse-practitioner-directed practice that 
                is qualified under paragraph (2) as--
                          ``(i) providing beneficiaries with patient-
                        centered medical home services; and
                          ``(ii) meets such other requirements as the 
                        Secretary may specify.
                  ``(C) Targeted high need beneficiary defined.--For 
                purposes of this subsection, the term `targeted high 
                need beneficiary' means a high need beneficiary who, 
                based on a risk score as specified by the Secretary, is 
                generally within the upper 50th percentile of Medicare 
                beneficiaries.
                  ``(D) Beneficiary election to participate.--The 
                Secretary shall determine an appropriate method of 
                ensuring that beneficiaries have agreed to participate 
                in the pilot program.
                  ``(E) Implementation.--The pilot program under this 
                subsection shall begin no later than 6 months after the 
                date of the enactment of this section.
          ``(2) standard setting and qualification process for patient-
        centered medical homes.--The Secretary shall review alternative 
        models for standard setting and qualification, and shall 
        establish a process--
                  ``(A) to establish standards to enable medical 
                practices to qualify as patient-centered medical homes; 
                and
                  ``(B) to initially provide for the review and 
                certification of medical practices as meeting such 
                standards.
          ``(3)  Payment.--
                  ``(A) Establishment of methodology.--The Secretary 
                shall establish a methodology for the payment for 
                medical home services furnished by independent patient-
                centered medical homes. Under such methodology, the 
                Secretary shall adjust payments to medical homes based 
                on beneficiary risk scores to ensure that higher 
                payments are made for higher risk beneficiaries.
                  ``(B) Per beneficiary per month payments.--Under such 
                payment methodology, the Secretary shall pay 
                independent patient-centered medical homes a monthly 
                fee for each targeted high need beneficiary who 
                consents to receive medical home services through such 
                medical home.
                  ``(C) Prospective payment.--The fee under 
                subparagraph (B) shall be paid on a prospective basis.
                  ``(D) Amount of payment.--In determining the amount 
                of such fee, the Secretary shall consider the 
                following:
                          ``(i) The clinical work and practice expenses 
                        involved in providing the medical home services 
                        provided by the independent patient-centered 
                        medical home (such as providing increased 
                        access, care coordination, population disease 
                        management, and teaching self-care skills for 
                        managing chronic illnesses) for which payment 
                        is not made under this title as of the date of 
                        the enactment of this section.
                          ``(ii) Allow for differential payments based 
                        on capabilities of the independent patient-
                        centered medical home.
                          ``(iii) Use appropriate risk-adjustment in 
                        determining the amount of the per beneficiary 
                        per month payment under this paragraph in a 
                        manner that ensures that higher payments are 
                        made for higher risk beneficiaries.
          ``(4) Encouraging participation of variety of practices.--The 
        pilot program under this subsection shall be designed to 
        include the participation of physicians in practices with fewer 
        than 10 full-time equivalent physicians, as well as physicians 
        in larger practices, particularly in underserved and rural 
        areas, as well as federally qualified community health centers, 
        and rural health centers.
          ``(5) No duplication in pilot participation.--A physician in 
        a group practice that participates in the accountable care 
        organization pilot program under section 1866D shall not be 
        eligible to participate in the pilot program under this 
        subsection, unless the pilot program under this section has 
        been implemented on a permanent basis under subsection (e)(3).
  ``(d) Community-based Medical Home Model.--
          ``(1) In general.--
                  ``(A) Authority for payments.--Under the community-
                based medical home model under this subsection (in this 
                section referred to as the `CBMH model'), the Secretary 
                shall make payments for the furnishing of medical home 
                services by a community-based medical home (as defined 
                in subparagraph (B)) pursuant to paragraph (5)(B) for 
                high need beneficiaries.
                  ``(B) Community-based medical home defined.--In this 
                section, the term `community-based medical home' means 
                a nonprofit community-based or State-based organization 
                that is certified under paragraph (2) as meeting the 
                following requirements:
                          ``(i) The organization provides beneficiaries 
                        with medical home services.
                          ``(ii) The organization provides medical home 
                        services under the supervision of and in close 
                        collaboration with the primary care or 
                        principal care physician, nurse practitioner, 
                        or physician assistant designated by the 
                        beneficiary as his or her community-based 
                        medical home provider.
                          ``(iii) The organization employs community 
                        health workers, including nurses or other non-
                        physician practitioners, lay health workers, or 
                        other persons as determined appropriate by the 
                        Secretary, that assist the primary or principal 
                        care physician, nurse practitioner, or 
                        physician assistant in chronic care management 
                        activities such as teaching self-care skills 
                        for managing chronic illnesses, transitional 
                        care services, care plan setting, medication 
                        therapy management services for patients with 
                        multiple chronic diseases, or help 
                        beneficiaries access the health care and 
                        community-based resources in their local 
                        geographic area.
                          ``(iv) The organization meets such other 
                        requirements as the Secretary may specify.
                  ``(C) High need beneficiary.--In this section, the 
                term `high need beneficiary' means an individual who 
                requires regular medical monitoring, advising, or 
                treatment.
          ``(2) Qualification process for community-based medical 
        homes.--The Secretary shall establish a process--
                  ``(A) for the initial qualification of community-
                based or State-based organizations as community-based 
                medical homes; and
                  ``(B) to provide for the review and qualification of 
                such community-based and State-based organizations 
                pursuant to criteria established by the Secretary.
          ``(3) Duration.--The pilot program for community-based 
        medical homes under this subsection shall start no later than 2 
        years after the date of the enactment of this section. Each 
        demonstration site under the pilot program shall operate for a 
        period of up to 5 years after the initial implementation phase, 
        without regard to the receipt of a initial implementation 
        funding under subsection (i).
          ``(4) Preference.--In selecting sites for the CBMH model, the 
        Secretary may give preference to--
                  ``(A) applications from geographic areas that propose 
                to coordinate health care services for chronically ill 
                beneficiaries across a variety of health care settings, 
                such as primary care physician practices with fewer 
                than 10 physicians, specialty physicians, nurse 
                practitioner practices, Federally qualified health 
                centers, rural health clinics, and other settings;
                  ``(B) applications that include other payors that 
                furnish medical home services for chronically ill 
                patients covered by such payors; and
                  ``(C) applications from States that propose to use 
                the medical home model to coordinate health care 
                services for individuals enrolled under this title, 
                individuals enrolled under title XIX, and full-benefit 
                dual eligible individuals (as defined in section 
                1935(c)(6)) with chronic diseases across a variety of 
                health care settings.
          ``(5)  Payments.--
                  ``(A) Establishment of methodology.--The Secretary 
                shall establish a methodology for the payment for 
                medical home services furnished under the CBMH model.
                  ``(B) Per beneficiary per month payments.--Under such 
                payment methodology, the Secretary shall make two 
                separate monthly payments for each high need 
                beneficiary who consents to receive medical home 
                services through such medical home, as follows:
                          ``(i) Payment to community-based 
                        organization.--One monthly payment to a 
                        community-based or State-based organization.
                          ``(ii) Payment to primary or principal care 
                        practice.--One monthly payment to the primary 
                        or principal care practice for such 
                        beneficiary.
                  ``(C) Prospective payment.--The payments under 
                subparagraph (B) shall be paid on a prospective basis.
                  ``(D) Amount of payment.--In determining the amount 
                of such payment, the Secretary shall consider the 
                following:
                          ``(i) The clinical work and practice expenses 
                        involved in providing the medical home services 
                        provided by the community-based medical home 
                        (such as providing increased access, care 
                        coordination, care plan setting, population 
                        disease management, and teaching self-care 
                        skills for managing chronic illnesses) for 
                        which payment is not made under this title as 
                        of the date of the enactment of this section.
                          ``(ii) Use appropriate risk-adjustment in 
                        determining the amount of the per beneficiary 
                        per month payment under this paragraph.
          ``(6) Initial implementation funding.--The Secretary may make 
        available initial implementation funding to a community based 
        or State-based organization or a State that is participating in 
        the pilot program under this subsection. Such organization 
        shall provide the Secretary with a detailed implementation plan 
        that includes how such funds will be used.
  ``(e) Expansion of Program.--
          ``(1) Evaluation of cost and quality.--The Secretary shall 
        evaluate the pilot program to determine--
                  ``(A) the extent to which medical homes result in--
                          ``(i) improvement in the quality and 
                        coordination of health care services, 
                        particularly with regard to the care of complex 
                        patients;
                          ``(ii) improvement in reducing health 
                        disparities;
                          ``(iii) reductions in preventable 
                        hospitalizations;
                          ``(iv) prevention of readmissions;
                          ``(v) reductions in emergency room visits;
                          ``(vi) improvement in health outcomes, 
                        including patient functional status where 
                        applicable;
                          ``(vii) improvement in patient satisfaction;
                          ``(viii) improved efficiency of care such as 
                        reducing duplicative diagnostic tests and 
                        laboratory tests; and
                          ``(ix) reductions in health care 
                        expenditures; and
                  ``(B) the feasability and advisability of reimbursing 
                medical homes for medical home services under this 
                title on a permanent basis.
          ``(2) Report.--Not later than 60 days after the date of 
        completion of the evaluation under paragraph (1), the Secretary 
        shall submit to Congress and make available to the public a 
        report on the findings of the evaluation under paragraph (1).
          ``(3) Expansion of program.--
                  ``(A) In general.--Subject to the results of the 
                evaluation under paragraph (1) and subparagraph (B), 
                the Secretary may issue regulations to implement, on a 
                permanent basis, one or more models, if, and to the 
                extent that such model or models, are beneficial to the 
                program under this title, including that such 
                implementation will improve quality of care, as 
                determined by the Secretary.
                  ``(B) Certification requirement.--The Secretary may 
                not issue such regulations unless the Chief Actuary of 
                the Centers for Medicare & Medicaid Services certifies 
                that the expansion of the components of the pilot 
                program described in subparagraph (A) would result in 
                estimated spending under this title that would be no 
                more than the level of spending that the Secretary 
                estimates would otherwise be spent under this title in 
                the absence of such expansion.
  ``(f) Administrative Provisions.--
          ``(1) No duplication in payments.--During any month, the 
        Secretary may not make payments under this section under more 
        than one model or through more than one medical home under any 
        model for the furnishing of medical home services to an 
        individual.
          ``(2) No effect on payment for evaluation and management 
        services.--Payments made under this section are in addition to, 
        and have no effect on the amount of, payment for evaluation and 
        management services made under this title
          ``(3) Administration.--Chapter 35 of title 44, United States 
        Code shall not apply to this section.
  ``(g) Funding.--
          ``(1) Operational costs.--For purposes of administering and 
        carrying out the pilot program (including the design, 
        implementation, technical assistance for and evaluation of such 
        program), in addition to funds otherwise available, there shall 
        be transferred from the Federal Supplementary Medical Insurance 
        Trust Fund under section 1841 to the Secretary for the Centers 
        for Medicare & Medicaid Services Program Management Account 
        $6,000,000 for each of fiscal years 2010 through 2014. Amounts 
        appropriated under this paragraph for a fiscal year shall be 
        available until expended.
          ``(2) Patient-centered medical home services.--In addition to 
        funds otherwise available, there shall be available to the 
        Secretary for the Centers for Medicare & Medicaid Services, 
        from the Federal Supplementary Medical Insurance Trust Fund 
        under section 1841--
                  ``(A) $200,000,000 for each of fiscal years 2010 
                through 2014 for payments for medical home services 
                under subsection (c)(3); and
                  ``(B) $125,000,000 for each of fiscal years 2012 
                through 2016, for payments under subsection (d)(5).
        Amounts available under this paragraph for a fiscal year shall 
        be available until expended.
          ``(3) Initial implementation.--In addition to funds otherwise 
        available, there shall be available to the Secretary for the 
        Centers for Medicare & Medicaid Services, from the Federal 
        Supplementary Medical Insurance Trust Fund under section 1841, 
        $2,500,000 for each of fiscal years 2010 through 2012, under 
        subsection (d)(6). Amounts available under this paragraph for a 
        fiscal year shall be available until expended.
  ``(h) Treatment of TRHCA Medicare Medical Home Demonstration 
Funding.--
          ``(1) In addition to funds otherwise available for payment of 
        medical home services under subsection (c)(3), there shall also 
        be available the amount provided in subsection (g) of section 
        204 of division B of the Tax Relief and Health Care Act of 2006 
        (42 U.S.C. 1395b-1 note).
          ``(2) Notwithstanding section 1302(c) of the America's 
        Affordable Health Choices Act of 2009, in addition to funds 
        provided in paragraph (1) and subsection (g)(2)(A), the funding 
        for medical home services that would otherwise have been 
        available if such section 204 medical home demonstration had 
        been implemented (without regard to subsection (g) of such 
        section) shall be available to the independent patient-centered 
        medical home model described in subsection (c).''.
  (b) Effective Date.--The amendment made by this section shall apply 
to services furnished on or after the date of the enactment of this 
Act.
  (c) Conforming Repeal.--Section 204 of division B of the Tax Relief 
and Health Care Act of 2006 (42 U.S.C. 1395b-1 note), as amended by 
section 133(a)(2) of the Medicare Improvements for Patients and 
Providers Act of 2008 (Public Law 110-275), is repealed.

SEC. 1303. PAYMENT INCENTIVE FOR SELECTED PRIMARY CARE SERVICES.

  (a) In General.--Section 1833 of the Social Security Act is amended 
by inserting after subsection (o) the following new subsection:
  ``(p) Primary Care Payment Incentives.--
          ``(1) In general.--In the case of primary care services (as 
        defined in paragraph (2)) furnished on or after January 1, 
        2011, by a primary care practitioner (as defined in paragraph 
        (3)) for which amounts are payable under section 1848, in 
        addition to the amount otherwise paid under this part there 
        shall also be paid to the practitioner (or to an employer or 
        facility in the cases described in clause (A) of section 
        1842(b)(6)) (on a monthly or quarterly basis) from the Federal 
        Supplementary Medical Insurance Trust Fund an amount equal 5 
        percent (or 10 percent if the practitioner predominately 
        furnishes such services in an area that is designated (under 
        section 332(a)(1)(A) of the Public Health Service Act) as a 
        primary care health professional shortage area.
          ``(2) Primary care services defined.--In this subsection, the 
        term `primary care services'--
                  ``(A) means services which are evaluation and 
                management services as defined in section 
                1848(j)(5)(A); and
                  ``(B) includes services furnished by another health 
                care professional that would be described in 
                subparagraph (A) if furnished by a physician.
          ``(3) Primary care practitioner defined.--In this subsection, 
        the term `primary care practitioner'--
                  ``(A) means a physician or other health care 
                practitioner (including a nurse practitioner) who--
                          ``(i) specializes in family medicine, general 
                        internal medicine, general pediatrics, 
                        geriatrics, or obstetrics and gynecology; and
                          ``(ii) has allowed charges for primary care 
                        services that account for at least 50 percent 
                        of the physician's or practitioner's total 
                        allowed charges under section 1848, as 
                        determined by the Secretary for the most recent 
                        period for which data are available; and
                  ``(B) includes a physician assistant who is under the 
                supervision of a physician described in subparagraph 
                (A).
          ``(4) Limitation on review.--There shall be no administrative 
        or judicial review under section 1869, section 1878, or 
        otherwise, respecting--
                  ``(A) any determination or designation under this 
                subsection;
                  ``(B) the identification of services as primary care 
                services under this subsection; and
                  ``(C) the identification of a practitioner as a 
                primary care practitioner under this subsection.
          ``(5) Coordination with other payments.--
                  ``(A) With other primary care incentives.--The 
                provisions of this subsection shall not be taken into 
                account in applying subsections (m) and (u) and any 
                payment under such subsections shall not be taken into 
                account in computing payments under this subsection.
                  ``(B) With quality incentives.--Payments under this 
                subsection shall not be taken into account in 
                determining the amounts that would otherwise be paid 
                under this part for purposes of section 
                1834(g)(2)(B).''.
  (b) Conforming Amendments.--
          (1) Section 1833(m) of such Act (42 U.S.C. 1395l(m)) is 
        amended by redesignating paragraph (4) as paragraph (5) and by 
        inserting after paragraph (3) the following new paragraph:
  ``(4) The provisions of this subsection shall not be taken into 
account in applying subsections (m) or (u) and any payment under such 
subsections shall not be taken into account in computing payments under 
this subsection.''.
          (2) Section 1848(m)(5)(B) of such Act (42 U.S.C. 1395w-
        4(m)(5)(B)) is amended by inserting ``, (p),'' after ``(m)''.
          (3) Section 1848(o)(1)(B)(iv) of such Act (42 U.S.C. 1395w-
        4(o)(1)(B)(iv)) is amended by inserting ``primary care'' before 
        ``health professional shortage area''.

SEC. 1304. INCREASED REIMBURSEMENT RATE FOR CERTIFIED NURSE-MIDWIVES.

  (a) In General.--Section 1833(a)(1)(K) of the Social Security Act (42 
U.S.C.1395l(a)(1)(K)) is amended by striking ``(but in no event'' and 
all that follows through ``performed by a physician)''.
  (b) Effective Date.--The amendment made by subsection (a) shall apply 
to services furnished on or after January 1, 2011.

SEC. 1305. COVERAGE AND WAIVER OF COST-SHARING FOR PREVENTIVE SERVICES.

  (a) Medicare Covered Preventive Services Defined.--Section 1861 of 
the Social Security Act (42 U.S.C. 1395x), as amended by section 
1233(a)(1)(B), is amended by adding at the end the following new 
subsection:

                 ``Medicare Covered Preventive Services

  ``(iii)(1) Subject to the succeeding provisions of this subsection, 
the term `Medicare covered preventive services' means the following:
          ``(A) Prostate cancer screening tests (as defined in 
        subsection (oo)).
          ``(B) Colorectal cancer screening tests (as defined in 
        subsection (pp).
          ``(C) Diabetes outpatient self-management training services 
        (as defined in subsection (qq)).
          ``(D) Screening for glaucoma for certain individuals (as 
        described in subsection (s)(2)(U)).
          ``(E) Medical nutrition therapy services for certain 
        individuals (as described in subsection (s)(2)(V)).
          ``(F) An initial preventive physical examination (as defined 
        in subsection (ww)).
          ``(G) Cardiovascular screening blood tests (as defined in 
        subsection (xx)(1)).
          ``(H) Diabetes screening tests (as defined in subsection 
        (yy)).
          ``(I) Ultrasound screening for abdominal aortic aneurysm for 
        certain individuals (as described in subsection (s)(2)(AA)).
          ``(J) Pneumococcal and influenza vaccines and their 
        administration (as described in subsection (s)(10)(A)) and 
        hepatitis B vaccine and its administration for certain 
        individuals (as described in subsection (s)(10)(B)).
          ``(K) Screening mammography (as defined in subsection (jj)).
          ``(L) Screening pap smear and screening pelvic exam (as 
        defined in subsection (nn)).
          ``(M) Bone mass measurement (as defined in subsection (rr)).
          ``(N) Kidney disease education services (as defined in 
        subsection (ggg)).
          ``(O) Additional preventive services (as defined in 
        subsection (ddd)).
  ``(2) With respect to specific Medicare covered preventive services, 
the limitations and conditions described in the provisions referenced 
in paragraph (1) with respect to such services shall apply.''.
  (b) Payment and Elimination of Cost-sharing.--
          (1) In general.--
                  (A) In general.--Section 1833(a) of the Social 
                Security Act (42 U.S.C. 1395l(a)) is amended by adding 
                after and below paragraph (9) the following:
``With respect to Medicare covered preventive services, in any case in 
which the payment rate otherwise provided under this part is computed 
as a percent of less than 100 percent of an actual charge, fee schedule 
rate, or other rate, such percentage shall be increased to 100 
percent.''.
                  (B) Application to sigmoidoscopies and 
                colonoscopies.--Section 1834(d) of such Act (42 U.S.C. 
                1395m(d)) is amended--
                          (i) in paragraph (2)(C), by amending clause 
                        (ii) to read as follows:
                          ``(ii) No coinsurance.--In the case of a 
                        beneficiary who receives services described in 
                        clause (i), there shall be no coinsurance 
                        applied.''; and
                          (ii) in paragraph (3)(C), by amending clause 
                        (ii) to read as follows:
                          ``(ii) No coinsurance.--In the case of a 
                        beneficiary who receives services described in 
                        clause (i), there shall be no coinsurance 
                        applied.''.
          (2) Elimination of coinsurance in outpatient hospital 
        settings.--
                  (A) Exclusion from opd fee schedule.--Section 
                1833(t)(1)(B)(iv) of the Social Security Act (42 U.S.C. 
                1395l(t)(1)(B)(iv)) is amended by striking ``screening 
                mammography (as defined in section 1861(jj)) and 
                diagnostic mammography'' and inserting ``diagnostic 
                mammograms and Medicare covered preventive services (as 
                defined in section 1861(iii)(1))''.
                  (B) Conforming amendments.--Section 1833(a)(2) of the 
                Social Security Act (42 U.S.C. 1395l(a)(2)) is 
                amended--
                          (i) in subparagraph (F), by striking ``and'' 
                        after the semicolon at the end;
                          (ii) in subparagraph (G), by adding ``and'' 
                        at the end; and
                          (iii) by adding at the end the following new 
                        subparagraph:
                  ``(H) with respect to additional preventive services 
                (as defined in section 1861(ddd)) furnished by an 
                outpatient department of a hospital, the amount 
                determined under paragraph (1)(W);''.
          (3) Waiver of application of deductible for all preventive 
        services.--The first sentence of section 1833(b) of the Social 
        Security Act (42 U.S.C. 1395l(b)) is amended--
                  (A) in clause (1), by striking ``items and services 
                described in section 1861(s)(10)(A)'' and inserting 
                ``Medicare covered preventive services (as defined in 
                section 1861(iii))'';
                  (B) by inserting ``and'' before ``(4)''; and
                  (C) by striking clauses (5) through (8).
          (4) Application to providers of services.--Section 
        1866(a)(2)(A)(ii) of such Act (42 U.S.C. 1395cc(a)(2)(A)(ii)) 
        is amended by inserting ``other than for Medicare covered 
        preventive services and'' after ``for such items and services 
        (''.
  (c) Effective Date.--The amendments made by this section shall apply 
to services furnished on or after January 1, 2011.

SEC. 1306. WAIVER OF DEDUCTIBLE FOR COLORECTAL CANCER SCREENING TESTS 
                    REGARDLESS OF CODING, SUBSEQUENT DIAGNOSIS, OR 
                    ANCILLARY TISSUE REMOVAL.

  (a) In General.--Section 1833 of the Social Security Act (42 U.S.C. 
1395l(b)), as amended by section 1305(b), is further amended--
          (1) in subsection (a), in the sentence added by section 
        1305(b)(1)(A), by inserting ``(including services described in 
        the last sentence of section 1833(b))'' after ``preventive 
        services''; and
          (2) in subsection (b), by adding at the end the following new 
        sentence: ``Clause (1) of the first sentence of this subsection 
        shall apply with respect to a colorectal cancer screening test 
        regardless of the code that is billed for the establishment of 
        a diagnosis as a result of the test, or for the removal of 
        tissue or other matter or other procedure that is furnished in 
        connection with, as a result of, and in the same clinical 
        encounter as, the screening test.''.
  (b) Effective Date.--The amendment made by subsection (a) shall apply 
to items and services furnished on or after January 1, 2011.

SEC. 1307. EXCLUDING CLINICAL SOCIAL WORKER SERVICES FROM COVERAGE 
                    UNDER THE MEDICARE SKILLED NURSING FACILITY 
                    PROSPECTIVE PAYMENT SYSTEM AND CONSOLIDATED 
                    PAYMENT.

  (a) In General.--Section 1888(e)(2)(A)(ii) of the Social Security Act 
(42 U.S.C. 1395yy(e)(2)(A)(ii)) is amended by inserting ``clinical 
social worker services,'' after ``qualified psychologist services,''.
  (b) Conforming Amendment.--Section 1861(hh)(2) of the Social Security 
Act (42 U.S.C. 1395x(hh)(2)) is amended by striking ``and other than 
services furnished to an inpatient of a skilled nursing facility which 
the facility is required to provide as a requirement for 
participation''.
  (c) Effective Date.--The amendments made by this section shall apply 
to items and services furnished on or after July 1, 2010.

SEC. 1308. COVERAGE OF MARRIAGE AND FAMILY THERAPIST SERVICES AND 
                    MENTAL HEALTH COUNSELOR SERVICES.

  (a) Coverage of Marriage and Family Therapist Services.--
          (1) Coverage of services.--Section 1861(s)(2) of the Social 
        Security Act (42 U.S.C. 1395x(s)(2)), as amended by section 
        1235, is amended--
                  (A) in subparagraph (EE), by striking ``and'' at the 
                end;
                  (B) in subparagraph (FF), by adding ``and'' at the 
                end; and
                  (C) by adding at the end the following new 
                subparagraph:
                  ``(GG) marriage and family therapist services (as 
                defined in subsection (jjj));''.
          (2) Definition.--Section 1861 of the Social Security Act (42 
        U.S.C. 1395x), as amended by sections 1233 and 1305, is amended 
        by adding at the end the following new subsection:

                ``Marriage and Family Therapist Services

  ``(jjj)(1) The term `marriage and family therapist services' means 
services performed by a marriage and family therapist (as defined in 
paragraph (2)) for the diagnosis and treatment of mental illnesses, 
which the marriage and family therapist is legally authorized to 
perform under State law (or the State regulatory mechanism provided by 
State law) of the State in which such services are performed, as would 
otherwise be covered if furnished by a physician or as incident to a 
physician's professional service, but only if no facility or other 
provider charges or is paid any amounts with respect to the furnishing 
of such services.
  ``(2) The term `marriage and family therapist' means an individual 
who--
          ``(A) possesses a master's or doctoral degree which qualifies 
        for licensure or certification as a marriage and family 
        therapist pursuant to State law;
          ``(B) after obtaining such degree has performed at least 2 
        years of clinical supervised experience in marriage and family 
        therapy; and
          ``(C) is licensed or certified as a marriage and family 
        therapist in the State in which marriage and family therapist 
        services are performed.''.
          (3) Provision for payment under part b.--Section 
        1832(a)(2)(B) of the Social Security Act (42 U.S.C. 
        1395k(a)(2)(B)) is amended by adding at the end the following 
        new clause:
                          ``(v) marriage and family therapist 
                        services;''.
          (4) Amount of payment.--
                  (A) In general.--Section 1833(a)(1) of the Social 
                Security Act (42 U.S.C. 1395l(a)(1)) is amended--
                          (i) by striking ``and'' before ``(W)''; and
                          (ii) by inserting before the semicolon at the 
                        end the following: ``, and (X) with respect to 
                        marriage and family therapist services under 
                        section 1861(s)(2)(GG), the amounts paid shall 
                        be 80 percent of the lesser of the actual 
                        charge for the services or 75 percent of the 
                        amount determined for payment of a psychologist 
                        under clause (L)''.
                  (B) Development of criteria with respect to 
                consultation with a health care professional.--The 
                Secretary of Health and Human Services shall, taking 
                into consideration concerns for patient 
                confidentiality, develop criteria with respect to 
                payment for marriage and family therapist services for 
                which payment may be made directly to the marriage and 
                family therapist under part B of title XVIII of the 
                Social Security Act (42 U.S.C. 1395j et seq.) under 
                which such a therapist must agree to consult with a 
                patient's attending or primary care physician or nurse 
                practitioner in accordance with such criteria.
          (5) Exclusion of marriage and family therapist services from 
        skilled nursing facility prospective payment system.--Section 
        1888(e)(2)(A)(ii) of the Social Security Act (42 U.S.C. 
        1395yy(e)(2)(A)(ii)), as amended by section 1307(a), is amended 
        by inserting ``marriage and family therapist services (as 
        defined in subsection (jjj)(1)),'' after ``clinical social 
        worker services,''.
          (6) Coverage of marriage and family therapist services 
        provided in rural health clinics and federally qualified health 
        centers.--Section 1861(aa)(1)(B) of the Social Security Act (42 
        U.S.C. 1395x(aa)(1)(B)) is amended by striking ``or by a 
        clinical social worker (as defined in subsection (hh)(1)),'' 
        and inserting ``, by a clinical social worker (as defined in 
        subsection (hh)(1)), or by a marriage and family therapist (as 
        defined in subsection (jjj)(2)),''.
          (7) Inclusion of marriage and family therapists as 
        practitioners for assignment of claims.--Section 1842(b)(18)(C) 
        of the Social Security Act (42 U.S.C. 1395u(b)(18)(C)) is 
        amended by adding at the end the following new clause:
          ``(vii) A marriage and family therapist (as defined in 
        section 1861(jjj)(2)).''.
  (b) Coverage of Mental Health Counselor Services.--
          (1) Coverage of services.--Section 1861(s)(2) of the Social 
        Security Act (42 U.S.C. 1395x(s)(2)), as previously amended, is 
        further amended--
                  (A) in subparagraph (FF), by striking ``and'' at the 
                end;
                  (B) in subparagraph (GG), by inserting ``and'' at the 
                end; and
                  (C) by adding at the end the following new 
                subparagraph:
          ``(HH) mental health counselor services (as defined in 
        subsection (kkk)(1));''.
          (2) Definition.--Section 1861 of the Social Security Act (42 
        U.S.C. 1395x), as previously amended, is amended by adding at 
        the end the following new subsection:

                   ``Mental Health Counselor Services

  ``(kkk)(1) The term `mental health counselor services' means services 
performed by a mental health counselor (as defined in paragraph (2)) 
for the diagnosis and treatment of mental illnesses which the mental 
health counselor is legally authorized to perform under State law (or 
the State regulatory mechanism provided by the State law) of the State 
in which such services are performed, as would otherwise be covered if 
furnished by a physician or as incident to a physician's professional 
service, but only if no facility or other provider charges or is paid 
any amounts with respect to the furnishing of such services.
  ``(2) The term `mental health counselor' means an individual who--
          ``(A) possesses a master's or doctor's degree which qualifies 
        the individual for licensure or certification for the practice 
        of mental health counseling in the State in which the services 
        are performed;
          ``(B) after obtaining such a degree has performed at least 2 
        years of supervised mental health counselor practice; and
          ``(C) is licensed or certified as a mental health counselor 
        or professional counselor by the State in which the services 
        are performed.''.
          (3) Provision for payment under part b.--Section 
        1832(a)(2)(B) of the Social Security Act (42 U.S.C. 
        1395k(a)(2)(B)), as amended by subsection (a)(3), is further 
        amended--
                  (A) by striking ``and'' at the end of clause (iv);
                  (B) by adding ``and'' at the end of clause (v); and
                  (C) by adding at the end the following new clause:
                          ``(vi) mental health counselor services;''.
          (4) Amount of payment.--
                  (A) In general.--Section 1833(a)(1) of the Social 
                Security Act (42 U.S.C. 1395l(a)(1)), as amended by 
                subsection (a), is further amended--
                          (i) by striking ``and'' before ``(X)''; and
                          (ii) by inserting before the semicolon at the 
                        end the following: ``, and (Y), with respect to 
                        mental health counselor services under section 
                        1861(s)(2)(HH), the amounts paid shall be 80 
                        percent of the lesser of the actual charge for 
                        the services or 75 percent of the amount 
                        determined for payment of a psychologist under 
                        clause (L)''.
                  (B) Development of criteria with respect to 
                consultation with a physician.--The Secretary of Health 
                and Human Services shall, taking into consideration 
                concerns for patient confidentiality, develop criteria 
                with respect to payment for mental health counselor 
                services for which payment may be made directly to the 
                mental health counselor under part B of title XVIII of 
                the Social Security Act (42 U.S.C. 1395j et seq.) under 
                which such a counselor must agree to consult with a 
                patient's attending or primary care physician in 
                accordance with such criteria.
          (5) Exclusion of mental health counselor services from 
        skilled nursing facility prospective payment system.--Section 
        1888(e)(2)(A)(ii) of the Social Security Act (42 U.S.C. 
        1395yy(e)(2)(A)(ii)), as amended by section 1307(a) and 
        subsection (a), is amended by inserting ``mental health 
        counselor services (as defined in section 1861(kkk)(1)),'' 
        after ``marriage and family therapist services (as defined in 
        subsection (jjj)(1)),''.
          (6) Coverage of mental health counselor services provided in 
        rural health clinics and federally qualified health centers.--
        Section 1861(aa)(1)(B) of the Social Security Act (42 U.S.C. 
        1395x(aa)(1)(B)), as amended by subsection (a), is amended by 
        striking ``or by a marriage and family therapist (as defined in 
        subsection (jjj)(2)),'' and inserting ``by a marriage and 
        family therapist (as defined in subsection (jjj)(2)), or a 
        mental health counselor (as defined in subsection (kkk)(2)),''.
          (7) Inclusion of mental health counselors as practitioners 
        for assignment of claims.--Section 1842(b)(18)(C) of the Social 
        Security Act (42 U.S.C. 1395u(b)(18)(C)), as amended by 
        subsection (a)(7), is amended by adding at the end the 
        following new clause:
          ``(viii) A mental health counselor (as defined in section 
        1861(kkk)(2)).''.
  (c) Effective Date.--The amendments made by this section shall apply 
to items and services furnished on or after January 1, 2011.

SEC. 1309. EXTENSION OF PHYSICIAN FEE SCHEDULE MENTAL HEALTH ADD-ON.

  Section 138(a)(1) of the Medicare Improvements for Patients and 
Providers Act of 2008 (Public Law 110-275) is amended by striking 
``December 31, 2009'' and inserting ``December 31, 2011''.

SEC. 1310. EXPANDING ACCESS TO VACCINES.

