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114th Congress   }                                   {   Rept. 114-178
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                   {          Part 1

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



 
                       STEVE GLEASON ACT OF 2015

                                _______
                                

                 June 24, 2015.--Ordered to be printed

                                _______
                                

Mr. Ryan of Wisconsin, from the Committee on Ways and Means, submitted 
                             the following

                              R E P O R T

                         [To accompany S. 984]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (S. 984) to amend title XVIII of the Social Security Act 
to provide Medicare beneficiary access to eye tracking 
accessories for speech generating devices and to remove the 
rental cap for durable medical equipment under the Medicare 
Program with respect to speech generating devices, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
 I. SUMMARY AND BACKGROUND............................................2
        A. Purpose and Summary...................................     2
        B. Background and Need for Legislation...................     2
        C.  Legislative History..................................     3
II. EXPLANATION OF THE BILL.......................................... 3
III.VOTES OF THE COMMITTEE........................................... 4

IV. BUDGET EFFECTS OF THE BILL........................................4
        A. Committee Estimate of Budgetary Effects...............     4
        B. Statement Regarding New Budget Authority and Tax 
            Expenditures Budget Authority........................     4
        C. Cost Estimate Prepared by the Congressional Budget 
            Office...............................................     4
 V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE........7
        A. Committee Oversight Findings and Recommendations......     7
        B. Statement of General Performance Goals and Objectives.     7
        C. Information Relating to Unfunded Mandates.............     7
        D. Congressional Earmarks, Limited Tax Benefits, and 
            Limited Tariff Benefits..............................     7
        E. Duplication of Federal Programs.......................     7
        F. Disclosure of Directed Rule Makings...................     7
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED.............8
        A. Text of Existing Law Amended or Repealed by the Bill, 
            as Reported..........................................     8
        B. Changes in Existing Law Proposed by the Bill, as 
            Reported.............................................   120

                       I. SUMMARY AND BACKGROUND 


                        A. Purpose and Summary 

    The bill, S. 984, the Steve Gleason Act of 2015, as 
reported, would: require Medicare coverage of eye tracking and 
gaze interaction accessories for speech generating devices 
(SGD) for individuals with a medical need; and establish that a 
beneficiary owns an SGD upon delivery, as opposed to after a 
13-month rental period, from October 2015 through September 
2018.

                B. Background and Need for Legislation 

    The Centers for Medicare and Medicaid Services (CMS) 
established national payment rules in 2001 that defined 
coverage for SGDs. SGDs are accessories to Medicare-covered 
power wheelchairs that enable beneficiaries with severe speech 
impairment that results from ALS, muscular dystrophy, and other 
conditions to meet functional speaking needs. Under the 2001 
rules, Medicare paid for an SGD upon its delivery to a 
beneficiary. Since the beneficiary owned the SGD upon receipt, 
the beneficiary was allowed to pay out-of-pocket to upgrade its 
functionality, e.g. adding Internet browsing, and continue to 
use the SGD during a stay in a facility, e.g. hospital, nursing 
home.
    Over the past 18 months, CMS has made changes to national 
and local payment policies that limit beneficiary access to 
SGDs, including:
           Reversing the 2001 coverage policy by 
        stating that Medicare will not pay for an SGD that is 
        modified to increase its functionality;
           Establishing that beneficiaries own their 
        SGD after a 13-month rental period instead of upon 
        receipt; and
           Assessing claims for SGDs equipped with eye 
        tracking and gaze interaction using a higher approval 
        standard that has resulted in a high rate of claim 
        denials.
    On September 11, 2014, over 200 members of the House and 
Senate from both parties sent a letter to CMS expressing 
concern with these restrictive policies.
    On April 16, 2015, Senator Vitter introduced S. 984, the 
Steve Gleason Act.
    On April 21, 2015, Representative Cathy McMorris Rodgers 
introduced H.R. 1919, which is identical to S. 984. 
Representative Mike Kelly, Representative Peter Roskam, and 
Rep. John Larson have co-sponsored H.R. 1919. Additional Ways 
and Means members are co-sponsors of a similar version of the 
bill that was introduced earlier in the 114th Congress.
    On April 22, 2015, the Senate passed S. 984 by voice vote. 
S. 984 would:
           Clarify that Medicare covers SGD eye 
        tracking and gaze interaction accessories to prevent 
        inappropriate claim denials; and
           Reinstate the long-standing policy that 
        beneficiaries own their SGD upon receipt for the three-
        year period October 2015-October 2018; and
           On April 29, 2015, CMS proposed an update to 
        its national SGD payment policy that, if finalized, 
        would address some, but not all, of the restrictive 
        policy actions that the agency took over the past 18 
        months.

                         C. Legislative History


Background

    H.R. 1919 was introduced on April 21, 2015, and was 
referred to the Committee on Energy and Commerce, in addition 
to the Committee on Ways and Means.
    S. 984 passed the Senate by voice vote on April 22, 2015.

Committee Hearings

    None.

Committee Action

    The Committee marked up S.984 on June 2, 2015 and ordered 
the bill favorably reported to the House of Representatives by 
a voice vote (with a quorum present).

                      II. EXPLANATION OF THE BILL


                       Steve Gleason Act of 2015


                              PRESENT LAW

    Medicare covers items beneficiaries that use in their homes 
and can withstand repeated use, such as wheelchairs and 
hospital beds, under the Part B DME benefit. The DME benefit 
provides CMS authority to establish Medicare payment rules 
related to SGDs. Prior to 2001, CMS did not cover SGDs, ruling 
that they are convenience items not associated with medical 
need. CMS established national payment rules starting in 2001 
that provide coverage for SGDs. Under these rules, 
beneficiaries were able to pay out-of-pocket to upgrade the 
functionality of their SGD. CMS recently reinterpreted its 2001 
rules by stating that Medicare does not pay for an SGD that has 
been modified to increase its functionality. CMS also used its 
administrative authority to establish that beneficiaries do not 
own their SGD until after the conclusion of a 13-month rental 
period and to establish a higher threshold for demonstrating 
medical need for SGD eye tracking and gaze interaction.

                           REASONS FOR CHANGE

    CMS, reinterpreting its 2001 policy, stated that Medicare 
does not pay for SGDs that are modified to increase 
functionality. This takes away beneficiaries' ability to pay 
out-of-pocket to upgrade their SGD to best meet their needs. 
CMS established that beneficiaries own their SGD after a 13-
month rental period, changing from the previous designation 
that they own SGD upon receipt. This takes away the ability of 
beneficiaries to use the tailored SGD if they require a 
hospital, nursing home, or other facility stay. CMS applied a 
higher standard for assessing SGDs equipped with eye tracking 
and gaze interaction. This resulted in inappropriate denials of 
SGDs claims for beneficiaries who rely on this technology.

                        EXPLANATION OF PROVISION

    The Steve Gleason Act of 2015 would require Medicare 
coverage of SGD eye tracking and gaze interaction accessories 
for individuals with a medical need; and establish that a 
beneficiary owns an SGD upon receipt, as opposed to at the 
conclusion of a 13-month rental period, from October 1, 2015 
through September 30, 2018. These changes would improve the 
lives of beneficiaries suffering from Amyotrophic Lateral 
Sclerosis (ALS), like Steve Gleason, muscular dystrophy, and 
other debilitating conditions.

                             EFFECTIVE DATE

    The section of the bill that requires Medicare coverage of 
SGD eye tracking and gaze interaction accessories takes effect 
January 1, 2016.
    The section of the bill that establishes that the 
beneficiary owns an SGD upon receipt is in effect from October 
1, 2015 through September 30, 2018.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the votes of the Committee on its consideration of 
S. 984.
    S. 984 was ordered favorably reported to the House of 
Representatives by voice vote (with a quorum present).

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, S.984, as 
reported. The Committee agrees with the estimate prepared by 
the Congressional Budget Office (CBO), which is included below.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves $28 million increase in budget authority. The 
Committee states further that the bill involves no new or 
increased tax expenditures.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.
                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 22, 2015.
Hon. Paul Ryan,
Chairman, Committee on Ways and Means, House of Representatives, 
        Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 984, the Steve 
Gleason Act of 2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Lara 
Robillard.
            Sincerely,
                                              Keith Hall, Director.
    Enclosure.

S. 984--Steve Gleason Act of 2015

    Summary: S. 984 would modify Medicare coverage and payment 
rules for speech-generating devices (SGDs). CBO estimates that 
enacting S. 984 would increase direct spending by $28 million 
over the 2016-2025 period. Pay-as-you-go procedures apply 
because enacting the legislation would affect direct spending.
    S. 984 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary effect of S. 984 is shown in the following table. The 
costs of this legislation fall within budget function 570 
(Medicare).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   By fiscal year, in millions of dollars----
                                                      --------------------------------------------------------------------------------------------------
                                                        2015   2016   2017   2018   2019   2020   2021   2022   2023   2024   2025  2016-2020  2016-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING
 
Estimated Budget Authority...........................      0      5      5      4     -3      2      3      3      3      3      3        13         28
Estimated Outlays....................................      0      5      5      4     -3      2      3      3      3      3      3        13         28
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Basis of estimate: SGDs assist individuals who have lost 
the ability to speak because of diseases like amyotrophic 
lateral sclerosis (ALS) and Parkinson's disease. Under current 
law, the Medicare program covers certain SGDs through the 
durable medical equipment (DME) benefit. Payments are made on a 
capped-rental basis; that is, Medicare makes a monthly payment 
for a set period (of 13 months). At the end of the capped 
rental period, the beneficiary may choose to own the item or 
can return it if it is no longer needed. If the beneficiary 
enters institutional care during the rental period, Medicare 
does not make a payment, because the facility is responsible 
for all items and services needed for beneficiary care.\1\
---------------------------------------------------------------------------
    \1\The beneficiary may retain the item during institutionalization 
or the supplier can take it back, returning it when the beneficiary is 
discharged. Time spent in an institutional setting generally does not 
count toward the 13-month rental period, because Medicare is not making 
a payment.
---------------------------------------------------------------------------
    S. 984 would make two changes to Medicare coverage and 
payment rules. The first change would revise the definition of 
DME to include eye-tracking and gaze-interaction devices, which 
allow beneficiaries to use SGDs when they are unable to use 
their limbs to operate the devices. In CBO's judgment, that 
change would codify current Medicare practice and would have no 
budgetary impact.
    The legislation would also modify the capped-rental 
designation for SGDs and allow beneficiaries to purchase them 
immediately, rather than assume ownership at the end of the 
rental period. The legislation would make this purchase option 
available from October 1, 2015 through September 30, 2018. CBO 
expects that many beneficiaries would choose immediate 
purchase, rather than opting for rental, to ensure continuous 
access to the device. Although the total cost of 13 monthly 
payments exceeds the up-front purchase price for SGDs, many 
beneficiaries do not use the device for the full 13 months, 
thus lowering average payments for SGDs under the capped-rental 
approach. On that basis, CBO estimates that Medicare's payments 
for SGDs would be higher on average under S. 984, raising 
federal spending in the 2016-2018 period.
    CBO estimates that S. 984 would increase spending after 
2018 because the Centers for Medicare and Medicaid Services 
(CMS), which administers the Medicare program, might not revert 
to the capped-rental system. If CMS does revert to the capped-
rental system, spending in 2019 would be lower, as some 
beneficiaries would choose to purchase SGDs in 2018, thus 
eliminating spending for some rental months in 2019. If instead 
outright purchase is allowed to continue, CBO estimates that 
federal spending would increase for the reasons discussed 
above. The net effects of those two possibilities would be a 
decrease in spending in 2019 and increased federal spending in 
the years 2020 through 2025. In total, CBO estimates that by 
providing an option to purchase SGDs, S. 984 would increase 
federal spending by $28 million over the 2016-2025 period.
    For this estimate, CBO assumes that S. 984 will be enacted 
near the end of fiscal year 2015.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in the following table.

             CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR S. 984, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON JUNE 2, 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year, in millions of dollars--
                                                      --------------------------------------------------------------------------------------------------
                                                        2015   2016   2017   2018   2019   2020   2021   2022   2023   2024   2025  2015-2020  2015-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 NET INCREASE OR DECREASE (-) IN THE [ON-BUDGET] DEFICIT
 
Statutory Pay-As-You-Go Impact.......................      0      5      5      4     -3      2      3      3      3      3      3        13         28
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: S. 984 
contains no intergovernmental mandates as defined in UMRA and 
would impose no costs on state, local, or tribal governments.
    Estimate prepared by: Federal Costs: Lara Robillard; Impact 
on State, Local, and Tribal Governments: J'nell Blanco Suchy; 
Impact on the Private Sector: Amy Petz.
    Estimate approved by: Holly Harvey, Deputy Assistant 
Director for Budget Analysis.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was as a result of the 
Committee's review of the provisions of S. 984 that the 
Committee concluded that it is appropriate to report the bill, 
as amended, favorably to the House of Representatives with the 
recommendation that the bill do pass.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

  D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill, and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   E. Duplication of Federal Programs

    In compliance with Sec. 3(g)(2) of H. Res. 5 (114th 
Congress), the Committee states that no provision of the bill 
establishes or reauthorizes: (1) a program of the Federal 
Government known to be duplicative of another Federal program; 
(2) a program included in any report from the Government 
Accountability Office to Congress pursuant to section 21 of 
Public Law 111-139; or (3) a program related to a program 
identified in the most recent Catalog of Federal Domestic 
Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

                 F. Disclosure of Directed Rule Makings

    In compliance with Sec. 3(i) of H. Res. 5 (114th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED


  A. Text of Existing Law Amended or Repealed by the Bill, as Reported

    In compliance with clause 3(e)(1)(A) of rule XIII of the 
Rules of the House of Representatives, the text of each section 
proposed to be amended or repealed by the bill, as reported, is 
shown below:

SOCIAL SECURITY ACT

           *       *       *       *       *       *       *



TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED

           *       *       *       *       *       *       *



   Part B--Supplementary Medical Insurance Benefits for the Aged and 
Disabled

           *       *       *       *       *       *       *



        SPECIAL PAYMENT RULES FOR PARTICULAR ITEMS AND SERVICES

  Sec. 1834. (a) Payment for Durable Medical Equipment.--
          (1) General rule for payment.--
                  (A) In general.--With respect to a covered 
                item (as defined in paragraph (13)) for which 
                payment is determined under this subsection, 
                payment shall be made in the frequency 
                specified in paragraphs (2) through (7) and in 
                an amount equal to 80 percent of the payment 
                basis described in subparagraph (B).
                  (B) Payment basis.--Subject to subparagraph 
                (F)(i), the payment basis described in this 
                subparagraph is the lesser of--
                          (i) the actual charge for the item, 
                        or
                          (ii) the payment amount recognized 
                        under paragraphs (2) through (7) of 
                        this subsection for the item;
                except that clause (i) shall not apply if the 
                covered item is furnished by a public home 
                health agency (or by another home health agency 
                which demonstrates to the satisfaction of the 
                Secretary that a significant portion of its 
                patients are low income) free of charge or at 
                nominal charges to the public.
                  (C) Exclusive payment rule.--Subject to 
                subparagraph (F)(ii), this subsection shall 
                constitute the exclusive provision of this 
                title for payment for covered items under this 
                part or under part A to a home health agency.
                  (D) Reduction in fee schedules for certain 
                items.--With respect to a seat-lift chair or 
                transcutaneous electrical nerve stimulator 
                furnished on or after April 1, 1990, the 
                Secretary shall reduce the payment amount 
                applied under subparagraph (B)(ii) for such an 
                item by 15 percent, and, in the case of a 
                transcutaneous electrical nerve stimulator 
                furnished on or after January 1, 1991, the 
                Secretary shall further reduce such payment 
                amount (as previously reduced) by 45 percent.
                  (E) Clinical conditions for coverage.--
                          (i) In general.--The Secretary shall 
                        establish standards for clinical 
                        conditions for payment for covered 
                        items under this subsection.
                          (ii) Requirements.--The standards 
                        established under clause (i) shall 
                        include the specification of types or 
                        classes of covered items that require, 
                        as a condition of payment under this 
                        subsection, a face-to-face examination 
                        of the individual by a physician (as 
                        defined in section 1861(r)), a 
                        physician assistant, nurse 
                        practitioner, or a clinical nurse 
                        specialist (as those terms are defined 
                        in section 1861(aa)(5)) and a 
                        prescription for the item.
                          (iii) Priority of establishment of 
                        standards.--In establishing the 
                        standards under this subparagraph, the 
                        Secretary shall first establish 
                        standards for those covered items for 
                        which the Secretary determines there 
                        has been a proliferation of use, 
                        consistent findings of charges for 
                        covered items that are not delivered, 
                        or consistent findings of falsification 
                        of documentation to provide for payment 
                        of such covered items under this part.
                          (iv) Standards for power 
                        wheelchairs.--Effective on the date of 
                        the enactment of this subparagraph, in 
                        the case of a covered item consisting 
                        of a motorized or power wheelchair for 
                        an individual, payment may not be made 
                        for such covered item unless a 
                        physician (as defined in section 
                        1861(r)(1)), a physician assistant, 
                        nurse practitioner, or a clinical nurse 
                        specialist (as those terms are defined 
                        in section 1861(aa)(5)) has conducted a 
                        face-to-face examination of the 
                        individual and written a prescription 
                        for the item.
                          (v) Limitation on payment for covered 
                        items.--Payment may not be made for a 
                        covered item under this subsection 
                        unless the item meets any standards 
                        established under this subparagraph for 
                        clinical condition of coverage.
                  (F) Application of competitive acquisition; 
                limitation of inherent reasonableness 
                authority.--In the case of covered items 
                furnished on or after January 1, 2011, subject 
                to subparagraphs (G) and (H), that are included 
                in a competitive acquisition program in a 
                competitive acquisition area under section 
                1847(a)--
                          (i) the payment basis under this 
                        subsection for such items and services 
                        furnished in such area shall be the 
                        payment basis determined under such 
                        competitive acquisition program;
                          (ii) the Secretary may (and, in the 
                        case of covered items furnished on or 
                        after January 1, 2016, subject to 
                        clause (iii), shall) use information on 
                        the payment determined under such 
                        competitive acquisition programs to 
                        adjust the payment amount otherwise 
                        recognized under subparagraph (B)(ii) 
                        for an area that is not a competitive 
                        acquisition area under section 1847 and 
                        in the case of such adjustment, 
                        paragraph (10)(B) shall not be applied; 
                        and
                          (iii) in the case of covered items 
                        furnished on or after January 1, 2016, 
                        the Secretary shall continue to make 
                        such adjustments described in clause 
                        (ii) as, under such competitive 
                        acquisition programs, additional 
                        covered items are phased in or 
                        information is updated as contracts 
                        under section 1847 are recompeted in 
                        accordance with section 1847(b)(3)(B).
                  (G) Use of information on competitive bid 
                rates.--The Secretary shall specify by 
                regulation the methodology to be used in 
                applying the provisions of subparagraph (F)(ii) 
                and subsection (h)(1)(H)(ii). In promulgating 
                such regulation, the Secretary shall consider 
                the costs of items and services in areas in 
                which such provisions would be applied compared 
                to the payment rates for such items and 
                services in competitive acquisition areas.
                  (H) Diabetic supplies.--
                          (i) In general.--On or after the date 
                        described in clause (ii), the payment 
                        amount under this part for diabetic 
                        supplies, including testing strips, 
                        that are non-mail order items (as 
                        defined by the Secretary) shall be 
                        equal to the single payment amounts 
                        established under the national mail 
                        order competition for diabetic supplies 
                        under section 1847.
                          (ii) Date described.--The date 
                        described in this clause is the date of 
                        the implementation of the single 
                        payment amounts under the national mail 
                        order competition for diabetic supplies 
                        under section 1847.
                  (I) Treatment of vacuum erection systems.--
                Effective for items and services furnished on 
                and after July 1, 2015, vacuum erection systems 
                described as prosthetic devices described in 
                section 1861(s)(8) shall be treated in the same 
                manner as erectile dysfunction drugs are 
                treated for purposes of section 1860D-
                2(e)(2)(A).
          (2) Payment for inexpensive and other routinely 
        purchased durable medical equipment.--
                  (A) In general.--Payment for an item of 
                durable medical equipment (as defined in 
                paragraph (13))--
                          (i) the purchase price of which does 
                        not exceed $150,
                          (ii) which the Secretary determines 
                        is acquired at least 75 percent of the 
                        time by purchase, or
                          (iii) which is an accessory used in 
                        conjunction with a nebulizer, 
                        aspirator, or a ventilator excluded 
                        under paragraph (3)(A),
                shall be made on a rental basis or in a lump-
                sum amount for the purchase of the item. The 
                payment amount recognized for purchase or 
                rental of such equipment is the amount 
                specified in subparagraph (B) for purchase or 
                rental, except that the total amount of 
                payments with respect to an item may not exceed 
                the payment amount specified in subparagraph 
                (B) with respect to the purchase of the item.
                  (B) Payment amount.--For purposes of 
                subparagraph (A), the amount specified in this 
                subparagraph, with respect to the purchase or 
                rental of an item furnished in a carrier 
                service area--
                          (i) in 1989 and in 1990 is the 
                        average reasonable charge in the area 
                        for the purchase or rental, 
                        respectively, of the item for the 12-
                        month period ending on June 30, 1987, 
                        increased by the percentage increase in 
                        the consumer price index for all urban 
                        consumers (U.S. city average) for the 
                        6-month period ending with December 
                        1987;
                          (ii) in 1991 is the sum of (I) 67 
                        percent of the local payment amount for 
                        the item or device computed under 
                        subparagraph (C)(i)(I) for 1991, and 
                        (II) 33 percent of the national limited 
                        payment amount for the item or device 
                        computed under subparagraph (C)(ii) for 
                        1991;
                          (iii) in 1992 is the sum of (I) 33 
                        percent of the local payment amount for 
                        the item or device computed under 
                        subparagraph (C)(i)(II) for 1992, and 
                        (II) 67 percent of the national limited 
                        payment amount for the item or device 
                        computed under subparagraph (C)(ii) for 
                        1992; and
                          (iv) in 1993 and each subsequent year 
                        is the national limited payment amount 
                        for the item or device computed under 
                        subparagraph (C)(ii) for that year 
                        (reduced by 10 percent, in the case of 
                        a blood glucose testing strip furnished 
                        after 1997 for an individual with 
                        diabetes).
                  (C) Computation of local payment amount and 
                national limited payment amount.--For purposes 
                of subparagraph (B)--
                          (i) the local payment amount for an 
                        item or device for a year is equal to--
                                  (I) for 1991, the amount 
                                specified in subparagraph 
                                (B)(i) for 1990 increased by 
                                the covered item update for 
                                1991, and
                                  (II) for 1992, 1993, and 1994 
                                the amount determined under 
                                this clause for the preceding 
                                year increased by the covered 
                                item update for the year; and
                          (ii) the national limited payment 
                        amount for an item or device for a year 
                        is equal to--
                                  (I) for 1991, the local 
                                payment amount determined under 
                                clause (i) for such item or 
                                device for that year, except 
                                that the national limited 
                                payment amount may not exceed 
                                100 percent of the weighted 
                                average of all local payment 
                                amounts determined under such 
                                clause for such item for that 
                                year and may not be less than 
                                85 percent of the weighted 
                                average of all local payment 
                                amounts determined under such 
                                clause for such item,
                                  (II) for 1992 and 1993, the 
                                amount determined under this 
                                clause for the preceding year 
                                increased by the covered item 
                                update for such subsequent 
                                year,
                                  (III) for 1994, the local 
                                payment amount determined under 
                                clause (i) for such item or 
                                device for that year, except 
                                that the national limited 
                                payment amount may not exceed 
                                100 percent of the median of 
                                all local payment amounts 
                                determined under such clause 
                                for such item for that year and 
                                may not be less than 85 percent 
                                of the median of all local 
                                payment amounts determined 
                                under such clause for such item 
                                or device for that year, and
                                  (IV) for each subsequent 
                                year, the amount determined 
                                under this clause for the 
                                preceding year increased by the 
                                covered item update for such 
                                subsequent year.
          (3) Payment for items requiring frequent and 
        substantial servicing.--
                  (A) In general.--Payment for a covered item 
                (such as IPPB machines and ventilators, 
                excluding ventilators that are either 
                continuous airway pressure devices or 
                intermittent assist devices with continuous 
                airway pressure devices) for which there must 
                be frequent and substantial servicing in order 
                to avoid risk to the patient's health shall be 
                made on a monthly basis for the rental of the 
                item and the amount recognized is the amount 
                specified in subparagraph (B).
                  (B) Payment amount.--For purposes of 
                subparagraph (A), the amount specified in this 
                subparagraph, with respect to an item or device 
                furnished in a carrier service area--
                          (i) in 1989 and in 1990 is the 
                        average reasonable charge in the area 
                        for the rental of the item or device 
                        for the 12-month period ending with 
                        June 1987, increased by the percentage 
                        increase in the consumer price index 
                        for all urban consumers (U.S. city 
                        average) for the 6-month period ending 
                        with December 1987;
                          (ii) in 1991 is the sum of (I) 67 
                        percent of the local payment amount for 
                        the item or device computed under 
                        subparagraph (C)(i)(I) for 1991, and 
                        (II) 33 percent of the national limited 
                        payment amount for the item or device 
                        computed under subparagraph (C)(ii) for 
                        1991;
                          (iii) in 1992 is the sum of (I) 33 
                        percent of the local payment amount for 
                        the item or device computed under 
                        subparagraph (C)(i)(II) for 1992, and 
                        (II) 67 percent of the national limited 
                        payment amount for the item or device 
                        computed under subparagraph (C)(ii) for 
                        1992; and
                          (iv) in 1993 and each subsequent year 
                        is the national limited payment amount 
                        for the item or device computed under 
                        subparagraph (C)(ii) for that year.
                  (C) Computation of local payment amount and 
                national limited payment amount.--For purposes 
                of subparagraph (B)--
                          (i) the local payment amount for an 
                        item or device for a year is equal to--
                                  (I) for 1991, the amount 
                                specified in subparagraph 
                                (B)(i) for 1990 increased by 
                                the covered item update for 
                                1991, and
                                  (II) for 1992, 1993, and 1994 
                                the amount determined under 
                                this clause for the preceding 
                                year increased by the covered 
                                item update for the year; and
                          (ii) the national limited payment 
                        amount for an item or device for a year 
                        is equal to--
                                  (I) for 1991, the local 
                                payment amount determined under 
                                clause (i) for such item or 
                                device for that year, except 
                                that the national limited 
                                payment amount may not exceed 
                                100 percent of the weighted 
                                average of all local payment 
                                amounts determined under such 
                                clause for such item for that 
                                year and may not be less than 
                                85 percent of the weighted 
                                average of all local payment 
                                amounts determined under such 
                                clause for such item,
                                  (II) for 1992 and 1993, the 
                                amount determined under this 
                                clause for the preceding year 
                                increased by the covered item 
                                update for such subsequent 
                                year,
                                  (III) for 1994, the local 
                                payment amount determined under 
                                clause (i) for such item or 
                                device for that year, except 
                                that the national limited 
                                payment amount may not exceed 
                                100 percent of the median of 
                                all local payment amounts 
                                determined under such clause 
                                for such item for that year and 
                                may not be less than 85 percent 
                                of the median of all local 
                                payment amounts determined 
                                under such clause for such item 
                                or device for that year, and
                                  (IV) for each subsequent 
                                year, the amount determined 
                                under this clause for the 
                                preceding year increased by the 
                                covered item update for such 
                                subsequent year.
          (4) Payment for certain customized items.--Payment 
        with respect to a covered item that is uniquely 
        constructed or substantially modified to meet the 
        specific needs of an individual patient, and for that 
        reason cannot be grouped with similar items for 
        purposes of payment under this title, shall be made in 
        a lump-sum amount (A) for the purchase of the item in a 
        payment amount based upon the carrier's individual 
        consideration for that item, and (B) for the reasonable 
        and necessary maintenance and servicing for parts and 
        labor not covered by the supplier's or manufacturer's 
        warranty, when necessary during the period of medical 
        need, and the amount recognized for such maintenance 
        and servicing shall be paid on a lump-sum, as needed 
        basis based upon the carrier's individual consideration 
        for that item. In the case of a wheelchair furnished on 
        or after January 1, 1992, the wheelchair shall be 
        treated as a customized item for purposes of this 
        paragraph if the wheelchair has been measured, fitted, 
        or adapted in consideration of the patient's body size, 
        disability, period of need, or intended use, and has 
        been assembled by a supplier or ordered from a 
        manufacturer who makes available customized features, 
        modifications, or components for wheelchairs that are 
        intended for an individual patient's use in accordance 
        with instructions from the patient's physician.
          (5) Payment for oxygen and oxygen equipment.--
                  (A) In general.--Payment for oxygen and 
                oxygen equipment shall be made on a monthly 
                basis in the monthly payment amount recognized 
                under paragraph (9) for oxygen and oxygen 
                equipment (other than portable oxygen 
                equipment), subject to subparagraphs (B), (C), 
                (E), and (F).
                  (B) Add-on for portable oxygen equipment.--
                When portable oxygen equipment is used, but 
                subject to subparagraph (D), the payment amount 
                recognized under subparagraph (A) shall be 
                increased by the monthly payment amount 
                recognized under paragraph (9) for portable 
                oxygen equipment.
                  (C) Volume adjustment.--When the attending 
                physician prescribes an oxygen flow rate--
                          (i) exceeding 4 liters per minute, 
                        the payment amount recognized under 
                        subparagraph (A), subject to 
                        subparagraph (D), shall be increased by 
                        50 percent, or
                          (ii) of less than 1 liter per minute, 
                        the payment amount recognized under 
                        subparagraph (A) shall be decreased by 
                        50 percent.
                  (D) Limit on adjustment.--When portable 
                oxygen equipment is used and the attending 
                physician prescribes an oxygen flow rate 
                exceeding 4 liters per minute, there shall only 
                be an increase under either subparagraph (B) or 
                (C), whichever increase is larger, and not 
                under both such subparagraphs.
                  (E) Recertification for patients receiving 
                home oxygen therapy.--In the case of a patient 
                receiving home oxygen therapy services who, at 
                the time such services are initiated, has an 
                initial arterial blood gas value at or above a 
                partial pressure of 56 or an arterial oxygen 
                saturation at or above 89 percent (or such 
                other values, pressures, or criteria as the 
                Secretary may specify) no payment may be made 
                under this part for such services after the 
                expiration of the 90-day period that begins on 
                the date the patient first receives such 
                services unless the patient's attending 
                physician certifies that, on the basis of a 
                follow-up test of the patient's arterial blood 
                gas value or arterial oxygen saturation 
                conducted during the final 30 days of such 90-
                day period, there is a medical need for the 
                patient to continue to receive such services.
                  (F) Rental Cap.--
                          (i) In general.--Payment for oxygen 
                        equipment (including portable oxygen 
                        equipment) under this paragraph may not 
                        extend over a period of continuous use 
                        (as determined by the Secretary) of 
                        longer than 36 months.
                          (ii) Payments and rules after rental 
                        cap.--After the 36th continuous month 
                        during which payment is made for the 
                        equipment under this paragraph--
                                  (I) the supplier furnishing 
                                such equipment under this 
                                subsection shall continue to 
                                furnish the equipment during 
                                any period of medical need for 
                                the remainder of the reasonable 
                                useful lifetime of the 
                                equipment, as determined by the 
                                Secretary;
                                  (II) payments for oxygen 
                                shall continue to be made in 
                                the amount recognized for 
                                oxygen under paragraph (9) for 
                                the period of medical need; and
                                  (III) maintenance and 
                                servicing payments shall, if 
                                the Secretary determines such 
                                payments are reasonable and 
                                necessary, be made (for parts 
                                and labor not covered by the 
                                supplier's or manufacturer's 
                                warranty, as determined by the 
                                Secretary to be appropriate for 
                                the equipment), and such 
                                payments shall be in an amount 
                                determined to be appropriate by 
                                the Secretary.
          (6) Payment for other covered items (other than 
        durable medical equipment).--Payment for other covered 
        items (other than durable medical equipment and other 
        covered items described in paragraph (3), (4), or (5)) 
        shall be made in a lump-sum amount for the purchase of 
        the item in the amount of the purchase price recognized 
        under paragraph (8).
          (7) Payment for other items of durable medical 
        equipment.--
                  (A) Payment.--In the case of an item of 
                durable medical equipment not described in 
                paragraphs (2) through (6), the following rules 
                shall apply:
                          (i) Rental.--
                                  (I) In general.--Except as 
                                provided in clause (iii), 
                                payment for the item shall be 
                                made on a monthly basis for the 