  (a) In General.--Paragraph (10) of section 1861(s) of the Social 
Security Act (42 U.S.C. 1395w(s)) is amended to read as follows:
          ``(10) federally recommended vaccines (as defined in 
        subsection (lll)) and their respective administration;''.
  (b) Federally Recommended Vaccines Defined.--Section 1861 of such Act 
is further amended by adding at the end the following new subsection:

                    ``Federally Recommended Vaccines

  ``(lll) The term `federally recommended vaccine' means an approved 
vaccine recommended by the Advisory Committee on Immunization Practices 
(an advisory committee established by the Secretary, acting through the 
Director of the Centers for Disease Control and Prevention).''.
  (c) Conforming Amendments.--
          (1) Section 1833 of such Act (42 U.S.C. 1395l) is amended, in 
        each of subsections (a)(1)(B), (a)(2)(G), and (a)(3)(A), by 
        striking ``1861(s)(10)(A)'' and inserting ``1861(s)(10)'' each 
        place it appears.
          (2) Section 1842(o)(1)(A)(iv) of such Act (42 U.S.C. 
        1395u(o)(1)(A)(iv)) is amended--
                  (A) by striking ``subparagraph (A) or (B) of''; and
                  (B) by inserting before the period the following: 
                ``and before January 1, 2011, and influenza vaccines 
                furnished on or after January 1, 2011''.
          (3) Section 1847A(c)(6) of such Act (42 U.S.C. 1395w-
        3a(c)(6)) is amended by striking subparagraph (G) and inserting 
        the following:
                  ``(G) Implementation.--Chapter 35 of title 44, United 
                States Code shall not apply to manufacturer provision 
                of information pursuant to section 1927(b)(3)(A)(iii) 
                for purposes of implementation of this section.''.
          (4) Section 1860D-2(e)(1) of such Act (42 U.S.C. 1395w-
        102(e)(1)) is amended by striking ``such term includes a 
        vaccine'' and all that follows through ``its administration) 
        and''.
          (5) Section 1861(ww)(2)(A) of such Act (42 U.S.C. 
        1395x(ww)(2)(A))) is amended by striking ``Pneumococcal, 
        influenza, and hepatitis B vaccine and administration'' and 
        inserting ``Federally recommended vaccines (as defined in 
        subsection (lll)) and their respective administration''.
          (6) Section 1861(iii)(1) of such Act, as added by section 
        1305(a), is amended by amending subparagraph (J) to read as 
        follows:
          ``(J) Federally recommended vaccines (as defined in 
        subsection (lll)) and their respective administration.''.
          (7) Section 1927(b)(3)(A)(iii) of such Act (42 U.S.C. 1396r-
        8(b)(3)(A)(iii)) is amended, in the matter following subclause 
        (III), by inserting ``(A)(iv) (including influenza vaccines 
        furnished on or after January 1, 2011),'' after ``described in 
        subparagraph''
  (d) Effective Dates.--The amendments made by--
          (1) this section (other than by subsection (c)(7)) shall 
        apply to vaccines administered on or after January 1, 2011; and
          (2) by subsection (c)(7) shall apply to calendar quarters 
        beginning on or after January 1, 2010.

SEC. 1311. EXPANSION OF MEDICARE-COVERED PREVENTIVE SERVICES AT 
                    FEDERALLY QUALIFIED HEALTH CENTERS.

   Section 1861(aa)(3)(A) of the Social Security Act (42 U.S.C. 1395w 
(aa)(3)(A)) is amended to read as follows:     
                  ``(A) services of the type described subparagraphs 
                (A) through (C) of paragraph (1) and services described 
                in section 1861(iii); and''.

                           TITLE IV--QUALITY

             Subtitle A--Comparative Effectiveness Research

SEC. 1401. COMPARATIVE EFFECTIVENESS RESEARCH.

  (a) In General.--Title XI of the Social Security Act is amended by 
adding at the end the following new part:

              ``Part D--Comparative Effectiveness Research

                  ``comparative effectiveness research
  ``Sec. 1181.  (a) Center for Comparative Effectiveness Research 
Established.--
          ``(1) In general.--The Secretary shall establish within the 
        Agency for Healthcare Research and Quality a Center for 
        Comparative Effectiveness Research (in this section referred to 
        as the `Center') to conduct, support, and synthesize research 
        (including research conducted or supported under section 1013 
        of the Medicare Prescription Drug, Improvement, and 
        Modernization Act of 2003) with respect to the outcomes, 
        effectiveness, and appropriateness of health care services and 
        procedures in order to identify the manner in which diseases, 
        disorders, and other health conditions can most effectively and 
        appropriately be prevented, diagnosed, treated, and managed 
        clinically.
          ``(2) Duties.--The Center shall--
                  ``(A) conduct, support, and synthesize research 
                relevant to the comparative effectiveness of the full 
                spectrum of health care items, services and systems, 
                including pharmaceuticals, medical devices, medical and 
                surgical procedures, and other medical interventions;
                  ``(B) conduct and support systematic reviews of 
                clinical research, including original research 
                conducted subsequent to the date of the enactment of 
                this section;
                  ``(C) continuously develop rigorous scientific 
                methodologies for conducting comparative effectiveness 
                studies, and use such methodologies appropriately;
                  ``(D) submit to the Comparative Effectiveness 
                Research Commission, the Secretary, and Congress 
                appropriate relevant reports described in subsection 
                (d)(2); and
                  ``(E) encourage, as appropriate, the development and 
                use of clinical registries and the development of 
                clinical effectiveness research data networks from 
                electronic health records, post marketing drug and 
                medical device surveillance efforts, and other forms of 
                electronic health data.
          ``(3) Powers.--
                  ``(A) Obtaining official data.--The Center may secure 
                directly from any department or agency of the United 
                States information necessary to enable it to carry out 
                this section. Upon request of the Center, the head of 
                that department or agency shall furnish that 
                information to the Center on an agreed upon schedule.
                  ``(B) Data collection.--In order to carry out its 
                functions, the Center shall--
                          ``(i) utilize existing information, both 
                        published and unpublished, where possible, 
                        collected and assessed either by its own staff 
                        or under other arrangements made in accordance 
                        with this section,
                          ``(ii) carry out, or award grants or 
                        contracts for, original research and 
                        experimentation, where existing information is 
                        inadequate, and
                          ``(iii) adopt procedures allowing any 
                        interested party to submit information for the 
                        use by the Center and Commission under 
                        subsection (b) in making reports and 
                        recommendations.
                  ``(C) Access of gao to information.--The Comptroller 
                General shall have unrestricted access to all 
                deliberations, records, and nonproprietary data of the 
                Center and Commission under subsection (b), immediately 
                upon request.
                  ``(D) Periodic audit.--The Center and Commission 
                under subsection (b) shall be subject to periodic audit 
                by the Comptroller General.
  ``(b) Oversight by Comparative Effectiveness Research Commission.--
          ``(1) In general.--The Secretary shall establish an 
        independent Comparative Effectiveness Research Commission (in 
        this section referred to as the `Commission') to oversee and 
        evaluate the activities carried out by the Center under 
        subsection (a), subject to the authority of the Secretary, to 
        ensure such activities result in highly credible research and 
        information resulting from such research.
          ``(2) Duties.--The Commission shall--
                  ``(A) determine national priorities for research 
                described in subsection (a) and in making such 
                determinations consult with a broad array of public and 
                private stakeholders, including patients and health 
                care providers and payers;
                  ``(B) monitor the appropriateness of use of the CERTF 
                described in subsection (g) with respect to the timely 
                production of comparative effectiveness research 
                determined to be a national priority under subparagraph 
                (A);
                  ``(C) identify highly credible research methods and 
                standards of evidence for such research to be 
                considered by the Center;
                  ``(D) review the methodologies developed by the 
                center under subsection (a)(2)(C);
                  ``(E) not later than one year after the date of the 
                enactment of this section, enter into an arrangement 
                under which the Institute of Medicine of the National 
                Academy of Sciences shall conduct an evaluation and 
                report on standards of evidence for such research;
                  ``(F) support forums to increase stakeholder 
                awareness and permit stakeholder feedback on the 
                efforts of the Center to advance methods and standards 
                that promote highly credible research;
                  ``(G) make recommendations for policies that would 
                allow for public access of data produced under this 
                section, in accordance with appropriate privacy and 
                proprietary practices, while ensuring that the 
                information produced through such data is timely and 
                credible;
                  ``(H) appoint a clinical perspective advisory panel 
                for each research priority determined under 
                subparagraph (A), which shall consult with patients and 
                advise the Center on research questions, methods, and 
                evidence gaps in terms of clinical outcomes for the 
                specific research inquiry to be examined with respect 
                to such priority to ensure that the information 
                produced from such research is clinically relevant to 
                decisions made by clinicians and patients at the point 
                of care;
                  ``(I) make recommendations for the priority for 
                periodic reviews of previous comparative effectiveness 
                research and studies conducted by the Center under 
                subsection (a);
                  ``(J) routinely review processes of the Center with 
                respect to such research to confirm that the 
                information produced by such research is objective, 
                credible, consistent with standards of evidence 
                established under this section, and developed through a 
                transparent process that includes consultations with 
                appropriate stakeholders; and
                  ``(K) make recommendations to the center for the 
                broad dissemination of the findings of research 
                conducted and supported under this section that enables 
                clinicians, patients, consumers, and payers to make 
                more informed health care decisions that improve 
                quality and value.
          ``(3) Composition of commission.--
                  ``(A) In general.--The members of the Commission 
                shall consist of--
                          ``(i) the Director of the Agency for 
                        Healthcare Research and Quality;
                          ``(ii) the Chief Medical Officer of the 
                        Centers for Medicare & Medicaid Services; and
                          ``(iii) 15 additional members who shall 
                        represent broad constituencies of stakeholders 
                        including clinicians, patients, researchers, 
                        third-party payers, consumers of Federal and 
                        State beneficiary programs.
                Of such members, at least 9 shall be practicing 
                physicians, health care practitioners, consumers, or 
                patients.
                  ``(B) Qualifications.--
                          ``(i) Diverse representation of 
                        perspectives.--The members of the Commission 
                        shall represent a broad range of perspectives 
                        and shall collectively have experience in the 
                        following areas:
                                  ``(I) Epidemiology.
                                  ``(II) Health services research.
                                  ``(III) Bioethics.
                                  ``(IV) Decision sciences.
                                  ``(V) Health disparities.
                                  ``(VI) Economics.
                          ``(ii) Diverse representation of health care 
                        community.--At least one member shall represent 
                        each of the following health care communities:
                                  ``(I) Patients.
                                  ``(II) Health care consumers.
                                  ``(III) Practicing Physicians, 
                                including surgeons.
                                  ``(IV) Other health care 
                                practitioners engaged in clinical care.
                                  ``(V) Employers.
                                  ``(VI) Public payers.
                                  ``(VII) Insurance plans.
                                  ``(VIII) Clinical researchers who 
                                conduct research on behalf of 
                                pharmaceutical or device manufacturers.
                  ``(C) Limitation.--No more than 3 of the Members of 
                the Commission may be representatives of pharmaceutical 
                or device manufacturers and such representatives shall 
                be clinical researchers described under subparagraph 
                (B)(ii)(VIII).
          ``(4) Appointment.--
                  ``(A) In general.--The Secretary shall appoint the 
                members of the Commission.
                  ``(B) Consultation.--In considering candidates for 
                appointment to the Commission, the Secretary may 
                consult with the Government Accountability Office and 
                the Institute of Medicine of the National Academy of 
                Sciences.
          ``(5) Chairman; vice chairman.--The Secretary shall designate 
        a member of the Commission, at the time of appointment of the 
        member, as Chairman and a member as Vice Chairman for that term 
        of appointment, except that in the case of vacancy of the 
        Chairmanship or Vice Chairmanship, the Secretary may designate 
        another member for the remainder of that member's term. The 
        Chairman shall serve as an ex officio member of the National 
        Advisory Council of the Agency for Health Care Research and 
        Quality under section 931(c)(3)(B) of the Public Health Service 
        Act.
          ``(6) Terms.--
                  ``(A) In general.--Except as provided in subparagraph 
                (B), each member of the Commission shall be appointed 
                for a term of 4 years.
                  ``(B) Terms of initial appointees.--Of the members 
                first appointed--
                          ``(i) 8 shall be appointed for a term of 4 
                        years; and
                          ``(ii) 7 shall be appointed for a term of 3 
                        years.
          ``(7) Coordination.--To enhance effectiveness and 
        coordination, the Secretary is encouraged, to the greatest 
        extent possible, to seek coordination between the Commission 
        and the National Advisory Council of the Agency for Healthcare 
        Research and Quality.
          ``(8) Conflicts of interest.--
                  ``(A) In general.--In appointing the members of the 
                Commission or a clinical perspective advisory panel 
                described in paragraph (2)(H), the Secretary or the 
                Commission, respectively, shall take into consideration 
                any financial interest (as defined in subparagraph 
                (D)), consistent with this paragraph, and develop a 
                plan for managing any identified conflicts.
                  ``(B) Evaluation and criteria.--When considering an 
                appointment to the Commission or a clinical perspective 
                advisory panel described paragraph (2)(H) the Secretary 
                or the Commission shall review the expertise of the 
                individual and the financial disclosure report filed by 
                the individual pursuant to the Ethics in Government Act 
                of 1978 for each individual under consideration for the 
                appointment, so as to reduce the likelihood that an 
                appointed individual will later require a written 
                determination as referred to in section 208(b)(1) of 
                title 18, United States Code, a written certification 
                as referred to in section 208(b)(3) of title 18, United 
                States Code, or a waiver as referred to in subparagraph 
                (D)(iii) for service on the Commission at a meeting of 
                the Commission.
                  ``(C) Disclosures; prohibitions on participation; 
                waivers.--
                          ``(i) Disclosure of financial interest.--
                        Prior to a meeting of the Commission or a 
                        clinical perspective advisory panel described 
                        in paragraph (2)(H) regarding a `particular 
                        matter' (as that term is used in section 208 of 
                        title 18, United States Code), each member of 
                        the Commission or the clinical perspective 
                        advisory panel who is a full-time Government 
                        employee or special Government employee shall 
                        disclose to the Secretary financial interests 
                        in accordance with subsection (b) of such 
                        section 208.
                          ``(ii) Prohibitions on participation.--Except 
                        as provided under clause (iii), a member of the 
                        Commission or a clinical perspective advisory 
                        panel described in paragraph (2)(H) may not 
                        participate with respect to a particular matter 
                        considered in meeting of the Commission or the 
                        clinical perspective advisory panel if such 
                        member (or an immediate family member of such 
                        member) has a financial interest that could be 
                        affected by the advice given to the Secretary 
                        with respect to such matter, excluding 
                        interests exempted in regulations issued by the 
                        Director of the Office of Government Ethics as 
                        too remote or inconsequential to affect the 
                        integrity of the services of the Government 
                        officers or employees to which such regulations 
                        apply.
                          ``(iii) Waiver.--If the Secretary determines 
                        it necessary to afford the Commission or a 
                        clinical perspective advisory panel described 
                        in paragraph 2(H) essential expertise, the 
                        Secretary may grant a waiver of the prohibition 
                        in clause (ii) to permit a member described in 
                        such subparagraph to--
                                  ``(I) participate as a non-voting 
                                member with respect to a particular 
                                matter considered in a Commission or a 
                                clinical perspective advisory panel 
                                meeting; or
                                  ``(II) participate as a voting member 
                                with respect to a particular matter 
                                considered in a Commission or a 
                                clinical perspective advisory panel 
                                meeting.
                          ``(iv) Limitation on waivers and other 
                        exceptions.--
                                  ``(I) Determination of allowable 
                                exceptions for the commission.--The 
                                number of waivers granted to members of 
                                the Commission cannot exceed one-half 
                                of the total number of members for the 
                                Commission.
                                  ``(II) Prohibition on voting status 
                                on clinical perspective advisory 
                                panels.--No voting member of any 
                                clinical perspective advisory panel 
                                shall be in receipt of a waiver. No 
                                more than two nonvoting members of any 
                                clinical perspective advisory panel 
                                shall receive a waiver.
                  ``(D) Financial interest defined.--For purposes of 
                this paragraph, the term `financial interest' means a 
                financial interest under section 208(a) of title 18, 
                United States Code.
          ``(9) Compensation.--While serving on the business of the 
        Commission (including travel time), a member of the Commission 
        shall be entitled to compensation at the per diem equivalent of 
        the rate provided for level IV of the Executive Schedule under 
        section 5315 of title 5, United States Code; and while so 
        serving away from home and the member's regular place of 
        business, a member may be allowed travel expenses, as 
        authorized by the Director of the Commission.
          ``(10) Availability of reports.--The Commission shall 
        transmit to the Secretary a copy of each report submitted under 
        this subsection and shall make such reports available to the 
        public.
          ``(11) Director and staff; experts and consultants.--Subject 
        to such review as the Secretary deems necessary to assure the 
        efficient administration of the Commission, the Commission 
        may--
                  ``(A) appoint an Executive Director (subject to the 
                approval of the Secretary) and such other personnel as 
                Federal employees under section 2105 of title 5, United 
                States Code, as may be necessary to carry out its 
                duties (without regard to the provisions of title 5, 
                United States Code, governing appointments in the 
                competitive service);
                  ``(B) seek such assistance and support as may be 
                required in the performance of its duties from 
                appropriate Federal departments and agencies;
                  ``(C) enter into contracts or make other 
                arrangements, as may be necessary for the conduct of 
                the work of the Commission (without regard to section 
                3709 of the Revised Statutes (41 U.S.C. 5));
                  ``(D) make advance, progress, and other payments 
                which relate to the work of the Commission;
                  ``(E) provide transportation and subsistence for 
                persons serving without compensation; and
                  ``(F) prescribe such rules and regulations as it 
                deems necessary with respect to the internal 
                organization and operation of the Commission.
  ``(c) Research Requirements.--Any research conducted, supported, or 
synthesized under this section shall meet the following requirements:
          ``(1) Ensuring transparency, credibility, and access.--
                  ``(A) The establishment of the agenda and conduct of 
                the research shall be insulated from inappropriate 
                political or stakeholder influence.
                  ``(B) Methods of conducting such research shall be 
                scientifically based.
                  ``(C) All aspects of the prioritization of research, 
                conduct of the research, and development of conclusions 
                based on the research shall be transparent to all 
                stakeholders.
                  ``(D) The process and methods for conducting such 
                research shall be publicly documented and available to 
                all stakeholders.
                  ``(E) Throughout the process of such research, the 
                Center shall provide opportunities for all stakeholders 
                involved to review and provide public comment on the 
                methods and findings of such research.
          ``(2) Use of clinical perspective advisory panels.--The 
        research shall meet a national research priority determined 
        under subsection (b)(2)(A) and shall consider advice given to 
        the Center by the clinical perspective advisory panel for the 
        national research priority.
          ``(3) Stakeholder input.--
                  ``(A) In general.--The Commission shall consult with 
                patients, health care providers, health care consumer 
                representatives, and other appropriate stakeholders 
                with an interest in the research through a transparent 
                process recommended by the Commission.
                  ``(B) Specific areas of consultation.--Consultation 
                shall include where deemed appropriate by the 
                Commission--
                          ``(i) recommending research priorities and 
                        questions;
                          ``(ii) recommending research methodologies; 
                        and
                          ``(iii) advising on and assisting with 
                        efforts to disseminate research findings.
                  ``(C) Ombudsman.--The Secretary shall designate a 
                patient ombudsman. The ombudsman shall--
                          ``(i) serve as an available point of contact 
                        for any patients with an interest in proposed 
                        comparative effectiveness studies by the 
                        Center; and
                          ``(ii) ensure that any comments from patients 
                        regarding proposed comparative effectiveness 
                        studies are reviewed by the Commission.
          ``(4) Taking into account potential differences.--Research 
        shall--
                  ``(A) be designed, as appropriate, to take into 
                account the potential for differences in the 
                effectiveness of health care items and services used 
                with various subpopulations such as racial and ethnic 
                minorities, women, different age groups (including 
                children, adolescents, adults, and seniors), and 
                individuals with different comorbidities; and--
                  ``(B) seek, as feasible and appropriate, to include 
                members of such subpopulations as subjects in the 
                research.
  ``(d) Public Access to Comparative Effectiveness Information.--
          ``(1) In general.--Not later than 90 days after receipt by 
        the Center or Commission, as applicable, of a relevant report 
        described in paragraph (2) made by the Center, Commission, or 
        clinical perspective advisory panel under this section, 
        appropriate information contained in such report shall be 
        posted on the official public Internet site of the Center and 
        of the Commission, as applicable.
          ``(2) Relevant reports described.--For purposes of this 
        section, a relevant report is each of the following submitted 
        by the Center or a grantee or contractor of the Center:
                  ``(A) Any interim or progress reports as deemed 
                appropriate by the Secretary.
                  ``(B) Stakeholder comments.
                  ``(C) A final report.
  ``(e) Dissemination and Incorporation of Comparative Effectiveness 
Information.--
          ``(1) Dissemination.--The Center shall provide for the 
        dissemination of appropriate findings produced by research 
        supported, conducted, or synthesized under this section to 
        health care providers, patients, vendors of health information 
        technology focused on clinical decision support, appropriate 
        professional associations, and Federal and private health 
        plans, and other relevant stakeholders. In disseminating such 
        findings the Center shall--
                  ``(A) convey findings of research so that they are 
                comprehensible and useful to patients and providers in 
                making health care decisions;
                  ``(B) discuss findings and other considerations 
                specific to certain sub-populations, risk factors, and 
                comorbidities as appropriate;
                  ``(C) include considerations such as limitations of 
                research and what further research may be needed, as 
                appropriate;
                  ``(D) not include any data that the dissemination of 
                which would violate the privacy of research 
                participants or violate any confidentiality agreements 
                made with respect to the use of data under this 
                section; and
                  ``(E) assist the users of health information 
                technology focused on clinical decision support to 
                promote the timely incorporation of such findings into 
                clinical practices and promote the ease of use of such 
                incorporation.
          ``(2) Dissemination protocols and strategies.--The Center 
        shall develop protocols and strategies for the appropriate 
        dissemination of research findings in order to ensure effective 
        communication of findings and the use and incorporation of such 
        findings into relevant activities for the purpose of informing 
        higher quality and more effective and efficient decisions 
        regarding medical items and services. In developing and 
        adopting such protocols and strategies, the Center shall 
        consult with stakeholders concerning the types of dissemination 
        that will be most useful to the end users of information and 
        may provide for the utilization of multiple formats for 
        conveying findings to different audiences, including 
        dissemination to individuals with limited English proficiency.
  ``(f) Reports to Congress.--
          ``(1) Annual reports.--Beginning not later than one year 
        after the date of the enactment of this section, the Director 
        of the Agency of Healthcare Research and Quality and the 
        Commission shall submit to Congress an annual report on the 
        activities of the Center and the Commission, as well as the 
        research, conducted under this section. Each such report shall 
        include a discussion of the Center's compliance with subsection 
        (c)(4)(B), including any reasons for lack of compliance with 
        such subsection.
          ``(2) Recommendation for fair share per capita amount for 
        all-payer financing.--Beginning not later than December 31, 
        2011, the Secretary shall submit to Congress an annual 
        recommendation for a fair share per capita amount described in 
        subsection (c)(1) of section 9511 of the Internal Revenue Code 
        of 1986 for purposes of funding the CERTF under such section.
          ``(3) Analysis and review.--Not later than December 31, 2013, 
        the Secretary, in consultation with the Commission, shall 
        submit to Congress a report on all activities conducted or 
        supported under this section as of such date. Such report shall 
        include an evaluation of the overall costs of such activities 
        and an analysis of the backlog of any research proposals 
        approved by the Commission but not funded.
  ``(g) Funding of Comparative Effectiveness Research.--For fiscal year 
2010 and each subsequent fiscal year, amounts in the Comparative 
Effectiveness Research Trust Fund (referred to in this section as the 
`CERTF') under section 9511 of the Internal Revenue Code of 1986 shall 
be available, without the need for further appropriations and without 
fiscal year limitation, to the Secretary to carry out this section.
  ``(h) Construction.--Nothing in this section shall be construed to 
permit the Commission or the Center to mandate coverage, reimbursement, 
or other policies for any public or private payer.''.
  (b) Comparative Effectiveness Research Trust Fund; Financing for the 
Trust Fund.--For provision establishing a Comparative Effectiveness 
Research Trust Fund and financing such Trust Fund, see section 1802.

                 Subtitle B--Nursing Home Transparency

   PART 1--IMPROVING TRANSPARENCY OF INFORMATION ON SKILLED NURSING 
                   FACILITIES AND NURSING FACILITIES

SEC. 1411. REQUIRED DISCLOSURE OF OWNERSHIP AND ADDITIONAL DISCLOSABLE 
                    PARTIES INFORMATION.

  (a) In General.--Section 1124 of the Social Security Act (42 U.S.C. 
1320a-3) is amended by adding at the end the following new subsection:
  ``(c) Required Disclosure of Ownership and Additional Disclosable 
Parties Information.--
          ``(1) Disclosure.--A facility (as defined in paragraph 
        (7)(B)) shall have the information described in paragraph (3) 
        available--
                  ``(A) during the period beginning on the date of the 
                enactment of this subsection and ending on the date 
                such information is made available to the public under 
                section 1411(b) of the America's Affordable Health 
                Choices Act of 2009, for submission to the Secretary, 
                the Inspector General of the Department of Health and 
                Human Services, the State in which the facility is 
                located, and the State long-term care ombudsman in the 
                case where the Secretary, the Inspector General, the 
                State, or the State long-term care ombudsman requests 
                such information; and
                  ``(B) beginning on the effective date of the final 
                regulations promulgated under paragraph (4)(A), for 
                reporting such information in accordance with such 
                final regulations.
        Nothing in subparagraph (A) shall be construed as authorizing a 
        facility to dispose of or delete information described in such 
        subparagraph after the effective date of the final regulations 
        promulgated under paragraph (4)(A).
          ``(2) Public availability of information.--During the period 
        described in paragraph (1)(A), a facility shall--
                  ``(A) make the information described in paragraph (3) 
                available to the public upon request and update such 
                information as may be necessary to reflect changes in 
                such information; and
                  ``(B) post a notice of the availability of such 
                information in the lobby of the facility in a prominent 
                manner.
          ``(3) Information described.--
                  ``(A) In general.--The following information is 
                described in this paragraph:
                          ``(i) The information described in 
                        subsections (a) and (b), subject to 
                        subparagraph (C).
                          ``(ii) The identity of and information on--
                                  ``(I) each member of the governing 
                                body of the facility, including the 
                                name, title, and period of service of 
                                each such member;
                                  ``(II) each person or entity who is 
                                an officer, director, member, partner, 
                                trustee, or managing employee of the 
                                facility, including the name, title, 
                                and date of start of service of each 
                                such person or entity; and
                                  ``(III) each person or entity who is 
                                an additional disclosable party of the 
                                facility.
                          ``(iii) The organizational structure of each 
                        person and entity described in subclauses (II) 
                        and (III) of clause (ii) and a description of 
                        the relationship of each such person or entity 
                        to the facility and to one another.
                  ``(B) Special rule where information is already 
                reported or submitted.--To the extent that information 
                reported by a facility to the Internal Revenue Service 
                on Form 990, information submitted by a facility to the 
                Securities and Exchange Commission, or information 
                otherwise submitted to the Secretary or any other 
                Federal agency contains the information described in 
                clauses (i), (ii), or (iii) of subparagraph (A), the 
                Secretary may allow, to the extent practicable, such 
                Form or such information to meet the requirements of 
                paragraph (1) and to be submitted in a manner specified 
                by the Secretary.
                  ``(C) Special rule.--In applying subparagraph 
                (A)(i)--
                          ``(i) with respect to subsections (a) and 
                        (b), `ownership or control interest' shall 
                        include direct or indirect interests, including 
                        such interests in intermediate entities; and
                          ``(ii) subsection (a)(3)(A)(ii) shall include 
                        the owner of a whole or part interest in any 
                        mortgage, deed of trust, note, or other 
                        obligation secured, in whole or in part, by the 
                        entity or any of the property or assets 
                        thereof, if the interest is equal to or exceeds 
                        5 percent of the total property or assets of 
                        the entirety.
          ``(4) Reporting.--
                  ``(A) In general.--Not later than the date that is 2 
                years after the date of the enactment of this 
                subsection, the Secretary shall promulgate regulations 
                requiring, effective on the date that is 90 days after 
                the date on which such final regulations are published 
                in the Federal Register, a facility to report the 
                information described in paragraph (3) to the Secretary 
                in a standardized format, and such other regulations as 
                are necessary to carry out this subsection. Such final 
                regulations shall ensure that the facility certifies, 
                as a condition of participation and payment under the 
                program under title XVIII or XIX, that the information 
                reported by the facility in accordance with such final 
                regulations is accurate and current.
                  ``(B) Guidance.--The Secretary shall provide guidance 
                and technical assistance to States on how to adopt the 
                standardized format under subparagraph (A).
          ``(5) No effect on existing reporting requirements.--Nothing 
        in this subsection shall reduce, diminish, or alter any 
        reporting requirement for a facility that is in effect as of 
        the date of the enactment of this subsection.
          ``(6) Definitions.--In this subsection:
                  ``(A) Additional disclosable party.--The term 
                `additional disclosable party' means, with respect to a 
                facility, any person or entity who--
                          ``(i) exercises operational, financial, or 
                        managerial control over the facility or a part 
                        thereof, or provides policies or procedures for 
                        any of the operations of the facility, or 
                        provides financial or cash management services 
                        to the facility;
                          ``(ii) leases or subleases real property to 
                        the facility, or owns a whole or part interest 
                        equal to or exceeding 5 percent of the total 
                        value of such real property;
                          ``(iii) lends funds or provides a financial 
                        guarantee to the facility in an amount which is 
                        equal to or exceeds $50,000; or
                          ``(iv) provides management or administrative 
                        services, clinical consulting services, or 
                        accounting or financial services to the 
                        facility.
                  ``(B) Facility.--The term `facility' means a 
                disclosing entity which is--
                          ``(i) a skilled nursing facility (as defined 
                        in section 1819(a)); or
                          ``(ii) a nursing facility (as defined in 
                        section 1919(a)).
                  ``(C) Managing employee.--The term `managing 
                employee' means, with respect to a facility, an 
                individual (including a general manager, business 
                manager, administrator, director, or consultant) who 
                directly or indirectly manages, advises, or supervises 
                any element of the practices, finances, or operations 
                of the facility.
                  ``(D) Organizational structure.--The term 
                `organizational structure' means, in the case of--
                          ``(i) a corporation, the officers, directors, 
                        and shareholders of the corporation who have an 
                        ownership interest in the corporation which is 
                        equal to or exceeds 5 percent;
                          ``(ii) a limited liability company, the 
                        members and managers of the limited liability 
                        company (including, as applicable, what 
                        percentage each member and manager has of the 
                        ownership interest in the limited liability 
                        company);
                          ``(iii) a general partnership, the partners 
                        of the general partnership;
                          ``(iv) a limited partnership, the general 
                        partners and any limited partners of the 
                        limited partnership who have an ownership 
                        interest in the limited partnership which is 
                        equal to or exceeds 10 percent;
                          ``(v) a trust, the trustees of the trust;
                          ``(vi) an individual, contact information for 
                        the individual; and
                          ``(vii) any other person or entity, such 
                        information as the Secretary determines 
                        appropriate.''.
  (b) Public Availability of Information.--
          (1) In general.--Not later than the date that is 1 year after 
        the date on which the final regulations promulgated under 
        section 1124(c)(4)(A) of the Social Security Act, as added by 
        subsection (a), are published in the Federal Register, the 
        information reported in accordance with such final regulations 
        shall be made available to the public in accordance with 
        procedures established by the Secretary.
          (2) Definitions.--In this subsection:
                  (A) Nursing facility.--The term ``nursing facility'' 
                has the meaning given such term in section 1919(a) of 
                the Social Security Act (42 U.S.C. 1396r(a)).
                  (B) Secretary.--The term ``Secretary'' means the 
                Secretary of Health and Human Services.
                  (C) Skilled nursing facility.--The term ``skilled 
                nursing facility'' has the meaning given such term in 
                section 1819(a) of the Social Security Act (42 U.S.C. 
                1395i-3(a)).
  (c) Conforming Amendments.--
          (1) Skilled nursing facilities.--Section 1819(d)(1) of the 
        Social Security Act (42 U.S.C. 1395i-3(d)(1)) is amended by 
        striking subparagraph (B) and redesignating subparagraph (C) as 
        subparagraph (B).
          (2) Nursing facilities.--Section 1919(d)(1) of the Social 
        Security Act (42 U.S.C. 1396r(d)(1)) is amended by striking 
        subparagraph (B) and redesignating subparagraph (C) as 
        subparagraph (B).

SEC. 1412. ACCOUNTABILITY REQUIREMENTS.

  (a) Effective Compliance and Ethics Programs.--
          (1) Skilled nursing facilities.--Section 1819(d)(1) of the 
        Social Security Act (42 U.S.C. 1395i-3(d)(1)), as amended by 
        section 1411(c)(1), is amended by adding at the end the 
        following new subparagraph:
                  ``(C) Compliance and ethics programs.--
                          ``(i) Requirement.--On or after the date that 
                        is 36 months after the date of the enactment of 
                        this subparagraph, a skilled nursing facility 
                        shall, with respect to the entity that operates 
                        the facility (in this subparagraph referred to 
                        as the `operating organization' or 
                        `organization'), have in operation a compliance 
                        and ethics program that is effective in 
                        preventing and detecting criminal, civil, and 
                        administrative violations under this Act and in 
                        promoting quality of care consistent with 
                        regulations developed under clause (ii).
                          ``(ii) Development of regulations.--
                                  ``(I) In general.--Not later than the 
                                date that is 2 years after such date of 
                                the enactment, the Secretary, in 
                                consultation with the Inspector General 
                                of the Department of Health and Human 
                                Services, shall promulgate regulations 
                                for an effective compliance and ethics 
                                program for operating organizations, 
                                which may include a model compliance 
                                program.
                                  ``(II) Design of regulations.--Such 
                                regulations with respect to specific 
                                elements or formality of a program may 
                                vary with the size of the organization, 
                                such that larger organizations should 
                                have a more formal and rigorous program 
                                and include established written 
                                policies defining the standards and 
                                procedures to be followed by its 
                                employees. Such requirements shall 
                                specifically apply to the corporate 
                                level management of multi-unit nursing 
                                home chains.
                                  ``(III) Evaluation.--Not later than 3 
                                years after the date of promulgation of 
                                regulations under this clause, the 
                                Secretary shall complete an evaluation 
                                of the compliance and ethics programs 
                                required to be established under this 
                                subparagraph. Such evaluation shall 
                                determine if such programs led to 
                                changes in deficiency citations, 
                                changes in quality performance, or 
                                changes in other metrics of resident 
                                quality of care. The Secretary shall 
                                submit to Congress a report on such 
                                evaluation and shall include in such 
                                report such recommendations regarding 
                                changes in the requirements for such 
                                programs as the Secretary determines 
                                appropriate.
                          ``(iii) Requirements for compliance and 
                        ethics programs.--In this subparagraph, the 
                        term `compliance and ethics program' means, 
                        with respect to a skilled nursing facility, a 
                        program of the operating organization that--
                                  ``(I) has been reasonably designed, 
                                implemented, and enforced so that it 
                                generally will be effective in 
                                preventing and detecting criminal, 
                                civil, and administrative violations 
                                under this Act and in promoting quality 
                                of care; and
                                  ``(II) includes at least the required 
                                components specified in clause (iv).
                          ``(iv) Required components of program.--The 
                        required components of a compliance and ethics 
                        program of an organization are the following:
                                  ``(I) The organization must have 
                                established compliance standards and 
                                procedures to be followed by its 
                                employees, contractors, and other 
                                agents that are reasonably capable of 
                                reducing the prospect of criminal, 
                                civil, and administrative violations 
                                under this Act.
                                  ``(II) Specific individuals within 
                                high-level personnel of the 
                                organization must have been assigned 
                                overall responsibility to oversee 
                                compliance with such standards and 
                                procedures and have sufficient 
                                resources and authority to assure such 
                                compliance.
                                  ``(III) The organization must have 
                                used due care not to delegate 
                                substantial discretionary authority to 
                                individuals whom the organization knew, 
                                or should have known through the 
                                exercise of due diligence, had a 
                                propensity to engage in criminal, 
                                civil, and administrative violations 
                                under this Act.
                                  ``(IV) The organization must have 
                                taken steps to communicate effectively 
                                its standards and procedures to all 
                                employees and other agents, such as by 
                                requiring participation in training 
                                programs or by disseminating 
                                publications that explain in a 
                                practical manner what is required.
                                  ``(V) The organization must have 
                                taken reasonable steps to achieve 
                                compliance with its standards, such as 
                                by utilizing monitoring and auditing 
                                systems reasonably designed to detect 
                                criminal, civil, and administrative 
                                violations under this Act by its 
                                employees and other agents and by 
                                having in place and publicizing a 
                                reporting system whereby employees and 
                                other agents could report violations by 
                                others within the organization without 
                                fear of retribution.
                                  ``(VI) The standards must have been 
                                consistently enforced through 
                                appropriate disciplinary mechanisms, 
                                including, as appropriate, discipline 
                                of individuals responsible for the 
                                failure to detect an offense.
                                  ``(VII) After an offense has been 
                                detected, the organization must have 
                                taken all reasonable steps to respond 
                                appropriately to the offense and to 
                                prevent further similar offenses, 
                                including repayment of any funds to 
                                which it was not entitled and any 
                                necessary modification to its program 
                                to prevent and detect criminal, civil, 
                                and administrative violations under 
                                this Act.
                                  ``(VIII) The organization must 
                                periodically undertake reassessment of 
                                its compliance program to identify 
                                changes necessary to reflect changes 
                                within the organization and its 
                                facilities.
                          ``(v) Coordination.--The provisions of this 
                        subparagraph shall apply with respect to a 
                        skilled nursing facility in lieu of section 
                        1874(d).''.
          (2) Nursing facilities.--Section 1919(d)(1) of the Social 
        Security Act (42 U.S.C. 1396r(d)(1)), as amended by section 
        1411(c)(2), is amended by adding at the end the following new 
        subparagraph:
                  ``(C) Compliance and ethics program.--
                          ``(i) Requirement.--On or after the date that 
                        is 36 months after the date of the enactment of 
                        this subparagraph, a nursing facility shall, 
                        with respect to the entity that operates the 
                        facility (in this subparagraph referred to as 
                        the `operating organization' or 
                        `organization'), have in operation a compliance 
                        and ethics program that is effective in 
                        preventing and detecting criminal, civil, and 
                        administrative violations under this Act and in 
                        promoting quality of care consistent with 
                        regulations developed under clause (ii).
                          ``(ii) Development of regulations.--
                                  ``(I) In general.--Not later than the 
                                date that is 2 years after such date of 
                                the enactment, the Secretary, in 
                                consultation with the Inspector General 
                                of the Department of Health and Human 
                                Services, shall develop regulations for 
                                an effective compliance and ethics 
                                program for operating organizations, 
                                which may include a model compliance 
                                program.
                                  ``(II) Design of regulations.--Such 
                                regulations with respect to specific 
                                elements or formality of a program may 
                                vary with the size of the organization, 
                                such that larger organizations should 
                                have a more formal and rigorous program 
                                and include established written 
                                policies defining the standards and 
                                procedures to be followed by its 
                                employees. Such requirements may 
                                specifically apply to the corporate 
                                level management of multi-unit nursing 
                                home chains.
                                  ``(III) Evaluation.--Not later than 3 
                                years after the date of promulgation of 
                                regulations under this clause the 
                                Secretary shall complete an evaluation 
                                of the compliance and ethics programs 
                                required to be established under this 
                                subparagraph. Such evaluation shall 
                                determine if such programs led to 
                                changes in deficiency citations, 
                                changes in quality performance, or 
                                changes in other metrics of resident 
                                quality of care. The Secretary shall 
                                submit to Congress a report on such 
                                evaluation and shall include in such 
                                report such recommendations regarding 
                                changes in the requirements for such 
                                programs as the Secretary determines 
                                appropriate.
                          ``(iii) Requirements for compliance and 
                        ethics programs.--In this subparagraph, the 
                        term `compliance and ethics program' means, 
                        with respect to a nursing facility, a program 
                        of the operating organization that--
                                  ``(I) has been reasonably designed, 
                                implemented, and enforced so that it 
                                generally will be effective in 
                                preventing and detecting criminal, 
                                civil, and administrative violations 
                                under this Act and in promoting quality 
                                of care; and
                                  ``(II) includes at least the required 
                                components specified in clause (iv).
                          ``(iv) Required components of program.--The 
                        required components of a compliance and ethics 
                        program of an organization are the following:
                                  ``(I) The organization must have 
                                established compliance standards and 
                                procedures to be followed by its 
                                employees and other agents that are 
                                reasonably capable of reducing the 
                                prospect of criminal, civil, and 
                                administrative violations under this 
                                Act.
                                  ``(II) Specific individuals within 
                                high-level personnel of the 
                                organization must have been assigned 
                                overall responsibility to oversee 
                                compliance with such standards and 
                                procedures and has sufficient resources 
                                and authority to assure such 
                                compliance.
                                  ``(III) The organization must have 
                                used due care not to delegate 
                                substantial discretionary authority to 
                                individuals whom the organization knew, 
                                or should have known through the 
                                exercise of due diligence, had a 
                                propensity to engage in criminal, 
                                civil, and administrative violations 
                                under this Act.
                                  ``(IV) The organization must have 
                                taken steps to communicate effectively 
                                its standards and procedures to all 
                                employees and other agents, such as by 
                                requiring participation in training 
                                programs or by disseminating 
                                publications that explain in a 
                                practical manner what is required.
                                  ``(V) The organization must have 
                                taken reasonable steps to achieve 
                                compliance with its standards, such as 
                                by utilizing monitoring and auditing 
                                systems reasonably designed to detect 
                                criminal, civil, and administrative 
                                violations under this Act by its 
                                employees and other agents and by 
                                having in place and publicizing a 
                                reporting system whereby employees and 
                                other agents could report violations by 
                                others within the organization without 
                                fear of retribution.
                                  ``(VI) The standards must have been 
                                consistently enforced through 
                                appropriate disciplinary mechanisms, 
                                including, as appropriate, discipline 
                                of individuals responsible for the 
                                failure to detect an offense.
                                  ``(VII) After an offense has been 
                                detected, the organization must have 
                                taken all reasonable steps to respond 
                                appropriately to the offense and to 
                                prevent further similar offenses, 
                                including repayment of any funds to 
                                which it was not entitled and any 
                                necessary modification to its program 
                                to prevent and detect criminal, civil, 
                                and administrative violations under 
                                this Act.
                                  ``(VIII) The organization must 
                                periodically undertake reassessment of 
                                its compliance program to identify 
                                changes necessary to reflect changes 
                                within the organization and its 
                                facilities.
                          ``(v) Coordination.--The provisions of this 
                        subparagraph shall apply with respect to a 
                        nursing facility in lieu of section 
                        1902(a)(77).''.
  (b) Quality Assurance and Performance Improvement Program.--
          (1) Skilled nursing facilities.--Section 1819(b)(1)(B) of the 
        Social Security Act (42 U.S.C. 1396r(b)(1)(B)) is amended--
                  (A) by striking ``assurance'' and inserting 
                ``assurance and quality assurance and performance 
                improvement program'';
                  (B) by designating the matter beginning with ``A 
                skilled nursing facility'' as a clause (i) with the 
                heading ``In general.--'' and the appropriate 
                indentation;
                  (C) in clause (i) (as so designated by subparagraph 
                (B)), by redesignating clauses (i) and (ii) as 
                subclauses (I) and (II), respectively; and
                  (D) by adding at the end the following new clause:
                          ``(ii) Quality assurance and performance 
                        improvement program.--
                                  ``(I) In general.--Not later than 
                                December 31, 2011, the Secretary shall 
                                establish and implement a quality 
                                assurance and performance improvement 
                                program (in this clause referred to as 
                                the `QAPI program') for skilled nursing 
                                facilities, including multi-unit chains 
                                of such facilities. Under the QAPI 
                                program, the Secretary shall establish 
                                standards relating to such facilities 
                                and provide technical assistance to 
                                such facilities on the development of 
                                best practices in order to meet such 
                                standards. Not later than 1 year after 
                                the date on which the regulations are 
                                promulgated under subclause (II), a 
                                skilled nursing facility must submit to 
                                the Secretary a plan for the facility 
                                to meet such standards and implement 
                                such best practices, including how to 
                                coordinate the implementation of such 
                                plan with quality assessment and 
                                assurance activities conducted under 
                                clause (i).
                                  ``(II) Regulations.--The Secretary 
                                shall promulgate regulations to carry 
                                out this clause.''.
          (2) Nursing facilities.--Section 1919(b)(1)(B) of the Social 
        Security Act (42 U.S.C. 1396r(b)(1)(B)) is amended--
                  (A) by striking ``assurance'' and inserting 
                ``assurance and quality assurance and performance 
                improvement program'';
                  (B) by designating the matter beginning with ``A 
                nursing facility'' as a clause (i) with the heading 
                ``In general.--'' and the appropriate indentation; and
                  (C) by adding at the end the following new clause:
                          ``(ii) Quality assurance and performance 
                        improvement program.--
                                  ``(I) In general.--Not later than 
                                December 31, 2011, the Secretary shall 
                                establish and implement a quality 
                                assurance and performance improvement 
                                program (in this clause referred to as 
                                the `QAPI program') for nursing 
                                facilities, including multi-unit chains 
                                of such facilities. Under the QAPI 
                                program, the Secretary shall establish 
                                standards relating to such facilities 
                                and provide technical assistance to 
                                such facilities on the development of 
                                best practices in order to meet such 
                                standards. Not later than 1 year after 
                                the date on which the regulations are 
                                promulgated under subclause (II), a 
                                nursing facility must submit to the 
                                Secretary a plan for the facility to 
                                meet such standards and implement such 
                                best practices, including how to 
                                coordinate the implementation of such 
                                plan with quality assessment and 
                                assurance activities conducted under 
                                clause (i).
                                  ``(II) Regulations.--The Secretary 
                                shall promulgate regulations to carry 
                                out this clause.''.
          (3) Proposal to revise quality assurance and performance 
        improvement programs.--The Secretary shall include in the 
        proposed rule published under section 1888(e) of the Social 
        Security Act (42 U.S.C. 1395yy(e)(5)(A)) for the subsequent 
        fiscal year to the extent otherwise authorized under section 
        1819(b)(1)(B) or 1819(d)(1)(C) of the Social Security Act or 
        other statutory or regulatory authority, one or more proposals 
        for skilled nursing facilities to modify and strengthen quality 
        assurance and performance improvement programs in such 
        facilities. At the time of publication of such proposed rule 
        and to the extent otherwise authorized under section 
        1919(b)(1)(B) or 1919(d)(1)(C) of such Act or other regulatory 
        authority.
          (4) Facility plan.--Not later than 1 year after the date on 
        which the regulations are promulgated under subclause (II) of 
        clause (ii) of sections 1819(b)(1)(B) and 1919(b)(1)(B) of the 
        Social Security Act, as added by paragraphs (1) and (2), a 
        skilled nursing facility and a nursing facility must submit to 
        the Secretary a plan for the facility to meet the standards 
        under such regulations and implement such best practices, 
        including how to coordinate the implementation of such plan 
        with quality assessment and assurance activities conducted 
        under clause (i) of such sections.
  (c) GAO Study on Nursing Facility Undercapitalization.--
          (1) In general.--The Comptroller General of the United States 
        shall conduct a study that examines the following:
                  (A) The extent to which corporations that own or 
                operate large numbers of nursing facilities, taking 
                into account ownership type (including private equity 
                and control interests), are undercapitalizing such 
                facilities.
                  (B) The effects of such undercapitalization on 
                quality of care, including staffing and food costs, at 
                such facilities.
                  (C) Options to address such undercapitalization, such 
                as requirements relating to surety bonds, liability 
                insurance, or minimum capitalization.
          (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Comptroller General shall submit to 
        Congress a report on the study conducted under paragraph (1).
          (3) Nursing facility.--In this subsection, the term ``nursing 
        facility'' includes a skilled nursing facility.

SEC. 1413. NURSING HOME COMPARE MEDICARE WEBSITE.

  (a) Skilled Nursing Facilities.--
          (1) In general.--Section 1819 of the Social Security Act (42 
        U.S.C. 1395i-3) is amended--
                  (A) by redesignating subsection (i) as subsection 
                (j); and
                  (B) by inserting after subsection (h) the following 
                new subsection:
  ``(i) Nursing Home Compare Website.--
          ``(1) Inclusion of additional information.--
                  ``(A) In general.--The Secretary shall ensure that 
                the Department of Health and Human Services includes, 
                as part of the information provided for comparison of 
                nursing homes on the official Internet website of the 
                Federal Government for Medicare beneficiaries (commonly 
                referred to as the `Nursing Home Compare' Medicare 
                website) (or a successor website), the following 
                information in a manner that is prominent, easily 
                accessible, readily understandable to consumers of 
                long-term care services, and searchable:
                          ``(i) Information that is reported to the 
                        Secretary under section 1124(c)(4).
                          ``(ii) Information on the `Special Focus 
                        Facility program' (or a successor program) 
                        established by the Centers for Medicare and 
                        Medicaid Services, according to procedures 
                        established by the Secretary. Such procedures 
                        shall provide for the inclusion of information 
                        with respect to, and the names and locations 
                        of, those facilities that, since the previous 
                        quarter--
                                  ``(I) were newly enrolled in the 
                                program;
                                  ``(II) are enrolled in the program 
                                and have failed to significantly 
                                improve;
                                  ``(III) are enrolled in the program 
                                and have significantly improved;
                                  ``(IV) have graduated from the 
                                program; and
                                  ``(V) have closed voluntarily or no 
                                longer participate under this title.
                          ``(iii) Staffing data for each facility 
                        (including resident census data and data on the 
                        hours of care provided per resident per day) 
                        based on data submitted under subsection 
                        (b)(8)(C), including information on staffing 
                        turnover and tenure, in a format that is 
                        clearly understandable to consumers of long-
                        term care services and allows such consumers to 
                        compare differences in staffing between 
                        facilities and State and national averages for 
                        the facilities. Such format shall include--
                                  ``(I) concise explanations of how to 
                                interpret the data (such as a plain 
                                English explanation of data reflecting 
                                `nursing home staff hours per resident 
                                day');
                                  ``(II) differences in types of staff 
                                (such as training associated with 
                                different categories of staff);
                                  ``(III) the relationship between 
                                nurse staffing levels and quality of 
                                care; and
                                  ``(IV) an explanation that 
                                appropriate staffing levels vary based 
                                on patient case mix.
                          ``(iv) Links to State Internet websites with 
                        information regarding State survey and 
                        certification programs, links to Form 2567 
                        State inspection reports (or a successor form) 
                        on such websites, information to guide 
                        consumers in how to interpret and understand 
                        such reports, and the facility plan of 
                        correction or other response to such report.
                          ``(v) The standardized complaint form 
                        developed under subsection (f)(8), including 
                        explanatory material on what complaint forms 
                        are, how they are used, and how to file a 
                        complaint with the State survey and 
                        certification program and the State long-term 
                        care ombudsman program.
                          ``(vi) Summary information on the number, 
                        type, severity, and outcome of substantiated 
                        complaints.
                          ``(vii) The number of adjudicated instances 
                        of criminal violations by employees of a 
                        nursing facility--
                                  ``(I) that were committed inside the 
                                facility;
                                  ``(II) with respect to such instances 
                                of violations or crimes committed 
                                inside of the facility that were the 
                                violations or crimes of abuse, neglect, 
                                and exploitation, criminal sexual 
                                abuse, or other violations or crimes 
                                that resulted in serious bodily injury; 
                                and
                                  ``(III) the number of civil monetary 
                                penalties levied against the facility, 
                                employees, contractors, and other 
                                agents.
                  ``(B) Deadline for provision of information.--
                          ``(i) In general.--Except as provided in 
                        clause (ii), the Secretary shall ensure that 
                        the information described in subparagraph (A) 
                        is included on such website (or a successor 
                        website) not later than 1 year after the date 
                        of the enactment of this subsection.
                          ``(ii) Exception.--The Secretary shall ensure 
                        that the information described in subparagraph 
                        (A)(i) and (A)(iii) is included on such website 
                        (or a successor website) not later than the 
                        date on which the requirements under section 
                        1124(c)(4) and subsection (b)(8)(C)(ii) are 
                        implemented.
          ``(2) Review and modification of website.--
                  ``(A) In general.--The Secretary shall establish a 
                process--
                          ``(i) to review the accuracy, clarity of 
                        presentation, timeliness, and comprehensiveness 
                        of information reported on such website as of 
                        the day before the date of the enactment of 
                        this subsection; and
                          ``(ii) not later than 1 year after the date 
                        of the enactment of this subsection, to modify 
                        or revamp such website in accordance with the 
                        review conducted under clause (i).
                  ``(B) Consultation.--In conducting the review under 
                subparagraph (A)(i), the Secretary shall consult with--
                          ``(i) State long-term care ombudsman 
                        programs;
                          ``(ii) consumer advocacy groups;
                          ``(iii) provider stakeholder groups; and
                          ``(iv) any other representatives of programs 
                        or groups the Secretary determines 
                        appropriate.''.
          (2) Timeliness of submission of survey and certification 
        information.--
                  (A) In general.--Section 1819(g)(5) of the Social 
                Security Act (42 U.S.C. 1395i-3(g)(5)) is amended by 
                adding at the end the following new subparagraph:
                  ``(E) Submission of survey and certification 
                information to the secretary.--In order to improve the 
                timeliness of information made available to the public 
                under subparagraph (A) and provided on the Nursing Home 
                Compare Medicare website under subsection (i), each 
                State shall submit information respecting any survey or 
                certification made respecting a skilled nursing 
                facility (including any enforcement actions taken by 
                the State) to the Secretary not later than the date on 
                which the State sends such information to the facility. 
                The Secretary shall use the information submitted under 
                the preceding sentence to update the information 
                provided on the Nursing Home Compare Medicare website 
                as expeditiously as practicable but not less frequently 
                than quarterly.''.
                  (B) Effective date.--The amendment made by this 
                paragraph shall take effect 1 year after the date of 
                the enactment of this Act.
          (3) Special focus facility program.--Section 1819(f) of such 
        Act is amended by adding at the end the following new 
        paragraph:
          ``(8) Special focus facility program.--
                  ``(A) In general.--The Secretary shall conduct a 
                special focus facility program for enforcement of 
                requirements for skilled nursing facilities that the 
                Secretary has identified as having substantially failed 
                to meet applicable requirement of this Act.
                  ``(B) Periodic surveys.--Under such program the 
                Secretary shall conduct surveys of each facility in the 
                program not less than once every 6 months.''.
  (b) Nursing Facilities.--
          (1) In general.--Section 1919 of the Social Security Act (42 
        U.S.C. 1396r) is amended--
                  (A) by redesignating subsection (i) as subsection 
                (j); and
                  (B) by inserting after subsection (h) the following 
                new subsection:
  ``(i) Nursing Home Compare Website.--
          ``(1) Inclusion of additional information.--
                  ``(A) In general.--The Secretary shall ensure that 
                the Department of Health and Human Services includes, 
                as part of the information provided for comparison of 
                nursing homes on the official Internet website of the 
                Federal Government for Medicare beneficiaries (commonly 
                referred to as the `Nursing Home Compare' Medicare 
                website) (or a successor website), the following 
                information in a manner that is prominent, easily 
                accessible, readily understandable to consumers of 
                long-term care services, and searchable:
                          ``(i) Staffing data for each facility 
                        (including resident census data and data on the 
                        hours of care provided per resident per day) 
                        based on data submitted under subsection 
                        (b)(8)(C)(ii), including information on 
                        staffing turnover and tenure, in a format that 
                        is clearly understandable to consumers of long-
                        term care services and allows such consumers to 
                        compare differences in staffing between 
                        facilities and State and national averages for 
                        the facilities. Such format shall include--
                                  ``(I) concise explanations of how to 
                                interpret the data (such as plain 
                                English explanation of data reflecting 
                                `nursing home staff hours per resident 
                                day');
                                  ``(II) differences in types of staff 
                                (such as training associated with 
                                different categories of staff);
                                  ``(III) the relationship between 
                                nurse staffing levels and quality of 
                                care; and
                                  ``(IV) an explanation that 
                                appropriate staffing levels vary based 
                                on patient case mix.
                          ``(ii) Links to State Internet websites with 
                        information regarding State survey and 
                        certification programs, links to Form 2567 
                        State inspection reports (or a successor form) 
                        on such websites, information to guide 
                        consumers in how to interpret and understand 
                        such reports, and the facility plan of 
                        correction or other response to such report.
                          ``(iii) The standardized complaint form 
                        developed under subsection (f)(10), including 
                        explanatory material on what complaint forms 
                        are, how they are used, and how to file a 
                        complaint with the State survey and 
                        certification program and the State long-term 
                        care ombudsman program.
                          ``(iv) Summary information on the number, 
                        type, severity, and outcome of substantiated 
                        complaints.
                          ``(v) The number of adjudicated instances of 
                        criminal violations by employees of a nursing 
                        facility--
                                  ``(I) that were committed inside of 
                                the facility; and
                                  ``(II) with respect to such instances 
                                of violations or crimes committed 
                                outside of the facility, that were the 
                                violations or crimes that resulted in 
                                the serious bodily injury of an elder.
                  ``(B) Deadline for provision of information.--
                          ``(i) In general.--Except as provided in 
                        clause (ii), the Secretary shall ensure that 
                        the information described in subparagraph (A) 
                        is included on such website (or a successor 
                        website) not later than 1 year after the date 
                        of the enactment of this subsection.
                          ``(ii) Exception.--The Secretary shall ensure 
                        that the information described in subparagraph 
                        (A)(i) and (A)(iii) is included on such website 
                        (or a successor website) not later than the 
                        date on which the requirements under section 
                        1124(c)(4) and subsection (b)(8)(C)(ii) are 
                        implemented.
          ``(2) Review and modification of website.--
                  ``(A) In general.--The Secretary shall establish a 
                process--
                          ``(i) to review the accuracy, clarity of 
                        presentation, timeliness, and comprehensiveness 
                        of information reported on such website as of 
                        the day before the date of the enactment of 
                        this subsection; and
                          ``(ii) not later than 1 year after the date 
                        of the enactment of this subsection, to modify 
                        or revamp such website in accordance with the 
                        review conducted under clause (i).
                  ``(B) Consultation.--In conducting the review under 
                subparagraph (A)(i), the Secretary shall consult with--
                          ``(i) State long-term care ombudsman 
                        programs;
                          ``(ii) consumer advocacy groups;
                          ``(iii) provider stakeholder groups;
                          ``(iv) skilled nursing facility employees and 
                        their representatives; and
                          ``(v) any other representatives of programs 
                        or groups the Secretary determines 
                        appropriate.''.
          (2) Timeliness of submission of survey and certification 
        information.--
                  (A) In general.--Section 1919(g)(5) of the Social 
                Security Act (42 U.S.C. 1396r(g)(5)) is amended by 
                adding at the end the following new subparagraph:
                  ``(E) Submission of survey and certification 
                information to the secretary.--In order to improve the 
                timeliness of information made available to the public 
                under subparagraph (A) and provided on the Nursing Home 
                Compare Medicare website under subsection (i), each 
                State shall submit information respecting any survey or 
                certification made respecting a nursing facility 
                (including any enforcement actions taken by the State) 
                to the Secretary not later than the date on which the 
                State sends such information to the facility. The 
                Secretary shall use the information submitted under the 
                preceding sentence to update the information provided 
                on the Nursing Home Compare Medicare website as 
                expeditiously as practicable but not less frequently 
                than quarterly.''.
                  (B) Effective date.--The amendment made by this 
                paragraph shall take effect 1 year after the date of 
                the enactment of this Act.
          (3) Special focus facility program.--Section 1919(f) of such 
        Act is amended by adding at the end of the following new 
        paragraph:
          ``(10) Special focus facility program.--
                  ``(A) In general.--The Secretary shall conduct a 
                special focus facility program for enforcement of 
                requirements for nursing facilities that the Secretary 
                has identified as having substantially failed to meet 
                applicable requirements of this Act.
                  ``(B) Periodic surveys.--Under such program the 
                Secretary shall conduct surveys of each facility in the 
                program not less often than once every 6 months.''.
  (c) Availability of Reports on Surveys, Certifications, and Complaint 
Investigations.--
          (1) Skilled nursing facilities.--Section 1819(d)(1) of the 
        Social Security Act (42 U.S.C. 1395i-3(d)(1)), as amended by 
        sections 1411 and 1412, is amended by adding at the end the 
        following new subparagraph:
                  ``(D) Availability of survey, certification, and 
                complaint investigation reports.--A skilled nursing 
                facility must--
                          ``(i) have reports with respect to any 
                        surveys, certifications, and complaint 
                        investigations made respecting the facility 
                        during the 3 preceding years available for any 
                        individual to review upon request; and
                          ``(ii) post notice of the availability of 
                        such reports in areas of the facility that are 
                        prominent and accessible to the public.
                The facility shall not make available under clause (i) 
                identifying information about complainants or 
                residents.''.
          (2) Nursing facilities.--Section 1919(d)(1) of the Social 
        Security Act (42 U.S.C. 1396r(d)(1)), as amended by sections 
        1411 and 1412, is amended by adding at the end the following 
        new subparagraph:
                  ``(D) Availability of survey, certification, and 
                complaint investigation reports.--A nursing facility 
                must--
                          ``(i) have reports with respect to any 
                        surveys, certifications, and complaint 
                        investigations made respecting the facility 
                        during the 3 preceding years available for any 
                        individual to review upon request; and
                          ``(ii) post notice of the availability of 
                        such reports in areas of the facility that are 
                        prominent and accessible to the public.
                The facility shall not make available under clause (i) 
                identifying information about complainants or 
                residents.''.
          (3) Effective date.--The amendments made by this subsection 
        shall take effect 1 year after the date of the enactment of 
        this Act.
  (d) Guidance to States on Form 2567 State Inspection Reports and 
Complaint Investigation Reports.--
          (1) Guidance.--The Secretary of Health and Human Services (in 
        this subtitle referred to as the ``Secretary'') shall provide 
        guidance to States on how States can establish electronic links 
        to Form 2567 State inspection reports (or a successor form), 
        complaint investigation reports, and a facility's plan of 
        correction or other response to such Form 2567 State inspection 
        reports (or a successor form) on the Internet website of the 
        State that provides information on skilled nursing facilities 
        and nursing facilities and the Secretary shall, if possible, 
        include such information on Nursing Home Compare.
          (2) Requirement.--Section 1902(a)(9) of the Social Security 
        Act (42 U.S.C. 1396a(a)(9)) is amended--
                  (A) by striking ``and'' at the end of subparagraph 
                (B);
                  (B) by striking the semicolon at the end of 
                subparagraph (C) and inserting ``, and''; and
                  (C) by adding at the end the following new 
                subparagraph:
                  ``(D) that the State maintain a consumer-oriented 
                website providing useful information to consumers 
                regarding all skilled nursing facilities and all 
                nursing facilities in the State, including for each 
                facility, Form 2567 State inspection reports (or a 
                successor form), complaint investigation reports, the 
                facility's plan of correction, and such other 
                information that the State or the Secretary considers 
                useful in assisting the public to assess the quality of 
                long term care options and the quality of care provided 
                by individual facilities;''.
          (3) Definitions.--In this subsection:
                  (A) Nursing facility.--The term ``nursing facility'' 
                has the meaning given such term in section 1919(a) of 
                the Social Security Act (42 U.S.C. 1396r(a)).
                  (B) Secretary.--The term ``Secretary'' means the 
                Secretary of Health and Human Services.
                  (C) Skilled nursing facility.--The term ``skilled 
                nursing facility'' has the meaning given such term in 
                section 1819(a) of the Social Security Act (42 U.S.C. 
                1395i-3(a)).

SEC. 1414. REPORTING OF EXPENDITURES.

  Section 1888 of the Social Security Act (42 U.S.C. 1395yy) is amended 
by adding at the end the following new subsection:
  ``(f) Reporting of Direct Care Expenditures.--
          ``(1) In general.--For cost reports submitted under this 
        title for cost reporting periods beginning on or after the date 
        that is 3 years after the date of the enactment of this 
        subsection, skilled nursing facilities shall separately report 
        expenditures for wages and benefits for direct care staff 
        (breaking out (at a minimum) registered nurses, licensed 
        professional nurses, certified nurse assistants, and other 
        medical and therapy staff).
          ``(2) Modification of form.--The Secretary, in consultation 
        with private sector accountants experienced with skilled 
        nursing facility cost reports, shall redesign such reports to 
        meet the requirement of paragraph (1) not later than 1 year 
        after the date of the enactment of this subsection.
          ``(3) Categorization by functional accounts.--Not later than 
        30 months after the date of the enactment of this subsection, 
        the Secretary, working in consultation with the Medicare 
        Payment Advisory Commission, the Inspector General of the 
        Department of Health and Human Services, and other expert 
        parties the Secretary determines appropriate, shall take the 
        expenditures listed on cost reports, as modified under 
        paragraph (1), submitted by skilled nursing facilities and 
        categorize such expenditures, regardless of any source of 
        payment for such expenditures, for each skilled nursing 
        facility into the following functional accounts on an annual 
        basis:
                  ``(A) Spending on direct care services (including 
                nursing, therapy, and medical services).
                  ``(B) Spending on indirect care (including 
                housekeeping and dietary services).
                  ``(C) Capital assets (including building and land 
                costs).
                  ``(D) Administrative services costs.
          ``(4) Availability of information submitted.--The Secretary 
        shall establish procedures to make information on expenditures 
        submitted under this subsection readily available to interested 
        parties upon request, subject to such requirements as the 
        Secretary may specify under the procedures established under 
        this paragraph.''.

SEC. 1415. STANDARDIZED COMPLAINT FORM.