                                rental of the item during the 
                                period of medical need (but 
                                payments under this clause may 
                                not extend over a period of 
                                continuous use (as determined 
                                by the Secretary) of longer 
                                than 13 months).
                                  (II) Payment amount.--Subject 
                                to subclause (III) and 
                                subparagraph (B), the amount 
                                recognized for the item, for 
                                each of the first 3 months of 
                                such period, is 10 percent of 
                                the purchase price recognized 
                                under paragraph (8) with 
                                respect to the item, and, for 
                                each of the remaining months of 
                                such period, is 7.5 percent of 
                                such purchase price.
                                  (III) Special rule for power-
                                driven wheelchairs.--For 
                                purposes of payment for power-
                                driven wheelchairs, subclause 
                                (II) shall be applied by 
                                substituting ``15 percent'' and 
                                ``6 percent'' for ``10 
                                percent'' and ``7.5 percent'', 
                                respectively.
                          (ii) Ownership after rental.--On the 
                        first day that begins after the 13th 
                        continuous month during which payment 
                        is made for the rental of an item under 
                        clause (i), the supplier of the item 
                        shall transfer title to the item to the 
                        individual.
                          (iii) Purchase agreement option for 
                        complex, rehabilitative power-driven 
                        wheelchairs.--In the case of a complex, 
                        rehabilitative power-driven wheelchair, 
                        at the time the supplier furnishes the 
                        item, the supplier shall offer the 
                        individual the option to purchase the 
                        item, and payment for such item shall 
                        be made on a lump-sum basis if the 
                        individual exercises such option.
                          (iv) Maintenance and servicing.--
                        After the supplier transfers title to 
                        the item under clause (ii) or in the 
                        case of a power-driven wheelchair for 
                        which a purchase agreement has been 
                        entered into under clause (iii), 
                        maintenance and servicing payments 
                        shall, if the Secretary determines such 
                        payments are reasonable and necessary, 
                        be made (for parts and labor not 
                        covered by the supplier's or 
                        manufacturer's warranty, as determined 
                        by the Secretary to be appropriate for 
                        the particular type of durable medical 
                        equipment), and such payments shall be 
                        in an amount determined to be 
                        appropriate by the Secretary.
                  (B) Range for rental amounts.--
                          (i) For 1989.--For items furnished 
                        during 1989, the payment amount 
                        recognized under subparagraph (A)(i) 
                        shall not be more than 115 percent, and 
                        shall not be less than 85 percent, of 
                        the prevailing charge established for 
                        rental of the item in January 1987, 
                        increased by the percentage increase in 
                        the consumer price index for all urban 
                        consumers (U.S. city average) for the 
                        6-month period ending with December 
                        1987.
                          (ii) For 1990.--For items furnished 
                        during 1990, clause (i) shall apply in 
                        the same manner as it applies to items 
                        furnished during 1989.
                  (C) Replacement of items.--
                          (i) Establishment of reasonable 
                        useful lifetime.--In accordance with 
                        clause (iii), the Secretary shall 
                        determine and establish a reasonable 
                        useful lifetime for items of durable 
                        medical equipment for which payment may 
                        be made under this paragraph.
                          (ii) Payment for replacement items.--
                        If the reasonable lifetime of such an 
                        item, as so established, has been 
                        reached during a continuous period of 
                        medical need, or the carrier determines 
                        that the item is lost or irreparably 
                        damaged, the patient may elect to have 
                        payment for an item serving as a 
                        replacement for such item made--
                                  (I) on a monthly basis for 
                                the rental of the replacement 
                                item in accordance with 
                                subparagraph (A); or
                                  (II) in the case of an item 
                                for which a purchase agreement 
                                has been entered into under 
                                subparagraph (A)(iii), in a 
                                lump-sum amount for the 
                                purchase of the item.
                          (iii) Length of reasonable useful 
                        lifetime.--The reasonable useful 
                        lifetime of an item of durable medical 
                        equipment under this subparagraph shall 
                        be equal to 5 years, except that, if 
                        the Secretary determines that, on the 
                        basis of prior experience in making 
                        payments for such an item under this 
                        title, a reasonable useful lifetime of 
                        5 years is not appropriate with respect 
                        to a particular item, the Secretary 
                        shall establish an alternative 
                        reasonable lifetime for such item.
          (8) Purchase price recognized for miscellaneous 
        devices and items.--For purposes of paragraphs (6) and 
        (7), the amount that is recognized under this paragraph 
        as the purchase price for a covered item is the amount 
        described in subparagraph (C) of this paragraph, 
        determined as follows:
                  (A) Computation of local purchase price.--
                Each carrier under section 1842 shall compute a 
                base local purchase price for the item as 
                follows:
                          (i) The carrier shall compute a base 
                        local purchase price, for each item 
                        described--
                                  (I) in paragraph (6) equal to 
                                the average reasonable charge 
                                in the locality for the 
                                purchase of the item for the 
                                12-month period ending with 
                                June 1987, or
                                  (II) in paragraph (7) equal 
                                to the average of the purchase 
                                prices on the claims submitted 
                                on an assignment-related basis 
                                for the unused item supplied 
                                during the 6-month period 
                                ending with December 1986.
                          (ii) The carrier shall compute a 
                        local purchase price, with respect to 
                        the furnishing of each particular 
                        item--
                                  (I) in 1989 and 1990, equal 
                                to the base local purchase 
                                price computed under clause (i) 
                                increased by the percentage 
                                increase in the consumer price 
                                index for all urban consumers 
                                (U.S. city average) for the 6-
                                month period ending with 
                                December 1987,
                                  (II) in 1991, equal to the 
                                local purchase price computed 
                                under this clause for the 
                                previous year, increased by the 
                                covered item update for 1991, 
                                and decreased by the percentage 
                                by which the average of the 
                                reasonable charges for claims 
                                paid for all items described in 
                                paragraph (7) is lower than the 
                                average of the purchase prices 
                                submitted for such items during 
                                the final 9 months of 1988; or
                                  (III) in 1992, 1993, and 1994 
                                equal to the local purchase 
                                price computed under this 
                                clause for the previous year 
                                increased by the covered item 
                                update for the year.
                  (B) Computation of national limited purchase 
                price.--With respect to the furnishing of a 
                particular item in a year, the Secretary shall 
                compute a national limited purchase price--
                          (i) for 1991, equal to the local 
                        purchase price computed under 
                        subparagraph (A)(ii) for the item for 
                        the year, except that such national 
                        limited purchase price may not exceed 
                        100 percent of the weighted average of 
                        all local purchase prices for the item 
                        computed under such subparagraph for 
                        the year, and may not be less than 85 
                        percent of the weighted average of all 
                        local purchase prices for the item 
                        computed under such subparagraph for 
                        the year;
                          (ii) for 1992 and 1993, the amount 
                        determined under this subparagraph for 
                        the preceding year increased by the 
                        covered item update for such subsequent 
                        year;
                          (iii) for 1994, the local purchase 
                        price computed under subparagraph 
                        (A)(ii) for the item for the year, 
                        except that such national limited 
                        purchase price may not exceed 100 
                        percent of the median of all local 
                        purchase prices computed for the item 
                        under such subparagraph for the year 
                        and may not be less than 85 percent of 
                        the median of all local purchase prices 
                        computed under such subparagraph for 
                        the item for the year; and
                          (iv) for each subsequent year, equal 
                        to the amount determined under this 
                        subparagraph for the preceding year 
                        increased by the covered item update 
                        for such subsequent year.
                  (C) Purchase price recognized.--For purposes 
                of paragraphs (6) and (7), the amount that is 
                recognized under this paragraph as the purchase 
                price for each item furnished--
                          (i) in 1989 or 1990, is 100 percent 
                        of the local purchase price computed 
                        under subparagraph (A)(ii)(I);
                          (ii) in 1991, is the sum of (I) 67 
                        percent of the local purchase price 
                        computed under subparagraph (A)(ii)(II) 
                        for 1991, and (II) 33 percent of the 
                        national limited purchase price 
                        computed under subparagraph (B) for 
                        1991;
                          (iii) in 1992, is the sum of (I) 33 
                        percent of the local purchase price 
                        computed under subparagraph 
                        (A)(ii)(III) for 1992, and (II) 67 
                        percent of the national limited 
                        purchase price computed under 
                        subparagraph (B) for 1992; and
                          (iv) in 1993 or a subsequent year, is 
                        the national limited purchase price 
                        computed under subparagraph (B) for 
                        that year.
          (9) Monthly payment amount recognized with respect to 
        oxygen and oxygen equipment.--For purposes of paragraph 
        (5), the amount that is recognized under this paragraph 
        for payment for oxygen and oxygen equipment is the 
        monthly payment amount described in subparagraph (C) of 
        this paragraph. Such amount shall be computed 
        separately (i) for all items of oxygen and oxygen 
        equipment (other than portable oxygen equipment) and 
        (ii) for portable oxygen equipment (each such group 
        referred to in this paragraph as an ``item'').
                  (A) Computation of local monthly payment 
                rate.--Each carrier under this section shall 
                compute a base local payment rate for each item 
                as follows:
                          (i) The carrier shall compute a base 
                        local average monthly payment rate per 
                        beneficiary as an amount equal to (I) 
                        the total reasonable charges for the 
                        item during the 12-month period ending 
                        with December 1986, divided by (II) the 
                        total number of months for all 
                        beneficiaries receiving the item in the 
                        area during the 12-month period for 
                        which the carrier made payment for the 
                        item under this title.
                          (ii) The carrier shall compute a 
                        local average monthly payment rate for 
                        the item applicable--
                                  (I) to 1989 and 1990, equal 
                                to 95 percent of the base local 
                                average monthly payment rate 
                                computed under clause (i) for 
                                the item increased by the 
                                percentage increase in the 
                                consumer price index for all 
                                urban consumers (U.S. city 
                                average) for the 6-month period 
                                ending with December 1987, or
                                  (II) to 1991, 1992, 1993, and 
                                1994 equal to the local average 
                                monthly payment rate computed 
                                under this clause for the item 
                                for the previous year increased 
                                by the covered item increase 
                                for the year.
                  (B) Computation of national limited monthly 
                payment rate.--With respect to the furnishing 
                of an item in a year, the Secretary shall 
                compute a national limited monthly payment rate 
                equal to--
                          (i) for 1991, the local monthly 
                        payment rate computed under 
                        subparagraph (A)(ii)(II) for the item 
                        for the year, except that such national 
                        limited monthly payment rate may not 
                        exceed 100 percent of the weighted 
                        average of all local monthly payment 
                        rates computed for the item under such 
                        subparagraph for the year, and may not 
                        be less than 85 percent of the weighted 
                        average of all local monthly payment 
                        rates computed for the item under such 
                        subparagraph for the year;
                          (ii) for 1992 and 1993, the amount 
                        determined under this subparagraph for 
                        the preceding year increased by the 
                        covered item update for such subsequent 
                        year;
                          (iii) for 1994, the local monthly 
                        payment rate computed under 
                        subparagraph (A)(ii) for the item for 
                        the year, except that such national 
                        limited monthly payment rate may not 
                        exceed 100 percent of the median of all 
                        local monthly payment rates computed 
                        for the item under such subparagraph 
                        for the year and may not be less than 
                        85 percent of the median of all local 
                        monthly payment rates computed for the 
                        item under such subparagraph for the 
                        year;
                          (iv) for 1995, 1996, and 1997, equal 
                        to the amount determined under this 
                        subparagraph for the preceding year 
                        increased by the covered item update 
                        for such subsequent year;
                          (v) for 1998, 75 percent of the 
                        amount determined under this 
                        subparagraph for 1997; and
                          (vi) for 1999 and each subsequent 
                        year, 70 percent of the amount 
                        determined under this subparagraph for 
                        1997.
                  (C) Monthly payment amount recognized.--For 
                purposes of paragraph (5), the amount that is 
                recognized under this paragraph as the base 
                monthly payment amount for each item 
                furnished--
                          (i) in 1989 and in 1990, is 100 
                        percent of the local average monthly 
                        payment rate computed under 
                        subparagraph (A)(ii) for the item;
                          (ii) in 1991, is the sum of (I) 67 
                        percent of the local average monthly 
                        payment rate computed under 
                        subparagraph (A)(ii)(II) for the item 
                        for 1991, and (II) 33 percent of the 
                        national limited monthly payment rate 
                        computed under subparagraph (B)(i) for 
                        the item for 1991;
                          (iii) in 1992, is the sum of (I) 33 
                        percent of the local average monthly 
                        payment rate computed under 
                        subparagraph (A)(ii)(II) for the item 
                        for 1992, and (II) 67 percent of the 
                        national limited monthly payment rate 
                        computed under subparagraph (B)(ii) for 
                        the item for 1992; and
                          (iv) in a subsequent year, is the 
                        national limited monthly payment rate 
                        computed under subparagraph (B) for the 
                        item for that year.
          (10) Exceptions and adjustments.--
                  (A) Areas outside continental united 
                states.--Exceptions to the amounts recognized 
                under the previous provisions of this 
                subsection shall be made to take into account 
                the unique circumstances of covered items 
                furnished in Alaska, Hawaii, or Puerto Rico.
                  (B) Adjustment for inherent reasonableness.--
                The Secretary is authorized to apply the 
                provisions of paragraphs (8) and (9) of section 
                1842(b) to covered items and suppliers of such 
                items and payments under this subsection in an 
                area and with respect to covered items and 
                services for which the Secretary does not make 
                a payment amount adjustment under paragraph 
                (1)(F).
                  (C) Transcutaneous electrical nerve 
                stimulator (tens).--In order to permit an 
                attending physician time to determine whether 
                the purchase of a transcutaneous electrical 
                nerve stimulator is medically appropriate for a 
                particular patient, the Secretary may determine 
                an appropriate payment amount for the initial 
                rental of such item for a period of not more 
                than 2 months. If such item is subsequently 
                purchased, the payment amount with respect to 
                such purchase is the payment amount determined 
                under paragraph (2).
          (11) Improper billing and requirement of physician 
        order.--
                  (A) Improper billing for certain rental 
                items.--Notwithstanding any other provision of 
                this title, a supplier of a covered item for 
                which payment is made under this subsection and 
                which is furnished on a rental basis shall 
                continue to supply the item without charge 
                (other than a charge provided under this 
                subsection for the maintenance and servicing of 
                the item) after rental payments may no longer 
                be made under this subsection. If a supplier 
                knowingly and willfully violates the previous 
                sentence, the Secretary may apply sanctions 
                against the supplier under section 1842(j)(2) 
                in the same manner such sanctions may apply 
                with respect to a physician.
                  (B) Requirement of physician order.--
                          (i) In general.--The Secretary is 
                        authorized to require, for specified 
                        covered items, that payment may be made 
                        under this subsection with respect to 
                        the item only if a physician enrolled 
                        under section 1866(j) or an eligible 
                        professional under section 
                        1848(k)(3)(B) that is enrolled under 
                        section 1866(j) has communicated to the 
                        supplier, before delivery of the item, 
                        a written order for the item.
                          (ii) Requirement for face to face 
                        encounter.--The Secretary shall require 
                        that such an order be written pursuant 
                        to a physician, a physician assistant, 
                        a nurse practitioner, or a clinical 
                        nurse specialist (as those terms are 
                        defined in section 1861(aa)(5)) 
                        documenting such physician, physician 
                        assistant, practitioner, or specialist 
                        has had a face-to-face encounter 
                        (including through use of telehealth 
                        under subsection (m) and other than 
                        with respect to encounters that are 
                        incident to services involved) with the 
                        individual involved during the 6-month 
                        period preceding such written order, or 
                        other reasonable timeframe as 
                        determined by the Secretary.
          (12) Regional carriers.--The Secretary may designate, 
        by regulation under section 1842, one carrier for one 
        or more entire regions to process all claims within the 
        region for covered items under this section.
          (13) Covered item.--In this subsection, the term 
        ``covered item'' means durable medical equipment (as 
        defined in section 1861(n)), including such equipment 
        described in section 1861(m)(5), but not including 
        implantable items for which payment may be made under 
        section 1833(t).
          (14) Covered item update.--In this subsection, the 
        term ``covered item update'' means, with respect to a 
        year--
                  (A) for 1991 and 1992, the percentage 
                increase in the consumer price index for all 
                urban consumers (U.S. city average) for the 12-
                month period ending with June of the previous 
                year reduced by 1 percentage point;
                  (B) for 1993, 1994, 1995, 1996, and 1997, the 
                percentage increase in the consumer price index 
                for all urban consumers (U.S. city average) for 
                the 12-month period ending with June of the 
                previous year;
                  (C) for each of the years 1998 through 2000, 
                0 percentage points;
                  (D) for 2001, the percentage increase in the 
                consumer price index for all urban consumers 
                (U.S. city average) for the 12-month period 
                ending with June 2000;
                  (E) for 2002, 0 percentage points;
                  (F) for 2003, the percentage increase in the 
                consumer price index for all urban consumers 
                (U.S. urban average) for the 12-month period 
                ending with June of 2002;
                  (G) for 2004 through 2006--
                          (i) subject to clause (ii), in the 
                        case of class III medical devices 
                        described in section 513(a)(1)(C) of 
                        the Federal Food, Drug, and Cosmetic 
                        Act (21 U.S.C. 360(c)(1)(C)), the 
                        percentage increase described in 
                        subparagraph (B) for the year involved; 
                        and
                          (ii) in the case of covered items not 
                        described in clause (i), 0 percentage 
                        points;
                  (H) for 2007--
                          (i) subject to clause (ii), in the 
                        case of class III medical devices 
                        described in section 513(a)(1)(C) of 
                        the Federal Food, Drug, and Cosmetic 
                        Act (21 U.S.C. 360(c)(1)(C)), the 
                        percentage change determined by the 
                        Secretary to be appropriate taking into 
                        account recommendations contained in 
                        the report of the Comptroller General 
                        of the United States under section 
                        302(c)(1)(B) of the Medicare 
                        Prescription Drug, Improvement, and 
                        Modernization Act of 2003; and
                          (ii) in the case of covered items not 
                        described in clause (i), 0 percentage 
                        points;
                  (I) for 2008--
                          (i) subject to clause (ii), in the 
                        case of class III medical devices 
                        described in section 513(a)(1)(C) of 
                        the Federal Food, Drug, and Cosmetic 
                        Act (21 U.S.C. 360(c)(1)(C)), the 
                        percentage increase described in 
                        subparagraph (B) (as applied to the 
                        payment amount for 2007 determined 
                        after the application of the percentage 
                        change under subparagraph (H)(i)); and
                          (ii) in the case of covered items not 
                        described in clause (i), 0 percentage 
                        points;
                  (J) for 2009--
                          (i) in the case of items and services 
                        furnished in any geographic area, if 
                        such items or services were selected 
                        for competitive acquisition in any area 
                        under the competitive acquisition 
                        program under section 
                        1847(a)(1)(B)(i)(I) before July 1, 
                        2008, including related accessories but 
                        only if furnished with such items and 
                        services selected for such competition 
                        and diabetic supplies but only if 
                        furnished through mail order, - 9.5 
                        percent; or
                          (ii) in the case of other items and 
                        services, the percentage increase in 
                        the consumer price index for all urban 
                        consumers (U.S. urban average) for the 
                        12-month period ending with June 2008;
                  (K) for 2010, the percentage increase in the 
                consumer price index for all urban consumers 
                (U.S. urban average) for the 12-month period 
                ending with June of the previous year; and
                  (L) for 2011 and each subsequent year--
                          (i) the percentage increase in the 
                        consumer price index for all urban 
                        consumers (United States city average) 
                        for the 12-month period ending with 
                        June of the previous year, reduced by--
                          (ii) the productivity adjustment 
                        described in section 
                        1886(b)(3)(B)(xi)(II).
        The application of subparagraph (L)(ii) may result in 
        the covered item update under this paragraph being less 
        than 0.0 for a year, and may result in payment rates 
        under this subsection for a year being less than such 
        payment rates for the preceding year.
          (15) Advance determinations of coverage for certain 
        items.--
                  (A) Development of lists of items by 
                secretary.--The Secretary may develop and 
                periodically update a list of items for which 
                payment may be made under this subsection that 
                the Secretary determines, on the basis of prior 
                payment experience, are frequently subject to 
                unnecessary utilization throughout a carrier's 
                entire service area or a portion of such area.
                  (B) Development of lists of suppliers by 
                secretary.--The Secretary may develop and 
                periodically update a list of suppliers of 
                items for which payment may be made under this 
                subsection with respect to whom--
                          (i) the Secretary has found that a 
                        substantial number of claims for 
                        payment under this part for items 
                        furnished by the supplier have been 
                        denied on the basis of the application 
                        of section 1862(a)(1); or
                          (ii) the Secretary has identified a 
                        pattern of overutilization resulting 
                        from the business practice of the 
                        supplier.
                  (C) Determinations of coverage in advance.--A 
                carrier shall determine in advance of delivery 
                of an item whether payment for the item may not 
                be made because the item is not covered or 
                because of the application of section 
                1862(a)(1) if--
                          (i) the item is included on the list 
                        developed by the Secretary under 
                        subparagraph (A);
                          (ii) the item is furnished by a 
                        supplier included on the list developed 
                        by the Secretary under subparagraph 
                        (B); or
                          (iii) the item is a customized item 
                        (other than inexpensive items specified 
                        by the Secretary) and the patient to 
                        whom the item is to be furnished or the 
                        supplier requests that such advance 
                        determination be made.
          (16) Disclosure of information and surety bond.--The 
        Secretary shall not provide for the issuance (or 
        renewal) of a provider number for a supplier of durable 
        medical equipment, for purposes of payment under this 
        part for durable medical equipment furnished by the 
        supplier, unless the supplier provides the Secretary on 
        a continuing basis--
                  (A) with--
                          (i) full and complete information as 
                        to the identity of each person with an 
                        ownership or control interest (as 
                        defined in section 1124(a)(3)) in the 
                        supplier or in any subcontractor (as 
                        defined by the Secretary in 
                        regulations) in which the supplier 
                        directly or indirectly has a 5 percent 
                        or more ownership interest; and
                          (ii) to the extent determined to be 
                        feasible under regulations of the 
                        Secretary, the name of any disclosing 
                        entity (as defined in section 
                        1124(a)(2)) with respect to which a 
                        person with such an ownership or 
                        control interest in the supplier is a 
                        person with such an ownership or 
                        control interest in the disclosing 
                        entity; and
                  (B) with a surety bond in a form specified by 
                the Secretary and in an amount that is not less 
                than $50,000 that the Secretary determines is 
                commensurate with the volume of the billing of 
                the supplier.
        The Secretary may waive the requirement of a bond under 
        subparagraph (B) in the case of a supplier that 
        provides a comparable surety bond under State law. The 
        Secretary, at the Secretary's discretion, may impose 
        the requirements of the first sentence with respect to 
        some or all providers of items or services under part A 
        or some or all suppliers or other persons (other than 
        physicians or other practitioners, as defined in 
        section 1842(b)(18)(C)) who furnish items or services 
        under this part.
          (17) Prohibition against unsolicited telephone 
        contacts by suppliers.--
                  (A) In general.--A supplier of a covered item 
                under this subsection may not contact an 
                individual enrolled under this part by 
                telephone regarding the furnishing of a covered 
                item to the individual unless 1 of the 
                following applies:
                          (i) The individual has given written 
                        permission to the supplier to make 
                        contact by telephone regarding the 
                        furnishing of a covered item.
                          (ii) The supplier has furnished a 
                        covered item to the individual and the 
                        supplier is contacting the individual 
                        only regarding the furnishing of such 
                        covered item.
                          (iii) If the contact is regarding the 
                        furnishing of a covered item other than 
                        a covered item already furnished to the 
                        individual, the supplier has furnished 
                        at least 1 covered item to the 
                        individual during the 15-month period 
                        preceding the date on which the 
                        supplier makes such contact.
                  (B) Prohibiting payment for items furnished 
                subsequent to unsolicited contacts.--If a 
                supplier knowingly contacts an individual in 
                violation of subparagraph (A), no payment may 
                be made under this part for any item 
                subsequently furnished to the individual by the 
                supplier.
                  (C) Exclusion from program for suppliers 
                engaging in pattern of unsolicited contacts.--
                If a supplier knowingly contacts individuals in 
                violation of subparagraph (A) to such an extent 
                that the supplier's conduct establishes a 
                pattern of contacts in violation of such 
                subparagraph, the Secretary shall exclude the 
                supplier from participation in the programs 
                under this Act, in accordance with the 
                procedures set forth in subsections (c), (f), 
                and (g) of section 1128.
          (18) Refund of amounts collected for certain 
        disallowed items.--
                  (A) In general.--If a nonparticipating 
                supplier furnishes to an individual enrolled 
                under this part a covered item for which no 
                payment may be made under this part by reason 
                of paragraph (17)(B), the supplier shall refund 
                on a timely basis to the patient (and shall be 
                liable to the patient for) any amounts 
                collected from the patient for the item, 
                unless--
                          (i) the supplier establishes that the 
                        supplier did not know and could not 
                        reasonably have been expected to know 
                        that payment may not be made for the 
                        item by reason of paragraph (17)(B), or
                          (ii) before the item was furnished, 
                        the patient was informed that payment 
                        under this part may not be made for 
                        that item and the patient has agreed to 
                        pay for that item.
                  (B) Sanctions.--If a supplier knowingly and 
                willfully fails to make refunds in violation of 
                subparagraph (A), the Secretary may apply 
                sanctions against the supplier in accordance 
                with section 1842(j)(2).
                  (C) Notice.--Each carrier with a contract in 
                effect under this part with respect to 
                suppliers of covered items shall send any 
                notice of denial of payment for covered items 
                by reason of paragraph (17)(B) and for which 
                payment is not requested on an assignment-
                related basis to the supplier and the patient 
                involved.
                  (D) Timely basis defined.--A refund under 
                subparagraph (A) is considered to be on a 
                timely basis only if--
                          (i) in the case of a supplier who 
                        does not request reconsideration or 
                        seek appeal on a timely basis, the 
                        refund is made within 30 days after the 
                        date the supplier receives a denial 
                        notice under subparagraph (C), or
                          (ii) in the case in which such a 
                        reconsideration or appeal is taken, the 
                        refund is made within 15 days after the 
                        date the supplier receives notice of an 
                        adverse determination on 
                        reconsideration or appeal.
          (19) Certain upgraded items.--
                  (A) Individual's right to choose upgraded 
                item.--Notwithstanding any other provision of 
                this title, the Secretary may issue regulations 
                under which an individual may purchase or rent 
                from a supplier an item of upgraded durable 
                medical equipment for which payment would be 
                made under this subsection if the item were a 
                standard item.
                  (B) Payments to supplier.--In the case of the 
                purchase or rental of an upgraded item under 
                subparagraph (A)--
                          (i) the supplier shall receive 
                        payment under this subsection with 
                        respect to such item as if such item 
                        were a standard item; and
                          (ii) the individual purchasing or 
                        renting the item shall pay the supplier 
                        an amount equal to the difference 
                        between the supplier's charge and the 
                        amount under clause (i).
                In no event may the supplier's charge for an 
                upgraded item exceed the applicable fee 
                schedule amount (if any) for such item.
                  (C) Consumer protection safeguards.--Any 
                regulations under subparagraph (A) shall 
                provide for consumer protection standards with 
                respect to the furnishing of upgraded equipment 
                under subparagraph (A). Such regulations shall 
                provide for--
                          (i) determination of fair market 
                        prices with respect to an upgraded 
                        item;
                          (ii) full disclosure of the 
                        availability and price of standard 
                        items and proof of receipt of such 
                        disclosure information by the 
                        beneficiary before the furnishing of 
                        the upgraded item;
                          (iii) conditions of participation for 
                        suppliers in the billing arrangement;
                          (iv) sanctions of suppliers who are 
                        determined to engage in coercive or 
                        abusive practices, including exclusion; 
                        and
                          (v) such other safeguards as the 
                        Secretary determines are necessary.
          (20) Identification of quality standards.--
                  (A) In general.--Subject to subparagraph (C), 
                the Secretary shall establish and implement 
                quality standards for suppliers of items and 
                services described in subparagraph (D) to be 
                applied by recognized independent accreditation 
                organizations (as designated under subparagraph 
                (B)) and with which such suppliers shall be 
                required to comply in order to--
                          (i) furnish any such item or service 
                        for which payment is made under this 
                        part; and
                          (ii) receive or retain a provider or 
                        supplier number used to submit claims 
                        for reimbursement for any such item or 
                        service for which payment may be made 
                        under this title.
                  (B) Designation of independent accreditation 
                organizations.--Not later than the date that is 
                1 year after the date on which the Secretary 
                implements the quality standards under 
                subparagraph (A), notwithstanding section 
                1865(a), the Secretary shall designate and 
                approve one or more independent accreditation 
                organizations for purposes of such 
                subparagraph.
                  (C) Quality standards.--The quality standards 
                described in subparagraph (A) may not be less 
                stringent than the quality standards that would 
                otherwise apply if this paragraph did not apply 
                and shall include consumer services standards.
                  (D) Items and services described.--The items 
                and services described in this subparagraph are 
                the following items and services, as the 
                Secretary determines appropriate:
                          (i) Covered items (as defined in 
                        paragraph (13)) for which payment may 
                        otherwise be made under this 
                        subsection.
                          (ii) Prosthetic devices and orthotics 
                        and prosthetics described in section 
                        1834(h)(4).
                          (iii) Items and services described in 
                        section 1842(s)(2).
                  (E) Implementation.--The Secretary may 
                establish by program instruction or otherwise 
                the quality standards under this paragraph, 
                including subparagraph (F), after consultation 
                with representatives of relevant parties. Such 
                standards shall be applied prospectively and 
                shall be published on the Internet website of 
                the Centers for Medicare & Medicaid Services.
                  (F) Application of accreditation 
                requirement.--In implementing quality standards 
                under this paragraph--
                          (i) subject to clause (ii) and 
                        subparagraph (G), the Secretary shall 
                        require suppliers furnishing items and 
                        services described in subparagraph (D) 
                        on or after October 1, 2009, directly 
                        or as a subcontractor for another 
                        entity, to have submitted to the 
                        Secretary evidence of accreditation by 
                        an accreditation organization 
                        designated under subparagraph (B) as 
                        meeting applicable quality standards, 
                        except that the Secretary shall not 
                        require under this clause pharmacies to 
                        obtain such accreditation before 
                        January 1, 2010, except that the 
                        Secretary shall not require a pharmacy 
                        to have submitted to the Secretary such 
                        evidence of accreditation prior to 
                        January 1, 2011; and
                          (ii) in applying such standards and 
                        the accreditation requirement of clause 
                        (i) with respect to eligible 
                        professionals (as defined in section 
                        1848(k)(3)(B)), and including such 
                        other persons, such as orthotists and 
                        prosthetists, as specified by the 
                        Secretary, furnishing such items and 
                        services--
                                  (I) such standards and 
                                accreditation requirement shall 
                                not apply to such professionals 
                                and persons unless the 
                                Secretary determines that the 
                                standards being applied are 
                                designed specifically to be 
                                applied to such professionals 
                                and persons; and
                                  (II) the Secretary may exempt 
                                such professionals and persons 
                                from such standards and 
                                requirement if the Secretary 
                                determines that licensing, 
                                accreditation, or other 
                                mandatory quality requirements 
                                apply to such professionals and 
                                persons with respect to the 
                                furnishing of such items and 
                                services.
                  (G) Application of accreditation requirement 
                to certain pharmacies.--
                          (i) In general.--With respect to 
                        items and services furnished on or 
                        after January 1, 2011, in implementing 
                        quality standards under this 
                        paragraph--
                                  (I) subject to subclause 
                                (II), in applying such 
                                standards and the accreditation 
                                requirement of subparagraph 
                                (F)(i) with respect to 
                                pharmacies described in clause 
                                (ii) furnishing such items and 
                                services, such standards and 
                                accreditation requirement shall 
                                not apply to such pharmacies; 
                                and
                                  (II) the Secretary may apply 
                                to such pharmacies an 
                                alternative accreditation 
                                requirement established by the 
                                Secretary if the Secretary 
                                determines such alternative 
                                accreditation requirement is 
                                more appropriate for such 
                                pharmacies.
                          (ii) Pharmacies described.--A 
                        pharmacy described in this clause is a 
                        pharmacy that meets each of the 
                        following criteria:
                                  (I) The total billings by the 
                                pharmacy for such items and 
                                services under this title are 
                                less than 5 percent of total 
                                pharmacy sales, as determined 
                                based on the average total 
                                pharmacy sales for the previous 
                                3 calendar years, 3 fiscal 
                                years, or other yearly period 
                                specified by the Secretary.
                                  (II) The pharmacy has been 
                                enrolled under section 1866(j) 
                                as a supplier of durable 
                                medical equipment, prosthetics, 
                                orthotics, and supplies, has 
                                been issued (which may include 
                                the renewal of) a provider 
                                number for at least 5 years, 
                                and for which a final adverse 
                                action (as defined in section 
                                424.57(a) of title 42, Code of 
                                Federal Regulations) has not 
                                been imposed in the past 5 
                                years.
                                  (III) The pharmacy submits to 
                                the Secretary an attestation, 
                                in a form and manner, and at a 
                                time, specified by the 
                                Secretary, that the pharmacy 
                                meets the criteria described in 
                                subclauses (I) and (II). Such 
                                attestation shall be subject to 
                                section 1001 of title 18, 
                                United States Code.
                                  (IV) The pharmacy agrees to 
                                submit materials as requested 
                                by the Secretary, or during the 
                                course of an audit conducted on 
                                a random sample of pharmacies 
                                selected annually, to verify 
                                that the pharmacy meets the 
                                criteria described in 
                                subclauses (I) and (II). 
                                Materials submitted under the 
                                preceding sentence shall 
                                include a certification by an 
                                accountant on behalf of the 
                                pharmacy or the submission of 
                                tax returns filed by the 
                                pharmacy during the relevant 
                                periods, as requested by the 
                                Secretary.
          (21) Special payment rule for specified items and 
        supplies.--
                  (A) In general.--Notwithstanding the 
                preceding provisions of this subsection, for 
                specified items and supplies (described in 
                subparagraph (B)) furnished during 2005, the 
                payment amount otherwise determined under this 
                subsection for such specified items and 
                supplies shall be reduced by the percentage 
                difference between--
                          (i) the amount of payment otherwise 
                        determined for the specified item or 
                        supply under this subsection for 2002, 
                        and
                          (ii) the amount of payment for the 
                        specified item or supply under chapter 
                        89 of title 5, United States Code, as 
                        identified in the column entitled 
                        ``Median FEHP Price'' in the table 
                        entitled ``SUMMARY OF MEDICARE PRICES 
                        COMPARED TO VA, MEDICAID, RETAIL, AND 
                        FEHP PRICES FOR 16 ITEMS'' included in 
                        the Testimony of the Inspector General 
                        before the Senate Committee on 
                        Appropriations, June 12, 2002, or any 
                        subsequent report by the Inspector 
                        General.
                  (B) Specified item or supply described.--For 
                purposes of subparagraph (A), a specified item 
                or supply means oxygen and oxygen equipment, 
                standard wheelchairs (including standard power 
                wheelchairs), nebulizers, diabetic supplies 
                consisting of lancets and testing strips, 
                hospital beds, and air mattresses, but only if 
                the HCPCS code for the item or supply is 
                identified in a table referred to in 
                subparagraph (A)(ii).
                  (C) Application of update to special payment 
                amount.--The covered item update under 
                paragraph (14) for specified items and supplies 
                for 2006 and each subsequent year shall be 
                applied to the payment amount under 
                subparagraph (A) unless payment is made for 
                such items and supplies under section 1847.
          (22) Special payment rule for diabetic supplies.--
        Notwithstanding the preceding provisions of this 
        subsection, for purposes of determining the payment 
        amount under this subsection for diabetic supplies 
        furnished on or after the first day of the calendar 
        quarter during 2013 that is at least 30 days after the 
        date of the enactment of this paragraph and before the 
        date described in paragraph (1)(H)(ii), the Secretary 
        shall recalculate and apply the covered item update 
        under paragraph (14) as if subparagraph (J)(i) of such 
        paragraph was amended by striking ``but only if 
        furnished through mail order''.
  (b) Fee Schedules for Radiologist Services.--
          (1) Development.--The Secretary shall develop--
                  (A) a relative value scale to serve as the 
                basis for the payment for radiologist services 
                under this part, and
                  (B) using such scale and appropriate 
                conversion factors and subject to subsection 
                (c)(1)(A), fee schedules (on a regional, 
                statewide, locality, or carrier service area 
                basis) for payment for radiologist services 
                under this part, to be implemented for such 
                services furnished during 1989.
          (2) Consultation.--In carrying out paragraph (1), the 
        Secretary shall regularly consult closely with the 
        Physician Payment Review Commission, the American 
        College of Radiology, and other organizations 
        representing physicians or suppliers who furnish 
        radiologist services and shall share with them the data 
        and data analysis being used to make the determinations 
        under paragraph (1), including data on variations in 
        current medicare payments by geographic area, and by 
        service and physician specialty.
          (3) Considerations.--In developing the relative value 
        scale and fee schedules under paragraph (1), the 
        Secretary--
                  (A) shall take into consideration variations 
                in the cost of furnishing such services among 
                geographic areas and among different sites 
                where services are furnished, and
                  (B) may also take into consideration such 
                other factors respecting the manner in which 
                physicians in different specialties furnish 
                such services as may be appropriate to assure 
                that payment amounts are equitable and designed 
                to promote effective and efficient provision of 
                radiologist services by physicians in the 
                different specialties.
          (4) Savings.--
                  (A) Budget neutral fee schedules.--The 
                Secretary shall develop preliminary fee 
                schedules for 1989, which are designed to 
                result in the same amount of aggregate payments 
                (net of any coinsurance and deductibles under 
                sections 1833(a)(1)(J) and 1833(b)) for 
                radiologist services furnished in 1989 as would 
                have been made if this subsection had not been 
                enacted.
                  (B) Initial savings.--The fee schedules 
                established for payment purposes under this 
                subsection for services furnished in 1989 shall 
                be 97 percent of the amounts permitted under 
                these preliminary fee schedules developed under 
                subparagraph (A).
                  (C)  1990 fee schedules.--For radiologist 
                services (other than portable X-ray services) 
                furnished under this part during 1990, after 
                March 31 of such year, the conversion factors 