  (a) Skilled Nursing Facilities.--
          (1) Development by the secretary.--Section 1819(f) of the 
        Social Security Act (42 U.S.C. 1395i-3(f)), as amended by 
        section 1413(a)(3), is amended by adding at the end the 
        following new paragraph:
          ``(9) Standardized complaint form.--The Secretary shall 
        develop a standardized complaint form for use by a resident (or 
        a person acting on the resident's behalf) in filing a complaint 
        with a State survey and certification agency and a State long-
        term care ombudsman program with respect to a skilled nursing 
        facility.''.
          (2) State requirements.--Section 1819(e) of the Social 
        Security Act (42 U.S.C. 1395i-3(e)) is amended by adding at the 
        end the following new paragraph:
          ``(6) Complaint processes and whistle-blower protection.--
                  ``(A) Complaint forms.--The State must make the 
                standardized complaint form developed under subsection 
                (f)(9) available upon request to--
                          ``(i) a resident of a skilled nursing 
                        facility;
                          ``(ii) any person acting on the resident's 
                        behalf; and
                          ``(iii) any person who works at a skilled 
                        nursing facility or is a representative of such 
                        a worker.
                  ``(B) Complaint resolution process.--The State must 
                establish a complaint resolution process in order to 
                ensure that a resident, the legal representative of a 
                resident of a skilled nursing facility, or other 
                responsible party is not retaliated against if the 
                resident, legal representative, or responsible party 
                has complained, in good faith, about the quality of 
                care or other issues relating to the skilled nursing 
                facility, that the legal representative of a resident 
                of a skilled nursing facility or other responsible 
                party is not denied access to such resident or 
                otherwise retaliated against if such representative 
                party has complained, in good faith, about the quality 
                of care provided by the facility or other issues 
                relating to the facility, and that a person who works 
                at a skilled nursing facility is not retaliated against 
                if the worker has complained, in good faith, about 
                quality of care or services or an issue relating to the 
                quality of care or services provided at the facility, 
                whether the resident, legal representative, other 
                responsible party, or worker used the form developed 
                under subsection (f)(9) or some other method for 
                submitting the complaint. Such complaint resolution 
                process shall include--
                          ``(i) procedures to assure accurate tracking 
                        of complaints received, including notification 
                        to the complainant that a complaint has been 
                        received;
                          ``(ii) procedures to determine the likely 
                        severity of a complaint and for the 
                        investigation of the complaint;
                          ``(iii) deadlines for responding to a 
                        complaint and for notifying the complainant of 
                        the outcome of the investigation; and
                          ``(iv) procedures to ensure that the identity 
                        of the complainant will be kept confidential.
                  ``(C) Whistleblower protection.--
                          ``(i) Prohibition against retaliation.--No 
                        person who works at a skilled nursing facility 
                        may be penalized, discriminated, or retaliated 
                        against with respect to any aspect of 
                        employment, including discharge, promotion, 
                        compensation, terms, conditions, or privileges 
                        of employment, or have a contract for services 
                        terminated, because the person (or anyone 
                        acting at the person's request) complained, in 
                        good faith, about the quality of care or 
                        services provided by a nursing facility or 
                        about other issues relating to quality of care 
                        or services, whether using the form developed 
                        under subsection (f)(9) or some other method 
                        for submitting the complaint.
                          ``(ii) Retaliatory reporting.--A skilled 
                        nursing facility may not file a complaint or a 
                        report against a person who works (or has 
                        worked at the facility with the appropriate 
                        State professional disciplinary agency because 
                        the person (or anyone acting at the person's 
                        request) complained in good faith, as described 
                        in clause (i).
                          ``(iii) Commencement of action.--Any person 
                        who believes the person has been penalized, 
                        discriminated , or retaliated against or had a 
                        contract for services terminated in violation 
                        of clause (i) or against whom a complaint has 
                        been filed in violation of clause (ii) may 
                        bring an action at law or equity in the 
                        appropriate district court of the United 
                        States, which shall have jurisdiction over such 
                        action without regard to the amount in 
                        controversy or the citizenship of the parties, 
                        and which shall have jurisdiction to grant 
                        complete relief, including, but not limited to, 
                        injunctive relief (such as reinstatement, 
                        compensatory damages (which may include 
                        reimbursement of lost wages, compensation, and 
                        benefits), costs of litigation (including 
                        reasonable attorney and expert witness fees), 
                        exemplary damages where appropriate, and such 
                        other relief as the court deems just and 
                        proper.
                          ``(iv) Rights not waivable.--The rights 
                        protected by this paragraph may not be 
                        diminished by contract or other agreement, and 
                        nothing in this paragraph shall be construed to 
                        diminish any greater or additional protection 
                        provided by Federal or State law or by contract 
                        or other agreement.
                          ``(v) Requirement to post notice of employee 
                        rights.--Each skilled nursing facility shall 
                        post conspicuously in an appropriate location a 
                        sign (in a form specified by the Secretary) 
                        specifying the rights of persons under this 
                        paragraph and including a statement that an 
                        employee may file a complaint with the 
                        Secretary against a skilled nursing facility 
                        that violates the provisions of this paragraph 
                        and information with respect to the manner of 
                        filing such a complaint.
                  ``(D) Rule of construction.--Nothing in this 
                paragraph shall be construed as preventing a resident 
                of a skilled nursing facility (or a person acting on 
                the resident's behalf) from submitting a complaint in a 
                manner or format other than by using the standardized 
                complaint form developed under subsection (f)(9) 
                (including submitting a complaint orally).
                  ``(E) Good faith defined.--For purposes of this 
                paragraph, an individual shall be deemed to be acting 
                in good faith with respect to the filing of a complaint 
                if the individual reasonably believes--
                          ``(i) the information reported or disclosed 
                        in the complaint is true; and
                          ``(ii) the violation of this title has 
                        occurred or may occur in relation to such 
                        information.''.
  (b) Nursing Facilities.--
          (1) Development by the secretary.--Section 1919(f) of the 
        Social Security Act (42 U.S.C. 1395i-3(f)), as amended by 
        section 1413(b), is amended by adding at the end the following 
        new paragraph:
          ``(11) Standardized complaint form.--The Secretary shall 
        develop a standardized complaint form for use by a resident (or 
        a person acting on the resident's behalf) in filing a complaint 
        with a State survey and certification agency and a State long-
        term care ombudsman program with respect to a nursing 
        facility.''.
          (2) State requirements.--Section 1919(e) of the Social 
        Security Act (42 U.S.C. 1395i-3(e)) is amended by adding at the 
        end the following new paragraph:
          ``(8) Complaint processes and whistleblower protection.--
                  ``(A) Complaint forms.--The State must make the 
                standardized complaint form developed under subsection 
                (f)(11) available upon request to--
                          ``(i) a resident of a nursing facility;
                          ``(ii) any person acting on the resident's 
                        behalf; and
                          ``(iii) any person who works at a nursing 
                        facility or a representative of such a worker.
                  ``(B) Complaint resolution process.--The State must 
                establish a complaint resolution process in order to 
                ensure that a resident, the legal representative of a 
                resident of a nursing facility, or other responsible 
                party is not retaliated against if the resident, legal 
                representative, or responsible party has complained, in 
                good faith, about the quality of care or other issues 
                relating to the nursing facility, that the legal 
                representative of a resident of a nursing facility or 
                other responsible party is not denied access to such 
                resident or otherwise retaliated against if such 
                representative party has complained, in good faith, 
                about the quality of care provided by the facility or 
                other issues relating to the facility, and that a 
                person who works at a nursing facility is not 
                retaliated against if the worker has complained, in 
                good faith, about quality of care or services or an 
                issue relating to the quality of care or services 
                provided at the facility, whether the resident, legal 
                representative, other responsible party, or worker used 
                the form developed under subsection (f)(11) or some 
                other method for submitting the complaint. Such 
                complaint resolution process shall include--
                          ``(i) procedures to assure accurate tracking 
                        of complaints received, including notification 
                        to the complainant that a complaint has been 
                        received;
                          ``(ii) procedures to determine the likely 
                        severity of a complaint and for the 
                        investigation of the complaint;
                          ``(iii) deadlines for responding to a 
                        complaint and for notifying the complainant of 
                        the outcome of the investigation; and
                          ``(iv) procedures to ensure that the identity 
                        of the complainant will be kept confidential.
                  ``(C) Whistleblower protection.--
                          ``(i) Prohibition against retaliation.--No 
                        person who works at a nursing facility may be 
                        penalized, discriminated, or retaliated against 
                        with respect to any aspect of employment, 
                        including discharge, promotion, compensation, 
                        terms, conditions, or privileges of employment, 
                        or have a contract for services terminated, 
                        because the person (or anyone acting at the 
                        person's request) complained, in good faith, 
                        about the quality of care or services provided 
                        by a nursing facility or about other issues 
                        relating to quality of care or services, 
                        whether using the form developed under 
                        subsection (f)(11) or some other method for 
                        submitting the complaint.
                          ``(ii) Retaliatory reporting.--A nursing 
                        facility may not file a complaint or a report 
                        against a person who works (or has worked at 
                        the facility with the appropriate State 
                        professional disciplinary agency because the 
                        person (or anyone acting at the person's 
                        request) complained in good faith, as described 
                        in clause (i).
                          ``(iii) Commencement of action.--Any person 
                        who believes the person has been penalized, 
                        discriminated, or retaliated against or had a 
                        contract for services terminated in violation 
                        of clause (i) or against whom a complaint has 
                        been filed in violation of clause (ii) may 
                        bring an action at law or equity in the 
                        appropriate district court of the United 
                        States, which shall have jurisdiction over such 
                        action without regard to the amount in 
                        controversy or the citizenship of the parties, 
                        and which shall have jurisdiction to grant 
                        complete relief, including, but not limited to, 
                        injunctive relief (such as reinstatement, 
                        compensatory damages (which may include 
                        reimbursement of lost wages, compensation, and 
                        benefits), costs of litigation (including 
                        reasonable attorney and expert witness fees), 
                        exemplary damages where appropriate, and such 
                        other relief as the court deems just and 
                        proper.
                          ``(iv) Rights not waivable.--The rights 
                        protected by this paragraph may not be 
                        diminished by contract or other agreement, and 
                        nothing in this paragraph shall be construed to 
                        diminish any greater or additional protection 
                        provided by Federal or State law or by contract 
                        or other agreement.
                          ``(v) Requirement to post notice of employee 
                        rights.--Each nursing facility shall post 
                        conspicuously in an appropriate location a sign 
                        (in a form specified by the Secretary) 
                        specifying the rights of persons under this 
                        paragraph and including a statement that an 
                        employee may file a complaint with the 
                        Secretary against a nursing facility that 
                        violates the provisions of this paragraph and 
                        information with respect to the manner of 
                        filing such a complaint.
                  ``(D) Rule of construction.--Nothing in this 
                paragraph shall be construed as preventing a resident 
                of a nursing facility (or a person acting on the 
                resident's behalf) from submitting a complaint in a 
                manner or format other than by using the standardized 
                complaint form developed under subsection (f)(11) 
                (including submitting a complaint orally).
                  ``(E) Good faith defined.--For purposes of this 
                paragraph, an individual shall be deemed to be acting 
                in good faith with respect to the filing of a complaint 
                if the individual reasonably believes--
                          ``(i) the information reported or disclosed 
                        in the complaint is true; and
                          ``(ii) the violation of this title has 
                        occurred or may occur in relation to such 
                        information.''.
  (c) Effective Date.--The amendments made by this section shall take 
effect 1 year after the date of the enactment of this Act.

SEC. 1416. ENSURING STAFFING ACCOUNTABILITY.

  (a) Skilled Nursing Facilities.--Section 1819(b)(8) of the Social 
Security Act (42 U.S.C. 1395i-3(b)(8)) is amended by adding at the end 
the following new subparagraph:
                  ``(C) Submission of staffing information based on 
                payroll data in a uniform format.--Beginning not later 
                than 2 years after the date of the enactment of this 
                subparagraph, and after consulting with State long-term 
                care ombudsman programs, consumer advocacy groups, 
                provider stakeholder groups, employees and their 
                representatives, and other parties the Secretary deems 
                appropriate, the Secretary shall require a skilled 
                nursing facility to electronically submit to the 
                Secretary direct care staffing information (including 
                information with respect to agency and contract staff) 
                based on payroll and other verifiable and auditable 
                data in a uniform format (according to specifications 
                established by the Secretary in consultation with such 
                programs, groups, and parties). Such specifications 
                shall require that the information submitted under the 
                preceding sentence--
                          ``(i) specify the category of work a 
                        certified employee performs (such as whether 
                        the employee is a registered nurse, licensed 
                        practical nurse, licensed vocational nurse, 
                        certified nursing assistant, therapist, or 
                        other medical personnel);
                          ``(ii) include resident census data and 
                        information on resident case mix;
                          ``(iii) include a regular reporting schedule; 
                        and
                          ``(iv) include information on employee 
                        turnover and tenure and on the hours of care 
                        provided by each category of certified 
                        employees referenced in clause (i) per resident 
                        per day.
                Nothing in this subparagraph shall be construed as 
                preventing the Secretary from requiring submission of 
                such information with respect to specific categories, 
                such as nursing staff, before other categories of 
                certified employees. Information under this 
                subparagraph with respect to agency and contract staff 
                shall be kept separate from information on employee 
                staffing.''.
  (b) Nursing Facilities.--Section 1919(b)(8) of the Social Security 
Act (42 U.S.C. 1396r(b)(8)) is amended by adding at the end the 
following new subparagraph:
                  ``(C) Submission of staffing information based on 
                payroll data in a uniform format.--Beginning not later 
                than 2 years after the date of the enactment of this 
                subparagraph, and after consulting with State long-term 
                care ombudsman programs, consumer advocacy groups, 
                provider stakeholder groups, employees and their 
                representatives, and other parties the Secretary deems 
                appropriate, the Secretary shall require a nursing 
                facility to electronically submit to the Secretary 
                direct care staffing information (including information 
                with respect to agency and contract staff) based on 
                payroll and other verifiable and auditable data in a 
                uniform format (according to specifications established 
                by the Secretary in consultation with such programs, 
                groups, and parties). Such specifications shall require 
                that the information submitted under the preceding 
                sentence--
                          ``(i) specify the category of work a 
                        certified employee performs (such as whether 
                        the employee is a registered nurse, licensed 
                        practical nurse, licensed vocational nurse, 
                        certified nursing assistant, therapist, or 
                        other medical personnel);
                          ``(ii) include resident census data and 
                        information on resident case mix;
                          ``(iii) include a regular reporting schedule; 
                        and
                          ``(iv) include information on employee 
                        turnover and tenure and on the hours of care 
                        provided by each category of certified 
                        employees referenced in clause (i) per resident 
                        per day.
                Nothing in this subparagraph shall be construed as 
                preventing the Secretary from requiring submission of 
                such information with respect to specific categories, 
                such as nursing staff, before other categories of 
                certified employees. Information under this 
                subparagraph with respect to agency and contract staff 
                shall be kept separate from information on employee 
                staffing.''.

                     PART 2--TARGETING ENFORCEMENT

SEC. 1421. CIVIL MONEY PENALTIES.

  (a) Skilled Nursing Facilities.--
          (1) In general.--Section 1819(h)(2)(B)(ii) of the Social 
        Security Act (42 U.S.C. 1395i-3(h)(2)(B)(ii)) is amended to 
        read as follows:
                          ``(ii) Authority with respect to civil money 
                        penalties.--
                                  ``(I) Amount.--The Secretary may 
                                impose a civil money penalty in the 
                                applicable per instance or per day 
                                amount (as defined in subclause (II) 
                                and (III)) for each day or instance, 
                                respectively, of noncompliance (as 
                                determined appropriate by the 
                                Secretary).
                                  ``(II) Applicable per instance 
                                amount.--In this clause, the term 
                                `applicable per instance amount' 
                                means--
                                          ``(aa) in the case where the 
                                        deficiency is found to be a 
                                        direct proximate cause of death 
                                        of a resident of the facility, 
                                        an amount not to exceed 
                                        $100,000.
                                          ``(bb) in each case of a 
                                        deficiency where the facility 
                                        is cited for actual harm or 
                                        immediate jeopardy, an amount 
                                        not less than $3,050 and not 
                                        more than $25,000; and
                                          ``(cc) in each case of any 
                                        other deficiency, an amount not 
                                        less than $250 and not to 
                                        exceed $3050.
                                  ``(III) Applicable per day amount.--
                                In this clause, the term `applicable 
                                per day amount' means--
                                          ``(aa) in each case of a 
                                        deficiency where the facility 
                                        is cited for actual harm or 
                                        immediate jeopardy, an amount 
                                        not less than $3,050 and not 
                                        more than $25,000 and
                                          ``(bb) in each case of any 
                                        other deficiency, an amount not 
                                        less than $250 and not to 
                                        exceed $3,050.
                                  ``(IV) Reduction of civil money 
                                penalties in certain circumstances.--
                                Subject to subclauses (V) and (VI), in 
                                the case where a facility self-reports 
                                and promptly corrects a deficiency for 
                                which a penalty was imposed under this 
                                clause not later than 10 calendar days 
                                after the date of such imposition, the 
                                Secretary may reduce the amount of the 
                                penalty imposed by not more than 50 
                                percent.
                                  ``(V) Prohibition on reduction for 
                                certain deficiencies.--
                                          ``(aa) Repeat deficiencies.--
                                        The Secretary may not reduce 
                                        under subclause (IV) the amount 
                                        of a penalty if the deficiency 
                                        is a repeat deficiency.
                                          ``(bb) Certain other 
                                        deficiencies.--The Secretary 
                                        may not reduce under subclause 
                                        (IV) the amount of a penalty if 
                                        the penalty is imposed for a 
                                        deficiency described in 
                                        subclause (II)(aa) or (III)(aa) 
                                        and the actual harm or 
                                        widespread harm immediately 
                                        jeopardizes the health or 
                                        safety of a resident or 
                                        residents of the facility, or 
                                        if the penalty is imposed for a 
                                        deficiency described in 
                                        subclause (II)(bb).
                                  ``(VI) Limitation on aggregate 
                                reductions.--The aggregate reduction in 
                                a penalty under subclause (IV) may not 
                                exceed 35 percent on the basis of self-
                                reporting, on the basis of a waiver or 
                                an appeal (as provided for under 
                                regulations under section 488.436 of 
                                title 42, Code of Federal Regulations), 
                                or on the basis of both.
                                  ``(VII) Collection of civil money 
                                penalties.--In the case of a civil 
                                money penalty imposed under this 
                                clause, the Secretary--
                                          ``(aa) subject to item (cc), 
                                        shall, not later than 30 days 
                                        after the date of imposition of 
                                        the penalty, provide the 
                                        opportunity for the facility to 
                                        participate in an independent 
                                        informal dispute resolution 
                                        process which generates a 
                                        written record prior to the 
                                        collection of such penalty, but 
                                        such opportunity shall not 
                                        affect the responsibility of 
                                        the State survey agency for 
                                        making final recommendations 
                                        for such penalties;
                                          ``(bb) in the case where the 
                                        penalty is imposed for each day 
                                        of noncompliance, shall not 
                                        impose a penalty for any day 
                                        during the period beginning on 
                                        the initial day of the 
                                        imposition of the penalty and 
                                        ending on the day on which the 
                                        informal dispute resolution 
                                        process under item (aa) is 
                                        completed;
                                          ``(cc) may provide for the 
                                        collection of such civil money 
                                        penalty and the placement of 
                                        such amounts collected in an 
                                        escrow account under the 
                                        direction of the Secretary on 
                                        the earlier of the date on 
                                        which the informal dispute 
                                        resolution process under item 
                                        (aa) is completed or the date 
                                        that is 90 days after the date 
                                        of the imposition of the 
                                        penalty;
                                          ``(dd) may provide that such 
                                        amounts collected are kept in 
                                        such account pending the 
                                        resolution of any subsequent 
                                        appeals;
                                          ``(ee) in the case where the 
                                        facility successfully appeals 
                                        the penalty, may provide for 
                                        the return of such amounts 
                                        collected (plus interest) to 
                                        the facility; and
                                          ``(ff) in the case where all 
                                        such appeals are unsuccessful, 
                                        may provide that some portion 
                                        of such amounts collected may 
                                        be used to support activities 
                                        that benefit residents, 
                                        including assistance to support 
                                        and protect residents of a 
                                        facility that closes 
                                        (voluntarily or involuntarily) 
                                        or is decertified (including 
                                        offsetting costs of relocating 
                                        residents to home and 
                                        community-based settings or 
                                        another facility), projects 
                                        that support resident and 
                                        family councils and other 
                                        consumer involvement in 
                                        assuring quality care in 
                                        facilities, and facility 
                                        improvement initiatives 
                                        approved by the Secretary 
                                        (including joint training of 
                                        facility staff and surveyors, 
                                        technical assistance for 
                                        facilities under quality 
                                        assurance programs, the 
                                        appointment of temporary 
                                        management, and other 
                                        activities approved by the 
                                        Secretary).
                                  ``(VIII) Procedure.--The provisions 
                                of section 1128A (other than 
                                subsections (a) and (b) and except to 
                                the extent that such provisions require 
                                a hearing prior to the imposition of a 
                                civil money penalty) shall apply to a 
                                civil money penalty under this clause 
                                in the same manner as such provisions 
                                apply to a penalty or proceeding under 
                                section 1128A(a).''.
          (2) Conforming amendment.--The second sentence of section 
        1819(h)(5) of the Social Security Act (42 U.S.C. 1395i-3(h)(5)) 
        is amended by inserting ``(ii),''after ``(i),''.
  (b) Nursing Facilities.--
          (1) Penalties imposed by the state.--
                  (A) In general.--Section 1919(h)(2) of the Social 
                Security Act (42 U.S.C. 1396r(h)(2)) is amended--
                          (i) in subparagraph (A)(ii), by striking the 
                        first sentence and inserting the following: ``A 
                        civil money penalty in accordance with 
                        subparagraph (G).''; and
                          (ii) by adding at the end the following new 
                        subparagraph:
                  ``(G) Civil money penalties.--
                          ``(i) In general.--The State may impose a 
                        civil money penalty under subparagraph (A)(ii) 
                        in the applicable per instance or per day 
                        amount (as defined in subclause (II) and (III)) 
                        for each day or instance, respectively, of 
                        noncompliance (as determined appropriate by the 
                        Secretary).
                          ``(ii) Applicable per instance amount.--In 
                        this subparagraph, the term `applicable per 
                        instance amount' means--
                                  ``(I) in the case where the 
                                deficiency is found to be a direct 
                                proximate cause of death of a resident 
                                of the facility, an amount not to 
                                exceed $100,000.
                                  ``(II) in each case of a deficiency 
                                where the facility is cited for actual 
                                harm or immediate jeopardy, an amount 
                                not less than $3,050 and not more than 
                                $25,000; and
                                  ``(III) in each case of any other 
                                deficiency, an amount not less than 
                                $250 and not to exceed $3050.
                          ``(iii) Applicable per day amount.--In this 
                        subparagraph, the term `applicable per day 
                        amount' means--
                                  ``(I) in each case of a deficiency 
                                where the facility is cited for actual 
                                harm or immediate jeopardy, an amount 
                                not less than $3,050 and not more than 
                                $25,000 and
                                  ``(II) in each case of any other 
                                deficiency, an amount not less than 
                                $250 and not to exceed $3,050.
                          ``(iv) Reduction of civil money penalties in 
                        certain circumstances.--Subject to clauses (v) 
                        and (vi), in the case where a facility self-
                        reports and promptly corrects a deficiency for 
                        which a penalty was imposed under subparagraph 
                        (A)(ii) not later than 10 calendar days after 
                        the date of such imposition, the State may 
                        reduce the amount of the penalty imposed by not 
                        more than 50 percent.
                          ``(v) Prohibition on reduction for certain 
                        deficiencies.--
                                  ``(I) Repeat deficiencies.--The State 
                                may not reduce under clause (iv) the 
                                amount of a penalty if the State had 
                                reduced a penalty imposed on the 
                                facility in the preceding year under 
                                such clause with respect to a repeat 
                                deficiency.
                                  ``(II) Certain other deficiencies.--
                                The State may not reduce under clause 
                                (iv) the amount of a penalty if the 
                                penalty is imposed for a deficiency 
                                described in clause (ii)(II) or 
                                (iii)(I) and the actual harm or 
                                widespread harm that immediately 
                                jeopardizes the health or safety of a 
                                resident or residents of the facility, 
                                or if the penalty is imposed for a 
                                deficiency described in clause (ii)(I).
                                  ``(III) Limitation on aggregate 
                                reductions.--The aggregate reduction in 
                                a penalty under clause (iv) may not 
                                exceed 35 percent on the basis of self-
                                reporting, on the basis of a waiver or 
                                an appeal (as provided for under 
                                regulations under section 488.436 of 
                                title 42, Code of Federal Regulations), 
                                or on the basis of both.
                          ``(vi) Collection of civil money penalties.--
                        In the case of a civil money penalty imposed 
                        under subparagraph (A)(ii), the State--
                                  ``(I) subject to subclause (III), 
                                shall, not later than 30 days after the 
                                date of imposition of the penalty, 
                                provide the opportunity for the 
                                facility to participate in an 
                                independent informal dispute resolution 
                                process which generates a written 
                                record prior to the collection of such 
                                penalty, but such opportunity shall not 
                                affect the responsibility of the State 
                                survey agency for making final 
                                recommendations for such penalties;
                                  ``(II) in the case where the penalty 
                                is imposed for each day of 
                                noncompliance, shall not impose a 
                                penalty for any day during the period 
                                beginning on the initial day of the 
                                imposition of the penalty and ending on 
                                the day on which the informal dispute 
                                resolution process under subclause (I) 
                                is completed;
                                  ``(III) may provide for the 
                                collection of such civil money penalty 
                                and the placement of such amounts 
                                collected in an escrow account under 
                                the direction of the State on the 
                                earlier of the date on which the 
                                informal dispute resolution process 
                                under subclause (I) is completed or the 
                                date that is 90 days after the date of 
                                the imposition of the penalty;
                                  ``(IV) may provide that such amounts 
                                collected are kept in such account 
                                pending the resolution of any 
                                subsequent appeals;
                                  ``(V) in the case where the facility 
                                successfully appeals the penalty, may 
                                provide for the return of such amounts 
                                collected (plus interest) to the 
                                facility; and
                                  ``(VI) in the case where all such 
                                appeals are unsuccessful, may provide 
                                that such funds collected shall be used 
                                for the purposes described in the 
                                second sentence of subparagraph 
                                (A)(ii).''.
                  (B) Conforming amendment.--The second sentence of 
                section 1919(h)(2)(A)(ii) of the Social Security Act 
                (42 U.S.C. 1396r(h)(2)(A)(ii)) is amended by inserting 
                before the period at the end the following: ``, and 
                some portion of such funds may be used to support 
                activities that benefit residents, including assistance 
                to support and protect residents of a facility that 
                closes (voluntarily or involuntarily) or is decertified 
                (including offsetting costs of relocating residents to 
                home and community-based settings or another facility), 
                projects that support resident and family councils and 
                other consumer involvement in assuring quality care in 
                facilities, and facility improvement initiatives 
                approved by the Secretary (including joint training of 
                facility staff and surveyors, providing technical 
                assistance to facilities under quality assurance 
                programs, the appointment of temporary management, and 
                other activities approved by the Secretary)''.
          (2) Penalties imposed by the secretary.--
                  (A) In general.--Section 1919(h)(3)(C)(ii) of the 
                Social Security Act (42 U.S.C. 1396r(h)(3)(C)) is 
                amended to read as follows:
                          ``(ii) Authority with respect to civil money 
                        penalties.--
                                  ``(I) Amount.--Subject to subclause 
                                (II), the Secretary may impose a civil 
                                money penalty in an amount not to 
                                exceed $10,000 for each day or each 
                                instance of noncompliance (as 
                                determined appropriate by the 
                                Secretary).
                                  ``(II) Reduction of civil money 
                                penalties in certain circumstances.--
                                Subject to subclause (III), in the case 
                                where a facility self-reports and 
                                promptly corrects a deficiency for 
                                which a penalty was imposed under this 
                                clause not later than 10 calendar days 
                                after the date of such imposition, the 
                                Secretary may reduce the amount of the 
                                penalty imposed by not more than 50 
                                percent.
                                  ``(III) Prohibition on reduction for 
                                repeat deficiencies.--The Secretary may 
                                not reduce the amount of a penalty 
                                under subclause (II) if the Secretary 
                                had reduced a penalty imposed on the 
                                facility in the preceding year under 
                                such subclause with respect to a repeat 
                                deficiency.
                                  ``(IV) Collection of civil money 
                                penalties.--In the case of a civil 
                                money penalty imposed under this 
                                clause, the Secretary--
                                          ``(aa) subject to item (bb), 
                                        shall, not later than 30 days 
                                        after the date of imposition of 
                                        the penalty, provide the 
                                        opportunity for the facility to 
                                        participate in an independent 
                                        informal dispute resolution 
                                        process which generates a 
                                        written record prior to the 
                                        collection of such penalty;
                                          ``(bb) in the case where the 
                                        penalty is imposed for each day 
                                        of noncompliance, shall not 
                                        impose a penalty for any day 
                                        during the period beginning on 
                                        the initial day of the 
                                        imposition of the penalty and 
                                        ending on the day on which the 
                                        informal dispute resolution 
                                        process under item (aa) is 
                                        completed;
                                          ``(cc) may provide for the 
                                        collection of such civil money 
                                        penalty and the placement of 
                                        such amounts collected in an 
                                        escrow account under the 
                                        direction of the Secretary on 
                                        the earlier of the date on 
                                        which the informal dispute 
                                        resolution process under item 
                                        (aa) is completed or the date 
                                        that is 90 days after the date 
                                        of the imposition of the 
                                        penalty;
                                          ``(dd) may provide that such 
                                        amounts collected are kept in 
                                        such account pending the 
                                        resolution of any subsequent 
                                        appeals;
                                          ``(ee) in the case where the 
                                        facility successfully appeals 
                                        the penalty, may provide for 
                                        the return of such amounts 
                                        collected (plus interest) to 
                                        the facility; and
                                          ``(ff) in the case where all 
                                        such appeals are unsuccessful, 
                                        may provide that some portion 
                                        of such amounts collected may 
                                        be used to support activities 
                                        that benefit residents, 
                                        including assistance to support 
                                        and protect residents of a 
                                        facility that closes 
                                        (voluntarily or involuntarily) 
                                        or is decertified (including 
                                        offsetting costs of relocating 
                                        residents to home and 
                                        community-based settings or 
                                        another facility), projects 
                                        that support resident and 
                                        family councils and other 
                                        consumer involvement in 
                                        assuring quality care in 
                                        facilities, and facility 
                                        improvement initiatives 
                                        approved by the Secretary 
                                        (including joint training of 
                                        facility staff and surveyors, 
                                        technical assistance for 
                                        facilities under quality 
                                        assurance programs, the 
                                        appointment of temporary 
                                        management, and other 
                                        activities approved by the 
                                        Secretary).
                                  ``(V) Procedure.--The provisions of 
                                section 1128A (other than subsections 
                                (a) and (b) and except to the extent 
                                that such provisions require a hearing 
                                prior to the imposition of a civil 
                                money penalty) shall apply to a civil 
                                money penalty under this clause in the 
                                same manner as such provisions apply to 
                                a penalty or proceeding under section 
                                1128A(a).''.
                  (B) Conforming amendment.--Section 1919(h)(8) of the 
                Social Security Act (42 U.S.C. 1396r(h)(5)(8)) is 
                amended by inserting ``and in paragraph (3)(C)(ii)'' 
                after ``paragraph (2)(A)''.
  (c) Effective Date.--The amendments made by this section shall take 
effect 1 year after the date of the enactment of this Act.

SEC. 1422. NATIONAL INDEPENDENT MONITOR PILOT PROGRAM.

  (a) Establishment.--
          (1) In general.--The Secretary, in consultation with the 
        Inspector General of the Department of Health and Human 
        Services, shall establish a pilot program (in this section 
        referred to as the ``pilot program'') to develop, test, and 
        implement use of an independent monitor to oversee interstate 
        and large intrastate chains of skilled nursing facilities and 
        nursing facilities.
          (2) Selection.--The Secretary shall select chains of skilled 
        nursing facilities and nursing facilities described in 
        paragraph (1) to participate in the pilot program from among 
        those chains that submit an application to the Secretary at 
        such time, in such manner, and containing such information as 
        the Secretary may require.
          (3) Duration.--The Secretary shall conduct the pilot program 
        for a two-year period.
          (4) Implementation.--The Secretary shall implement the pilot 
        program not later than one year after the date of the enactment 
        of this Act.
  (b) Requirements.--The Secretary shall evaluate chains selected to 
participate in the pilot program based on criteria selected by the 
Secretary, including where evidence suggests that one or more 
facilities of the chain are experiencing serious safety and quality of 
care problems. Such criteria may include the evaluation of a chain that 
includes one or more facilities participating in the ``Special Focus 
Facility'' program (or a successor program) or one or more facilities 
with a record of repeated serious safety and quality of care 
deficiencies.
  (c) Responsibilities of the Independent Monitor.--An independent 
monitor that enters into a contract with the Secretary to participate 
in the conduct of such program shall--
          (1) conduct periodic reviews and prepare root-cause quality 
        and deficiency analyses of a chain to assess if facilities of 
        the chain are in compliance with State and Federal laws and 
        regulations applicable to the facilities;
          (2) undertake sustained oversight of the chain, whether 
        publicly or privately held, to involve the owners of the chain 
        and the principal business partners of such owners in 
        facilitating compliance by facilities of the chain with State 
        and Federal laws and regulations applicable to the facilities;
          (3) analyze the management structure, distribution of 
        expenditures, and nurse staffing levels of facilities of the 
        chain in relation to resident census, staff turnover rates, and 
        tenure;
          (4) report findings and recommendations with respect to such 
        reviews, analyses, and oversight to the chain and facilities of 
        the chain, to the Secretary and to relevant States; and
          (5) publish the results of such reviews, analyses, and 
        oversight.
  (d) Implementation of Recommendations.--
          (1) Receipt of finding by chain.--Not later than 10 days 
        after receipt of a finding of an independent monitor under 
        subsection (c)(4), a chain participating in the pilot program 
        shall submit to the independent monitor a report--
                  (A) outlining corrective actions the chain will take 
                to implement the recommendations in such report; or
                  (B) indicating that the chain will not implement such 
                recommendations and why it will not do so.
          (2) Receipt of report by independent monitor.--Not later than 
        10 days after the date of receipt of a report submitted by a 
        chain under paragraph (1), an independent monitor shall 
        finalize its recommendations and submit a report to the chain 
        and facilities of the chain, the Secretary, and the State (or 
        States) involved, as appropriate, containing such final 
        recommendations.
  (e) Cost of Appointment.--A chain shall be responsible for a portion 
of the costs associated with the appointment of independent monitors 
under the pilot program. The chain shall pay such portion to the 
Secretary (in an amount and in accordance with procedures established 
by the Secretary).
  (f) Waiver Authority.--The Secretary may waive such requirements of 
titles XVIII and XIX of the Social Security Act (42 U.S.C. 1395 et 
seq.; 1396 et seq.) as may be necessary for the purpose of carrying out 
the pilot program.
  (g) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this section.
  (h) Definitions.--In this section:
          (1) Facility.--The term ``facility'' means a skilled nursing 
        facility or a nursing facility.
          (2) Nursing facility.--The term ``nursing facility'' has the 
        meaning given such term in section 1919(a) of the Social 
        Security Act (42 U.S.C. 1396r(a)).
          (3) Secretary.--The term ``Secretary'' means the Secretary of 
        Health and Human Services, acting through the Assistant 
        Secretary for Planning and Evaluation.
          (4) Skilled nursing facility.--The term ``skilled nursing 
        facility'' has the meaning given such term in section 1819(a) 
        of the Social Security Act (42 U.S.C. 1395(a)).
  (i) Evaluation and Report.--
          (1) Evaluation.--The Inspector General of the Department of 
        Health and Human Services shall evaluate the pilot program. 
        Such evaluation shall--
                  (A) determine whether the independent monitor program 
                should be established on a permanent basis; and
                  (B) if the Inspector General determines that the 
                independent monitor program should be established on a 
                permanent basis, recommend appropriate procedures and 
                mechanisms for such establishment.
          (2) Report.--Not later than 180 days after the completion of 
        the pilot program, the Inspector General shall submit to 
        Congress and the Secretary a report containing the results of 
        the evaluation conducted under paragraph (1), together with 
        recommendations for such legislation and administrative action 
        as the Inspector General determines appropriate.