                used under this subsection shall be 96 percent 
                of the conversion factors that applied under 
                this subsection as of December 31, 1989.
                  (D)  1991 fee schedules.--For radiologist 
                services (other than portable X-ray services) 
                furnished under this part during 1991, the 
                conversion factors used in a locality under 
                this subsection shall, subject to clause (vii), 
                be reduced to the adjusted conversion factor 
                for the locality determined as follows:
                          (i) National weighted average 
                        conversion factor.--The Secretary shall 
                        estimate the national weighted average 
                        of the conversion factors used under 
                        this subsection for services furnished 
                        during 1990 beginning on April 1, using 
                        the best available data.
                          (ii) Reduced national weighted 
                        average.--The national weighted average 
                        estimated under clause (i) shall be 
                        reduced by 13 percent.
                          (iii) Computation of 1990 locality 
                        index relative to national average.--
                        The Secretary shall establish an index 
                        which reflects, for each locality, the 
                        ratio of the conversion factor used in 
                        the locality under this subsection to 
                        the national weighted average estimated 
                        under clause (i).
                          (iv) Adjusted conversion factor.--The 
                        adjusted conversion factor for the 
                        professional or technical component of 
                        a service in a locality is the sum of 
                        \1/2\ of the locally-adjusted amount 
                        determined under clause (v) and \1/2\ 
                        of the GPCI-adjusted amount determined 
                        under clause (vi).
                          (v) Locally-adjusted amount.--For 
                        purposes of clause (iv), the locally 
                        adjusted amount determined under this 
                        clause is the product of (I) the 
                        national weighted average conversion 
                        factor computed under clause (ii), and 
                        (II) the index value established under 
                        clause (iii) for the locality.
                          (vi) GPCI-adjusted amount.--For 
                        purposes of clause (iv), the GPCI-
                        adjusted amount determined under this 
                        clause is the sum of--
                                  (I) the product of (a) the 
                                portion of the reduced national 
                                weighted average conversion 
                                factor computed under clause 
                                (ii) which is attributable to 
                                physician work and (b) the 
                                geographic work index value for 
                                the locality (specified in 
                                Addendum C to the Model Fee 
                                Schedule for Physician Services 
                                (published on September 4, 
                                1990, 55 Federal Register pp. 
                                36238-36243)); and
                                  (II) the product of (a) the 
                                remaining portion of the 
                                reduced national weighted 
                                average conversion factor 
                                computed under clause (ii), and 
                                (b) the geographic practice 
                                cost index value specified in 
                                section 1842(b)(14)(C)(iv) for 
                                the locality.
                        In applying this clause with respect to 
                        the professional component of a 
                        service, 80 percent of the conversion 
                        factor shall be considered to be 
                        attributable to physician work and with 
                        respect to the technical component of 
                        the service, 0 percent shall be 
                        considered to be attributable to 
                        physician work.
                          (vii) Limits on conversion factor.--
                        The conversion factor to be applied to 
                        a locality to the professional or 
                        technical component of a service shall 
                        not be reduced under this subparagraph 
                        by more than 9.5 percent below the 
                        conversion factor applied in the 
                        locality under subparagraph (C) to such 
                        component, but in no case shall the 
                        conversion factor be less than 60 
                        percent of the national weighted 
                        average of the conversion factors 
                        (computed under clause (i)).
                  (E) Rule for certain scanning services.--In 
                the case of the technical components of 
                magnetic resonance imaging (MRI) services and 
                computer assisted tomography (CAT) services 
                furnished after December 31, 1990, the amount 
                otherwise payable shall be reduced by 10 
                percent.
                  (F) Subsequent updating.--For radiologist 
                services furnished in subsequent years, the fee 
                schedules shall be the schedules for the 
                previous year updated by the percentage 
                increase in the MEI (as defined in section 
                1842(i)(3)) for the year.
                  (G) Nonparticipating physicians and 
                suppliers.--Each fee schedule so established 
                shall provide that the payment rate recognized 
                for nonparticipating physicians and suppliers 
                is equal to the appropriate percent (as defined 
                in section 1842(b)(4)(A)(iv)) of the payment 
                rate recognized for participating physicians 
                and suppliers.
          (5) Limiting charges of nonparticipating physicians 
        and suppliers.--
                  (A) In general.--In the case of radiologist 
                services furnished after January 1, 1989, for 
                which payment is made under a fee schedule 
                under this subsection, if a nonparticipating 
                physician or supplier furnishes the service to 
                an individual entitled to benefits under this 
                part, the physician or supplier may not charge 
                the individual more than the limiting charge 
                (as defined in subparagraph (B)).
                  (B) Limiting charge defined.--In subparagraph 
                (A), the term ``limiting charge'' means, with 
                respect to a service furnished--
                          (i) in 1989, 125 percent of the 
                        amount specified for the service in the 
                        appropriate fee schedule established 
                        under paragraph (1),
                          (ii) in 1990, 120 percent of the 
                        amount specified for the service in the 
                        appropriate fee schedule established 
                        under paragraph (1), and
                          (iii) after 1990, 115 percent of the 
                        amount specified for the service in the 
                        appropriate fee schedule established 
                        under paragraph (1).
                  (C) Enforcement.--If a physician or supplier 
                knowingly and willfully bills in violation of 
                subparagraph (A), the Secretary may apply 
                sanctions against such physician or supplier in 
                accordance with section 1842(j)(2) in the same 
                manner as such sanctions may apply to a 
                physician.
          (6) Radiologist services defined.--For the purposes 
        of this subsection and section 1833(a)(1)(J), the term 
        ``radiologist services'' only includes radiology 
        services performed by, or under the direction or 
        supervision of, a physician--
                  (A) who is certified, or eligible to be 
                certified, by the American Board of Radiology, 
                or
                  (B) for whom radiology services account for 
                at least 50 percent of the total amount of 
                charges made under this part.
  (c) Payment and Standards for Screening Mammography.--
          (1) In general.--With respect to expenses incurred 
        for screening mammography (as defined in section 
        1861(jj)), payment may be made only--
                  (A) for screening mammography conducted 
                consistent with the frequency permitted under 
                paragraph (2); and
                  (B) if the screening mammography is conducted 
                by a facility that has a certificate (or 
                provisional certificate) issued under section 
                354 of the Public Health Service Act.
          (2) Frequency covered.--
                  (A) In general.--Subject to revision by the 
                Secretary under subparagraph (B)--
                          (i) no payment may be made under this 
                        part for screening mammography 
                        performed on a woman under 35 years of 
                        age;
                          (ii) payment may be made under this 
                        part for only one screening mammography 
                        performed on a woman over 34 years of 
                        age, but under 40 years of age; and
                          (iii) in the case of a woman over 39 
                        years of age, payment may not be made 
                        under this part for screening 
                        mammography performed within 11 months 
                        following the month in which a previous 
                        screening mammography was performed.
                  (B) Revision of frequency.--
                          (i) Review.--The Secretary, in 
                        consultation with the Director of the 
                        National Cancer Institute, shall review 
                        periodically the appropriate frequency 
                        for performing screening mammography, 
                        based on age and such other factors as 
                        the Secretary believes to be pertinent.
                          (ii) Revision of frequency.--The 
                        Secretary, taking into consideration 
                        the review made under clause (i), may 
                        revise from time to time the frequency 
                        with which screening mammography may be 
                        paid for under this subsection.
  (d) Frequency Limits and Payment for Colorectal Cancer 
Screening Tests.--
          (1) Screening fecal-occult blood tests.--
                  (A) Payment amount.--The payment amount for 
                colorectal cancer screening tests consisting of 
                screening fecal-occult blood tests is equal to 
                the payment amount established for diagnostic 
                fecal-occult blood tests under section 1833(h).
                  (B) Frequency limit.--No payment may be made 
                under this part for a colorectal cancer 
                screening test consisting of a screening fecal-
                occult blood test--
                          (i) if the individual is under 50 
                        years of age; or
                          (ii) if the test is performed within 
                        the 11 months after a previous 
                        screening fecal-occult blood test.
          (2) Screening flexible sigmoidoscopies.--
                  (A) Fee schedule.--With respect to colorectal 
                cancer screening tests consisting of screening 
                flexible sigmoidoscopies, payment under section 
                1848 shall be consistent with payment under 
                such section for similar or related services.
                  (B) Payment limit.--In the case of screening 
                flexible sigmoidoscopy services, payment under 
                this part shall not exceed such amount as the 
                Secretary specifies, based upon the rates 
                recognized for diagnostic flexible 
                sigmoidoscopy services.
                  (C) Facility payment limit.--
                          (i) In general.--Notwithstanding 
                        subsections (i)(2)(A) and (t) of 
                        section 1833, in the case of screening 
                        flexible sigmoidoscopy services 
                        furnished on or after January 1, 1999, 
                        that--
                                  (I) in accordance with 
                                regulations, may be performed 
                                in an ambulatory surgical 
                                center and for which the 
                                Secretary permits ambulatory 
                                surgical center payments under 
                                this part, and
                                  (II) are performed in an 
                                ambulatory surgical center or 
                                hospital outpatient department,
                        payment under this part shall be based 
                        on the lesser of the amount under the 
                        fee schedule that would apply to such 
                        services if they were performed in a 
                        hospital outpatient department in an 
                        area or the amount under the fee 
                        schedule that would apply to such 
                        services if they were performed in an 
                        ambulatory surgical center in the same 
                        area.
                          (ii) Limitation on coinsurance.--
                        Notwithstanding any other provision of 
                        this title, in the case of a 
                        beneficiary who receives the services 
                        described in clause (i)--
                                  (I) in computing the amount 
                                of any applicable copayment, 
                                the computation of such 
                                coinsurance shall be based upon 
                                the fee schedule under which 
                                payment is made for the 
                                services, and
                                  (II) the amount of such 
                                coinsurance is equal to 25 
                                percent of the payment amount 
                                under the fee schedule 
                                described in subclause (I).
                  (D) Special rule for detected lesions.--If 
                during the course of such screening flexible 
                sigmoidoscopy, a lesion or growth is detected 
                which results in a biopsy or removal of the 
                lesion or growth, payment under this part shall 
                not be made for the screening flexible 
                sigmoidoscopy but shall be made for the 
                procedure classified as a flexible 
                sigmoidoscopy with such biopsy or removal.
                  (E) Frequency limit.--No payment may be made 
                under this part for a colorectal cancer 
                screening test consisting of a screening 
                flexible sigmoidoscopy--
                          (i) if the individual is under 50 
                        years of age; or
                          (ii) if the procedure is performed 
                        within the 47 months after a previous 
                        screening flexible sigmoidoscopy or, in 
                        the case of an individual who is not at 
                        high risk for colorectal cancer, if the 
                        procedure is performed within the 119 
                        months after a previous screening 
                        colonoscopy.
          (3) Screening colonoscopy.--
                  (A) Fee schedule.--With respect to colorectal 
                cancer screening test consisting of a screening 
                colonoscopy, payment under section 1848 shall 
                be consistent with payment amounts under such 
                section for similar or related services.
                  (B) Payment limit.--In the case of screening 
                colonoscopy services, payment under this part 
                shall not exceed such amount as the Secretary 
                specifies, based upon the rates recognized for 
                diagnostic colonoscopy services.
                  (C) Facility payment limit.--
                          (i) In general.--Notwithstanding 
                        subsections (i)(2)(A) and (t) of 
                        section 1833, in the case of screening 
                        colonoscopy services furnished on or 
                        after January 1, 1999, that are 
                        performed in an ambulatory surgical 
                        center or a hospital outpatient 
                        department, payment under this part 
                        shall be based on the lesser of the 
                        amount under the fee schedule that 
                        would apply to such services if they 
                        were performed in a hospital outpatient 
                        department in an area or the amount 
                        under the fee schedule that would apply 
                        to such services if they were performed 
                        in an ambulatory surgical center in the 
                        same area.
                          (ii) Limitation on coinsurance.--
                        Notwithstanding any other provision of 
                        this title, in the case of a 
                        beneficiary who receives the services 
                        described in clause (i)--
                                  (I) in computing the amount 
                                of any applicable coinsurance, 
                                the computation of such 
                                coinsurance shall be based upon 
                                the fee schedule under which 
                                payment is made for the 
                                services, and
                                  (II) the amount of such 
                                coinsurance is equal to 25 
                                percent of the payment amount 
                                under the fee schedule 
                                described in subclause (I).
                  (D) Special rule for detected lesions.--If 
                during the course of such screening 
                colonoscopy, a lesion or growth is detected 
                which results in a biopsy or removal of the 
                lesion or growth, payment under this part shall 
                not be made for the screening colonoscopy but 
                shall be made for the procedure classified as a 
                colonoscopy with such biopsy or removal.
                  (E) Frequency limit.--No payment may be made 
                under this part for a colorectal cancer 
                screening test consisting of a screening 
                colonoscopy for individuals at high risk for 
                colorectal cancer if the procedure is performed 
                within the 23 months after a previous screening 
                colonoscopy or for other individuals if the 
                procedure is performed within the 119 months 
                after a previous screening colonoscopy or 
                within 47 months after a previous screening 
                flexible sigmoidoscopy.
  (e) Accreditation Requirement for Advanced Diagnostic Imaging 
Services.--
          (1) In general.--
                  (A) In general.--Beginning with January 1, 
                2012, with respect to the technical component 
                of advanced diagnostic imaging services for 
                which payment is made under the fee schedule 
                established under section 1848(b) and that are 
                furnished by a supplier, payment may only be 
                made if such supplier is accredited by an 
                accreditation organization designated by the 
                Secretary under paragraph (2)(B)(i).
                  (B) Advanced diagnostic imaging services 
                defined.--In this subsection, the term 
                ``advanced diagnostic imaging services'' 
                includes--
                          (i) diagnostic magnetic resonance 
                        imaging, computed tomography, and 
                        nuclear medicine (including positron 
                        emission tomography); and
                          (ii) such other diagnostic imaging 
                        services, including services described 
                        in section 1848(b)(4)(B) (excluding X-
                        ray, ultrasound, and fluoroscopy), as 
                        specified by the Secretary in 
                        consultation with physician specialty 
                        organizations and other stakeholders.
                  (C) Supplier defined.--In this subsection, 
                the term ``supplier'' has the meaning given 
                such term in section 1861(d).
          (2) Accreditation organizations.--
                  (A) Factors for designation of accreditation 
                organizations.--The Secretary shall consider 
                the following factors in designating 
                accreditation organizations under subparagraph 
                (B)(i) and in reviewing and modifying the list 
                of accreditation organizations designated 
                pursuant to subparagraph (C):
                          (i) The ability of the organization 
                        to conduct timely reviews of 
                        accreditation applications.
                          (ii) Whether the organization has 
                        established a process for the timely 
                        integration of new advanced diagnostic 
                        imaging services into the 
                        organization's accreditation program.
                          (iii) Whether the organization uses 
                        random site visits, site audits, or 
                        other strategies for ensuring 
                        accredited suppliers maintain adherence 
                        to the criteria described in paragraph 
                        (3).
                          (iv) The ability of the organization 
                        to take into account the capacities of 
                        suppliers located in a rural area (as 
                        defined in section 1886(d)(2)(D)).
                          (v) Whether the organization has 
                        established reasonable fees to be 
                        charged to suppliers applying for 
                        accreditation.
                          (vi) Such other factors as the 
                        Secretary determines appropriate.
                  (B) Designation.--Not later than January 1, 
                2010, the Secretary shall designate 
                organizations to accredit suppliers furnishing 
                the technical component of advanced diagnostic 
                imaging services. The list of accreditation 
                organizations so designated may be modified 
                pursuant to subparagraph (C).
                  (C) Review and modification of list of 
                accreditation organizations.--
                          (i) In general.--The Secretary shall 
                        review the list of accreditation 
                        organizations designated under 
                        subparagraph (B) taking into account 
                        the factors under subparagraph (A). 
                        Taking into account the results of such 
                        review, the Secretary may, by 
                        regulation, modify the list of 
                        accreditation organizations designated 
                        under subparagraph (B).
                          (ii) Special rule for accreditations 
                        done prior to removal from list of 
                        designated accreditation 
                        organizations.--In the case where the 
                        Secretary removes an organization from 
                        the list of accreditation organizations 
                        designated under subparagraph (B), any 
                        supplier that is accredited by the 
                        organization during the period 
                        beginning on the date on which the 
                        organization is designated as an 
                        accreditation organization under 
                        subparagraph (B) and ending on the date 
                        on which the organization is removed 
                        from such list shall be considered to 
                        have been accredited by an organization 
                        designated by the Secretary under 
                        subparagraph (B) for the remaining 
                        period such accreditation is in effect.
          (3) Criteria for accreditation.--The Secretary shall 
        establish procedures to ensure that the criteria used 
        by an accreditation organization designated under 
        paragraph (2)(B) to evaluate a supplier that furnishes 
        the technical component of advanced diagnostic imaging 
        services for the purpose of accreditation of such 
        supplier is specific to each imaging modality. Such 
        criteria shall include--
                  (A) standards for qualifications of medical 
                personnel who are not physicians and who 
                furnish the technical component of advanced 
                diagnostic imaging services;
                  (B) standards for qualifications and 
                responsibilities of medical directors and 
                supervising physicians, including standards 
                that recognize the considerations described in 
                paragraph (4);
                  (C) procedures to ensure that equipment used 
                in furnishing the technical component of 
                advanced diagnostic imaging services meets 
                performance specifications;
                  (D) standards that require the supplier have 
                procedures in place to ensure the safety of 
                persons who furnish the technical component of 
                advanced diagnostic imaging services and 
                individuals to whom such services are 
                furnished;
                  (E) standards that require the establishment 
                and maintenance of a quality assurance and 
                quality control program by the supplier that is 
                adequate and appropriate to ensure the 
                reliability, clarity, and accuracy of the 
                technical quality of diagnostic images produced 
                by such supplier; and
                  (F) any other standards or procedures the 
                Secretary determines appropriate.
          (4) Recognition in standards for the evaluation of 
        medical directors and supervising physicians.--The 
        standards described in paragraph (3)(B) shall recognize 
        whether a medical director or supervising physician--
                  (A) in a particular specialty receives 
                training in advanced diagnostic imaging 
                services in a residency program;
                  (B) has attained, through experience, the 
                necessary expertise to be a medical director or 
                a supervising physician;
                  (C) has completed any continuing medical 
                education courses relating to such services; or
                  (D) has met such other standards as the 
                Secretary determines appropriate.
          (5) Rule for accreditations made prior to 
        designation.--In the case of a supplier that is 
        accredited before January 1, 2010, by an accreditation 
        organization designated by the Secretary under 
        paragraph (2)(B) as of January 1, 2010, such supplier 
        shall be considered to have been accredited by an 
        organization designated by the Secretary under such 
        paragraph as of January 1, 2012, for the remaining 
        period such accreditation is in effect.
  (f) Reduction in Payments for Physician Pathology Services 
During 1991.--
          (1) In general.--For physician pathology services 
        furnished under this part during 1991, the prevailing 
        charges used in a locality under this part shall be 7 
        percent below the prevailing charges used in the 
        locality under this part in 1990 after March 31.
          (2) Limitation.--The prevailing charge for the 
        technical and professional components of an physician 
        pathology service furnished by a physician through an 
        independent laboratory shall not be reduced pursuant to 
        paragraph (1) to the extent that such reduction would 
        reduce such prevailing charge below 115 percent of the 
        prevailing charge for the professional component of 
        such service when furnished by a hospital-based 
        physician in the same locality. For purposes of the 
        preceding sentence, an independent laboratory is a 
        laboratory that is independent of a hospital and 
        separate from the attending or consulting physicians' 
        office.
  (g) Payment for Outpatient Critical Access Hospital 
Services.--
          (1) In general.--The amount of payment for outpatient 
        critical access hospital services of a critical access 
        hospital is equal to 101 percent of the reasonable 
        costs of the hospital in providing such services, 
        unless the hospital makes the election under paragraph 
        (2).
          (2) Election of cost-based hospital outpatient 
        service payment plus fee schedule for professional 
        services.--A critical access hospital may elect to be 
        paid for outpatient critical access hospital services 
        amounts equal to the sum of the following, less the 
        amount that such hospital may charge as described in 
        section 1866(a)(2)(A):
                  (A) Facility fee.--With respect to facility 
                services, not including any services for which 
                payment may be made under subparagraph (B), 101 
                percent of the reasonable costs of the critical 
                access hospital in providing such services.
                  (B) Fee schedule for professional services.--
                With respect to professional services otherwise 
                included within outpatient critical access 
                hospital services, 115 percent of such amounts 
                as would otherwise be paid under this part if 
                such services were not included in outpatient 
                critical access hospital services. Subsections 
                (x) and (y) of section 1833 shall not be taken 
                into account in determining the amounts that 
                would otherwise be paid pursuant to the 
                preceding sentence.
        The Secretary may not require, as a condition for 
        applying subparagraph (B) with respect to a critical 
        access hospital, that each physician or other 
        practitioner providing professional services in the 
        hospital must assign billing rights with respect to 
        such services, except that such subparagraph shall not 
        apply to those physicians and practitioners who have 
        not assigned such billing rights.
          (3) Disregarding charges.--The payment amounts under 
        this subsection shall be determined without regard to 
        the amount of the customary or other charge.
          (4) Treatment of clinical diagnostic laboratory 
        services.--No coinsurance, deductible, copayment, or 
        other cost-sharing otherwise applicable under this part 
        shall apply with respect to clinical diagnostic 
        laboratory services furnished as an outpatient critical 
        access hospital service. Nothing in this title shall be 
        construed as providing for payment for clinical 
        diagnostic laboratory services furnished as part of 
        outpatient critical access hospital services, other 
        than on the basis described in this subsection. For 
        purposes of the preceding sentence and section 
        1861(mm)(3), clinical diagnostic laboratory services 
        furnished by a critical access hospital shall be 
        treated as being furnished as part of outpatient 
        critical access services without regard to whether the 
        individual with respect to whom such services are 
        furnished is physically present in the critical access 
        hospital, or in a skilled nursing facility or a clinic 
        (including a rural health clinic) that is operated by a 
        critical access hospital, at the time the specimen is 
        collected.
          (5) Coverage of costs for certain emergency room on-
        call providers.--In determining the reasonable costs of 
        outpatient critical access hospital services under 
        paragraphs (1) and (2)(A), the Secretary shall 
        recognize as allowable costs, amounts (as defined by 
        the Secretary) for reasonable compensation and related 
        costs for physicians, physician assistants, nurse 
        practitioners, and clinical nurse specialists who are 
        on-call (as defined by the Secretary) to provide 
        emergency services but who are not present on the 
        premises of the critical access hospital involved, and 
        are not otherwise furnishing services covered under 
        this title and are not on-call at any other provider or 
        facility.
  (h) Payment for Prosthetic Devices and Orthotics and 
Prosthetics.--
          (1) General rule for payment.--
                  (A) In general.--Payment under this 
                subsection for prosthetic devices and orthotics 
                and prosthetics shall be made in a lump-sum 
                amount for the purchase of the item in an 
                amount equal to 80 percent of the payment basis 
                described in subparagraph (B).
                  (B) Payment basis.--Except as provided in 
                subparagraphs (C), (E), and (H)(i), the payment 
                basis described in this subparagraph is the 
                lesser of--
                          (i) the actual charge for the item; 
                        or
                          (ii) the amount recognized under 
                        paragraph (2) as the purchase price for 
                        the item.
                  (C) Exception for certain public home health 
                agencies.--Subparagraph (B)(i) shall not apply 
                to an item furnished by a public home health 
                agency (or by another home health agency which 
                demonstrates to the satisfaction of the 
                Secretary that a significant portion of its 
                patients are low income) free of charge or at 
                nominal charges to the public.
                  (D) Exclusive payment rule.--Subject to 
                subparagraph (H)(ii), this subsection shall 
                constitute the exclusive provision of this 
                title for payment for prosthetic devices, 
                orthotics, and prosthetics under this part or 
                under part A to a home health agency.
                  (E) Exception for certain items.--Payment for 
                ostomy supplies, tracheostomy supplies, and 
                urologicals shall be made in accordance with 
                subparagraphs (B) and (C) of section 
                1834(a)(2).
                  (F) Special payment rules for certain 
                prosthetics and custom-fabricated orthotics.--
                          (i) In general.--No payment shall be 
                        made under this subsection for an item 
                        of custom-fabricated orthotics 
                        described in clause (ii) or for an item 
                        of prosthetics unless such item is--
                                  (I) furnished by a qualified 
                                practitioner; and
                                  (II) fabricated by a 
                                qualified practitioner or a 
                                qualified supplier at a 
                                facility that meets such 
                                criteria as the Secretary 
                                determines appropriate.
                          (ii) Description of custom-fabricated 
                        item.--
                                  (I) In general.--An item 
                                described in this clause is an 
                                item of custom-fabricated 
                                orthotics that requires 
                                education, training, and 
                                experience to custom-fabricate 
                                and that is included in a list 
                                established by the Secretary in 
                                subclause (II). Such an item 
                                does not include shoes and shoe 
                                inserts.
                                  (II) List of items.--The 
                                Secretary, in consultation with 
                                appropriate experts in 
                                orthotics (including national 
                                organizations representing 
                                manufacturers of orthotics), 
                                shall establish and update as 
                                appropriate a list of items to 
                                which this subparagraph 
                                applies. No item may be 
                                included in such list unless 
                                the item is individually 
                                fabricated for the patient over 
                                a positive model of the 
                                patient.
                          (iii) Qualified practitioner 
                        defined.--In this subparagraph, the 
                        term ``qualified practitioner'' means a 
                        physician or other individual who--
                                  (I) is a qualified physical 
                                therapist or a qualified 
                                occupational therapist;
                                  (II) in the case of a State 
                                that provides for the licensing 
                                of orthotics and prosthetics, 
                                is licensed in orthotics or 
                                prosthetics by the State in 
                                which the item is supplied; or
                                  (III) in the case of a State 
                                that does not provide for the 
                                licensing of orthotics and 
                                prosthetics, is specifically 
                                trained and educated to provide 
                                or manage the provision of 
                                prosthetics and custom-designed 
                                or -fabricated orthotics, and 
                                is certified by the American 
                                Board for Certification in 
                                Orthotics and Prosthetics, Inc. 
                                or by the Board for Orthotist/
                                Prosthetist Certification, or 
                                is credentialed and approved by 
                                a program that the Secretary 
                                determines, in consultation 
                                with appropriate experts in 
                                orthotics and prosthetics, has 
                                training and education 
                                standards that are necessary to 
                                provide such prosthetics and 
                                orthotics.
                          (iv) Qualified supplier defined.--In 
                        this subparagraph, the term ``qualified 
                        supplier'' means any entity that is 
                        accredited by the American Board for 
                        Certification in Orthotics and 
                        Prosthetics, Inc. or by the Board for 
                        Orthotist/Prosthetist Certification, or 
                        accredited and approved by a program 
                        that the Secretary determines has 
                        accreditation and approval standards 
                        that are essentially equivalent to 
                        those of such Board.
                  (G) Replacement of prosthetic devices and 
                parts.--
                          (i) In general.--Payment shall be 
                        made for the replacement of prosthetic 
                        devices which are artificial limbs, or 
                        for the replacement of any part of such 
                        devices, without regard to continuous 
                        use or useful lifetime restrictions if 
                        an ordering physician determines that 
                        the provision of a replacement device, 
                        or a replacement part of such a device, 
                        is necessary because of any of the 
                        following:
                                  (I) A change in the 
                                physiological condition of the 
                                patient.
                                  (II) An irreparable change in 
                                the condition of the device, or 
                                in a part of the device.
                                  (III) The condition of the 
                                device, or the part of the 
                                device, requires repairs and 
                                the cost of such repairs would 
                                be more than 60 percent of the 
                                cost of a replacement device, 
                                or, as the case may be, of the 
                                part being replaced.
                          (ii) Confirmation may be required if 
                        device or part being replaced is less 
                        than 3 years old.--If a physician 
                        determines that a replacement device, 
                        or a replacement part, is necessary 
                        pursuant to clause (i)--
                                  (I) such determination shall 
                                be controlling; and
                                  (II) such replacement device 
                                or part shall be deemed to be 
                                reasonable and necessary for 
                                purposes of section 
                                1862(a)(1)(A);
                        except that if the device, or part, 
                        being replaced is less than 3 years old 
                        (calculated from the date on which the 
                        beneficiary began to use the device or 
                        part), the Secretary may also require 
                        confirmation of necessity of the 
                        replacement device or replacement part, 
                        as the case may be.
                  (H) Application of competitive acquisition to 
                orthotics; limitation of inherent 
                reasonableness authority.--In the case of 
                orthotics described in paragraph (2)(C) of 
                section 1847(a) furnished on or after January 
                1, 2009, subject to subsection (a)(1)(G), that 
                are included in a competitive acquisition 
                program in a competitive acquisition area under 
                such section--
                          (i) the payment basis under this 
                        subsection for such orthotics furnished 
                        in such area shall be the payment basis 
                        determined under such competitive 
                        acquisition program; and
                          (ii) the Secretary may use 
                        information on the payment determined 
                        under such competitive acquisition 
                        programs to adjust the payment amount 
                        otherwise recognized under subparagraph 
                        (B)(ii) for an area that is not a 
                        competitive acquisition area under 
                        section 1847, and in the case of such 
                        adjustment, paragraphs (8) and (9) of 
                        section 1842(b) shall not be applied.
          (2) Purchase price recognized.--For purposes of 
        paragraph (1), the amount that is recognized under this 
        paragraph as the purchase price for prosthetic devices, 
        orthotics, and prosthetics is the amount described in 
        subparagraph (C) of this paragraph, determined as 
        follows:
                  (A) Computation of local purchase price.--
                Each carrier under section 1842 shall compute a 
                base local purchase price for the item as 
                follows:
                          (i) The carrier shall compute a base 
                        local purchase price for each item 
                        equal to the average reasonable charge 
                        in the locality for the purchase of the 
                        item for the 12-month period ending 
                        with June 1987.
                          (ii) The carrier shall compute a 
                        local purchase price, with respect to 
                        the furnishing of each particular 
                        item--
                                  (I) in 1989 and 1990, equal 
                                to the base local purchase 
                                price computed under clause (i) 
                                increased by the percentage 
                                increase in the consumer price 
                                index for all urban consumers 
                                (United States city average) 
                                for the 6-month period ending 
                                with December 1987, or
                                  (II) in 1991, 1992 or 1993, 
                                equal to the local purchase 
                                price computed under this 
                                clause for the previous year 
                                increased by the applicable 
                                percentage increase for the 
                                year.
                  (B) Computation of regional purchase price.--
                With respect to the furnishing of a particular 
                item in each region (as defined by the 
                Secretary), the Secretary shall compute a 
                regional purchase price--
                          (i) for 1992, equal to the average 
                        (weighted by relative volume of all 
                        claims among carriers) of the local 
                        purchase prices for the carriers in the 
                        region computed under subparagraph 
                        (A)(ii)(II) for the year, and
                          (ii) for each subsequent year, equal 
                        to the regional purchase price computed 
                        under this subparagraph for the 
                        previous year increased by the 
                        applicable percentage increase for the 
                        year.
                  (C) Purchase price recognized.--For purposes 
                of paragraph (1) and subject to subparagraph 
                (D), the amount that is recognized under this 
                paragraph as the purchase price for each item 
                furnished--
                          (i) in 1989, 1990, or 1991, is 100 
                        percent of the local purchase price 
                        computed under subparagraph (A)(ii);
                          (ii) in 1992, is the sum of (I) 75 
                        percent of the local purchase price 
                        computed under subparagraph (A)(ii)(II) 
                        for 1992, and (II) 25 percent of the 
                        regional purchase price computed under 
                        subparagraph (B) for 1992;
                          (iii) in 1993, is the sum of (I) 50 
                        percent of the local purchase price 
                        computed under subparagraph (A)(ii)(II) 
                        for 1993, and (II) 50 percent of the 
                        regional purchase price computed under 
                        subparagraph (B) for 1993; and
                          (iv) in 1994 or a subsequent year, is 
                        the regional purchase price computed 
                        under subparagraph (B) for that year.
                  (D) Range on amount recognized.--The amount 
                that is recognized under subparagraph (C) as 
                the purchase price for an item furnished--
                          (i) in 1992, may not exceed 125 
                        percent, and may not be lower than 85 
                        percent, of the average of the purchase 
                        prices recognized under such 
                        subparagraph for all the carrier 
                        service areas in the United States in 
                        that year; and
                          (ii) in a subsequent year, may not 
                        exceed 120 percent, and may not be 
                        lower than 90 percent, of the average 
                        of the purchase prices recognized under 
                        such subparagraph for all the carrier 
                        service areas in the United States in 
                        that year.
          (3) Applicability of certain provisions relating to 
        durable medical equipment.--Paragraphs (12) and (17) 
        and subparagraphs (A) and (B) of paragraph (10) and 
        paragraph (11) of subsection (a) shall apply to 
        prosthetic devices, orthotics, and prosthetics in the 
        same manner as such provisions apply to covered items 
        under such subsection.
          (4) Definitions.--In this subsection--
                  (A) the term ``applicable percentage 
                increase'' means--
                          (i) for 1991, 0 percent;
                          (ii) for 1992 and 1993, the 
                        percentage increase in the consumer 
                        price index for all urban consumers 
                        (United States city average) for the 
                        12-month period ending with June of the 
                        previous year;
                          (iii) for 1994 and 1995, 0 percent;
                          (iv) for 1996 and 1997, the 
                        percentage increase in the consumer 
                        price index for all urban consumers 
                        (United States city average) for the 
                        12-month period ending with June of the 
                        previous year;
                          (v) for each of the years 1998 
                        through 2000, 1 percent;
                          (vi) for 2001, the percentage 
                        increase in the consumer price index 
                        for all urban consumers (U.S. city 
                        average) for the 12-month period ending 
                        with June 2000;
                          (vii) for 2002, 1 percent;
                          (viii) for 2003, the percentage 
                        increase in the consumer price index 
                        for all urban consumers (United States 
                        city average) for the 12-month period 
                        ending with June of the previous year;
                          (ix) for 2004, 2005, and 2006, 0 
                        percent;
                          (x) for for each of 2007 through 
                        2010, the percentage increase in the 
                        consumer price index for all urban 
                        consumers (United States city average) 
                        for the 12-month period ending with 
                        June of the previous year; and
                          (xi) for 2011 and each subsequent 
                        year--
                                  (I) the percentage increase 
                                in the consumer price index for 
                                all urban consumers (United 
                                States city average) for the 
                                12-month period ending with 
                                June of the previous year, 
                                reduced by--
                                  (II) the productivity 
                                adjustment described in section 
                                1886(b)(3)(B)(xi)(II).
                  (B) the term ``prosthetic devices'' has the 
                meaning given such term in section 1861(s)(8), 
                except that such term does not include 
                parenteral and enteral nutrition nutrients, 
                supplies, and equipment and does not include an 
                implantable item for which payment may be made 
                under section 1833(t); and
                  (C) the term ``orthotics and prosthetics'' 
                has the meaning given such term in section 
                1861(s)(9) (and includes shoes described in 
                section 1861(s)(12)), but does not include 
                intraocular lenses or medical supplies 
                (including catheters, catheter supplies, ostomy 
                bags, and supplies related to ostomy care) 
                furnished by a home health agency under section 
                1861(m)(5).
        The application of subparagraph (A)(xi)(II) may result 
        in the applicable percentage increase under 
        subparagraph (A) being less than 0.0 for a year, and 
        may result in payment rates under this subsection for a 
        year being less than such payment rates for the 
        preceding year.
  (i) Payment for Surgical Dressings.--
          (1) In general.--Payment under this subsection for 
        surgical dressings (described in section 1861(s)(5)) 
        shall be made in a lump sum amount for the purchase of 
        the item in an amount equal to 80 percent of the lesser 
        of--
                  (A) the actual charge for the item; or
                  (B) a payment amount determined in accordance 
                with the methodology described in subparagraphs 
                (B) and (C) of subsection (a)(2) (except that 
                in applying such methodology, the national 
                limited payment amount referred to in such 
                subparagraphs shall be initially computed based 
                on local payment amounts using average 
                reasonable charges for the 12-month period 
                ending December 31, 1992, increased by the 
                covered item updates described in such 
                subsection for 1993 and 1994).
          (2) Exceptions.--Paragraph (1) shall not apply to 
        surgical dressings that are--
                  (A) furnished as an incident to a physician's 
                professional service; or
                  (B) furnished by a home health agency.
  (j) Requirements for Suppliers of Medical Equipment and 
Supplies.--
          (1) Issuance and renewal of supplier number.--
                  (A) Payment.--Except as provided in 
                subparagraph (C), no payment may be made under 
                this part after the date of the enactment of 
                the Social Security Act Amendments of 1994 for 
                items furnished by a supplier of medical 
                equipment and supplies unless such supplier 
                obtains (and renews at such intervals as the 
                Secretary may require) a supplier number.
                  (B) Standards for possessing a supplier 
                number.--A supplier may not obtain a supplier 
                number unless--
                          (i) for medical equipment and 
                        supplies furnished on or after the date 
                        of the enactment of the Social Security 
                        Act Amendments of 1994 and before 
                        January 1, 1996, the supplier meets 
                        standards prescribed by the Secretary 
                        in regulations issued on June 18, 1992; 
                        and
                          (ii) for medical equipment and 
                        supplies furnished on or after January 
                        1, 1996, the supplier meets revised 
                        standards prescribed by the Secretary 
                        (in consultation with representatives 
                        of suppliers of medical equipment and 
                        supplies, carriers, and consumers) that 
                        shall include requirements that the 
                        supplier--
                                  (I) comply with all 
                                applicable State and Federal 
                                licensure and regulatory 
                                requirements;
                                  (II) maintain a physical 
                                facility on an appropriate 
                                site;
                                  (III) have proof of 
                                appropriate liability 
                                insurance; and
                                  (IV) meet such other 
                                requirements as the Secretary 
                                may specify.
                  (C) Exception for items furnished as incident 
                to a physician's service.--Subparagraph (A) 
                shall not apply with respect to medical 
                equipment and supplies furnished incident to a 
                physician's service.
                  (D) Prohibition against multiple supplier 
                numbers.--The Secretary may not issue more than 
                one supplier number to any supplier of medical 
                equipment and supplies unless the issuance of 
                more than one number is appropriate to identify 
                subsidiary or regional entities under the 
                supplier's ownership or control.
                  (E) Prohibition against delegation of 
                supplier determinations.--The Secretary may not 
                delegate (other than by contract under section 
                1842) the responsibility to determine whether 
                suppliers meet the standards necessary to 
                obtain a supplier number.
          (2) Certificates of medical necessity.--
                  (A) Limitation on information provided by 
                suppliers on certificates of medical 
                necessity.--
                          (i) In general.--Effective 60 days 
                        after the date of the enactment of the 
                        Social Security Act Amendments of 1994, 
                        a supplier of medical equipment and 
                        supplies may distribute to physicians, 
                        or to individuals entitled to benefits 