SEC. 1423. NOTIFICATION OF FACILITY CLOSURE.

  (a) Skilled Nursing Facilities.--
          (1) In general.--Section 1819(c) of the Social Security Act 
        (42 U.S.C. 1395i-3(c)) is amended by adding at the end the 
        following new paragraph:
          ``(7) Notification of facility closure.--
                  ``(A) In general.--Any individual who is the 
                administrator of a skilled nursing facility must--
                          ``(i) submit to the Secretary, the State 
                        long-term care ombudsman, residents of the 
                        facility, and the legal representatives of such 
                        residents or other responsible parties, written 
                        notification of an impending closure--
                                  ``(I) subject to subclause (II), not 
                                later than the date that is 60 days 
                                prior to the date of such closure; and
                                  ``(II) in the case of a facility 
                                where the Secretary terminates the 
                                facility's participation under this 
                                title, not later than the date that the 
                                Secretary determines appropriate;
                          ``(ii) ensure that the facility does not 
                        admit any new residents on or after the date on 
                        which such written notification is submitted; 
                        and
                          ``(iii) include in the notice a plan for the 
                        transfer and adequate relocation of the 
                        residents of the facility by a specified date 
                        prior to closure that has been approved by the 
                        State, including assurances that the residents 
                        will be transferred to the most appropriate 
                        facility or other setting in terms of quality, 
                        services, and location, taking into 
                        consideration the needs and best interests of 
                        each resident.
                  ``(B) Relocation.--
                          ``(i) In general.--The State shall ensure 
                        that, before a facility closes, all residents 
                        of the facility have been successfully 
                        relocated to another facility or an alternative 
                        home and community-based setting.
                          ``(ii) Continuation of payments until 
                        residents relocated.--The Secretary may, as the 
                        Secretary determines appropriate, continue to 
                        make payments under this title with respect to 
                        residents of a facility that has submitted a 
                        notification under subparagraph (A) during the 
                        period beginning on the date such notification 
                        is submitted and ending on the date on which 
                        the resident is successfully relocated.''.
          (2) Conforming amendments.--Section 1819(h)(4) of the Social 
        Security Act (42 U.S.C. 1395i-3(h)(4)) is amended--
                  (A) in the first sentence, by striking ``the 
                Secretary shall terminate'' and inserting ``the 
                Secretary, subject to subsection (c)(7), shall 
                terminate''; and
                  (B) in the second sentence, by striking ``subsection 
                (c)(2)'' and inserting ``paragraphs (2) and (7) of 
                subsection (c)''.
  (b) Nursing Facilities.--
          (1) In general.--Section 1919(c) of the Social Security Act 
        (42 U.S.C. 1396r(c)) is amended by adding at the end the 
        following new paragraph:
          ``(9) Notification of facility closure.--
                  ``(A) In general.--Any individual who is an 
                administrator of a nursing facility must--
                          ``(i) submit to the Secretary, the State 
                        long-term care ombudsman, residents of the 
                        facility, and the legal representatives of such 
                        residents or other responsible parties, written 
                        notification of an impending closure--
                                  ``(I) subject to subclause (II), not 
                                later than the date that is 60 days 
                                prior to the date of such closure; and
                                  ``(II) in the case of a facility 
                                where the Secretary terminates the 
                                facility's participation under this 
                                title, not later than the date that the 
                                Secretary determines appropriate;
                          ``(ii) ensure that the facility does not 
                        admit any new residents on or after the date on 
                        which such written notification is submitted; 
                        and
                          ``(iii) include in the notice a plan for the 
                        transfer and adequate relocation of the 
                        residents of the facility by a specified date 
                        prior to closure that has been approved by the 
                        State, including assurances that the residents 
                        will be transferred to the most appropriate 
                        facility or other setting in terms of quality, 
                        services, and location, taking into 
                        consideration the needs and best interests of 
                        each resident.
                  ``(B) Relocation.--
                          ``(i) In general.--The State shall ensure 
                        that, before a facility closes, all residents 
                        of the facility have been successfully 
                        relocated to another facility or an alternative 
                        home and community-based setting.
                          ``(ii) Continuation of payments until 
                        residents relocated.--The Secretary may, as the 
                        Secretary determines appropriate, continue to 
                        make payments under this title with respect to 
                        residents of a facility that has submitted a 
                        notification under subparagraph (A) during the 
                        period beginning on the date such notification 
                        is submitted and ending on the date on which 
                        the resident is successfully relocated.''.
  (c) Effective Date.--The amendments made by this section shall take 
effect 1 year after the date of the enactment of this Act.

                    PART 3--IMPROVING STAFF TRAINING

SEC. 1431. DEMENTIA AND ABUSE PREVENTION TRAINING.

  (a) Skilled Nursing Facilities.--Section 1819(f)(2)(A)(i)(I) of the 
Social Security Act (42 U.S.C. 1395i-3(f)(2)(A)(i)(I)) is amended by 
inserting ``(including, in the case of initial training and, if the 
Secretary determines appropriate, in the case of ongoing training, 
dementia management training and resident abuse prevention training)'' 
after ``curriculum''.
  (b) Nursing Facilities.--Section 1919(f)(2)(A)(i)(I) of the Social 
Security Act (42 U.S.C. 1396r(f)(2)(A)(i)(I)) is amended by inserting 
``(including, in the case of initial training and, if the Secretary 
determines appropriate, in the case of ongoing training, dementia 
management training and resident abuse prevention training)'' after 
``curriculum''.
  (c) Effective Date.--The amendments made by this section shall take 
effect 1 year after the date of the enactment of this Act.

SEC. 1432. STUDY AND REPORT ON TRAINING REQUIRED FOR CERTIFIED NURSE 
                    AIDES AND SUPERVISORY STAFF.

  (a) Study.--
          (1) In general.--The Secretary shall conduct a study on the 
        content of training for certified nurse aides and supervisory 
        staff of skilled nursing facilities and nursing facilities. The 
        study shall include an analysis of the following:
                  (A) Whether the number of initial training hours for 
                certified nurse aides required under sections 
                1819(f)(2)(A)(i)(II) and 1919(f)(2)(A)(i)(II) of the 
                Social Security Act (42 U.S.C. 1395i-3(f)(2)(A)(i)(II); 
                1396r(f)(2)(A)(i)(II)) should be increased from 75 and, 
                if so, what the required number of initial training 
                hours should be, including any recommendations for the 
                content of such training (including training related to 
                dementia).
                  (B) Whether requirements for ongoing training under 
                such sections 1819(f)(2)(A)(i)(II) and 
                1919(f)(2)(A)(i)(II) should be increased from 12 hours 
                per year, including any recommendations for the content 
                of such training.
          (2) Consultation.--In conducting the analysis under paragraph 
        (1)(A), the Secretary shall consult with States that, as of the 
        date of the enactment of this Act, require more than 75 hours 
        of training for certified nurse aides.
          (3) Definitions.--In this section:
                  (A) Nursing facility.--The term ``nursing facility'' 
                has the meaning given such term in section 1919(a) of 
                the Social Security Act (42 U.S.C. 1396r(a)).
                  (B) Secretary.--The term ``Secretary'' means the 
                Secretary of Health and Human Services, acting through 
                the Assistant Secretary for Planning and Evaluation.
                  (C) Skilled nursing facility.--The term ``skilled 
                nursing facility'' has the meaning given such term in 
                section 1819(a) of the Social Security Act (42 U.S.C. 
                1395(a)).
  (b) Report.--Not later than 2 years after the date of the enactment 
of this Act, the Secretary shall submit to Congress a report containing 
the results of the study conducted under subsection (a), together with 
recommendations for such legislation and administrative action as the 
Secretary determines appropriate.

                    Subtitle C--Quality Measurements

SEC. 1441. ESTABLISHMENT OF NATIONAL PRIORITIES FOR QUALITY 
                    IMPROVEMENT.

  Title XI of the Social Security Act, as amended by section 1401(a), 
is further amended by adding at the end the following new part:

                     ``Part E--Quality Improvement

   ``establishment of national priorities for performance improvement
  ``Sec. 1191.  (a) Establishment of National Priorities by the 
Secretary.--The Secretary shall establish and periodically update, not 
less frequently than triennially, national priorities for performance 
improvement.
  ``(b) Recommendations for National Priorities.--In establishing and 
updating national priorities under subsection (a), the Secretary shall 
solicit and consider recommendations from multiple outside 
stakeholders.
  ``(c) Considerations in Setting National Priorities.--With respect to 
such priorities, the Secretary shall ensure that priority is given to 
areas in the delivery of health care services in the United States 
that--
          ``(1) contribute to a large burden of disease, including 
        those that address the health care provided to patients with 
        prevalent, high-cost chronic diseases;
          ``(2) have the greatest potential to decrease morbidity and 
        mortality in this country, including those that are designed to 
        eliminate harm to patients;
          ``(3) have the greatest potential for improving the 
        performance, affordability, and patient-centeredness of health 
        care, including those due to variations in care;
          ``(4) address health disparities across groups and areas; and
          ``(5) have the potential for rapid improvement due to 
        existing evidence, standards of care or other reasons.
  ``(d) Definitions.--In this part:
          ``(1) Consensus-based entity.--The term `consensus-based 
        entity' means an entity with a contract with the Secretary 
        under section 1890.
          ``(2) Quality measure.--The term `quality measure' means a 
        national consensus standard for measuring the performance and 
        improvement of population health, or of institutional providers 
        of services, physicians, and other health care practitioners in 
        the delivery of health care services.
  ``(e) Funding.--
          ``(1) In general.--The Secretary shall provide for the 
        transfer, from the Federal Hospital Insurance Trust Fund under 
        section 1817 and the Federal Supplementary Medical Insurance 
        Trust Fund under section 1841 (in such proportion as the 
        Secretary determines appropriate), of $2,000,000, for the 
        activities under this section for each of the fiscal years 2010 
        through 2014.
          ``(2) Authorization of appropriations.--For purposes of 
        carrying out the provisions of this section, in addition to 
        funds otherwise available, out of any funds in the Treasury not 
        otherwise appropriated, there are appropriated to the Secretary 
        of Health and Human Services $2,000,000 for each of the fiscal 
        years 2010 through 2014.''.

SEC. 1442. DEVELOPMENT OF NEW QUALITY MEASURES; GAO EVALUATION OF DATA 
                    COLLECTION PROCESS FOR QUALITY MEASUREMENT.

  Part E of title XI of the Social Security Act, as added by section 
1441, is amended by adding at the end the following new sections:

``SEC. 1192. DEVELOPMENT OF NEW QUALITY MEASURES.

  ``(a) Agreements With Qualified Entities.--
          ``(1) In general.--The Secretary shall enter into agreements 
        with qualified entities to develop quality measures for the 
        delivery of health care services in the United States.
          ``(2) Form of agreements.--The Secretary may carry out 
        paragraph (1) by contract, grant, or otherwise.
          ``(3) Recommendations of consensus-based entity.--In carrying 
        out this section, the Secretary shall--
                  ``(A) seek public input; and
                  ``(B) take into consideration recommendations of the 
                consensus-based entity with a contract with the 
                Secretary under section 1890(a).
  ``(b) Determination of Areas Where Quality Measures Are Required.--
Consistent with the national priorities established under this part and 
with the programs administered by the Centers for Medicare & Medicaid 
Services and in consultation with other relevant Federal agencies, the 
Secretary shall determine areas in which quality measures for assessing 
health care services in the United States are needed.
  ``(c) Development of Quality Measures.--
          ``(1) Patient-centered and population-based measures.--
        Quality measures developed under agreements under subsection 
        (a) shall be designed--
                  ``(A) to assess outcomes and functional status of 
                patients;
                  ``(B) to assess the continuity and coordination of 
                care and care transitions for patients across providers 
                and health care settings, including end of life care;
                  ``(C) to assess patient experience and patient 
                engagement;
                  ``(D) to assess the safety, effectiveness, and 
                timeliness of care;
                  ``(E) to assess health disparities including those 
                associated with individual race, ethnicity, age, 
                gender, place of residence or language;
                  ``(F) to assess the efficiency and resource use in 
                the provision of care;
                  ``(G) to the extent feasible, to be collected as part 
                of health information technologies supporting better 
                delivery of health care services;
                  ``(H) to be available free of charge to users for the 
                use of such measures; and
                  ``(I) to assess delivery of health care services to 
                individuals regardless of age.
          ``(2) Availability of measures.--The Secretary shall make 
        quality measures developed under this section available to the 
        public.
          ``(3) Testing of proposed measures.--The Secretary may use 
        amounts made available under subsection (f) to fund the testing 
        of proposed quality measures by qualified entities. Testing 
        funded under this paragraph shall include testing of the 
        feasibility and usability of proposed measures.
          ``(4) Updating of endorsed measures.--The Secretary may use 
        amounts made available under subsection (f) to fund the 
        updating (and testing, if applicable) by consensus-based 
        entities of quality measures that have been previously endorsed 
        by such an entity as new evidence is developed, in a manner 
        consistent with section 1890(b)(3).
  ``(d) Qualified Entities.--Before entering into agreements with a 
qualified entity, the Secretary shall ensure that the entity is a 
public, nonprofit or academic institution with technical expertise in 
the area of health quality measurement.
  ``(e) Application for Grant.--A grant may be made under this section 
only if an application for the grant is submitted to the Secretary and 
the application is in such form, is made in such manner, and contains 
such agreements, assurances, and information as the Secretary 
determines to be necessary to carry out this section.
  ``(f) Funding.--
          ``(1) In general.--The Secretary shall provide for the 
        transfer, from the Federal Hospital Insurance Trust Fund under 
        section 1817 and the Federal Supplementary Medical Insurance 
        Trust Fund under section 1841 (in such proportion as the 
        Secretary determines appropriate), of $25,000,000, to the 
        Secretary for purposes of carrying out this section for each of 
        the fiscal years 2010 through 2014.
          ``(2) Authorization of appropriations.--For purposes of 
        carrying out the provisions of this section, in addition to 
        funds otherwise available, out of any funds in the Treasury not 
        otherwise appropriated, there are appropriated to the Secretary 
        of Health and Human Services $25,000,000 for each of the fiscal 
        years 2010 through 2014.

``SEC. 1193. GAO EVALUATION OF DATA COLLECTION PROCESS FOR QUALITY 
                    MEASUREMENT.

  ``(a) GAO Evaluations.--The Comptroller General of the United States 
shall conduct periodic evaluations of the implementation of the data 
collection processes for quality measures used by the Secretary.
  ``(b) Considerations.--In carrying out the evaluation under 
subsection (a), the Comptroller General shall determine--
          ``(1) whether the system for the collection of data for 
        quality measures provides for validation of data as relevant 
        and scientifically credible;
          ``(2) whether data collection efforts under the system use 
        the most efficient and cost-effective means in a manner that 
        minimizes administrative burden on persons required to collect 
        data and that adequately protects the privacy of patients' 
        personal health information and provides data security;
          ``(3) whether standards under the system provide for an 
        appropriate opportunity for physicians and other clinicians and 
        institutional providers of services to review and correct 
        findings; and
          ``(4) the extent to which quality measures are consistent 
        with section 1192(c)(1) or result in direct or indirect costs 
        to users of such measures.
  ``(c) Report.--The Comptroller General shall submit reports to 
Congress and to the Secretary containing a description of the findings 
and conclusions of the results of each such evaluation.''.

SEC. 1443. MULTI-STAKEHOLDER PRE-RULEMAKING INPUT INTO SELECTION OF 
                    QUALITY MEASURES.

  Section 1808 of the Social Security Act (42 U.S.C. 1395b-9) is 
amended by adding at the end the following new subsection:
  ``(d) Multi-stakeholder Pre-rulemaking Input Into Selection of 
Quality Measures.--
          ``(1) List of measures.--Not later than December 1 before 
        each year (beginning with 2011), the Secretary shall make 
        public a list of measures being considered for selection for 
        quality measurement by the Secretary in rulemaking with respect 
        to payment systems under this title beginning in the payment 
        year beginning in such year and for payment systems beginning 
        in the calendar year following such year, as the case may be.
          ``(2) Consultation on selection of endorsed quality 
        measures.--A consensus-based entity that has entered into a 
        contract under section 1890 shall, as part of such contract, 
        convene multi-stakeholder groups to provide recommendations on 
        the selection of individual or composite quality measures, for 
        use in reporting performance information to the public or for 
        use in public health care programs.
          ``(3) Multi-stakeholder input.--Not later than February 1 of 
        each year (beginning with 2011), the consensus-based entity 
        described in paragraph (2) shall transmit to the Secretary the 
        recommendations of multi-stakeholder groups provided under 
        paragraph (2). Such recommendations shall be included in the 
        transmissions the consensus-based entity makes to the Secretary 
        under the contract provided for under section 1890.
          ``(4) Requirement for transparency in process.--
                  ``(A) In general.--In convening multi-stakeholder 
                groups under paragraph (2) with respect to the 
                selection of quality measures, the consensus-based 
                entity described in such paragraph shall provide for an 
                open and transparent process for the activities 
                conducted pursuant to such convening.
                  ``(B) Selection of organizations participating in 
                multi-stakeholder groups.--The process under paragraph 
                (2) shall ensure that the selection of representatives 
                of multi-stakeholder groups includes provision for 
                public nominations for, and the opportunity for public 
                comment on, such selection.
          ``(5) Use of input.--The respective proposed rule shall 
        contain a summary of the recommendations made by the multi-
        stakeholder groups under paragraph (2), as well as other 
        comments received regarding the proposed measures, and the 
        extent to which such proposed rule follows such recommendations 
        and the rationale for not following such recommendations.
          ``(6) Multi-stakeholder groups.--For purposes of this 
        subsection, the term `multi-stakeholder groups' means, with 
        respect to a quality measure, a voluntary collaborative of 
        organizations representing persons interested in or affected by 
        the use of such quality measure, such as the following:
                  ``(A) Hospitals and other institutional providers.
                  ``(B) Physicians.
                  ``(C) Health care quality alliances.
                  ``(D) Nurses and other health care practitioners.
                  ``(E) Health plans.
                  ``(F) Patient advocates and consumer groups.
                  ``(G) Employers.
                  ``(H) Public and private purchasers of health care 
                items and services.
                  ``(I) Labor organizations.
                  ``(J) Relevant departments or agencies of the United 
                States.
                  ``(K) Biopharmaceutical companies and manufacturers 
                of medical devices.
                  ``(L) Licensing, credentialing, and accrediting 
                bodies.
          ``(7) Funding.--
                  ``(A) In general.--The Secretary shall provide for 
                the transfer, from the Federal Hospital Insurance Trust 
                Fund under section 1817 and the Federal Supplementary 
                Medical Insurance Trust Fund under section 1841 (in 
                such proportion as the Secretary determines 
                appropriate), of $1,000,000, to the Secretary for 
                purposes of carrying out this subsection for each of 
                the fiscal years 2010 through 2014.
                  ``(B) Authorization of appropriations.--For purposes 
                of carrying out the provisions of this subsection, in 
                addition to funds otherwise available, out of any funds 
                in the Treasury not otherwise appropriated, there are 
                appropriated to the Secretary of Health and Human 
                Services $1,000,000 for each of the fiscal years 2010 
                through 2014.''.

SEC. 1444. APPLICATION OF QUALITY MEASURES.

  (a) Inpatient Hospital Services.--Section 1886(b)(3)(B) of such Act 
(42 U.S.C. 1395ww(b)(3)(B)) is amended by adding at the end the 
following new clause:
  ``(x)(I) Subject to subclause (II), for purposes of reporting data on 
quality measures for inpatient hospital services furnished during 
fiscal year 2012 and each subsequent fiscal year, the quality measures 
specified under clause (viii) shall be measures selected by the 
Secretary from measures that have been endorsed by the entity with a 
contract with the Secretary under section 1890(a).
  ``(II) In the case of a specified area or medical topic determined 
appropriate by the Secretary for which a feasible and practical quality 
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. The Secretary shall submit such a non-endorsed measure to 
the entity for consideration for endorsement. If the entity considers 
but does not endorse such a measure and if the Secretary does not 
phase-out use of such measure, the Secretary shall include the 
rationale for continued use of such a measure in rulemaking.''.
  (b) Outpatient Hospital Services.--Section 1833(t)(17) of such Act 
(42 U.S.C. 1395l(t)(17)) is amended by adding at the end the following 
new subparagraph:
                  ``(F) Use of endorsed quality measures.--The 
                provisions of clause (x) of section 1886(b)(3)(C) shall 
                apply to quality measures for covered OPD services 
                under this paragraph in the same manner as such 
                provisions apply to quality measures for inpatient 
                hospital services.''.
  (c) Physicians' Services.--Section 1848(k)(2)(C)(ii) of such Act (42 
U.S.C. 1395w-4(k)(2)(C)(ii)) is amended by adding at the end the 
following: ``The Secretary shall submit such a non-endorsed measure to 
the entity for consideration for endorsement. If the entity considers 
but does not endorse such a measure and if the Secretary does not 
phase-out use of such measure, the Secretary shall include the 
rationale for continued use of such a measure in rulemaking.''.
  (d) Renal Dialysis Services.--Section 1881(h)(2)(B)(ii) of such Act 
(42 U.S.C. 1395rr(h)(2)(B)(ii)) is amended by adding at the end the 
following: ``The Secretary shall submit such a non-endorsed measure to 
the entity for consideration for endorsement. If the entity considers 
but does not endorse such a measure and if the Secretary does not 
phase-out use of such measure, the Secretary shall include the 
rationale for continued use of such a measure in rulemaking.''.
  (e) Endorsement of Standards.--Section 1890(b)(2) of the Social 
Security Act (42 U.S.C. 1395aaa(b)(2)) is amended by adding after and 
below subparagraph (B) the following:
        ``If the entity does not endorse a measure, such entity shall 
        explain the reasons and provide suggestions about changes to 
        such measure that might make it a potentially endorsable 
        measure.''.
  (f) Effective Date.--Except as otherwise provided, the amendments 
made by this section shall apply to quality measures applied for 
payment years beginning with 2012 or fiscal year 2012, as the case may 
be.

SEC. 1445. CONSENSUS-BASED ENTITY FUNDING.

  Section 1890(d) of the Social Security Act (42 U.S.C. 1395aaa(d)) is 
amended by striking ``for each of fiscal years 2009 through 2012'' and 
inserting ``for fiscal year 2009, and $12,000,000 for each of the 
fiscal years 2010 through 2012''

           Subtitle D--Physician Payments Sunshine Provision

SEC. 1451. REPORTS ON FINANCIAL RELATIONSHIPS BETWEEN MANUFACTURERS AND 
                    DISTRIBUTORS OF COVERED DRUGS, DEVICES, 
                    BIOLOGICALS, OR MEDICAL SUPPLIES UNDER MEDICARE, 
                    MEDICAID, OR CHIP AND PHYSICIANS AND OTHER HEALTH 
                    CARE ENTITIES AND BETWEEN PHYSICIANS AND OTHER 
                    HEALTH CARE ENTITIES.

  (a) In General.--Part A of title XI of the Social Security Act (42 
U.S.C. 1301 et seq.), as amended by section 1631(a), is further amended 
by inserting after section 1128G the following new section:

``SEC. 1128H. FINANCIAL REPORTS ON PHYSICIANS' FINANCIAL RELATIONSHIPS 
                    WITH MANUFACTURERS AND DISTRIBUTORS OF COVERED 
                    DRUGS, DEVICES, BIOLOGICALS, OR MEDICAL SUPPLIES 
                    UNDER MEDICARE, MEDICAID, OR CHIP AND WITH ENTITIES 
                    THAT BILL FOR SERVICES UNDER MEDICARE.

  ``(a) Reporting of Payments or Other Transfers of Value.--
          ``(1) In general.--Except as provided in this subsection, not 
        later than March 31, 2011 and annually thereafter, each 
        applicable manufacturer or distributor that provides a payment 
        or other transfer of value to a covered recipient, or to an 
        entity or individual at the request of or designated on behalf 
        of a covered recipient, shall submit to the Secretary, in such 
        electronic form as the Secretary shall require, the following 
        information with respect to the preceding calendar year:
                  ``(A) With respect to the covered recipient, the 
                recipient's name, business address, physician 
                specialty, and national provider identifier.
                  ``(B) With respect to the payment or other transfer 
                of value, other than a drug sample--
                          ``(i) its value and date;
                          ``(ii) the name of the related drug, device, 
                        or supply, if available; and
                          ``(iii) a description of its form, indicated 
                        (as appropriate for all that apply) as--
                                  ``(I) cash or a cash equivalent;
                                  ``(II) in-kind items or services;
                                  ``(III) stock, a stock option, or any 
                                other ownership interest, dividend, 
                                profit, or other return on investment; 
                                or
                                  ``(IV) any other form (as defined by 
                                the Secretary).
                  ``(C) With respect to a drug sample, the name, 
                number, date, and dosage units of the sample.
          ``(2) Aggregate reporting.--Information submitted by an 
        applicable manufacturer or distributor under paragraph (1) 
        shall include the aggregate amount of all payments or other 
        transfers of value provided by the manufacturer or distributor 
        to covered recipients (and to entities or individuals at the 
        request of or designated on behalf of a covered recipient) 
        during the year involved, including all payments and transfers 
        of value regardless of whether such payments or transfer of 
        value were individually disclosed.
          ``(3) Special rule for certain payments or other transfers of 
        value.--In the case where an applicable manufacturer or 
        distributor provides a payment or other transfer of value to an 
        entity or individual at the request of or designated on behalf 
        of a covered recipient, the manufacturer or distributor shall 
        disclose that payment or other transfer of value under the name 
        of the covered recipient.
          ``(4) Delayed reporting for payments made pursuant to product 
        development agreements.--In the case of a payment or other 
        transfer of value made to a covered recipient by an applicable 
        manufacturer or distributor pursuant to a product development 
        agreement for services furnished in connection with the 
        development of a new drug, device, biological, or medical 
        supply, the applicable manufacturer or distributor may report 
        the value and recipient of such payment or other transfer of 
        value in the first reporting period under this subsection in 
        the next reporting deadline after the earlier of the following:
                  ``(A) The date of the approval or clearance of the 
                covered drug, device, biological, or medical supply by 
                the Food and Drug Administration.
                  ``(B) Two calendar years after the date such payment 
                or other transfer of value was made.
          ``(5) Delayed reporting for payments made pursuant to 
        clinical investigations.--In the case of a payment or other 
        transfer of value made to a covered recipient by an applicable 
        manufacturer or distributor in connection with a clinical 
        investigation regarding a new drug, device, biological, or 
        medical supply, the applicable manufacturer or distributor may 
        report as required under this section in the next reporting 
        period under this subsection after the earlier of the 
        following:
                  ``(A) The date that the clinical investigation is 
                registered on the website maintained by the National 
                Institutes of Health pursuant to section 671 of the 
                Food and Drug Administration Amendments Act of 2007.
                  ``(B) Two calendar years after the date such payment 
                or other transfer of value was made.
          ``(6) Confidentiality.--Information described in paragraph 
        (4) or (5) shall be considered confidential and shall not be 
        subject to disclosure under section 552 of title 5, United 
        States Code, or any other similar Federal, State, or local law, 
        until or after the date on which the information is made 
        available to the public under such paragraph.
  ``(b) Reporting of Ownership Interest by Physicians in Hospitals and 
Other Entities That Bill Medicare.--Not later than March 31 of each 
year (beginning with 2011), each hospital or other health care entity 
(not including a Medicare Advantage organization) that bills the 
Secretary under part A or part B of title XVIII for services shall 
report on the ownership shares (other than ownership shares described 
in section 1877(c)) of each physician who, directly or indirectly, owns 
an interest in the entity. In this subsection, the term `physician' 
includes a physician's immediate family members (as defined for 
purposes of section 1877(a)).
  ``(c) Public Availability.--
          ``(1) In general.--The Secretary shall establish procedures 
        to ensure that, not later than September 30, 2011, and on June 
        30 of each year beginning thereafter, the information submitted 
        under subsections (a) and (b), other than information regard 
        drug samples, with respect to the preceding calendar year is 
        made available through an Internet website that--
                  ``(A) is searchable and is in a format that is clear 
                and understandable;
                  ``(B) contains information that is presented by the 
                name of the applicable manufacturer or distributor, the 
                name of the covered recipient, the business address of 
                the covered recipient, the specialty (if applicable) of 
                the covered recipient, the value of the payment or 
                other transfer of value, the date on which the payment 
                or other transfer of value was provided to the covered 
                recipient, the form of the payment or other transfer of 
                value, indicated (as appropriate) under subsection 
                (a)(1)(B)(ii), the nature of the payment or other 
                transfer of value, indicated (as appropriate) under 
                subsection (a)(1)(B)(iii), and the name of the covered 
                drug, device, biological, or medical supply, as 
                applicable;
                  ``(C) contains information that is able to be easily 
                aggregated and downloaded;
                  ``(D) contains a description of any enforcement 
                actions taken to carry out this section, including any 
                penalties imposed under subsection (d), during the 
                preceding year;
                  ``(E) contains background information on industry-
                physician relationships;
                  ``(F) in the case of information submitted with 
                respect to a payment or other transfer of value 
                described in subsection (a)(5), lists such information 
                separately from the other information submitted under 
                subsection (a) and designates such separately listed 
                information as funding for clinical research;
                  ``(G) contains any other information the Secretary 
                determines would be helpful to the average consumer; 
                and
                  ``(H) provides the covered recipient an opportunity 
                to submit corrections to the information made available 
                to the public with respect to the covered recipient.
          ``(2) Accuracy of reporting.--The accuracy of the information 
        that is submitted under subsections (a) and (b) and made 
        available under paragraph (1) shall be the responsibility of 
        the applicable manufacturer or distributor of a covered drug, 
        device, biological, or medical supply reporting under 
        subsection (a) or hospital or other health care entity 
        reporting physician ownership under subsection (b). The 
        Secretary shall establish procedures to ensure that the covered 
        recipient is provided with an opportunity to submit corrections 
        to the manufacturer, distributor, hospital, or other entity 
        reporting under subsection (a) or (b) with regard to 
        information made public with respect to the covered recipient 
        and, under such procedures, the corrections shall be 
        transmitted to the Secretary.
          ``(3) Special rule for drug samples.--Information relating to 
        drug samples provided under subsection (a) shall not be made 
        available to the public by the Secretary but may be made 
        available outside the Department of Health and Human Services 
        by the Secretary for research or legitimate business purposes 
        pursuant to data use agreements.
          ``(4) Special rule for national provider identifiers.--
        Information relating to national provider identifiers provided 
        under subsection (a) shall not be made available to the public 
        by the Secretary but may be made available outside the 
        Department of Health and Human Services by the Secretary for 
        research or legitimate business purposes pursuant to data use 
        agreements.
  ``(d) Penalties for Noncompliance.--
          ``(1) Failure to report.--
                  ``(A) In general.--Subject to subparagraph (B), 
                except as provided in paragraph (2), any applicable 
                manufacturer or distributor that fails to submit 
                information required under subsection (a) in a timely 
                manner in accordance with regulations promulgated to 
                carry out such subsection, and any hospital or other 
                entity that fails to submit information required under 
                subsection (b) in a timely manner in accordance with 
                regulations promulgated to carry out such subsection 
                shall be subject to a civil money penalty of not less 
                than $1,000, but not more than $10,000, for each 
                payment or other transfer of value or ownership or 
                investment interest not reported as required under such 
                subsection. Such penalty shall be imposed and collected 
                in the same manner as civil money penalties under 
                subsection (a) of section 1128A are imposed and 
                collected under that section.
                  ``(B) Limitation.--The total amount of civil money 
                penalties imposed under subparagraph (A) with respect 
                to each annual submission of information under 
                subsection (a) by an applicable manufacturer or 
                distributor or other entity shall not exceed $150,000.
          ``(2) Knowing failure to report.--
                  ``(A) In general.--Subject to subparagraph (B), any 
                applicable manufacturer or distributor that knowingly 
                fails to submit information required under subsection 
                (a) in a timely manner in accordance with regulations 
                promulgated to carry out such subsection and any 
                hospital or other entity that fails to submit 
                information required under subsection (b) in a timely 
                manner in accordance with regulations promulgated to 
                carry out such subsection, shall be subject to a civil 
                money penalty of not less than $10,000, but not more 
                than $100,000, for each payment or other transfer of 
                value or ownership or investment interest not reported 
                as required under such subsection. Such penalty shall 
                be imposed and collected in the same manner as civil 
                money penalties under subsection (a) of section 1128A 
                are imposed and collected under that section.
                  ``(B) Limitation.--The total amount of civil money 
                penalties imposed under subparagraph (A) with respect 
                to each annual submission of information under 
                subsection (a) or (b) by an applicable manufacturer, 
                distributor, or entity shall not exceed $1,000,000, or, 
                if greater, 0.1 percentage of the total annual revenues 
                of the manufacturer, distributor, or entity.
          ``(3) Use of funds.--Funds collected by the Secretary as a 
        result of the imposition of a civil money penalty under this 
        subsection shall be used to carry out this section.
          ``(4) Enforcement through state attorneys general.--The 
        attorney general of a State, after providing notice to the 
        Secretary of an intent to proceed under this paragraph in a 
        specific case and providing the Secretary with an opportunity 
        to bring an action under this subsection and the Secretary 
        declining such opportunity, may proceed under this subsection 
        against a manufacturer or distributor in the State.
  ``(e) Annual Report to Congress.--Not later than April 1 of each year 
beginning with 2011, the Secretary shall submit to Congress a report 
that includes the following:
          ``(1) The information submitted under this section during the 
        preceding year, aggregated for each applicable manufacturer or 
        distributor of a covered drug, device, biological, or medical 
        supply that submitted such information during such year.
          ``(2) A description of any enforcement actions taken to carry 
        out this section, including any penalties imposed under 
        subsection (d), during the preceding year.
  ``(f) Definitions.--In this section:
          ``(1) Applicable manufacturer; applicable distributor.--The 
        term `applicable manufacturer' means a manufacturer of a 
        covered drug, device, biological, or medical supply, and the 
        term `applicable distributor' means a distributor of a covered 
        drug, device, or medical supply.
          ``(2) Clinical investigation.--The term `clinical 
        investigation' means any experiment involving one or more human 
        subjects, or materials derived from human subjects, in which a 
        drug or device is administered, dispensed, or used.
          ``(3) Covered drug, device, biological, or medical supply.--
        The term `covered' means, with respect to a drug, device, 
        biological, or medical supply, such a drug, device, biological, 
        or medical supply for which payment is available under title 
        XVIII or a State plan under title XIX or XXI (or a waiver of 
        such a plan).
          ``(4) Covered recipient.--The term `covered recipient' means 
        the following:
                  ``(A) A physician.
                  ``(B) A physician group practice.
                  ``(C) Any other prescriber of a covered drug, device, 
                biological, or medical supply.
                  ``(D) A pharmacy or pharmacist.
                  ``(E) A health insurance issuer, group health plan, 
                or other entity offering a health benefits plan, 
                including any employee of such an issuer, plan, or 
                entity.
                  ``(F) A pharmacy benefit manager, including any 
                employee of such a manager.
                  ``(G) A hospital.
                  ``(H) A medical school.
                  ``(I) A sponsor of a continuing medical education 
                program.
                  ``(J) A patient advocacy or disease specific group.
                  ``(K) A organization of health care professionals.
                  ``(L) A biomedical researcher.
                  ``(M) A group purchasing organization.
          ``(5) Distributor of a covered drug, device, or medical 
        supply.--The term `distributor of a covered drug, device, or 
        medical supply' means any entity which is engaged in the 
        marketing or distribution of a covered drug, device, or medical 
        supply (or any subsidiary of or entity affiliated with such 
        entity), but does not include a wholesale pharmaceutical 
        distributor.
          ``(6) Employee.--The term `employee' has the meaning given 
        such term in section 1877(h)(2).
          ``(7) Knowingly.--The term `knowingly' has the meaning given 
        such term in section 3729(b) of title 31, United States Code.
          ``(8) Manufacturer of a covered drug, device, biological, or 
        medical supply.--The term `manufacturer of a covered drug, 
        device, biological, or medical supply' means any entity which 
        is engaged in the production, preparation, propagation, 
        compounding, conversion, processing, marketing, or distribution 
        of a covered drug, device, biological, or medical supply (or 
        any subsidiary of or entity affiliated with such entity).
          ``(9) Payment or other transfer of value.--
                  ``(A) In general.--The term `payment or other 
                transfer of value' means a transfer of anything of 
                value for or of any of the following:
                          ``(i) Gift, food, or entertainment.
                          ``(ii) Travel or trip.
                          ``(iii) Honoraria.
                          ``(iv) Research funding or grant.
                          ``(v) Education or conference funding.
                          ``(vi) Consulting fees.
                          ``(vii) Ownership or investment interest and 
                        royalties or license fee.
                  ``(B) Inclusions.--Subject to subparagraph (C), the 
                term `payment or other transfer of value' includes any 
                compensation, gift, honorarium, speaking fee, 
                consulting fee, travel, services, dividend, profit 
                distribution, stock or stock option grant, or any 
                ownership or investment interest held by a physician in 
                a manufacturer (excluding a dividend or other profit 
                distribution from, or ownership or investment interest 
                in, a publicly traded security or mutual fund (as 
                described in section 1877(c))).
                  ``(C) Exclusions.--The term `payment or other 
                transfer of value' does not include the following:
                          ``(i) Any payment or other transfer of value 
                        provided by an applicable manufacturer or 
                        distributor to a covered recipient where the 
                        amount transferred to, requested by, or 
                        designated on behalf of the covered recipient 
                        does not exceed $5.
                          ``(ii) The loan of a covered device for a 
                        short-term trial period, not to exceed 90 days, 
                        to permit evaluation of the covered device by 
                        the covered recipient.
                          ``(iii) Items or services provided under a 
                        contractual warranty, including the replacement 
                        of a covered device, where the terms of the 
                        warranty are set forth in the purchase or lease 
                        agreement for the covered device.
                          ``(iv) A transfer of anything of value to a 
                        covered recipient when the covered recipient is 
                        a patient and not acting in the professional 
                        capacity of a covered recipient.
                          ``(v) In-kind items used for the provision of 
                        charity care.
                          ``(vi) A dividend or other profit 
                        distribution from, or ownership or investment 
                        interest in, a publicly traded security and 
                        mutual fund (as described in section 1877(c)).
                          ``(vii) Compensation paid by a manufacturer 
                        or distributor of a covered drug, device, 
                        biological, or medical supply to a covered 
                        recipient who is directly employed by and works 
                        solely for such manufacturer or distributor.
                          ``(viii) Any discount or cash rebate.
          ``(10) Physician.--The term `physician' has the meaning given 
        that term in section 1861(r). For purposes of this section, 
        such term does not include a physician who is an employee of 
        the applicable manufacturer that is required to submit 
        information under subsection (a).
  ``(g) Annual Reports to States.--Not later than April 1 of each year 
beginning with 2011, the Secretary shall submit to States a report that 
includes a summary of the information submitted under subsections (a) 
and (d) during the preceding year with respect to covered recipients or 
other hospitals and entities in the State.
  ``(h) Relation to State Laws.--
          ``(1) In general.--Effective on January 1, 2011, subject to 
        paragraph (2), the provisions of this section shall preempt any 
        law or regulation of a State or of a political subdivision of a 
        State that requires an applicable manufacturer and applicable 
        distributor (as such terms are defined in subsection (f)) to 
        disclose or report, in any format, the type of information 
        (described in subsection (a)) regarding a payment or other 
        transfer of value provided by the manufacturer to a covered 
        recipient (as so defined).
          ``(2) No preemption of additional requirements.--Paragraph 
        (1) shall not preempt any law or regulation of a State or of a 
        political subdivision of a State that requires any of the 
        following:
                  ``(A) The disclosure or reporting of information not 
                of the type required to be disclosed or reported under 
                this section.
                  ``(B) The disclosure or reporting, in any format, of 
                the type of information required to be disclosed or 
                reported under this section to a Federal, State, or 
                local governmental agency for public health 
                surveillance, investigation, or other public health 
                purposes or health oversight purposes.
                  ``(C) The discovery or admissibility of information 
                described in this section in a criminal, civil, or 
                administrative proceeding.''.
  (b) Availability of Information From the Disclosure of Financial 
Relationship Report (DFRR).--The Secretary of Health and Human Services 
shall submit to Congress a report on the full results of the Disclosure 
of Physician Financial Relationships surveys required pursuant to 
section 5006 of the Deficit Reduction Act of 2005. Such report shall be 
submitted to Congress not later than the date that is 6 months after 
the date such surveys are collected and shall be made publicly 
available on an Internet website of the Department of Health and Human 
Services.

   Subtitle E--Public Reporting on Health Care-Associated Infections

SEC. 1461. REQUIREMENT FOR PUBLIC REPORTING BY HOSPITALS AND AMBULATORY 
                    SURGICAL CENTERS ON HEALTH CARE-ASSOCIATED 
                    INFECTIONS.

  (a) In General.--Title XI of the Social Security Act is amended by 
inserting after section 1138 the following section:

``SEC. 1138A. REQUIREMENT FOR PUBLIC REPORTING BY HOSPITALS AND 
                    AMBULATORY SURGICAL CENTERS ON HEALTH CARE-
                    ASSOCIATED INFECTIONS.

  ``(a) Reporting Requirement.--
          ``(1) In general.--The Secretary shall provide that a 
        hospital (as defined in subsection (g)) or ambulatory surgical 
        center meeting the requirements of titles XVIII or XIX may 
        participate in the programs established under such titles 
        (pursuant to the applicable provisions of law, including 
        sections 1866(a)(1) and 1832(a)(1)(F)(i)) only if, in 
        accordance with this section, the hospital or center reports 
        such information on health care-associated infections that 
        develop in the hospital or center (and such demographic 
        information associated with such infections) as the Secretary 
        specifies.
          ``(2) Reporting protocols.-- Such information shall be 
        reported in accordance with reporting protocols established by 
        the Secretary through the Director of the Centers for Disease 
        Control and Prevention (in this section referred to as the 
        `CDC') and to the National Healthcare Safety Network of the CDC 
        or under such another reporting system of such Centers as 
        determined appropriate by the Secretary in consultation with 
        such Director.
          ``(3) Coordination with hit.--The Secretary, through the 
        Director of the CDC and the Office of the National Coordinator 
        for Health Information Technology, shall ensure that the 
        transmission of information under this subsection is 
        coordinated with systems established under the HITECH Act, 
        where appropriate.
          ``(4) Procedures to ensure the validity of information.--The 
        Secretary shall establish procedures regarding the validity of 
        the information submitted under this subsection in order to 
        ensure that such information is appropriately compared across 
        hospitals and centers. Such procedures shall address failures 
        to report as well as errors in reporting.
          ``(5) Implementation.--Not later than 1 year after the date 
        of enactment of this section, the Secretary, through the 
        Director of CDC, shall promulgate regulations to carry out this 
        section.
  ``(b) Public Posting of Information.--The Secretary shall promptly 
post, on the official public Internet site of the Department of Health 
and Human Services, the information reported under subsection (a). Such 
information shall be set forth in a manner that allows for the 
comparison of information on health care-associated infections--
          ``(1) among hospitals and ambulatory surgical centers; and
          ``(2) by demographic information.
  ``(c) Annual Report to Congress.--On an annual basis the Secretary 
shall submit to the Congress a report that summarizes each of the 
following:
          ``(1) The number and types of health care-associated 
        infections reported under subsection (a) in hospitals and 
        ambulatory surgical centers during such year.
          ``(2) Factors that contribute to the occurrence of such 
        infections, including health care worker immunization rates.
          ``(3) Based on the most recent information available to the 
        Secretary on the composition of the professional staff of 
        hospitals and ambulatory surgical centers, the number of 
        certified infection control professionals on the staff of 
        hospitals and ambulatory surgical centers.
          ``(4) The total increases or decreases in health care costs 
        that resulted from increases or decreases in the rates of 
        occurrence of each such type of infection during such year.
          ``(5) Recommendations, in coordination with the Center for 
        Quality Improvement established under section 931 of the Public 
        Health Service Act, for best practices to eliminate the rates 
        of occurrence of each such type of infection in hospitals and 
        ambulatory surgical centers.
  ``(d) Non-preemption of State Laws.--Nothing in this section shall be 
construed as preempting or otherwise affecting any provision of State 
law relating to the disclosure of information on health care-associated 
infections or patient safety procedures for a hospital or ambulatory 
surgical center.
  ``(e) Health Care-associated Infection.--For purposes of this 
section:
          ``(1) In general.--The term `health care-associated 
        infection' means an infection that develops in a patient who 
        has received care in any institutional setting where health 
        care is delivered and is related to receiving health care.
          ``(2) Related to receiving health care.--The term `related to 
        receiving health care', with respect to an infection, means 
        that the infection was not incubating or present at the time 
        health care was provided.
  ``(f) Application to Critical Access Hospitals.--For purposes of this 
section, the term `hospital' includes a critical access hospital, as 
defined in section 1861(mm)(1).''.
  (b) Effective Date.--With respect to section 1138A of the Social 
Security Act (as inserted by subsection (a) of this section), the 
requirement under such section that hospitals and ambulatory surgical 
centers submit reports takes effect on such date (not later than 2 
years after the date of the enactment of this Act) as the Secretary of 
Health and Human Services shall specify. In order to meet such 
deadline, the Secretary may implement such section through guidance or 
other instructions.
  (c) GAO Report.--Not later than 18 months after the date of the 
enactment of this Act, the Comptroller General of the United States 
shall submit to Congress a report on the program established under 
section 1138A of the Social Security Act, as inserted by subsection 
(a). Such report shall include an analysis of the appropriateness of 
the types of information required for submission, compliance with 
reporting requirements, the success of the validity procedures 
established, and any conflict or overlap between the reporting required 
under such section and any other reporting systems mandated by either 
the States or the Federal Government.
  (d) Report on Additional Data.--Not later than 18 months after the 
date of the enactment of this Act, the Secretary of Health and Human 
Services shall submit to the Congress a report on the appropriateness 
of expanding the requirements under such section to include additional 
information (such as health care worker immunization rates), in order 
to improve health care quality and patient safety.

              TITLE V--MEDICARE GRADUATE MEDICAL EDUCATION

SEC. 1501. DISTRIBUTION OF UNUSED RESIDENCY POSITIONS.

  (a) In General.--Section 1886(h) of the Social Security Act (42 
U.S.C. 1395ww(h)) is amended--
          (1) in paragraph (4)(F)(i), by striking ``paragraph (7)'' and 
        inserting ``paragraphs (7) and (8)'';
          (2) in paragraph (4)(H)(i), by striking ``paragraph (7)'' and 
        inserting ``paragraphs (7) and (8)'';
          (3) in paragraph (7)(E), by inserting ``and paragraph (8)'' 
        after ``this paragraph''; and
          (4) by adding at the end the following new paragraph:
          ``(8) Additional redistribution of unused residency 
        positions.--
                  ``(A) Reductions in limit based on unused 
                positions.--
                          ``(i) Programs subject to reduction.--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, 2011, the otherwise applicable resident 
                        limit shall be reduced by 90 percent of the 
                        difference between such otherwise applicable 
                        resident limit and such reference resident 
                        level.
                          ``(ii) Reference resident level.--
                                  ``(I) In general.--Except as 
                                otherwise provided in a subsequent 
                                subclause, the reference resident level 
                                specified in this clause for a hospital 
                                is 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) 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, 
                                or planned expansion, of an existing 
                                residency training program that is not 
                                reflected on the most recent settled or 
                                submitted cost report, after audit and 
                                subject to the discretion of the 
                                Secretary, subject to subclause (IV), 
                                the reference resident level for such 
                                hospital is the resident level that 
                                includes the additional residents 
                                attributable to such expansion or 
                                establishment, as determined by the 
                                Secretary. The Secretary is authorized 
                                to determine an alternative reference 
                                resident level for a hospital that 
                                submitted to the Secretary a timely 
                                request, before the start of the 2009-
                                2010 academic year, for an increase in 
                                its reference resident level due to a 
                                planned expansion.
                                  ``(III) Special provider agreement.--
                                In the case of a hospital described in 
                                paragraph (4)(H)(v), the reference 
                                resident level specified in this clause 
                                is the limitation applicable under 
                                subclause (I) of such paragraph.
                                  ``(IV) Previous redistribution.--The 
                                reference resident level specified in 
                                this clause for a hospital shall be 
                                increased to the extent required to 
                                take into account an increase in 
                                resident positions made available to 
                                the hospital under paragraph (7)(B) 
                                that are not otherwise taken into 
                                account under a previous subclause.
                          ``(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)) and to the extent the hospitals can 
                        demonstrate that they are filling any 
                        additional  resident slots allocated to other 
                        hospitals through an affiliation agreement, the 
                        Secretary shall adjust the determination of 
                        available slots accordingly, or which the 
                        Secretary otherwise has permitted the resident 
                        positions (under section 402 of the Social 
                        Security Amendments of 1967) to be aggregated 
                        for purposes of applying the resident position 
                        limitations under this subsection.
                  ``(B) Redistribution.--
                          ``(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 estimated aggregate 
                        number of increases in the otherwise applicable 
                        resident limit under this subparagraph may not 
                        exceed the Secretary's estimate of the 
                        aggregate reduction in such limits attributable 
                        to subparagraph (A).
                          ``(ii) Requirements for qualifying 
                        hospitals.--A hospital is not a qualifying 
                        hospital for purposes of this paragraph unless 
                        the following requirements are met:
                                  ``(I) Maintenance of primary care 
                                resident level.--The hospital maintains 
                                the number of primary care residents at 
                                a level that is not less than the base 
                                level of primary care residents 
                                increased by the number of additional 
                                primary care resident positions 
                                provided to the hospital under this 
                                subparagraph. For purposes of this 
                                subparagraph, the `base level of 
                                primary care residents' for a hospital 
                                is the level of such residents as of a 
                                base period (specified by the 
                                Secretary), determined without regard 
                                to whether such positions were in 
                                excess of the otherwise applicable 
                                resident limit for such period but 
                                taking into account the application of 
                                subclauses (II) and (III) of 
                                subparagraph (A)(ii).
                                  ``(II) Dedicated assignment of 
                                additional resident positions to 
                                primary care.--The hospital assigns all 
                                such additional resident positions for 
                                primary care residents.
                                  ``(III) Accreditation.--The 
                                hospital's residency programs in 
                                primary care are fully accredited or, 
                                in the case of a residency training 
                                program not in operation as of the base 
                                year, the hospital is actively applying 
                                for such accreditation for the program 
                                for such additional resident positions 
                                (as determined by the Secretary).
                          ``(iii) Considerations in redistribution.--In 
                        determining for which qualifying hospitals the 
                        increase in the otherwise applicable resident 
                        limit is provided under this subparagraph, 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, 2011, 
                        made available under this subparagraph, as 
                        determined by the Secretary.
                          ``(iv) Priority for certain hospitals.--In 
                        determining for which qualifying hospitals the 
                        increase in the otherwise applicable resident 
                        limit is provided under this subparagraph, the 
                        Secretary shall distribute the increase to 
                        qualifying hospitals based on the following 
                        criteria:
                                  ``(I) The Secretary shall give 
                                preference to hospitals that had a 
                                reduction in resident training 
                                positions under subparagraph (A).
                                  ``(II) The Secretary shall give 
                                preference to hospitals with 3-year 
                                primary care residency training 
                                programs, such as family practice and 
                                general internal medicine.
                                  ``(III) The Secretary shall give 
                                preference to hospitals insofar as they 
                                have in effect formal arrangements (as 
                                determined by the Secretary) that place 
                                greater emphasis upon training in 
                                Federally qualified health centers, 
                                rural health clinics, and other 
                                nonprovider settings, and to hospitals 
                                that receive additional payments under 
                                subsection (d)(5)(F) and emphasize 
                                training in an outpatient department.
                                  ``(IV) The Secretary shall give 
                                preference to hospitals with a number 
                                of positions (as of July 1, 2009) in 
                                excess of the otherwise applicable 
                                resident limit for such period.
                                  ``(V) The Secretary shall give 
                                preference to hospitals that place 
                                greater emphasis upon training in a 
                                health professional shortage area 
                                (designated under section 332 of the 
                                Public Health Service Act) or a health 
                                professional needs area (designated 
                                under section 2211 of such Act).
                                  ``(VI) The Secretary shall give 
                                preference to hospitals in States that 
                                have low resident-to-population ratios 
                                (including a greater preference for 
                                those States with lower resident-to-
                                population ratios).
                          ``(v) Limitation.--In no case shall more than 
                        20 full-time equivalent additional residency 
                        positions be made available under this 
                        subparagraph with respect to any hospital.
                          ``(vi) Application of per resident amounts 
                        for primary care.--With respect to additional 
                        residency positions in a hospital attributable 
                        to the increase provided under this 
                        subparagraph, the approved FTE 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.
                          ``(vii) Distribution.--The Secretary shall 
                        distribute the increase in resident training 
                        positions to qualifying hospitals under this 
                        subparagraph not later than July 1, 2011.
                  ``(C) Resident level and limit defined.--In this 
                paragraph:
                          ``(i) The term `resident level' has the 
                        meaning given such term in paragraph (7)(C)(i).
                          ``(ii) 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).
                  ``(D) Maintenance of primary care resident level.--In 
                carrying out this paragraph, the Secretary shall 
                require hospitals that receive additional resident 
                positions under subparagraph (B)--
                          ``(i) to maintain records, and periodically 
                        report to the Secretary, on the number of 
                        primary care residents in its residency 
                        training programs; and
                          ``(ii) as a condition of payment for a cost 
                        reporting period under this subsection for such 
                        positions, to maintain the level of such 
                        positions at not less than the sum of--
                                  ``(I) the base level of primary care 
                                resident positions (as determined under 
                                subparagraph (B)(ii)(I)) before 
                                receiving such additional positions; 
                                and
                                  ``(II) the number of such additional 
                                positions.''.
  (b) IME.--
          (1) In general.--Section 1886(d)(5)(B)(v) of the Social 
        Security Act (42 U.S.C. 1395ww(d)(5)(B)(v)), in the third 
        sentence, is amended--
                  (A) by striking ``subsection (h)(7)'' and inserting 
                ``subsections (h)(7) and (h)(8)''; and
                  (B) by striking ``it applies'' and inserting ``they 
                apply''.
          (2) Conforming provision.--Section 1886(d)(5)(B) of the 
        Social Security Act (42 U.S.C. 1395ww(d)(5)(B)) is amended by 
        adding at the end the following clause:
  ``(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.''.
  (c) Conforming Amendment.--Section 422(b)(2) of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (Public 
Law 108-173) is amended by striking ``section 1886(h)(7)'' and all that 
follows and inserting ``paragraphs (7) and (8) of subsection (h) of 
section 1886 of the Social Security Act.''.

SEC. 1502. INCREASING TRAINING IN NONPROVIDER SETTINGS.

  (a) Direct GME.--Section 1886(h)(4)(E) of the Social Security Act (42 
U.S.C. 1395ww(h)) is amended--
          (1) by designating the first sentence as a clause (i) with 
        the heading ``In general.--'' and appropriate indentation;
          (2) by striking ``shall be counted and that all the time'' 
        and inserting ``shall be counted and that--
                                  ``(I) effective for cost reporting 
                                periods beginning before July 1, 2009, 
                                all the time'';
          (3) in subclause (I), as inserted by paragraph (1), by 
        striking the period at the end and inserting ``; and''; and
                  (A) by inserting after subclause (I), as so inserted, 
                the following:
                                  ``(II) effective for cost reporting 
                                periods beginning on or after July 1, 
                                2009, 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 the 
                                hospital incurs the costs of the 
                                stipends and fringe benefits of the 
                                resident during the time the resident 
                                spends 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.''.
  (b) IME.--Section 1886(d)(5)(B)(iv) of the Social Security Act (42 
U.S.C. 1395ww(d)(5)(B)(iv)) is amended--
          (1) by striking ``(iv) Effective for discharges occurring on 
        or after October 1, 1997'' and inserting ``(iv)(I) Effective 
        for discharges occurring on or after October 1, 1997, and 
        before July 1, 2009''; and
          (2) by inserting after subclause (I), as inserted by 
        paragraph (1), the following new subclause:
          ``(II) Effective for discharges occurring on or after July 1, 
        2009, all the time spent by an intern or resident in patient 
        care activities at an entity in a nonprovider setting shall be 
        counted towards the determination of full-time equivalency if 
        the 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.''.
  (c) OIG Study on Impact on Training.--The Inspector General of the 
Department of Health and Human Services shall analyze the data 
collected by the Secretary of Health and Human Services from the 
records made available to the Secretary under section 1886(h)(4)(E) of 
the Social Security Act, as amended by subsection (a), in order to 
assess the extent to which there is an increase in time spent by 
medical residents in training in nonprovider settings as a result of 
the amendments made by this section. Not later than 4 years after the 
date of the enactment of this Act, the Inspector General shall submit a 
report to Congress on such analysis and assessment.
  (d) Demonstration Project for Approved Teaching Health Centers.--
          (1) In general.--The Secretary of Health and Human Services 
        shall conduct a demonstration project under which an approved 
        teaching health center (as defined in paragraph (3)) would be 
        eligible for payment under subsections (h) and (k) of section 
        1886 of the Social Security Act (42 U.S.C. 1395ww) of amounts 
        for its own direct costs of graduate medical education 
        activities for primary care residents, as well as for the 
        direct costs of graduate medical education activities of its 
        contracting hospital for such residents, in a manner similar to 
        the manner in which such payments would be made to a hospital 
        if the hospital were to operate such a program.
          (2) Conditions.--Under the demonstration project--
                  (A) an approved teaching health center shall contract 
                with an accredited teaching hospital to carry out the 
                inpatient responsibilities of the primary care 
                residency program of the hospital involved and is 
                responsible for payment to the hospital for the 
                hospital's costs of the salary and fringe benefits for 
                residents in the program;
                  (B) the number of primary care residents of the 
                center shall not count against the contracting 
                hospital's resident limit; and
                  (C) the contracting hospital shall agree not to 
                diminish the number of residents in its primary care 
                residency training program.
          (3) Approved teaching health center defined.--In this 
        subsection, the term ``approved teaching health center'' means 
        a nonprovider setting, such as a Federally qualified health 
        center or rural health clinic (as defined in section 1861(aa) 
        of the Social Security Act), that develops and operates an 
        accredited primary care residency program for which funding 
        would be available if it were operated by a hospital.

SEC. 1503. RULES FOR COUNTING RESIDENT TIME FOR DIDACTIC AND SCHOLARLY 
                    ACTIVITIES AND OTHER ACTIVITIES.

  (a) Direct GME.--Section 1886(h) of the Social Security Act (42 
U.S.C. 1395ww(h)) is amended--
          (1) in paragraph (4)(E), as amended by section 1502(a)--
                  (A) in clause (i), by striking ``Such rules'' and 
                inserting ``Subject to clause (ii), such rules''; and
                  (B) by adding at the end the following new clause:
                          ``(ii) 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 nonpatient 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.'';
          (2) in paragraph (4), by adding at the end the following new 
        subparagraph:
                  ``(I) Treatment of certain time in approved medical 
                residency training programing.--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.''; and
          (3) in paragraph (5), by adding at the end the following new 
        subparagraph:
                  ``(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.''.
  (b) IME Determinations.--Section 1886(d)(5)(B) of such Act (42 U.S.C. 
1395ww(d)(5)(B)), as amended by section 1501(b), is amended by adding 
at the end the following new clause:
  ``(xi)(I) The provisions of subparagraph (I) 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 
nonpatient care activities, such as didactic conferences and seminars, 
as such time and activities are defined by the Secretary, that occurs 
in the hospital shall be counted toward the determination of full-time 
equivalency if the hospital--
          ``(aa) is recognized as a subsection (d) hospital;
          ``(bb) is recognized as a subsection (d) Puerto Rico 
        hospital;
          ``(cc) is reimbursed under a reimbursement system authorized 
        under section 1814(b)(3); or
          ``(dd) is a provider-based hospital outpatient department.
  ``(III) In determining the hospital's number of full-time equivalent 
residents for purposes of this subparagraph, all the time spent by an 
intern or resident in an approved medical residency training program in 
research activities that are not associated with the treatment or 
diagnosis of a particular patient, as such time and activities are 
defined by the Secretary, shall not be counted toward the determination 
of full-time equivalency.''.
  (c) Effective Dates; Application.--
          (1) In general.--Except as otherwise provided, the Secretary 
        of Health and Human Services shall implement the amendments 
        made by this section in a manner so as to apply to cost 
        reporting periods beginning on or after January 1, 1983.
          (2) Direct gme.--Section 1886(h)(4)(E)(ii) of the Social 
        Security Act, as added by subsection (a)(1)(B), shall apply to 
        cost reporting periods beginning on or after July 1, 2008.
          (3) IME.--Section 1886(d)(5)(B)(x)(III) of the Social 
        Security Act, as added by subsection (b), shall apply to cost 
        reporting periods beginning on or after October 1, 2001. Such 
        section, as so added, shall not give rise to any inference on 
        how the law in effect prior to such date should be interpreted.
          (4) Application.--The amendments made by this section shall 
        not be applied in a manner that requires reopening of any 
        settled hospital cost reports as to which there is not a 
        jurisdictionally proper appeal pending as of the date of the 
        enactment of this Act on the issue of payment for indirect 
        costs of medical education under section 1886(d)(5)(B) of the 
        Social Security Act or for direct graduate medical education 
        costs under section 1886(h) of such Act.

SEC. 1504. PRESERVATION OF RESIDENT CAP POSITIONS FROM CLOSED 
                    HOSPITALS.

  (a) Direct GME.--Section 1886(h)(4)(H) of the Social Security Act (42 
U.S.C. Section 1395ww(h)(4)(H)) is amended by adding at the end the 
following new clause:
                          ``(vi) Redistribution of residency slots 
                        after a hospital closes.--
                                  ``(I) In general.--The Secretary 
                                shall, by regulation, establish a 
                                process consistent with subclauses (II) 
                                and (III) under which, in the case 
                                where a hospital (other than a hospital 
                                described in clause (v)) with an 
                                approved medical residency program in a 
                                State closes on or after the date that 
                                is 2 years before the date of the 
                                enactment of this clause, the Secretary 
                                shall increase the otherwise applicable 
                                resident limit under this paragraph for 
                                other hospitals in the State in 
                                accordance with this clause.
                                  ``(II) Process for hospitals in 
                                certain areas.--In determining for 
                                which hospitals the increase in the 
                                otherwise applicable resident limit 
                                described in subclause (I) is provided, 
                                the Secretary shall establish a process 
                                to provide for such increase to one or 
                                more hospitals located in the State. 
                                Such process shall take into 
                                consideration the recommendations 
                                submitted to the Secretary by the 
                                senior health official (as designated 
                                by the chief executive officer of such 
                                State) if such recommendations are 
                                submitted not later than 180 days after 
                                the date of the hospital closure 
                                involved (or, in the case of a hospital 
                                that closed after the date that is 2 
                                years before the date of the enactment 
                                of this clause, 180 days after such 
                                date of enactment).
                                  ``(III) Limitation.--The estimated 
                                aggregate number of increases in the 
                                otherwise applicable resident limits 
                                for hospitals under this clause shall 
                                be equal to the estimated number of 
                                resident positions in the approved 
                                medical residency programs that closed 
                                on or after the date described in 
                                subclause (I).''.
  (b) No Effect on Temporary FTE Cap Adjustments.--The amendments made 
by this section shall not effect any temporary adjustment to a 
hospital's FTE cap under section 413.79(h) of title 42, Code of Federal 
Regulations (as in effect on the date of enactment of this Act) and 
shall not affect the application of section 1886(h)(4)(H)(v) of the 
Social Security Act.
  (c) Conforming Amendments.--
          (1) Section 422(b)(2) of the Medicare Prescription Drug, 
        Improvement, and Modernization Act of 2003 (Public Law 108-
        173), as amended by section 1501(c), is amended by striking 
        ``(7) and'' and inserting ``(4)(H)(vi), (7), and''.
          (2) Section 1886(h)(7)(E) of the Social Security Act (42 
        U.S.C. 1395ww(h)(7)(E)) is amended by inserting ``or under 
        paragraph (4)(H)(vi)'' after ``under this paragraph''.

SEC. 1505. IMPROVING ACCOUNTABILITY FOR APPROVED MEDICAL RESIDENCY 
                    TRAINING.