                        under this part, a certificate of 
                        medical necessity for commercial 
                        purposes which contains no more than 
                        the following information completed by 
                        the supplier:
                                  (I) An identification of the 
                                supplier and the beneficiary to 
                                whom such medical equipment and 
                                supplies are furnished.
                                  (II) A description of such 
                                medical equipment and supplies.
                                  (III) Any product code 
                                identifying such medical 
                                equipment and supplies.
                                  (IV) Any other administrative 
                                information (other than 
                                information relating to the 
                                beneficiary's medical 
                                condition) identified by the 
                                Secretary.
                          (ii) Information on payment amount 
                        and charges.--If a supplier distributes 
                        a certificate of medical necessity 
                        containing any of the information 
                        permitted to be supplied under clause 
                        (i), the supplier shall also list on 
                        the certificate of medical necessity 
                        the fee schedule amount and the 
                        supplier's charge for the medical 
                        equipment or supplies being furnished 
                        prior to distribution of such 
                        certificate to the physician.
                          (iii) Penalty.--Any supplier of 
                        medical equipment and supplies who 
                        knowingly and willfully distributes a 
                        certificate of medical necessity in 
                        violation of clause (i) or fails to 
                        provide the information required under 
                        clause (ii) is subject to a civil money 
                        penalty in an amount not to exceed 
                        $1,000 for each such certificate of 
                        medical necessity so distributed. The 
                        provisions of section 1128A (other than 
                        subsections (a) and (b)) shall apply to 
                        civil money penalties under this 
                        subparagraph in the same manner as they 
                        apply to a penalty or proceeding under 
                        section 1128A(a).
                  (B) Definition.--For purposes of this 
                paragraph, the term ``certificate of medical 
                necessity'' means a form or other document 
                containing information required by the carrier 
                to be submitted to show that an item is 
                reasonable and necessary for the diagnosis or 
                treatment of illness or injury or to improve 
                the functioning of a malformed body member.
          (3) Coverage and review criteria.--The Secretary 
        shall annually review the coverage and utilization of 
        items of medical equipment and supplies to determine 
        whether such items should be made subject to coverage 
        and utilization review criteria, and if appropriate, 
        shall develop and apply such criteria to such items.
          (4) Limitation on patient liability.--If a supplier 
        of medical equipment and supplies (as defined in 
        paragraph (5))--
                  (A) furnishes an item or service to a 
                beneficiary for which no payment may be made by 
                reason of paragraph (1);
                  (B) furnishes an item or service to a 
                beneficiary for which payment is denied in 
                advance under subsection (a)(15); or
                  (C) furnishes an item or service to a 
                beneficiary for which payment is denied under 
                section 1862(a)(1);
        any expenses incurred for items and services furnished 
        to an individual by such a supplier not on an assigned 
        basis shall be the responsibility of such supplier. The 
        individual shall have no financial responsibility for 
        such expenses and the supplier shall refund on a timely 
        basis to the individual (and shall be liable to the 
        individual for) any amounts collected from the 
        individual for such items or services. The provisions 
        of subsection (a)(18) shall apply to refunds required 
        under the previous sentence in the same manner as such 
        provisions apply to refunds under such subsection.
          (5) Definition.--The term ``medical equipment and 
        supplies'' means--
                  (A) durable medical equipment (as defined in 
                section 1861(n));
                  (B) prosthetic devices (as described in 
                section 1861(s)(8));
                  (C) orthotics and prosthetics (as described 
                in section 1861(s)(9));
                  (D) surgical dressings (as described in 
                section 1861(s)(5));
                  (E) such other items as the Secretary may 
                determine; and
                  (F) for purposes of paragraphs (1) and (3)--
                          (i) home dialysis supplies and 
                        equipment (as described in section 
                        1861(s)(2)(F)),
                          (ii) immunosuppressive drugs (as 
                        described in section 1861(s)(2)(J)),
                          (iii) therapeutic shoes for diabetics 
                        (as described in section 1861(s)(12)),
                          (iv) oral drugs prescribed for use as 
                        an anticancer therapeutic agent (as 
                        described in section 1861(s)(2)(Q)), 
                        and
                          (v) self-administered erythropoetin 
                        (as described in section 
                        1861(s)(2)(P)).
  (k) Payment for Outpatient Therapy Services and Comprehensive 
Outpatient Rehabilitation Services.--
          (1) In general.--With respect to services described 
        in section 1833(a)(8) or 1833(a)(9) for which payment 
        is determined under this subsection, the payment basis 
        shall be--
                  (A) for services furnished during 1998, the 
                amount determined under paragraph (2); or
                  (B) for services furnished during a 
                subsequent year, 80 percent of the lesser of--
                          (i) the actual charge for the 
                        services, or
                          (ii) the applicable fee schedule 
                        amount (as defined in paragraph (3)) 
                        for the services.
          (2) Payment in 1998 based upon adjusted reasonable 
        costs.--The amount under this paragraph for services is 
        the lesser of--
                  (A) the charges imposed for the services, or
                  (B) the adjusted reasonable costs (as defined 
                in paragraph (4)) for the services,
        less 20 percent of the amount of the charges imposed 
        for such services.
          (3) Applicable fee schedule amount.--In this 
        subsection, the term ``applicable fee schedule amount'' 
        means, with respect to services furnished in a year, 
        the amount determined under the fee schedule 
        established under section 1848 for such services 
        furnished during the year or, if there is no such fee 
        schedule established for such services, the amount 
        determined under the fee schedule established for such 
        comparable services as the Secretary specifies.
          (4) Adjusted reasonable costs.--In paragraph (2), the 
        term ``adjusted reasonable costs'' means, with respect 
        to any services, reasonable costs determined for such 
        services, reduced by 10 percent. The 10-percent 
        reduction shall not apply to services described in 
        section 1833(a)(8)(B) (relating to services provided by 
        hospitals).
          (5) Uniform coding.--For claims for services 
        submitted on or after April 1, 1998, for which the 
        amount of payment is determined under this subsection, 
        the claim shall include a code (or codes) under a 
        uniform coding system specified by the Secretary that 
        identifies the services furnished.
          (6) Restraint on billing.--The provisions of 
        subparagraphs (A) and (B) of section 1842(b)(18) shall 
        apply to therapy services for which payment is made 
        under this subsection in the same manner as they apply 
        to services provided by a practitioner described in 
        section 1842(b)(18)(C).
          (7) Adjustment in discount for certain multiple 
        therapy services.--In the case of therapy services 
        furnished on or after April 1, 2013, and for which 
        payment is made under this subsection pursuant to the 
        applicable fee schedule amount (as defined in paragraph 
        (3)), instead of the 25 percent multiple procedure 
        payment reduction specified in the final rule published 
        by the Secretary in the Federal Register on November 
        29, 2010, the reduction percentage shall be 50 percent.
  (l) Establishment of Fee Schedule for Ambulance Services.--
          (1) In general.--The Secretary shall establish a fee 
        schedule for payment for ambulance services whether 
        provided directly by a supplier or provider or under 
        arrangement with a provider under this part through a 
        negotiated rulemaking process described in title 5, 
        United States Code, and in accordance with the 
        requirements of this subsection.
          (2) Considerations.--In establishing such fee 
        schedule, the Secretary shall--
                  (A) establish mechanisms to control increases 
                in expenditures for ambulance services under 
                this part;
                  (B) establish definitions for ambulance 
                services which link payments to the type of 
                services provided;
                  (C) consider appropriate regional and 
                operational differences;
                  (D) consider adjustments to payment rates to 
                account for inflation and other relevant 
                factors; and
                  (E) phase in the application of the payment 
                rates under the fee schedule in an efficient 
                and fair manner consistent with paragraph (11), 
                except that such phase-in shall provide for 
                full payment of any national mileage rate for 
                ambulance services provided by suppliers that 
                are paid by carriers in any of the 50 States 
                where payment by a carrier for such services 
                for all such suppliers in such State did not, 
                prior to the implementation of the fee 
                schedule, include a separate amount for all 
                mileage within the county from which the 
                beneficiary is transported.
          (3) Savings.--In establishing such fee schedule, the 
        Secretary shall--
                  (A) ensure that the aggregate amount of 
                payments made for ambulance services under this 
                part during 2000 does not exceed the aggregate 
                amount of payments which would have been made 
                for such services under this part during such 
                year if the amendments made by section 4531(a) 
                of the Balanced Budget Act of 1997 continued in 
                effect, except that in making such 
                determination the Secretary shall assume an 
                update in such payments for 2002 equal to 
                percentage increase in the consumer price index 
                for all urban consumers (U.S. city average) for 
                the 12-month period ending with June of the 
                previous year reduced in the case of 2002 by 
                1.0 percentage points;
                  (B) set the payment amounts provided under 
                the fee schedule for services furnished in 2001 
                and each subsequent year at amounts equal to 
                the payment amounts under the fee schedule for 
                services furnished during the previous year, 
                increased, subject to subparagraph (C) and the 
                succeeding sentence of this paragraph, by the 
                percentage increase in the consumer price index 
                for all urban consumers (U.S. city average) for 
                the 12-month period ending with June of the 
                previous year reduced in the case of 2002 by 
                1.0 percentage points; and
                  (C) for 2011 and each subsequent year, after 
                determining the percentage increase under 
                subparagraph (B) for the year, reduce such 
                percentage increase by the productivity 
                adjustment described in section 
                1886(b)(3)(B)(xi)(II).
        The application of subparagraph (C) may result in the 
        percentage increase under subparagraph (B) being less 
        than 0.0 for a year, and may result in payment rates 
        under the fee schedule under this subsection for a year 
        being less than such payment rates for the preceding 
        year.
          (4) Consultation.--In establishing the fee schedule 
        for ambulance services under this subsection, the 
        Secretary shall consult with various national 
        organizations representing individuals and entities who 
        furnish and regulate ambulance services and share with 
        such organizations relevant data in establishing such 
        schedule.
          (5) Limitation on review.--There shall be no 
        administrative or judicial review under section 1869 or 
        otherwise of the amounts established under the fee 
        schedule for ambulance services under this subsection, 
        including matters described in paragraph (2).
          (6) Restraint on billing.--The provisions of 
        subparagraphs (A) and (B) of section 1842(b)(18) shall 
        apply to ambulance services for which payment is made 
        under this subsection in the same manner as they apply 
        to services provided by a practitioner described in 
        section 1842(b)(18)(C).
          (7) Coding system.--The Secretary may require the 
        claim for any services for which the amount of payment 
        is determined under this subsection to include a code 
        (or codes) under a uniform coding system specified by 
        the Secretary that identifies the services furnished.
          (8) Services furnished by critical access 
        hospitals.--Notwithstanding any other provision of this 
        subsection, the Secretary shall pay 101 percent of the 
        reasonable costs incurred in furnishing ambulance 
        services if such services are furnished--
                  (A) by a critical access hospital (as defined 
                in section 1861(mm)(1)), or
                  (B) by an entity that is owned and operated 
                by a critical access hospital,
        but only if the critical access hospital or entity is 
        the only provider or supplier of ambulance services 
        that is located within a 35-mile drive of such critical 
        access hospital.
          (9) Transitional assistance for rural providers.--In 
        the case of ground ambulance services furnished on or 
        after July 1, 2001, and before January 1, 2004, for 
        which the transportation originates in a rural area (as 
        defined in section 1886(d)(2)(D)) or in a rural census 
        tract of a metropolitan statistical area (as determined 
        under the most recent modification of the Goldsmith 
        Modification, originally published in the Federal 
        Register on February 27, 1992 (57 Fed. Reg. 6725)), the 
        fee schedule established under this subsection shall 
        provide that, with respect to the payment rate for 
        mileage for a trip above 17 miles, and up to 50 miles, 
        the rate otherwise established shall be increased by 
        not less than \1/2\ of the additional payment per mile 
        established for the first 17 miles of such a trip 
        originating in a rural area.
          (10) Phase-in providing floor using blend of fee 
        schedule and regional fee schedules.--In carrying out 
        the phase-in under paragraph (2)(E) for each level of 
        ground service furnished in a year, the portion of the 
        payment amount that is based on the fee schedule shall 
        be the greater of the amount determined under such fee 
        schedule (without regard to this paragraph) or the 
        following blended rate of the fee schedule under 
        paragraph (1) and of a regional fee schedule for the 
        region involved:
                  (A) For 2004 (for services furnished on or 
                after July 1, 2004), the blended rate shall be 
                based 20 percent on the fee schedule under 
                paragraph (1) and 80 percent on the regional 
                fee schedule.
                  (B) For 2005, the blended rate shall be based 
                40 percent on the fee schedule under paragraph 
                (1) and 60 percent on the regional fee 
                schedule.
                  (C) For 2006, the blended rate shall be based 
                60 percent on the fee schedule under paragraph 
                (1) and 40 percent on the regional fee 
                schedule.
                  (D) For 2007, 2008, and 2009, the blended 
                rate shall be based 80 percent on the fee 
                schedule under paragraph (1) and 20 percent on 
                the regional fee schedule.
                  (E) For 2010 and each succeeding year, the 
                blended rate shall be based 100 percent on the 
                fee schedule under paragraph (1).
        For purposes of this paragraph, the Secretary shall 
        establish a regional fee schedule for each of the nine 
        census divisions (referred to in section 1886(d)(2)) 
        using the methodology (used in establishing the fee 
        schedule under paragraph (1)) to calculate a regional 
        conversion factor and a regional mileage payment rate 
        and using the same payment adjustments and the same 
        relative value units as used in the fee schedule under 
        such paragraph.
          (11) Adjustment in payment for certain long trips.--
        In the case of ground ambulance services furnished on 
        or after July 1, 2004, and before January 1, 2009, 
        regardless of where the transportation originates, the 
        fee schedule established under this subsection shall 
        provide that, with respect to the payment rate for 
        mileage for a trip above 50 miles the per mile rate 
        otherwise established shall be increased by \1/4\ of 
        the payment per mile otherwise applicable to miles in 
        excess of 50 miles in such trip.
          (12) Assistance for rural providers furnishing 
        services in low population density areas.--
                  (A) In general.--In the case of ground 
                ambulance services furnished on or after July 
                1, 2004, and before January 1, 2018, for which 
                the transportation originates in a qualified 
                rural area (identified under subparagraph 
                (B)(iii)), the Secretary shall provide for a 
                percent increase in the base rate of the fee 
                schedule for a trip established under this 
                subsection. In establishing such percent 
                increase, the Secretary shall estimate the 
                average cost per trip for such services (not 
                taking into account mileage) in the lowest 
                quartile as compared to the average cost per 
                trip for such services (not taking into account 
                mileage) in the highest quartile of all rural 
                county populations.
                  (B) Identification of qualified rural 
                areas.--
                          (i) Determination of population 
                        density in area.--Based upon data from 
                        the United States decennial census for 
                        the year 2000, the Secretary shall 
                        determine, for each rural area, the 
                        population density for that area.
                          (ii) Ranking of areas.--The Secretary 
                        shall rank each such area based on such 
                        population density.
                          (iii) Identification of qualified 
                        rural areas.--The Secretary shall 
                        identify those areas (in subparagraph 
                        (A) referred to as ``qualified rural 
                        areas'') with the lowest population 
                        densities that represent, if each such 
                        area were weighted by the population of 
                        such area (as used in computing such 
                        population densities), an aggregate 
                        total of 25 percent of the total of the 
                        population of all such areas.
                          (iv) Rural area.--For purposes of 
                        this paragraph, the term ``rural area'' 
                        has the meaning given such term in 
                        section 1886(d)(2)(D). If feasible, the 
                        Secretary shall treat a rural census 
                        tract of a metropolitan statistical 
                        area (as determined under the most 
                        recent modification of the Goldsmith 
                        Modification, originally published in 
                        the Federal Register on February 27, 
                        1992 (57 Fed. Reg. 6725) as a rural 
                        area for purposes of this paragraph.
                          (v) Judicial review.--There shall be 
                        no administrative or judicial review 
                        under section 1869, 1878, or otherwise, 
                        respecting the identification of an 
                        area under this subparagraph.
          (13) Temporary increase for ground ambulance 
        services.--
                  (A) In general.--After computing the rates 
                with respect to ground ambulance services under 
                the other applicable provisions of this 
                subsection, in the case of such services 
                furnished on or after July 1, 2004, and before 
                January 1, 2007, and for such services 
                furnished on or after July 1, 2008, and before 
                January 1, 2018, for which the transportation 
                originates in--
                          (i) a rural area described in 
                        paragraph (9) or in a rural census 
                        tract described in such paragraph, the 
                        fee schedule established under this 
                        section shall provide that the rate for 
                        the service otherwise established, 
                        after the application of any increase 
                        under paragraphs (11) and (12), shall 
                        be increased by 2 percent (or 3 percent 
                        if such service is furnished on or 
                        after July 1, 2008, and before January 
                        1, 2018); and
                          (ii) an area not described in clause 
                        (i), the fee schedule established under 
                        this subsection shall provide that the 
                        rate for the service otherwise 
                        established, after the application of 
                        any increase under paragraph (11), 
                        shall be increased by 1 percent (or 2 
                        percent if such service is furnished on 
                        or after July 1, 2008, and before 
                        January 1, 2018).
                  (B) Application of increased payments after 
                applicable period.--The increased payments 
                under subparagraph (A) shall not be taken into 
                account in calculating payments for services 
                furnished after the applicable period specified 
                in such subparagraph.
          (14) Providing appropriate coverage of rural air 
        ambulance services.--
                  (A) In general.--The regulations described in 
                section 1861(s)(7) shall provide, to the extent 
                that any ambulance services (whether ground or 
                air) may be covered under such section, that a 
                rural air ambulance service (as defined in 
                subparagraph (C)) is reimbursed under this 
                subsection at the air ambulance rate if the air 
                ambulance service--
                          (i) is reasonable and necessary based 
                        on the health condition of the 
                        individual being transported at or 
                        immediately prior to the time of the 
                        transport; and
                          (ii) complies with equipment and crew 
                        requirements established by the 
                        Secretary.
                  (B) Satisfaction of requirement of medically 
                necessary.--The requirement of subparagraph 
                (A)(i) is deemed to be met for a rural air 
                ambulance service if--
                          (i) subject to subparagraph (D), such 
                        service is requested by a physician or 
                        other qualified medical personnel (as 
                        specified by the Secretary) who 
                        certifies or reasonably determines that 
                        the individual's condition is such that 
                        the time needed to transport the 
                        individual by land or the instability 
                        of transportation by land poses a 
                        threat to the individual's survival or 
                        seriously endangers the individual's 
                        health; or
                          (ii) such service is furnished 
                        pursuant to a protocol that is 
                        established by a State or regional 
                        emergency medical service (EMS) agency 
                        and recognized or approved by the 
                        Secretary under which the use of an air 
                        ambulance is recommended, if such 
                        agency does not have an ownership 
                        interest in the entity furnishing such 
                        service.
                  (C) Rural air ambulance service defined.--For 
                purposes of this paragraph, the term ``rural 
                air ambulance service'' means fixed wing and 
                rotary wing air ambulance service in which the 
                point of pick up of the individual occurs in a 
                rural area (as defined in section 
                1886(d)(2)(D)) or in a rural census tract of a 
                metropolitan statistical area (as determined 
                under the most recent modification of the 
                Goldsmith Modification, originally published in 
                the Federal Register on February 27, 1992 (57 
                Fed. Reg. 6725)).
                  (D) Limitation.--
                          (i) In general.--Subparagraph (B)(i) 
                        shall not apply if there is a financial 
                        or employment relationship between the 
                        person requesting the rural air 
                        ambulance service and the entity 
                        furnishing the ambulance service, or an 
                        entity under common ownership with the 
                        entity furnishing the air ambulance 
                        service, or a financial relationship 
                        between an immediate family member of 
                        such requester and such an entity.
                          (ii) Exception.--Where a hospital and 
                        the entity furnishing rural air 
                        ambulance services are under common 
                        ownership, clause (i) shall not apply 
                        to remuneration (through employment or 
                        other relationship) by the hospital of 
                        the requester or immediate family 
                        member if the remuneration is for 
                        provider-based physician services 
                        furnished in a hospital (as described 
                        in section 1887) which are reimbursed 
                        under part A and the amount of the 
                        remuneration is unrelated directly or 
                        indirectly to the provision of rural 
                        air ambulance services.
          (15) Payment adjustment for non-emergency ambulance 
        transports for esrd beneficiaries.--The fee schedule 
        amount otherwise applicable under the preceding 
        provisions of this subsection shall be reduced by 10 
        percent for ambulance services furnished on or after 
        October 1, 2013, consisting of non-emergency basic life 
        support services involving transport of an individual 
        with end-stage renal disease for renal dialysis 
        services (as described in section 1881(b)(14)(B)) 
        furnished other than on an emergency basis by a 
        provider of services or a renal dialysis facility.
          (16) Prior authorization for repetitive scheduled 
        non-emergent ambulance transports.--
                  (A) In general.--Beginning January 1, 2017, 
                if the expansion to all States of the model of 
                prior authorization described in paragraph (2) 