  (a) Specification of Goals for Approved Medical Residency Training 
Programs.--Section 1886(h)(1) of the Social Security Act (42 U.S.C. 
1395ww(h)(1)) is amended--
          (1) by designating the matter beginning with 
        ``Notwithstanding'' as a subparagraph (A) with the heading ``In 
        general.--'' and with appropriate indentation; and
          (2) by adding at the end the following new subparagraph:
                  ``(B) Goals and accountability for approved medical 
                residency training programs.--The goals of medical 
                residency training programs are to foster a physician 
                workforce so that physicians are trained to be able to 
                do the following:
                          ``(i) Work effectively in various health care 
                        delivery settings, such as nonprovider 
                        settings.
                          ``(ii) Coordinate patient care within and 
                        across settings relevant to their specialties.
                          ``(iii) Understand the relevant cost and 
                        value of various diagnostic and treatment 
                        options.
                          ``(iv) Work in inter-professional teams and 
                        multi-disciplinary team-based models in 
                        provider and nonprovider settings to enhance 
                        safety and improve quality of patient care.
                          ``(v) Be knowledgeable in methods of 
                        identifying systematic errors in health care 
                        delivery and in implementing systematic 
                        solutions in case of such errors, including 
                        experience and participation in continuous 
                        quality improvement projects to improve health 
                        outcomes of the population the physicians 
                        serve.
                          ``(vi) Be meaningful EHR users (as determined 
                        under section 1848(o)(2)) in the delivery of 
                        care and in improving the quality of the health 
                        of the community and the individuals that the 
                        hospital serves.''
  (b) GAO Study on Evaluation of Training Programs.--
          (1) In general.--The Comptroller General of the United States 
        shall conduct a study to evaluate the extent to which medical 
        residency training programs--
                  (A) are meeting the goals described in section 
                1886(h)(1)(B) of the Social Security Act, as added by 
                subsection (a), in a range of residency programs, 
                including primary care and other specialties; and
                  (B) have the appropriate faculty expertise to teach 
                the topics required to achieve such goals.
          (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Comptroller General shall submit to 
        Congress a report on such study and shall include in such 
        report recommendations as to how medical residency training 
        programs could be further encouraged to meet such goals through 
        means such as--
                  (A) development of curriculum requirements; and
                  (B) assessment of the accreditation processes of the 
                Accreditation Council for Graduate Medical Education 
                and the American Osteopathic Association and 
                effectiveness of those processes in accrediting medical 
                residency programs that meet the goals referred to in 
                paragraph (1)(A).

                      TITLE VI--PROGRAM INTEGRITY

     Subtitle A--Increased Funding to Fight Waste, Fraud, and Abuse

SEC. 1601. INCREASED FUNDING AND FLEXIBILITY TO FIGHT FRAUD AND ABUSE.

  (a) In General.--Section 1817(k) of the Social Security Act (42 
U.S.C. 1395i(k)) is amended--
          (1) by adding at the end the following new paragraph:
          ``(7) Additional funding.--In addition to the funds otherwise 
        appropriated to the Account from the Trust Fund under 
        paragraphs (3) and (4) and for purposes described in paragraphs 
        (3)(C) and (4)(A), there are hereby appropriated an additional 
        $100,000,000 to such Account from such Trust Fund for each 
        fiscal year beginning with 2011. The funds appropriated under 
        this paragraph shall be allocated in the same proportion as the 
        total funding appropriated with respect to paragraphs (3)(A) 
        and (4)(A) was allocated with respect to fiscal year 2010, and 
        shall be available without further appropriation until 
        expended.''.
          (2) in paragraph (4)(A)--
                  (A) by inserting ``for activities described in 
                paragraph (3)(C) and'' after ``necessary''; and
                  (B) by inserting ``until expended'' after 
                ``appropriation''.
  (b) Flexibility in Pursuing Fraud and Abuse.--Section 1893(a) of the 
Social Security Act (42 U.S.C. 1395ddd(a)) is amended by inserting ``, 
or otherwise,'' after ``entities''.

           Subtitle B--Enhanced Penalties for Fraud and Abuse

SEC. 1611. ENHANCED PENALTIES FOR FALSE STATEMENTS ON PROVIDER OR 
                    SUPPLIER ENROLLMENT APPLICATIONS.

  (a) In General.--Section 1128A(a) of the Social Security Act (42 
U.S.C. 1320a-7a(a)) is amended--
          (1) in paragraph (1)(D), by striking all that follows ``in 
        which the person was excluded'' and inserting ``under Federal 
        law from the Federal health care program under which the claim 
        was made, or'';
          (2) by striking ``or'' at the end of paragraph (6);
          (3) in paragraph (7), by inserting at the end ``or'';
          (4) by inserting after paragraph (7) the following new 
        paragraph:
          ``(8) knowingly makes or causes to be made any false 
        statement, omission, or misrepresentation of a material fact in 
        any application, agreement, bid, or contract to participate or 
        enroll as a provider of services or supplier under a Federal 
        health care program, including managed care organizations under 
        title XIX, Medicare Advantage organizations under part C of 
        title XVIII, prescription drug plan sponsors under part D of 
        title XVIII, and entities that apply to participate as 
        providers of services or suppliers in such managed care 
        organizations and such plans;'';
          (5) in the matter following paragraph (8), as inserted by 
        paragraph (4), by striking ``or in cases under paragraph (7), 
        $50,000 for each such act)'' and inserting ``in cases under 
        paragraph (7), $50,000 for each such act, or in cases under 
        paragraph (8), $50,000 for each false statement, omission, or 
        misrepresentation of a material fact)''; and
          (6) in the second sentence, by striking ``for a lawful 
        purpose)'' and inserting ``for a lawful purpose, or in cases 
        under paragraph (8), an assessment of not more than 3 times the 
        amount claimed as the result of the false statement, omission, 
        or misrepresentation of material fact claimed by a provider of 
        services or supplier whose application to participate contained 
        such false statement, omission, or misrepresentation)''.
  (b) Effective Date.--The amendments made by subsection (a) shall 
apply to acts committed on or after January 1, 2010.

SEC. 1612. ENHANCED PENALTIES FOR SUBMISSION OF FALSE STATEMENTS 
                    MATERIAL TO A FALSE CLAIM.

  (a) In General.--Section 1128A(a) of the Social Security Act (42 
U.S.C. 1320a-7a(a)), as amended by section 1611, is further amended--
          (1) in paragraph (7), by striking ``or'' at the end;
          (2) in paragraph (8), by inserting ``or'' at the end; and
          (3) by inserting after paragraph (8), the following new 
        paragraph:
          ``(9) knowingly makes, uses, or causes to be made or used, a 
        false record or statement material to a false or fraudulent 
        claim for payment for items and services furnished under a 
        Federal health care program;''; and
          (4) in the matter following paragraph (9), as inserted by 
        paragraph (3)--
                  (A) by striking ``or in cases under paragraph (8)'' 
                and inserting ``in cases under paragraph (8)''; and
                  (B) by striking ``a material fact)'' and inserting 
                ``a material fact, in cases under paragraph (9), 
                $50,000 for each false record or statement)''.
  (b) Effective Date.--The amendments made by subsection (a) shall 
apply to acts committed on or after January 1, 2010.

SEC. 1613. ENHANCED PENALTIES FOR DELAYING INSPECTIONS.

  (a) In General.--Section 1128A(a) of the Social Security Act (42 
U.S.C. 1320a-7a(a)), as amended by sections 1611 and 1612, is further 
amended--
          (1) in paragraph (8), by striking ``or'' at the end;
          (2) in paragraph (9), by inserting ``or'' at the end;
          (3) by inserting after paragraph (9) the following new 
        paragraph:
          ``(10) fails to grant timely access, upon reasonable request 
        (as defined by the Secretary in regulations), to the Inspector 
        General of the Department of Health and Human Services, for the 
        purpose of audits, investigations, evaluations, or other 
        statutory functions of the Inspector General of the Department 
        of Health and Human Services;''; and
          (4) in the matter following paragraph (10), as inserted by 
        paragraph (3), by inserting ``, or in cases under paragraph 
        (10), $15,000 for each day of the failure described in such 
        paragraph'' after ``false record or statement''.
  (b) Ensuring Timely Inspections Relating to Contracts With MA 
Organizations.--Section 1857(d)(2) of such Act (42 U.S.C. 1395w-
27(d)(2)) is amended--
          (1) in subparagraph (A), by inserting ``timely'' before 
        ``inspect''; and
          (2) in subparagraph (B), by inserting ``timely'' before 
        ``audit and inspect''.
  (c) Effective Date.--The amendments made by subsection (a) shall 
apply to violations committed on or after January 1, 2010.

SEC. 1614. ENHANCED HOSPICE PROGRAM SAFEGUARDS.

  (a) Medicare.--Part A of title XVIII of the Social Security Act is 
amended by inserting after section 1819 the following new section:

``SEC. 1819A. ASSURING QUALITY OF CARE IN HOSPICE CARE.

  ``(a) In General.--If the Secretary determines on the basis of a 
survey or otherwise, that a hospice program that is certified for 
participation under this title has demonstrated a substandard quality 
of care and failed to meet such other requirements as the Secretary may 
find necessary in the interest of the health and safety of the 
individuals who are provided care and services by the agency or 
organization involved and determines--
          ``(1) that the deficiencies involved immediately jeopardize 
        the health and safety of the individuals to whom the program 
        furnishes items and services, the Secretary shall take 
        immediate action to remove the jeopardy and correct the 
        deficiencies through the remedy specified in subsection 
        (b)(2)(A)(iii) or terminate the certification of the program, 
        and may provide, in addition, for 1 or more of the other 
        remedies described in subsection (b)(2)(A); or
          ``(2) that the deficiencies involved do not immediately 
        jeopardize the health and safety of the individuals to whom the 
        program furnishes items and services, the Secretary may--
                  ``(A) impose intermediate sanctions developed 
                pursuant to subsection (b), in lieu of terminating the 
                certification of the program; and
                  ``(B) if, after such a period of intermediate 
                sanctions, the program is still not in compliance with 
                such requirements, the Secretary shall terminate the 
                certification of the program.
        If the Secretary determines that a hospice program that is 
        certified for participation under this title is in compliance 
        with such requirements but, as of a previous period, was not in 
        compliance with such requirements, the Secretary may provide 
        for a civil money penalty under subsection (b)(2)(A)(i) for the 
        days in which it finds that the program was not in compliance 
        with such requirements.
  ``(b) Intermediate Sanctions.--
          ``(1) Development and implementation.--The Secretary shall 
        develop and implement, by not later than July 1, 2012--
                  ``(A) a range of intermediate sanctions to apply to 
                hospice programs under the conditions described in 
                subsection (a), and
                  ``(B) appropriate procedures for appealing 
                determinations relating to the imposition of such 
                sanctions.
          ``(2) Specified sanctions.--
                  ``(A) In general.--The intermediate sanctions 
                developed under paragraph (1) may include--
                          ``(i) civil money penalties in an amount not 
                        to exceed $10,000 for each day of noncompliance 
                        or, in the case of a per instance penalty 
                        applied by the Secretary, not to exceed 
                        $25,000,
                          ``(ii) denial of all or part of the payments 
                        to which a hospice program would otherwise be 
                        entitled under this title with respect to items 
                        and services furnished by a hospice program on 
                        or after the date on which the Secretary 
                        determines that intermediate sanctions should 
                        be imposed pursuant to subsection (a)(2),
                          ``(iii) the appointment of temporary 
                        management to oversee the operation of the 
                        hospice program and to protect and assure the 
                        health and safety of the individuals under the 
                        care of the program while improvements are 
                        made,
                          ``(iv) corrective action plans, and
                          ``(v) in-service training for staff.
                The provisions of section 1128A (other than subsections 
                (a) and (b)) shall apply to a civil money penalty under 
                clause (i) in the same manner as such provisions apply 
                to a penalty or proceeding under section 1128A(a). The 
                temporary management under clause (iii) shall not be 
                terminated until the Secretary has determined that the 
                program has the management capability to ensure 
                continued compliance with all requirements referred to 
                in that clause.
                  ``(B) Clarification.--The sanctions specified in 
                subparagraph (A) are in addition to sanctions otherwise 
                available under State or Federal law and shall not be 
                construed as limiting other remedies, including any 
                remedy available to an individual at common law.
                  ``(C) Commencement of payment.--A denial of payment 
                under subparagraph (A)(ii) shall terminate when the 
                Secretary determines that the hospice program no longer 
                demonstrates a substandard quality of care and meets 
                such other requirements as the Secretary may find 
                necessary in the interest of the health and safety of 
                the individuals who are provided care and services by 
                the agency or organization involved.
          ``(3) Secretarial authority.--The Secretary shall develop and 
        implement, by not later than July 1, 2011, specific procedures 
        with respect to the conditions under which each of the 
        intermediate sanctions developed under paragraph (1) is to be 
        applied, including the amount of any fines and the severity of 
        each of these sanctions. Such procedures shall be designed so 
        as to minimize the time between identification of deficiencies 
        and imposition of these sanctions and shall provide for the 
        imposition of incrementally more severe fines for repeated or 
        uncorrected deficiencies.''.
  (b) Application to Medicaid.--Section 1905(o) of the Social Security 
Act (42 U.S.C. 1396d(o)) is amended by adding at the end the following 
new paragraph:
  ``(4) The provisions of section 1819A shall apply to a hospice 
program providing hospice care under this title in the same manner as 
such provisions apply to a hospice program providing hospice care under 
title XVIII.''.
  (c) Application to CHIP.--Title XXI of the Social Security Act is 
amended by adding at the end the following new section:

``SEC. 2114. ASSURING QUALITY OF CARE IN HOSPICE CARE.

  ``The provisions of section 1819A shall apply to a hospice program 
providing hospice care under this title in the same manner such 
provisions apply to a hospice program providing hospice care under 
title XVIII.''.

SEC. 1615. ENHANCED PENALTIES FOR INDIVIDUALS EXCLUDED FROM PROGRAM 
                    PARTICIPATION.

  (a) In General.--Section 1128A(a) of the Social Security Act (42 
U.S.C. 1320a-7a(a)), as amended by the previous sections, is further 
amended--
          (1) by striking ``or'' at the end of paragraph (9);
          (2) by inserting ``or'' at the end of paragraph (10);
          (3) by inserting after paragraph (10) the following new 
        paragraph:
          ``(11) orders or prescribes an item or service, including 
        without limitation home health care, diagnostic and clinical 
        lab tests, prescription drugs, durable medical equipment, 
        ambulance services, physical or occupational therapy, or any 
        other item or service, during a period when the person has been 
        excluded from participation in a Federal health care program, 
        and the person knows or should know that a claim for such item 
        or service will be presented to such a program;''; and
          (4) in the matter following paragraph (11), as inserted by 
        paragraph (2), by striking ``$15,000 for each day of the 
        failure described in such paragraph'' and inserting ``$15,000 
        for each day of the failure described in such paragraph, or in 
        cases under paragraph (11), $50,000 for each order or 
        prescription for an item or service by an excluded 
        individual''.
  (b) Effective Date.--The amendments made by subsection (a) shall 
apply to violations committed on or after January 1, 2010.

SEC. 1616. ENHANCED PENALTIES FOR PROVISION OF FALSE INFORMATION BY 
                    MEDICARE ADVANTAGE AND PART D PLANS.

  (a) In General.--Section 1857(g)(2)(A) of the Social Security Act (42 
U.S.C. 1395w--27(g)(2)(A)) is amended by inserting ``except with 
respect to a determination under subparagraph (E), an assessment of not 
more than 3 times the amount claimed by such plan or plan sponsor based 
upon the misrepresentation or falsified information involved,'' after 
``for each such determination,''.
  (b) Effective Date.--The amendment made by subsection (a) shall apply 
to violations committed on or after January 1, 2010.

SEC. 1617. ENHANCED PENALTIES FOR MEDICARE ADVANTAGE AND PART D 
                    MARKETING VIOLATIONS.

  (a) In General.--Section 1857(g)(1) of the Social Security Act (42 
U.S.C. 1395w--27(g)(1)), as amended by section 1221(b), is amended--
          (1) in subparagraph (G), by striking ``or'' at the end;
          (2) by inserting after subparagraph (H) the following new 
        subparagraphs:
                  ``(I) 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;
                  ``(J) 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;
                  ``(K) fails to comply with marketing restrictions 
                described in subsections (h) and (j) of section 1851 or 
                applicable implementing regulations or guidance; or
                  ``(L) employs or contracts with any individual or 
                entity who engages in the conduct described in 
                subparagraphs (A) through (K) of this paragraph;''; and
          (3) by adding at the end the following new sentence: ``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 (L) of this paragraph.''
  (b) Effective Date.--The amendments made by subsection (a) shall 
apply to violations committed on or after January 1, 2010.

SEC. 1618. ENHANCED PENALTIES FOR OBSTRUCTION OF PROGRAM AUDITS.

  (a) In General.--Section 1128(b)(2) of the Social Security Act (42 
U.S.C. 1320a-7(b)(2)) is amended--
          (1) in the heading, by inserting ``or audit'' after 
        ``investigation''; and
          (2) by striking ``investigation into'' and all that follows 
        through the period and inserting ``investigation or audit 
        related to--''
                          ``(i) any offense described in paragraph (1) 
                        or in subsection (a); or
                          ``(ii) the use of funds received, directly or 
                        indirectly, from any Federal health care 
                        program (as defined in section 1128B(f)).''.
  (b) Effective Date.--The amendments made by subsection (a) shall 
apply to violations committed on or after January 1, 2010.

SEC. 1619. EXCLUSION OF CERTAIN INDIVIDUALS AND ENTITIES FROM 
                    PARTICIPATION IN MEDICARE AND STATE HEALTH CARE 
                    PROGRAMS.

  (a) In General.--Section 1128(c) of the Social Security Act, as 
previously amended by this division, is further amended--
          (1) in the heading, by striking ``and Period'' and inserting 
        ``Period, and Effect''; and
          (2) by adding at the end the following new paragraph:
  ``(4)(A) For purposes of this Act, subject to subparagraph (C), the 
effect of exclusion is that no payment may be made by any Federal 
health care program (as defined in section 1128B(f)) with respect to 
any item or service furnished--
          ``(i) by an excluded individual or entity; or
          ``(ii) at the medical direction or on the prescription of a 
        physician or other authorized individual when the person 
        submitting a claim for such item or service knew or had reason 
        to know of the exclusion of such individual.
  ``(B) For purposes of this section and sections 1128A and 1128B, 
subject to subparagraph (C), an item or service has been furnished by 
an individual or entity if the individual or entity directly or 
indirectly provided, ordered, manufactured, distributed, prescribed, or 
otherwise supplied the item or service regardless of how the item or 
service was paid for by a Federal health care program or to whom such 
payment was made.
  ``(C)(i) Payment may be made under a Federal health care program for 
emergency items or services (not including items or services furnished 
in an emergency room of a hospital) furnished by an excluded individual 
or entity, or at the medical direction or on the prescription of an 
excluded physician or other authorized individual during the period of 
such individual's exclusion.
  ``(ii) In the case that an individual eligible for benefits under 
title XVIII or XIX submits a claim for payment for items or services 
furnished by an excluded individual or entity, and such individual 
eligible for such benefits did not know or have reason to know that 
such excluded individual or entity was so excluded, then, 
notwithstanding such exclusion, payment shall be made for such items or 
services. In such case the Secretary shall notify such individual 
eligible for such benefits of the exclusion of the individual or entity 
furnishing the items or services. Payment shall not be made for items 
or services furnished by an excluded individual or entity to an 
individual eligible for such benefits after a reasonable time (as 
determined by the Secretary in regulations) after the Secretary has 
notified the individual eligible for such benefits of the exclusion of 
the individual or entity furnishing the items or services.
  ``(iii) In the case that a claim for payment for items or services 
furnished by an excluded individual or entity is submitted by an 
individual or entity other than an individual eligible for benefits 
under title XVIII or XIX or the excluded individual or entity, and the 
Secretary determines that the individual or entity that submitted the 
claim took reasonable steps to learn of the exclusion and reasonably 
relied upon inaccurate or misleading information from the relevant 
Federal health care program or its contractor, the Secretary may waive 
repayment of the amount paid in violation of the exclusion to the 
individual or entity that submitted the claim for the items or services 
furnished by the excluded individual or entity. If a Federal health 
care program contractor provided inaccurate or misleading information 
that resulted in the waiver of an overpayment under this clause, the 
Secretary shall take appropriate action to recover the improperly paid 
amount from the contractor.''.

         Subtitle C--Enhanced Program and Provider Protections

SEC. 1631. ENHANCED CMS PROGRAM PROTECTION AUTHORITY.

  (a) In General.--Title XI of the Social Security Act (42 U.S.C. 1301 
et seq.) is amended by inserting after section 1128F the following new 
section:

``SEC. 1128G. ENHANCED PROGRAM AND PROVIDER PROTECTIONS IN THE 
                    MEDICARE, MEDICAID, AND CHIP PROGRAMS.

  ``(a) Certain Authorized Screening, Enhanced Oversight Periods, and 
Enrollment Moratoria.--
          ``(1) In general.--For periods beginning after January 1, 
        2011, in the case that the Secretary determines there is a 
        significant risk of fraudulent activity (as determined by the 
        Secretary based on relevant complaints, reports, referrals by 
        law enforcement or other sources, data analysis, trending 
        information, or claims submissions by providers of services and 
        suppliers) with respect to a category of provider of services 
        or supplier of items or services, including a category within a 
        geographic area, under title XVIII, XIX, or XXI, the Secretary 
        may impose any of the following requirements with respect to a 
        provider of services or a supplier (whether such provider or 
        supplier is initially enrolling in the program or is renewing 
        such enrollment):
                  ``(A) Screening under paragraph (2).
                  ``(B) Enhanced oversight periods under paragraph (3).
                  ``(C) Enrollment moratoria under paragraph (4).
        In applying this subsection for purposes of title XIX and XXI 
        the Secretary may require a State to carry out the provisions 
        of this subsection as a requirement of the State plan under 
        title XIX or the child health plan under title XXI. Actions 
        taken and determinations made under this subsection shall not 
        be subject to review by a judicial tribunal.
          ``(2) Screening.--For purposes of paragraph (1), the 
        Secretary shall establish procedures under which screening is 
        conducted with respect to providers of services and suppliers 
        described in such paragraph. Such screening may include--
                  ``(A) licensing board checks;
                  ``(B) screening against the list of individuals and 
                entities excluded from the program under title XVIII, 
                XIX, or XXI;
                  ``(C) the excluded provider list system;
                  ``(D) background checks; and
                  ``(E) unannounced pre-enrollment or other site 
                visits.
          ``(3) Enhanced oversight period.--For purposes of paragraph 
        (1), the Secretary shall establish procedures to provide for a 
        period of not less than 30 days and not more than 365 days 
        during which providers of services and suppliers described in 
        such paragraph, as the Secretary determines appropriate, would 
        be subject to enhanced oversight, such as required or 
        unannounced (or required and unannounced) site visits or 
        inspections, prepayment review, enhanced review of claims, and 
        such other actions as specified by the Secretary, under the 
        programs under titles XVIII, XIX, and XXI. Under such 
        procedures, the Secretary may extend such period for more than 
        365 days if the Secretary determines that after the initial 
        period such additional period of oversight is necessary.
          ``(4) Moratorium on enrollment of providers and suppliers.--
        For purposes of paragraph (1), the Secretary, based upon a 
        finding of a risk of serious ongoing fraud within a program 
        under title XVIII, XIX, or XXI, may impose a moratorium on the 
        enrollment of providers of services and suppliers within a 
        category of providers of services and suppliers (including a 
        category within a specific geographic area) under such title. 
        Such a moratorium may only be imposed if the Secretary makes a 
        determination that the moratorium would not adversely impact 
        access of individuals to care under such program.
          ``(5) Clarification.--Nothing in this subsection shall be 
        interpreted to preclude or limit the ability of a State to 
        engage in provider screening or enhanced provider oversight 
        activities beyond those required by the Secretary.''.
  (b) Conforming Amendments.--
          (1) Medicaid.--Section 1902(a) of the Social Security Act (42 
        U.S.C. 42 U.S.C. 1396a(a)) is amended--
                  (A) in paragraph (23), by inserting before the 
                semicolon at the end the following: ``or by a person to 
                whom or entity to which a moratorium under section 
                1128G(a)(4) is applied during the period of such 
                moratorium'';
                  (B) in paragraph (72); by striking at the end 
                ``and'';
                  (C) in paragraph (73), by striking the period at the 
                end and inserting ``; and''; and
                  (D) by adding after paragraph (73) the following new 
                paragraph:
          ``(74) provide that the State will enforce any determination 
        made by the Secretary under subsection (a) of section 1128G 
        (relating to a significant risk of fraudulent activity with 
        respect to a category of provider or supplier described in such 
        subsection (a) through use of the appropriate procedures 
        described in such subsection (a)), and that the State will 
        carry out any activities as required by the Secretary for 
        purposes of such subsection (a).''.
          (2) CHIP.--Section 2102 of such Act (42 U.S.C. 1397bb) is 
        amended by adding at the end the following new subsection:
  ``(d) Program Integrity.--A State child health plan shall include a 
description of the procedures to be used by the State--
          ``(1) to enforce any determination made by the Secretary 
        under subsection (a) of section 1128G (relating to a 
        significant risk of fraudulent activity with respect to a 
        category of provider or supplier described in such subsection 
        through use of the appropriate procedures described in such 
        subsection); and
          ``(2) to carry out any activities as required by the 
        Secretary for purposes of such subsection.''.
          (3) Medicare.--Section 1866(j) of such Act (42 U.S.C. 
        1395cc(j)) is amended by adding at the end the following new 
        paragraph:
          ``(3) Program integrity.--The provisions of section 1128G(a) 
        apply to enrollments and renewals of enrollments of providers 
        of services and suppliers under this title.''.

SEC. 1632. ENHANCED MEDICARE, MEDICAID, AND CHIP PROGRAM DISCLOSURE 
                    REQUIREMENTS RELATING TO PREVIOUS AFFILIATIONS.

  (a) In General.--Section 1128G of the Social Security Act, as 
inserted by section 1631, is amended by adding at the end the following 
new subsection:
  ``(b) Enhanced Program Disclosure Requirements.--
          ``(1) Disclosure.--A provider of services or supplier who 
        submits on or after July 1, 2011, an application for enrollment 
        and renewing enrollment in a program under title XVIII, XIX, or 
        XXI shall disclose (in a form and manner determined by the 
        Secretary) any current affiliation or affiliation within the 
        previous 10-year period with a provider of services or supplier 
        that has uncollected debt or with a person or entity that has 
        been suspended or excluded under such program, subject to a 
        payment suspension, or has had its billing privileges revoked.
          ``(2) Enhanced safeguards.--If the Secretary determines that 
        such previous affiliation of such provider or supplier poses a 
        risk of fraud, waste, or abuse, the Secretary may apply such 
        enhanced safeguards as the Secretary determines necessary to 
        reduce such risk associated with such provider or supplier 
        enrolling or participating in the program under title XVIII, 
        XIX, or XXI. Such safeguards may include enhanced oversight, 
        such as enhanced screening of claims, required or unannounced 
        (or required and unannounced) site visits or inspections, 
        additional information reporting requirements, and conditioning 
        such enrollment on the provision of a surety bond.
          ``(3) Authority to deny participation.--If the Secretary 
        determines that there has been at least one such affiliation 
        and that such affiliation or affiliations, as applicable, of 
        such provider or supplier poses a serious risk of fraud, waste, 
        or abuse, the Secretary may deny the application of such 
        provider or supplier.''.
  (b) Conforming Amendments.--
          (1) Medicaid.--Paragraph (74) of section 1902(a) of such Act 
        (42 U.S.C. 1396a(a)), as added by section 1631(b)(1), is 
        amended--
                  (A) by inserting ``or subsection (b) of such section 
                (relating to disclosure requirements)'' before ``, and 
                that the State''; and
                  (B) by inserting before the period the following: 
                ``and apply any enhanced safeguards, with respect to a 
                provider or supplier described in such subsection (b), 
                as the Secretary determines necessary under such 
                subsection (b)''.
          (2) CHIP.--Subsection (d) of section 2102 of such Act (42 
        U.S.C. 1397bb), as added by section 1631(b)(2), is amended--
                  (A) in paragraph (1), by striking at the end ``and'';
                  (B) in paragraph (2) by striking the period at the 
                end and inserting ``; and''' and
                  (C) by adding at the end the following new paragraph:
          ``(3) to enforce any determination made by the Secretary 
        under subsection (b) of section 1128G (relating to disclosure 
        requirements) and to apply any enhanced safeguards, with 
        respect to a provider or supplier described in such subsection, 
        as the Secretary determines necessary under such subsection.''.

SEC. 1633. REQUIRED INCLUSION OF PAYMENT MODIFIER FOR CERTAIN 
                    EVALUATION AND MANAGEMENT SERVICES.

  Section 1848 of the Social Security Act (42 U.S.C. 1395w-4), as 
amended by section 4101 of the HITECH Act (Public Law 111-5), is 
amended by adding at the end the following new subsection:
  ``(p) Payment Modifier for Certain Evaluation and Management 
Services.--The Secretary shall establish a payment modifier under the 
fee schedule under this section for evaluation and management services 
(as specified in section 1842(b)(16)(B)(ii)) that result in the 
ordering of additional services (such as lab tests), the prescription 
of drugs, the furnishing or ordering of durable medical equipment in 
order to enable better monitoring of claims for payment for such 
additional services under this title, or the ordering, furnishing, or 
prescribing of other items and services determined by the Secretary to 
pose a high risk of waste, fraud, and abuse. The Secretary may require 
providers of services or suppliers to report such modifier in claims 
submitted for payment.''.

SEC. 1634. EVALUATIONS AND REPORTS REQUIRED UNDER MEDICARE INTEGRITY 
                    PROGRAM.

  (a) In General.--Section 1893(c) of the Social Security Act (42 
U.S.C. 1395ddd(c)) is amended--
          (1) in paragraph (3), by striking at the end ``and'';
          (2) by redesignating paragraph (4) as paragraph (5); and
          (3) by inserting after paragraph (3) the following new 
        paragraph:
          ``(4) for the contract year beginning in 2011 and each 
        subsequent contract year, the entity provides assurances to the 
        satisfaction of the Secretary that the entity will conduct 
        periodic evaluations of the effectiveness of the activities 
        carried out by such entity under the Program and will submit to 
        the Secretary an annual report on such activities; and''.
  (b) Reference to Medicaid Integrity Program.--For a similar provision 
with respect to the Medicaid Integrity Program, see section 1752.

SEC. 1635. REQUIRE PROVIDERS AND SUPPLIERS TO ADOPT PROGRAMS TO REDUCE 
                    WASTE, FRAUD, AND ABUSE.

  (a) In General.--Section 1874 of the Social Security Act (42 U.S.C. 
42 U.S.C. 1395kk) is amended by adding at the end the following new 
subsection:
  ``(e) Compliance Programs for Providers of Services and Suppliers.--
          ``(1) In general.--The Secretary may disenroll a provider of 
        services or a supplier (other than a physician or a skilled 
        nursing facility) under this title (or may impose any civil 
        monetary penalty or other intermediate sanction under paragraph 
        (4)) if such provider of services or supplier fails to, subject 
        to paragraph (5), establish a compliance program that contains 
        the core elements established under paragraph (2).
          ``(2) Establishment of core elements.--The Secretary, in 
        consultation with the Inspector General of the Department of 
        Health and Human Services, shall establish core elements for a 
        compliance program under paragraph (1). Such elements may 
        include written policies, procedures, and standards of conduct, 
        a designated compliance officer and a compliance committee; 
        effective training and education pertaining to fraud, waste, 
        and abuse for the organization's employees and contractors; a 
        confidential or anonymous mechanism, such as a hotline, to 
        receive compliance questions and reports of fraud, waste, or 
        abuse; disciplinary guidelines for enforcement of standards; 
        internal monitoring and auditing procedures, including 
        monitoring and auditing of contractors; procedures for ensuring 
        prompt responses to detected offenses and development of 
        corrective action initiatives, including responses to potential 
        offenses; and procedures to return all identified overpayments 
        to the programs under this title, title XIX, and title XXI.
          ``(3) Timeline for implementation.--The Secretary shall 
        determine a timeline for the establishment of the core elements 
        under paragraph (2) and the date on which a provider of 
        services and suppliers (other than physicians) shall be 
        required to have established such a program for purposes of 
        this subsection.
          ``(4) CMS enforcement authority.--The Administrator for the 
        Centers of Medicare & Medicaid Services shall have the 
        authority to determine whether a provider of services or 
        supplier described in subparagraph (3) has met the requirement 
        of this subsection and to impose a civil monetary penalty not 
        to exceed $50,000 for each violation. The Secretary may also 
        impose other intermediate sanctions, including corrective 
        action plans and additional monitoring in the case of a 
        violation of this subsection.
          ``(5) Pilot program.--The Secretary may conduct a pilot 
        program on the application of this subsection with respect to a 
        category of providers of services or suppliers (other than 
        physicians) that the Secretary determines to be a category 
        which is at high risk for waste, fraud, and abuse before 
        implementing the requirements of this subsection to all 
        providers of services and suppliers described in paragraph 
        (3).''.
  (b) Reference to Similar Medicaid Provision.--For a similar provision 
with respect to the Medicaid program under title XIX of the Social 
Security Act, see section 1753.

SEC. 1636. MAXIMUM PERIOD FOR SUBMISSION OF MEDICARE CLAIMS REDUCED TO 
                    NOT MORE THAN 12 MONTHS.

  (a) Purpose.--In general, the 36-month period currently allowed for 
claims filing under parts A, B, C, and, D of title XVIII of the Social 
Security Act presents opportunities for fraud schemes in which 
processing patterns of the Centers for Medicare & Medicaid Services can 
be observed and exploited. Narrowing the window for claims processing 
will not overburden providers and will reduce fraud and abuse.
  (b) Reducing Maximum Period for Submission.--
          (1) Part a.--Section 1814(a) of the Social Security Act (42 
        U.S.C. 1395f(a)) is amended--
                  (A) in paragraph (1), by striking ``period of 3 
                calendar years'' and all that follows and inserting 
                ``period of 1 calendar year from which such services 
                are furnished; and''; and
                  (B) by adding at the end the following new sentence: 
                ``In applying paragraph (1), the Secretary may specify 
                exceptions to the 1 calendar year period specified in 
                such paragraph.''.
          (2) Part b.--Section 1835(a) of such Act (42 U.S.C. 1395n(a)) 
        is amended--
                  (A) in paragraph (1), by striking ``period of 3 
                calendar years'' and all that follows and inserting 
                ``period of 1 calendar year from which such services 
                are furnished; and''; and
                  (B) by adding at the end the following new sentence: 
                ``In applying paragraph (1), the Secretary may specify 
                exceptions to the 1 calendar year period specified in 
                such paragraph.''.
          (3) Parts c and d.--Section 1857(d) of such Act is amended by 
        adding at the end the following new paragraph:
          ``(7) Period for submission of claims.--The contract shall 
        require an MA organization or PDP sponsor to require any 
        provider of services under contract with, in partnership with, 
        or affiliated with such organization or sponsor to ensure that, 
        with respect to items and services furnished by such provider 
        to an enrollee of such organization, written request, signed by 
        such enrollee, except in cases in which the Secretary finds it 
        impracticable for the enrollee to do so, is filed for payment 
        for such items and services 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 1 calendar year 
        period after such items and services are furnished. In applying 
        the previous sentence, the Secretary may specify exceptions to 
        the 1 calendar year period specified.''.
  (c) Effective Date.--The amendments made by subsection (b) shall be 
effective for items and services furnished on or after January 1, 2011.

SEC. 1637. PHYSICIANS WHO ORDER DURABLE MEDICAL EQUIPMENT OR HOME 
                    HEALTH SERVICES REQUIRED TO BE MEDICARE ENROLLED 
                    PHYSICIANS OR ELIGIBLE PROFESSIONALS.

  (a) DME.--Section 1834(a)(11)(B) of the Social Security Act (42 
U.S.C. 1395m(a)(11)(B)) is amended by striking ``physician'' and 
inserting ``physician enrolled under section 1866(j) or an eligible 
professional under section 1848(k)(3)(B)''.
  (b) Home Health Services.--
          (1) Part a.--Section 1814(a)(2) of such Act (42 U.S.C. 
        1395(a)(2)) is amended in the matter preceding subparagraph (A) 
        by inserting ``in the case of services described in 
        subparagraph (C), a physician enrolled under section 1866(j) or 
        an eligible professional under section 1848(k)(3)(B),'' before 
        ``or, in the case of services''.
          (2) Part b.--Section 1835(a)(2) of such Act (42 U.S.C. 
        1395n(a)(2)) is amended in the matter preceding subparagraph 
        (A) by inserting ``, or in the case of services described in 
        subparagraph (A), a physician enrolled under section 1866(j) or 
        an eligible professional under section 1848(k)(3)(B),'' after 
        ``a physician''.
  (c) Discretion to Expand Application.--The Secretary may extend the 
requirement applied by the amendments made by subsections (a) and (b) 
to durable medical equipment and home health services (relating to 
requiring certifications and written orders to be made by enrolled 
physicians and health professions) to other categories of items or 
services under this title, including covered part D drugs as defined in 
section 1860D-2(e), if the Secretary determines that such application 
would help to reduce the risk of waste, fraud, and abuse with respect 
to such other categories under title XVIII of the Social Security Act.
  (d) Effective Date.--The amendments made by this section shall apply 
to written orders and certifications made on or after July 1, 2010.

SEC. 1638. REQUIREMENT FOR PHYSICIANS TO PROVIDE DOCUMENTATION ON 
                    REFERRALS TO PROGRAMS AT HIGH RISK OF WASTE AND 
                    ABUSE.

  (a) Physicians and Other Suppliers.--Section 1842(h) of the Social 
Security Act, is amended by adding at the end the following new 
paragraph
  ``(10) The Secretary may disenroll, for a period of not more than one 
year for each act, a physician or supplier under section 1866(j) if 
such physician or supplier fails to maintain and, upon request of the 
Secretary, provide access to documentation relating to written orders 
or requests for payment for durable medical equipment, certifications 
for home health services, or referrals for other items or services 
written or ordered by such physician or supplier under this title, as 
specified by the Secretary.''.
  (b) Providers of Services.--Section 1866(a)(1) of such Act (42 U.S.C. 
1395cc), is amended--
          (1) in subparagraph (U), by striking at the end ``and'';
          (2) in subparagraph (V), by striking the period at the end 
        and adding ``; and''; and
          (3) by adding at the end the following new subparagraph:
                  ``(W) maintain and, upon request of the Secretary, 
                provide access to documentation relating to written 
                orders or requests for payment for durable medical 
                equipment, certifications for home health services, or 
                referrals for other items or services written or 
                ordered by the provider under this title, as specified 
                by the Secretary.''.
  (c) OIG Permissive Exclusion Authority.--Section 1128(b)(11) of the 
Social Security Act (42 U.S.C. 1320a-7(b)(11)) is amended by inserting 
``, ordering, referring for furnishing, or certifying the need for'' 
after ``furnishing''.
  (d) Effective Date.--The amendments made by this section shall apply 
to orders, certifications, and referrals made on or after January 1, 
2010.

SEC. 1639. FACE TO FACE ENCOUNTER WITH PATIENT REQUIRED BEFORE 
                    PHYSICIANS MAY CERTIFY ELIGIBILITY FOR HOME HEALTH 
                    SERVICES OR DURABLE MEDICAL EQUIPMENT UNDER 
                    MEDICARE.

  (a) Condition of Payment for Home Health Services.--
          (1) Part a.--Section 1814(a)(2)(C) of such Act is amended--
                  (A) by striking ``and such services'' and inserting 
                ``such services''; and
                  (B) by inserting after ``care of a physician'' the 
                following: ``, and, in the case of a certification or 
                recertification made by a physician after January 1, 
                2010, prior to making such certification the physician 
                must document that the physician has had a face-to-face 
                encounter (including through use of telehealth and 
                other than with respect to encounters that are incident 
                to services involved) with the individual during the 6-
                month period preceding such certification, or other 
                reasonable timeframe as determined by the Secretary''.
          (2) Part b.--Section 1835(a)(2)(A) of the Social Security Act 
        is amended--
                  (A) by striking ``and'' before ``(iii)''; and
                  (B) by inserting after ``care of a physician'' the 
                following: ``, and (iv) in the case of a certification 
                or recertification after January 1, 2010, prior to 
                making such certification the physician must document 
                that the physician has had a face-to-face encounter 
                (including through use of telehealth and other than 
                with respect to encounters that are incident to 
                services involved) with the individual during the 6-
                month period preceding such certification or 
                recertification, or other reasonable timeframe as 
                determined by the Secretary''.
  (b) Condition of Payment for Durable Medical Equipment.--Section 
1834(a)(11)(B) of the Social Security Act (42 U.S.C. 1395m(a)(11)(B)) 
is amended by adding before the period at the end the following: ``and 
shall require that such an order be written pursuant to the physician 
documenting that the physician has had a face-to-face encounter 
(including through use of telehealth 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''.
  (c) Application to Other Areas Under Medicare.--The Secretary may 
apply the face-to-face encounter requirement described in the 
amendments made by subsections (a) and (b) to other items and services 
for which payment is provided under title XVIII of the Social Security 
Act based upon a finding that such an decision would reduce the risk of 
waste, fraud, or abuse.
  (d) Application to Medicaid and CHIP.--The requirements pursuant to 
the amendments made by subsections (a) and (b) shall apply in the case 
of physicians making certifications for home health services under 
title XIX or XXI of the Social Security Act, in the same manner and to 
the same extent as such requirements apply in the case of physicians 
making such certifications under title XVIII of such Act.

SEC. 1640. EXTENSION OF TESTIMONIAL SUBPOENA AUTHORITY TO PROGRAM 
                    EXCLUSION INVESTIGATIONS.

  (a) In General.--Section 1128(f) of the Social Security Act (42 
U.S.C. 1320a-7(f)) is amended by adding at the end the following new 
paragraph:
  ``(4) The provisions of subsections (d) and (e) of section 205 shall 
apply with respect to this section to the same extent as they are 
applicable with respect to title II. The Secretary may delegate the 
authority granted by section 205(d) (as made applicable to this 
section) to the Inspector General of the Department of Health and Human 
Services or the Administrator of the Centers for Medicare & Medicaid 
Services for purposes of any investigation under this section.''.
  (b) Effective Date.--The amendment made by subsection (a) shall apply 
to investigations beginning on or after January 1, 2010.

SEC. 1641. REQUIRED REPAYMENTS OF MEDICARE AND MEDICAID OVERPAYMENTS.

  Section 1128G of the Social Security Act, as inserted by section 1631 
and amended by section 1632, is further amended by adding at the end 
the following new subsection:
  ``(c) Reports on and Repayment of Overpayments Identified Through 
Internal Audits and Reviews.--
          ``(1) Reporting and returning overpayments.--If a person 
        knows of an overpayment, the person must--
                  ``(A) report and return the overpayment to the 
                Secretary, the State, an intermediary, a carrier, or a 
                contractor, as appropriate, at the correct address, and
                  ``(B) notify the Secretary, the State, intermediary, 
                carrier, or contractor to whom the overpayment was 
                returned in writing of the reason for the overpayment.
          ``(2) Timing.--An overpayment must be reported and returned 
        under paragraph (1)(A) by not later than the date that is 60 
        days after the date the person knows of the overpayment.
        Any known overpayment retained later than the applicable date 
        specified in this paragraph creates an obligation as defined in 
        section 3729(b)(3) of title 31 of the United States Code.
          ``(3) Clarification.--Repayment of any overpayments (or 
        refunding by withholding of future payments) by a provider of 
        services or supplier does not otherwise limit the provider or 
        supplier's potential liability for administrative obligations 
        such as applicable interests, fines, and specialties or civil 
        or criminal sanctions involving the same claim if it is 
        determined later that the reason for the overpayment was 
        related to fraud by the provider or supplier or the employees 
        or agents of such provider or supplier.
          ``(4) Definitions.--In this subsection:
                  ``(A) Knows.--The term `knows' has the meaning given 
                the terms `knowing' and `knowingly' in section 3729(b) 
                of title 31 of the United States Code.
                  ``(B) Overpayment.--The term ``overpayment'' means 
                any finally determined funds that a person receives or 
                retains under title XVIII, XIX, or XXI to which the 
                person, after applicable reconciliation, is not 
                entitled under such title.
                  ``(C) Person.--The term `person' means a provider of 
                services, supplier, Medicaid managed care organization 
                (as defined in section 1903(m)(1)(A)), Medicare 
                Advantage organization (as defined in section 
                1859(a)(1)), or PDP sponsor (as defined in section 
                1860D-41(a)(13)), but excluding a beneficiary.''.

SEC. 1642. EXPANDED APPLICATION OF HARDSHIP WAIVERS FOR OIG EXCLUSIONS 
                    TO BENEFICIARIES OF ANY FEDERAL HEALTH CARE 
                    PROGRAM.

  Section 1128(c)(3)(B) of the Social Security Act (42 U.S.C. 1320a-
7(c)(3)(B)) is amended by striking ``individuals entitled to benefits 
under part A of title XVIII or enrolled under part B of such title, or 
both'' and inserting ``beneficiaries (as defined in section 
1128A(i)(5)) of that program''.

SEC. 1643. ACCESS TO CERTAIN INFORMATION ON RENAL DIALYSIS FACILITIES.

  Section 1881(b) of the Social Security Act (42 U.S.C. 1395rr(b)) is 
amended by adding at the end the following new paragraph:
  ``(15) For purposes of evaluating or auditing payments made to renal 
dialysis facilities for items and services under this section under 
paragraph (1), each such renal dialysis facility, upon the request of 
the Secretary, shall provide to the Secretary access to information 
relating to any ownership or compensation arrangement between such 
facility and the medical director of such facility or between such 
facility and any physician.''.

SEC. 1644. BILLING AGENTS, CLEARINGHOUSES, OR OTHER ALTERNATE PAYEES 
                    REQUIRED TO REGISTER UNDER MEDICARE.

  (a) Medicare.--Section 1866(j)(1) of the Social Security Act (42 
U.S.C. 1395cc(j)(1)) is amended by adding at the end the following new 
subparagraph:
                  ``(D) Billing agents and clearinghouses required to 
                be registered under medicare.--Any agent, 
                clearinghouse, or other alternate payee that submits 
                claims on behalf of a health care provider must be 
                registered with the Secretary in a form and manner 
                specified by the Secretary.''.
  (b) Medicaid.--For a similar provision with respect to the Medicaid 
program under title XIX of the Social Security Act, see section 1759.
  (c) Effective Date.--The amendment made by subsection (a) shall apply 
to claims submitted on or after January 1, 2012.

SEC. 1645. CONFORMING CIVIL MONETARY PENALTIES TO FALSE CLAIMS ACT 
                    AMENDMENTS.

  Section 1128A of the Social Security Act, as amended by sections 
1611, 1612, 1613, and 1615, is further amended--
          (1) in subsection (a)--
                  (A) in paragraph (1), by striking ``to an officer, 
                employee, or agent of the United States, or of any 
                department or agency thereof, or of any State agency 
                (as defined in subsection (i)(1))'';
                  (B) in paragraph (4)--
                          (i) in the matter preceding subparagraph (A), 
                        by striking ``participating in a program under 
                        title XVIII or a State health care program'' 
                        and inserting ``participating in a Federal 
                        health care program (as defined in section 
                        1128B(f))''; and
                          (ii) in subparagraph (A), by striking ``title 
                        XVIII or a State health care program'' and 
                        inserting ``a Federal health care program (as 
                        defined in section 1128B(f))'';
                  (C) by striking ``or'' at the end of paragraph (10);
                  (D) by inserting after paragraph (11) the following 
                new paragraphs:
          ``(12) conspires to commit a violation of this section; or
          ``(13) knowingly makes, uses, or causes to be made or used, a 
        false record or statement material to an obligation to pay or 
        transmit money or property to a Federal health care program, or 
        knowingly conceals or knowingly and improperly avoids or 
        decreases an obligation to pay or transmit money or property to 
        a Federal health care program;''; and
                  (E) in the matter following paragraph (13), as 
                inserted by subparagraph (D)--
                          (i) by striking ``or'' before ``in cases 
                        under paragraph (11)''; and
                          (ii) by inserting ``, in cases under 
                        paragraph (12), $50,000 for any violation 
                        described in this section committed in 
                        furtherance of the conspiracy involved; or in 
                        cases under paragraph (13), $50,000 for each 
                        false record or statement, or concealment, 
                        avoidance, or decrease'' after ``by an excluded 
                        individual''; and
                  (F) in the second sentence, by striking ``such false 
                statement, omission, or misrepresentation)'' and 
                inserting ``such false statement or misrepresentation, 
                in cases under paragraph (12), an assessment of not 
                more than 3 times the total amount that would otherwise 
                apply for any violation described in this section 
                committed in furtherance of the conspiracy involved, or 
                in cases under paragraph (13), an assessment of not 
                more than 3 times the total amount of the obligation to 
                which the false record or statement was material or 
                that was avoided or decreased)''.
          (2) in subsection (c)(1), by striking ``six years'' and 
        inserting ``10 years''; and
          (3) in subsection (i)--
                  (A) by amending paragraph (2) to read as follows:
          ``(2) The term `claim' means any application, request, or 
        demand, whether under contract, or otherwise, for money or 
        property for items and services under a Federal health care 
        program (as defined in section 1128B(f)), whether or not the 
        United States or a State agency has title to the money or 
        property, that--
                  ``(A) is presented or caused to be presented to an 
                officer, employee, or agent of the United States, or of 
                any department or agency thereof, or of any State 
                agency (as defined in subsection (i)(1)); or
                  ``(B) is made to a contractor, grantee, or other 
                recipient if the money or property is to be spent or 
                used on the Federal health care program's behalf or to 
                advance a Federal health care program interest, and if 
                the Federal health care program--
                          ``(i) provides or has provided any portion of 
                        the money or property requested or demanded; or
                          ``(ii) will reimburse such contractor, 
                        grantee, or other recipient for any portion of 
                        the money or property which is requested or 
                        demanded.'';
                  (B) by amending paragraph (3) to read as follows:
          ``(3) The term `item or service' means, without limitation, 
        any medical, social, management, administrative, or other item 
        or service used in connection with or directly or indirectly 
        related to a Federal health care program.'';
                  (C) in paragraph (6)--
                          (i) in subparagraph (C), by striking at the 
                        end ``or'';
                          (ii) in the first subparagraph (D), by 
                        striking at the end the period and inserting 
                        ``; or''; and
                          (iii) by redesignating the second 
                        subparagraph (D) as a subparagraph (E);
                  (D) by amending paragraph (7) to read as follows:
          ``(7) The terms `knowing', `knowingly', and `should know' 
        mean that a person, with respect to information--
                  ``(A) has actual knowledge of the information;
                  ``(B) acts in deliberate ignorance of the truth or 
                falsity of the information; or
                  ``(C) acts in reckless disregard of the truth or 
                falsity of the information;
        and require no proof of specific intent to defraud.''; and
                  (E) by adding at the end the following new 
                paragraphs:
          ``(8) The term `obligation' means an established duty, 
        whether or not fixed, arising from an express or implied 
        contractual, grantor-grantee, or licensor-licensee 
        relationship, from a fee-based or similar relationship, from 
        statute or regulation, or from the retention of any 
        overpayment.
          ``(9) The term `material' means having a natural tendency to 
        influence, or be capable of influencing, the payment or receipt 
        of money or property.''.

 Subtitle D--Access to Information Needed to Prevent Fraud, Waste, and 
                                 Abuse

SEC. 1651. ACCESS TO INFORMATION NECESSARY TO IDENTIFY FRAUD, WASTE, 
                    AND ABUSE.

  Section 1128G of the Social Security Act, as added by section 1631 
and amended by sections 1632 and 1641, is further amended by adding at 
the end the following new subsection;
  ``(d) Access to Information Necessary to Identify Fraud, Waste, and 
Abuse.--For purposes of law enforcement activity, and to the extent 
consistent with applicable disclosure, privacy, and security laws, 
including the Health Insurance Portability and Accountability Act of 
1996 and the Privacy Act of 1974, and subject to any information 
systems security requirements enacted by law or otherwise required by 
the Secretary, the Attorney General shall have access, facilitation by 
the Inspector General of the Department of Health and Human Services, 
to claims and payment data relating to titles XVIII and XIX, in 
consultation with the Centers for Medicare & Medicaid Services or the 
owner of such data.''.

SEC. 1652. ELIMINATION OF DUPLICATION BETWEEN THE HEALTHCARE INTEGRITY 
                    AND PROTECTION DATA BANK AND THE NATIONAL 
                    PRACTITIONER DATA BANK.

  (a) In General.--To eliminate duplication between the Healthcare 
Integrity and Protection Data Bank (HIPDB) established under section 
1128E of the Social Security Act and the National Practitioner Data 
Bank (NPBD) established under the Health Care Quality Improvement Act 
of 1986, section 1128E of the Social Security Act (42 U.S.C. 1320a-7e) 
is amended--
          (1) in subsection (a), by striking ``Not later than'' and 
        inserting ``Subject to subsection (h), not later than'';
          (2) in the first sentence of subsection (d)(2), by striking 
        ``(other than with respect to requests by Federal agencies)''; 
        and
          (3) by adding at the end the following new subsection:
  ``(h) Sunset of the Healthcare Integrity and Protection Data Bank; 
Transition Process.--Effective upon the enactment of this subsection, 
the Secretary shall implement a process to eliminate duplication 
between the Healthcare Integrity and Protection Data Bank (in this 
subsection referred to as the `HIPDB' established pursuant to 
subsection (a) and the National Practitioner Data Bank (in this 
subsection referred to as the `NPDB') as implemented under the Health 
Care Quality Improvement Act of 1986 and section 1921 of this Act, 
including systems testing necessary to ensure that information formerly 
collected in the HIPDB will be accessible through the NPDB, and other 
activities necessary to eliminate duplication between the two data 
banks. Upon the completion of such process, notwithstanding any other 
provision of law, the Secretary shall cease the operation of the HIPDB 
and shall collect information required to be reported under the 
preceding provisions of this section in the NPDB. Except as otherwise 
provided in this subsection, the provisions of subsections (a) through 
(g) shall continue to apply with respect to the reporting of (or 
failure to report), access to, and other treatment of the information 
specified in this section.''.
  (b) Elimination of the Responsibility of the HHS Office of the 
Inspector General.--Section 1128C(a)(1) of the Social Security Act (42 
U.S.C. 1320a-7c(a)(1)) is amended--
          (1) in subparagraph (C), by adding at the end ``and'';
          (2) in subparagraph (D), by striking at the end ``, and'' and 
        inserting a period; and
          (3) by striking subparagraph (E).
  (c) Special Provision for Access to the National Practitioner Data 
Bank by the Department of Veterans Affairs.--
          (1) In general.--Notwithstanding any other provision of law, 
        during the one year period that begins on the effective date 
        specified in subsection (e)(1), the information described in 
        paragraph (2) shall be available from the National Practitioner 
        Data Bank (described in section 1921 of the Social Security 
        Act) to the Secretary of Veterans Affairs without charge.
          (2) Information described.--For purposes of paragraph (1), 
        the information described in this paragraph is the information 
        that would, but for the amendments made by this section, have 
        been available to the Secretary of Veterans Affairs from the 
        Healthcare Integrity and Protection Data Bank.
  (d) Funding.--Notwithstanding any provisions of this Act, sections 
1128E(d)(2) and 1817(k)(3) of the Social Security Act, or any other 
provision of law, there shall be available for carrying out the 
transition process under section 1128E(h) of the Social Security Act 
over the period required to complete such process, and for operation of 
the National Practitioner Data Bank until such process is completed, 
without fiscal year limitation--
          (1) any fees collected pursuant to section 1128E(d)(2) of 
        such Act; and
          (2) such additional amounts as necessary, from appropriations 
        available to the Secretary and to the Office of the Inspector 
        General of the Department of Health and Human Services under 
        clauses (i) and (ii), respectively, of section 1817(k)(3)(A) of 
        such Act, for costs of such activities during the first 12 
        months following the date of the enactment of this Act.
  (e) Effective Date.--The amendments made--
          (1) by subsection (a)(2) shall take effect on the first day 
        after the Secretary of Health and Human Services certifies that 
        the process implemented pursuant to section 1128E(h) of the 
        Social Security Act (as added by subsection (a)(3)) is 
        complete; and
          (2) by subsection (b) shall take effect on the earlier of the 
        date specified in paragraph (1) or the first day of the second 
        succeeding fiscal year after the fiscal year during which this 
        Act is enacted.

SEC. 1653. COMPLIANCE WITH HIPAA PRIVACY AND SECURITY STANDARDS.

  The provisions of sections 262(a) and 264 of the Health Insurance 
Portability and Accountability Act of 1996 (and standards promulgated 
pursuant to such sections) and the Privacy Act of 1974 shall apply with 
respect to the provisions of this subtitle and amendments made by this 
subtitle.

                     [TITLE VII--MEDICAID AND CHIP]

  [For title VII of division B, see text of bill as introduced on July 
14, 2009.]

                 TITLE VIII--REVENUE-RELATED PROVISIONS

SEC. 1801. DISCLOSURES TO FACILITATE IDENTIFICATION OF INDIVIDUALS 
                    LIKELY TO BE INELIGIBLE FOR THE LOW-INCOME 
                    ASSISTANCE UNDER THE MEDICARE PRESCRIPTION DRUG 
                    PROGRAM TO ASSIST SOCIAL SECURITY ADMINISTRATION'S 
                    OUTREACH TO ELIGIBLE INDIVIDUALS.

  (a) In General.--Paragraph (19) of section 6103(l) of the Internal 
Revenue Code of 1986 is amended to read as follows:
          ``(19) Disclosures to facilitate identification of 
        individuals likely to be ineligible for low-income subsidies 
        under medicare prescription drug program to assist social 
        security administration's outreach to eligible individuals.--
                  ``(A) In general.--Upon written request from the 
                Commissioner of Social Security, the following return 
                information (including such information disclosed to 
                the Social Security Administration under paragraph (1) 
                or (5)) shall be disclosed to officers and employees of 
                the Social Security Administration, with respect to any 
                taxpayer identified by the Commissioner of Social 
                Security--
                          ``(i) return information for the applicable 
                        year from returns with respect to wages (as 
                        defined in section 3121(a) or 3401(a)) and 
                        payments of retirement income (as described in 
                        paragraph (1) of this subsection),
                          ``(ii) unearned income information and income 
                        information of the taxpayer from partnerships, 
                        trusts, estates, and subchapter S corporations 
                        for the applicable year,
                          ``(iii) if the individual filed an income tax 
                        return for the applicable year, the filing 
                        status, number of dependents, income from 
                        farming, and income from self-employment, on 
                        such return,
                          ``(iv) if the individual is a married 
                        individual filing a separate return for the 
                        applicable year, the social security number (if 
                        reasonably available) of the spouse on such 
                        return,
                          ``(v) if the individual files a joint return 
                        for the applicable year, the social security 
                        number, unearned income information, and income 
                        information from partnerships, trusts, estates, 
                        and subchapter S corporations of the 
                        individual's spouse on such return, and
                          ``(vi) such other return information relating 
                        to the individual (or the individual's spouse 
                        in the case of a joint return) as is prescribed 
                        by the Secretary by regulation as might 
                        indicate that the individual is likely to be 
                        ineligible for a low-income prescription drug 
                        subsidy under section 1860D-14 of the Social 
                        Security Act.
                  ``(B) Applicable year.--For the purposes of this 
                paragraph, the term `applicable year' means the most 
                recent taxable year for which information is available 
                in the Internal Revenue Service's taxpayer information 
                records.
                  ``(C) Restriction on individuals for whom disclosure 
                may be requested.--The Commissioner of Social Security 
                shall request information under this paragraph only 
                with respect to--
                          ``(i) individuals the Social Security 
                        Administration has identified, using all other 
                        reasonably available information, as likely to 
                        be eligible for a low-income prescription drug 
                        subsidy under section 1860D-14 of the Social 
                        Security Act and who have not applied for such 
                        subsidy, and
                          ``(ii) any individual the Social Security 
                        Administration has identified as a spouse of an 
                        individual described in clause (i).
                  ``(D) Restriction on use of disclosed information.--
                Return information disclosed under this paragraph may 
                be used only by officers and employees of the Social 
                Security Administration solely for purposes of 
                identifying individuals likely to be ineligible for a 
                low-income prescription drug subsidy under section 
                1860D-14 of the Social Security Act for use in outreach 
                efforts under section 1144 of the Social Security 
                Act.''.
  (b) Safeguards.--Paragraph (4) of section 6103(p) of such Code is 
amended--
          (1) by striking ``(19),'' each place it appears, and
          (2) by striking ``or (17)'' each place it appears and 
        inserting ``(17), or (19)''.
  (c) Conforming Amendment.--Paragraph (3) of section 6103(a) of such 
Code is amended by striking ``(19),''.
  (d) Effective Date.--The amendments made by this section shall apply 
to disclosures made after the date which is 12 months after the date of 
the enactment of this Act.

SEC. 1802. COMPARATIVE EFFECTIVENESS RESEARCH TRUST FUND; FINANCING FOR 
                    TRUST FUND.

  (a) Establishment of Trust Fund.--
          (1) In general.--Subchapter A of chapter 98 of the Internal 
        Revenue Code of 1986 (relating to trust fund code) is amended 
        by adding at the end the following new section:

``SEC. 9511. HEALTH CARE COMPARATIVE EFFECTIVENESS RESEARCH TRUST FUND.

  ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Health Care 
Comparative Effectiveness Research Trust Fund' (hereinafter in this 
section referred to as the `CERTF'), consisting of such amounts as may 
be appropriated or credited to such Trust Fund as provided in this 
section and section 9602(b).
  ``(b) Transfers to Fund.--There are hereby appropriated to the Trust 
Fund the following:
          ``(1) For fiscal year 2010, $90,000,000.
          ``(2) For fiscal year 2011, $100,000,000.
          ``(3) For fiscal year 2012, $110,000,000.
          ``(4) For each fiscal year beginning with fiscal year 2013--
                  ``(A) an amount equivalent to the net revenues 
                received in the Treasury from the fees imposed under 
                subchapter B of chapter 34 (relating to fees on health 
                insurance and self-insured plans) for such fiscal year; 
                and
                  ``(B) subject to subsection (c)(2), amounts 
                determined by the Secretary of Health and Human 
                Services to be equivalent to the fair share per capita 
                amount computed under subsection (c)(1) for the fiscal 
                year multiplied by the average number of individuals 
                entitled to benefits under part A, or enrolled under 
                part B, of title XVIII of the Social Security Act 
                during such fiscal year.
The amounts appropriated under paragraphs (1), (2), (3), and (4)(B) 
shall be transferred from the Federal Hospital Insurance Trust Fund and 
from the Federal Supplementary Medical Insurance Trust Fund 
(established under section 1841 of such Act), and from the Medicare 
Prescription Drug Account within such Trust Fund, in proportion (as 
estimated by the Secretary) to the total expenditures during such 
fiscal year that are made under title XVIII of such Act from the 
respective trust fund or account.
  ``(c) Fair Share Per Capita Amount.--
          ``(1) Computation.--
                  ``(A) In general.--Subject to subparagraph (B), the 
                fair share per capita amount under this paragraph for a 
                fiscal year (beginning with fiscal year 2013) is an 
                amount computed by the Secretary of Health and Human 
                Services for such fiscal year that, when applied under 
                this section and subchapter B of chapter 34 of the 
                Internal Revenue Code of 1986, will result in revenues 
                to the CERTF of $375,000,000 for the fiscal year.
                  ``(B) Alternative computation.--
                          ``(i) In general.--If the Secretary is unable 
                        to compute the fair share per capita amount 
                        under subparagraph (A) for a fiscal year, the 
                        fair share per capita amount under this 
                        paragraph for the fiscal year shall be the 
                        default amount determined under clause (ii) for 
                        the fiscal year.
                          ``(ii) Default amount.--The default amount 
                        under this clause for--
                                  ``(I) fiscal year 2013 is equal to 
                                $2; or
                                  ``(II) a subsequent year is equal to 
                                the default amount under this clause 
                                for the preceding fiscal year increased 
                                by the annual percentage increase in 
                                the medical care component of the 
                                consumer price index (United States 
                                city average) for the 12-month period 
                                ending with April of the preceding 
                                fiscal year.
                        Any amount determined under subclause (II) 
                        shall be rounded to the nearest penny.
          ``(2) Limitation on medicare funding.--In no case shall the 
        amount transferred under subsection (b)(4)(B) for any fiscal 
        year exceed $90,000,000.
  ``(d) Expenditures From Fund.--
          ``(1) In general.--Subject to paragraph (2), amounts in the 
        CERTF are available, without the need for further 
        appropriations and without fiscal year limitation, to the 
        Secretary of Health and Human Services for carrying out section 
        1181 of the Social Security Act.
          ``(2) Allocation for commission.--Not less than the following 
        amounts in the CERTF for a fiscal year shall be available to 
        carry out the activities of the Comparative Effectiveness 
        Research Commission established under section 1181(b) of the 
        Social Security Act for such fiscal year:
                  ``(A) For fiscal year 2010, $7,000,000.
                  ``(B) For fiscal year 2011, $9,000,000.
                  ``(C) For each fiscal year beginning with 2012, 
                $10,000,000.
        Nothing in this paragraph shall be construed as preventing 
        additional amounts in the CERTF from being made available to 
        the Comparative Effectiveness Research Commission for such 
        activities.
  ``(e) Net Revenues.--For purposes of this section, the term `net 
revenues' means the amount estimated by the Secretary based on the 
excess of--
          ``(1) the fees received in the Treasury under subchapter B of 
        chapter 34, over
          ``(2) the decrease in the tax imposed by chapter 1 resulting 
        from the fees imposed by such subchapter.''.
          (2) Clerical amendment.--The table of sections for such 
        subchapter A is amended by adding at the end thereof the 
        following new item:

``Sec. 9511. Health Care Comparative Effectiveness Research Trust 
Fund.''.

  (b) Financing for Fund From Fees on Insured and Self-Insured Health 
Plans.--
          (1) General rule.--Chapter 34 of the Internal Revenue Code of 
        1986 is amended by adding at the end the following new 
        subchapter:

         ``Subchapter B--Insured and Self-Insured Health Plans

``Sec. 4375. Health insurance.
``Sec. 4376. Self-insured health plans.
``Sec. 4377. Definitions and special rules.

``SEC. 4375. HEALTH INSURANCE.

  ``(a) Imposition of Fee.--There is hereby imposed on each specified 
health insurance policy for each policy year a fee equal to the fair 
share per capita amount determined under section 9511(c)(1) multiplied 
by the average number of lives covered under the policy.
  ``(b) Liability for Fee.--The fee imposed by subsection (a) shall be 
paid by the issuer of the policy.
  ``(c) Specified Health Insurance Policy.--For purposes of this 
section:
          ``(1) In general.--Except as otherwise provided in this 
        section, the term `specified health insurance policy' means any 
        accident or health insurance policy issued with respect to 
        individuals residing in the United States.
          ``(2) Exemption for certain policies.--The term `specified 
        health insurance policy' does not include any insurance if 
        substantially all of its coverage is of excepted benefits 
        described in section 9832(c).
          ``(3) Treatment of prepaid health coverage arrangements.--
                  ``(A) In general.--In the case of any arrangement 
                described in subparagraph (B)--
                          ``(i) such arrangement shall be treated as a 
                        specified health insurance policy, and
                          ``(i