                of section 515(a) of the Medicare Access and 
                CHIP Reauthorization Act of 2015 meets the 
                requirements described in paragraphs (1) 
                through (3) of section 1115A(c), then the 
                Secretary shall expand such model to all 
                States.
                  (B) Funding.--The Secretary shall use funds 
                made available under section 1893(h)(10) to 
                carry out this paragraph.
                  (C) Clarification regarding budget 
                neutrality.--Nothing in this paragraph may be 
                construed to limit or modify the application of 
                section 1115A(b)(3)(B) to models described in 
                such section, including with respect to the 
                model described in subparagraph (A) and 
                expanded beginning on January 1, 2017, under 
                such subparagraph.
  (m) Payment for Telehealth Services.--
          (1) In general.--The Secretary shall pay for 
        telehealth services that are furnished via a 
        telecommunications system by a physician (as defined in 
        section 1861(r)) or a practitioner (described in 
        section 1842(b)(18)(C)) to an eligible telehealth 
        individual enrolled under this part notwithstanding 
        that the individual physician or practitioner providing 
        the telehealth service is not at the same location as 
        the beneficiary. For purposes of the preceding 
        sentence, in the case of any Federal telemedicine 
        demonstration program conducted in Alaska or Hawaii, 
        the term ``telecommunications system'' includes store-
        and-forward technologies that provide for the 
        asynchronous transmission of health care information in 
        single or multimedia formats.
          (2) Payment amount.--
                  (A) Distant site.--The Secretary shall pay to 
                a physician or practitioner located at a 
                distant site that furnishes a telehealth 
                service to an eligible telehealth individual an 
                amount equal to the amount that such physician 
                or practitioner would have been paid under this 
                title had such service been furnished without 
                the use of a telecommunications system.
                  (B) Facility fee for originating site.--With 
                respect to a telehealth service, subject to 
                section 1833(a)(1)(U), there shall be paid to 
                the originating site a facility fee equal to--
                          (i) for the period beginning on 
                        October 1, 2001, and ending on December 
                        31, 2001, and for 2002, $20; and
                          (ii) for a subsequent year, the 
                        facility fee specified in clause (i) or 
                        this clause for the preceding year 
                        increased by the percentage increase in 
                        the MEI (as defined in section 
                        1842(i)(3)) for such subsequent year.
                  (C) Telepresenter not required.--Nothing in 
                this subsection shall be construed as requiring 
                an eligible telehealth individual to be 
                presented by a physician or practitioner at the 
                originating site for the furnishing of a 
                service via a telecommunications system, unless 
                it is medically necessary (as determined by the 
                physician or practitioner at the distant site).
          (3) Limitation on beneficiary charges.--
                  (A) Physician and practitioner.--The 
                provisions of section 1848(g) and subparagraphs 
                (A) and (B) of section 1842(b)(18) shall apply 
                to a physician or practitioner receiving 
                payment under this subsection in the same 
                manner as they apply to physicians or 
                practitioners under such sections.
                  (B) Originating site.--The provisions of 
                section 1842(b)(18) shall apply to originating 
                sites receiving a facility fee in the same 
                manner as they apply to practitioners under 
                such section.
          (4) Definitions.--For purposes of this subsection:
                  (A) Distant site.--The term ``distant site'' 
                means the site at which the physician or 
                practitioner is located at the time the service 
                is provided via a telecommunications system.
                  (B) Eligible telehealth individual.--The term 
                ``eligible telehealth individual'' means an 
                individual enrolled under this part who 
                receives a telehealth service furnished at an 
                originating site.
                  (C) Originating site.--
                          (i) In general.--The term 
                        ``originating site'' means only those 
                        sites described in clause (ii) at which 
                        the eligible telehealth individual is 
                        located at the time the service is 
                        furnished via a telecommunications 
                        system and only if such site is 
                        located--
                                  (I) in an area that is 
                                designated as a rural health 
                                professional shortage area 
                                under section 332(a)(1)(A) of 
                                the Public Health Service Act 
                                (42 U.S.C. 254e(a)(1)(A));
                                  (II) in a county that is not 
                                included in a Metropolitan 
                                Statistical Area; or
                                  (III) from an entity that 
                                participates in a Federal 
                                telemedicine demonstration 
                                project that has been approved 
                                by (or receives funding from) 
                                the Secretary of Health and 
                                Human Services as of December 
                                31, 2000.
                          (ii) Sites described.--The sites 
                        referred to in clause (i) are the 
                        following sites:
                                  (I) The office of a physician 
                                or practitioner.
                                  (II) A critical access 
                                hospital (as defined in section 
                                1861(mm)(1)).
                                  (III) A rural health clinic 
                                (as defined in section 
                                1861(aa)(2)).
                                  (IV) A Federally qualified 
                                health center (as defined in 
                                section 1861(aa)(4)).
                                  (V) A hospital (as defined in 
                                section 1861(e)).
                                  (VI) A hospital-based or 
                                critical access hospital-based 
                                renal dialysis center 
                                (including satellites).
                                  (VII) A skilled nursing 
                                facility (as defined in section 
                                1819(a)).
                                  (VIII) A community mental 
                                health center (as defined in 
                                section 1861(ff)(3)(B)).
                  (D) Physician.--The term ``physician'' has 
                the meaning given that term in section 1861(r).
                  (E) Practitioner.--The term ``practitioner'' 
                has the meaning given that term in section 
                1842(b)(18)(C).
                  (F) Telehealth service.--
                          (i) In general.--The term 
                        ``telehealth service'' means 
                        professional consultations, office 
                        visits, and office psychiatry services 
                        (identified as of July 1, 2000, by 
                        HCPCS codes 99241-99275, 99201-99215, 
                        90804-90809, and 90862 (and as 
                        subsequently modified by the 
                        Secretary)), and any additional service 
                        specified by the Secretary.
                          (ii) Yearly update.--The Secretary 
                        shall establish a process that 
                        provides, on an annual basis, for the 
                        addition or deletion of services (and 
                        HCPCS codes), as appropriate, to those 
                        specified in clause (i) for authorized 
                        payment under paragraph (1).
  (n) Authority To Modify or Eliminate Coverage of Certain 
Preventive Services.--Notwithstanding any other provision of 
this title, effective beginning on January 1, 2010, if the 
Secretary determines appropriate, the Secretary may--
          (1) modify--
                  (A) the coverage of any preventive service 
                described in subparagraph (A) of section 
                1861(ddd)(3) to the extent that such 
                modification is consistent with the 
                recommendations of the United States Preventive 
                Services Task Force; and
                  (B) the services included in the initial 
                preventive physical examination described in 
                subparagraph (B) of such section; and
          (2) provide that no payment shall be made under this 
        title for a preventive service described in 
        subparagraph (A) of such section that has not received 
        a grade of A, B, C, or I by such Task Force.
  (o) Development and Implementation of Prospective Payment 
System.--
          (1) Development.--
                  (A) In general.--The Secretary shall develop 
                a prospective payment system for payment for 
                Federally qualified health center services 
                furnished by Federally qualified health centers 
                under this title. Such system shall include a 
                process for appropriately describing the 
                services furnished by Federally qualified 
                health centers and shall establish payment 
                rates for specific payment codes based on such 
                appropriate descriptions of services. Such 
                system shall be established to take into 
                account the type, intensity, and duration of 
                services furnished by Federally qualified 
                health centers. Such system may include 
                adjustments, including geographic adjustments, 
                determined appropriate by the Secretary.
                  (B) Collection of data and evaluation.--By 
                not later than January 1, 2011, the Secretary 
                shall require Federally qualified health 
                centers to submit to the Secretary such 
                information as the Secretary may require in 
                order to develop and implement the prospective 
                payment system under this subsection, including 
                the reporting of services using HCPCS codes.
          (2) Implementation.--
                  (A) In general.--Notwithstanding section 
                1833(a)(3)(A), the Secretary shall provide, for 
                cost reporting periods beginning on or after 
                October 1, 2014, for payments of prospective 
                payment rates for Federally qualified health 
                center services furnished by Federally 
                qualified health centers under this title in 
                accordance with the prospective payment system 
                developed by the Secretary under paragraph (1).
                  (B) Payments.--
                          (i) Initial payments.--The Secretary 
                        shall implement such prospective 
                        payment system so that the estimated 
                        aggregate amount of prospective payment 
                        rates (determined prior to the 
                        application of section 1833(a)(1)(Z)) 
                        under this title for Federally 
                        qualified health center services in the 
                        first year that such system is 
                        implemented is equal to 100 percent of 
                        the estimated amount of reasonable 
                        costs (determined without the 
                        application of a per visit payment 
                        limit or productivity screen and prior 
                        to the application of section 
                        1866(a)(2)(A)(ii)) that would have 
                        occurred for such services under this 
                        title in such year if the system had 
                        not been implemented.
                          (ii) Payments in subsequent years.--
                        Payment rates in years after the year 
                        of implementation of such system shall 
                        be the payment rates in the previous 
                        year increased--
                                  (I) in the first year after 
                                implementation of such system, 
                                by the percentage increase in 
                                the MEI (as defined in section 
                                1842(i)(3)) for the year 
                                involved; and
                                  (II) in subsequent years, by 
                                the percentage increase in a 
                                market basket of Federally 
                                qualified health center goods 
                                and services as promulgated 
                                through regulations, or if such 
                                an index is not available, by 
                                the percentage increase in the 
                                MEI (as defined in section 
                                1842(i)(3)) for the year 
                                involved.
                  (C) Preparation for pps implementation.--
                Notwithstanding any other provision of law, the 
                Secretary may establish and implement by 
                program instruction or otherwise the payment 
                codes to be used under the prospective payment 
                system under this section.
  (p) Quality Incentives To Promote Patient Safety and Public 
Health in Computed Tomography.--
          (1) Quality incentives.--In the case of an applicable 
        computed tomography service (as defined in paragraph 
        (2)) for which payment is made under an applicable 
        payment system (as defined in paragraph (3)) and that 
        is furnished on or after January 1, 2016, using 
        equipment that is not consistent with the CT equipment 
        standard (described in paragraph (4)), the payment 
        amount for such service shall be reduced by the 
        applicable percentage (as defined in paragraph (5)).
          (2) Applicable computed tomography services 
        defined.--In this subsection, the term ``applicable 
        computed tomography service'' means a service billed 
        using diagnostic radiological imaging codes for 
        computed tomography (identified as of January 1, 2014, 
        by HCPCS codes 70450-70498, 71250-71275, 72125-72133, 
        72191-72194, 73200-73206, 73700-73706, 74150-74178, 
        74261-74263, and 75571-75574 (and any succeeding 
        codes).
          (3) Applicable payment system defined.--In this 
        subsection, the term ``applicable payment system'' 
        means the following:
                  (A) The technical component and the technical 
                component of the global fee under the fee 
                schedule established under section 1848(b).
                  (B) The prospective payment system for 
                hospital outpatient department services under 
                section 1833(t).
          (4) Consistency with ct equipment standard.--In this 
        subsection, the term ``not consistent with the CT 
        equipment standard'' means, with respect to an 
        applicable computed tomography service, that the 
        service was furnished using equipment that does not 
        meet each of the attributes of the National Electrical 
        Manufacturers Association (NEMA) Standard XR-29-2013, 
        entitled ``Standard Attributes on CT Equipment Related 
        to Dose Optimization and Management''. Through 
        rulemaking, the Secretary may apply successor 
        standards.
          (5) Applicable percentage defined.--In this 
        subsection, the term ``applicable percentage'' means--
                  (A) for 2016, 5 percent; and
                  (B) for 2017 and subsequent years, 15 
                percent.
          (6) Implementation.--
                  (A) Information.--The Secretary shall require 
                that information be provided and attested to by 
                a supplier and a hospital outpatient department 
                that indicates whether an applicable computed 
                tomography service was furnished that was not 
                consistent with the CT equipment standard 
                (described in paragraph (4)). Such information 
                may be included on a claim and may be a 
                modifier. Such information shall be verified, 
                as appropriate, as part of the periodic 
                accreditation of suppliers under section 
                1834(e) and hospitals under section 1865(a).
                  (B) Administration.--Chapter 35 of title 44, 
                United States Code, shall not apply to 
                information described in subparagraph (A).
  (q) Recognizing Appropriate Use Criteria for Certain Imaging 
Services.--
          (1) Program established.--
                  (A) In general.--The Secretary shall 
                establish a program to promote the use of 
                appropriate use criteria (as defined in 
                subparagraph (B)) for applicable imaging 
                services (as defined in subparagraph (C)) 
                furnished in an applicable setting (as defined 
                in subparagraph (D)) by ordering professionals 
                and furnishing professionals (as defined in 
                subparagraphs (E) and (F), respectively).
                  (B) Appropriate use criteria defined.--In 
                this subsection, the term ``appropriate use 
                criteria'' means criteria, only developed or 
                endorsed by national professional medical 
                specialty societies or other provider-led 
                entities, to assist ordering professionals and 
                furnishing professionals in making the most 
                appropriate treatment decision for a specific 
                clinical condition for an individual. To the 
                extent feasible, such criteria shall be 
                evidence-based.
                  (C) Applicable imaging service defined.--In 
                this subsection, the term ``applicable imaging 
                service'' means an advanced diagnostic imaging 
                service (as defined in subsection (e)(1)(B)) 
                for which the Secretary determines--
                          (i) one or more applicable 
                        appropriate use criteria specified 
                        under paragraph (2) apply;
                          (ii) there are one or more qualified 
                        clinical decision support mechanisms 
                        listed under paragraph (3)(C); and
                          (iii) one or more of such mechanisms 
                        is available free of charge.
                  (D) Applicable setting defined.--In this 
                subsection, the term ``applicable setting'' 
                means a physician's office, a hospital 
                outpatient department (including an emergency 
                department), an ambulatory surgical center, and 
                any other provider-led outpatient setting 
                determined appropriate by the Secretary.
                  (E) Ordering professional defined.--In this 
                subsection, the term ``ordering professional'' 
                means a physician (as defined in section 
                1861(r)) or a practitioner described in section 
                1842(b)(18)(C) who orders an applicable imaging 
                service.
                  (F) Furnishing professional defined.--In this 
                subsection, the term ``furnishing 
                professional'' means a physician (as defined in 
                section 1861(r)) or a practitioner described in 
                section 1842(b)(18)(C) who furnishes an 
                applicable imaging service.
          (2) Establishment of applicable appropriate use 
        criteria.--
                  (A) In general.--Not later than November 15, 
                2015, the Secretary shall through rulemaking, 
                and in consultation with physicians, 
                practitioners, and other stakeholders, specify 
                applicable appropriate use criteria for 
                applicable imaging services only from among 
                appropriate use criteria developed or endorsed 
                by national professional medical specialty 
                societies or other provider-led entities.
                  (B) Considerations.--In specifying applicable 
                appropriate use criteria under subparagraph 
                (A), the Secretary shall take into account 
                whether the criteria--
                          (i) have stakeholder consensus;
                          (ii) are scientifically valid and 
                        evidence based; and
                          (iii) are based on studies that are 
                        published and reviewable by 
                        stakeholders.
                  (C) Revisions.--The Secretary shall review, 
                on an annual basis, the specified applicable 
                appropriate use criteria to determine if there 
                is a need to update or revise (as appropriate) 
                such specification of applicable appropriate 
                use criteria and make such updates or revisions 
                through rulemaking.
                  (D) Treatment of multiple applicable 
                appropriate use criteria.--In the case where 
                the Secretary determines that more than one 
                appropriate use criterion applies with respect 
                to an applicable imaging service, the Secretary 
                shall apply one or more applicable appropriate 
                use criteria under this paragraph for the 
                service.
          (3) Mechanisms for consultation with applicable 
        appropriate use criteria.--
                  (A) Identification of mechanisms to consult 
                with applicable appropriate use criteria.--
                          (i) In general.--The Secretary shall 
                        specify qualified clinical decision 
                        support mechanisms that could be used 
                        by ordering professionals to consult 
                        with applicable appropriate use 
                        criteria for applicable imaging 
                        services.
                          (ii) Consultation.--The Secretary 
                        shall consult with physicians, 
                        practitioners, health care technology 
                        experts, and other stakeholders in 
                        specifying mechanisms under this 
                        paragraph.
                          (iii) Inclusion of certain 
                        mechanisms.--Mechanisms specified under 
                        this paragraph may include any or all 
                        of the following that meet the 
                        requirements described in subparagraph 
                        (B)(ii):
                                  (I) Use of clinical decision 
                                support modules in certified 
                                EHR technology (as defined in 
                                section 1848(o)(4)).
                                  (II) Use of private sector 
                                clinical decision support 
                                mechanisms that are independent 
                                from certified EHR technology, 
                                which may include use of 
                                clinical decision support 
                                mechanisms available from 
                                medical specialty 
                                organizations.
                                  (III) Use of a clinical 
                                decision support mechanism 
                                established by the Secretary.
                  (B) Qualified clinical decision support 
                mechanisms.--
                          (i) In general.--For purposes of this 
                        subsection, a qualified clinical 
                        decision support mechanism is a 
                        mechanism that the Secretary determines 
                        meets the requirements described in 
                        clause (ii).
                          (ii) Requirements.--The requirements 
                        described in this clause are the 
                        following:
                                  (I) The mechanism makes 
                                available to the ordering 
                                professional applicable 
                                appropriate use criteria 
                                specified under paragraph (2) 
                                and the supporting 
                                documentation for the 
                                applicable imaging service 
                                ordered.
                                  (II) In the case where there 
                                is more than one applicable 
                                appropriate use criterion 
                                specified under such paragraph 
                                for an applicable imaging 
                                service, the mechanism 
                                indicates the criteria that it 
                                uses for the service.
                                  (III) The mechanism 
                                determines the extent to which 
                                an applicable imaging service 
                                ordered is consistent with the 
                                applicable appropriate use 
                                criteria so specified.
                                  (IV) The mechanism generates 
                                and provides to the ordering 
                                professional a certification or 
                                documentation that documents 
                                that the qualified clinical 
                                decision support mechanism was 
                                consulted by the ordering 
                                professional.
                                  (V) The mechanism is updated 
                                on a timely basis to reflect 
                                revisions to the specification 
                                of applicable appropriate use 
                                criteria under such paragraph.
                                  (VI) The mechanism meets 
                                privacy and security standards 
                                under applicable provisions of 
                                law.
                                  (VII) The mechanism performs 
                                such other functions as 
                                specified by the Secretary, 
                                which may include a requirement 
                                to provide aggregate feedback 
                                to the ordering professional.
                  (C) List of mechanisms for consultation with 
                applicable appropriate use criteria.--
                          (i) Initial list.--Not later than 
                        April 1, 2016, the Secretary shall 
                        publish a list of mechanisms specified 
                        under this paragraph.
                          (ii) Periodic updating of list.--The 
                        Secretary shall identify on an annual 
                        basis the list of qualified clinical 
                        decision support mechanisms specified 
                        under this paragraph.
          (4) Consultation with applicable appropriate use 
        criteria.--
                  (A) Consultation by ordering professional.--
                Beginning with January 1, 2017, subject to 
                subparagraph (C), with respect to an applicable 
                imaging service ordered by an ordering 
                professional that would be furnished in an 
                applicable setting and paid for under an 
                applicable payment system (as defined in 
                subparagraph (D)), an ordering professional 
                shall--
                          (i) consult with a qualified decision 
                        support mechanism listed under 
                        paragraph (3)(C); and
                          (ii) provide to the furnishing 
                        professional the information described 
                        in clauses (i) through (iii) of 
                        subparagraph (B).
                  (B) Reporting by furnishing professional.--
                Beginning with January 1, 2017, subject to 
                subparagraph (C), with respect to an applicable 
                imaging service furnished in an applicable 
                setting and paid for under an applicable 
                payment system (as defined in subparagraph 
                (D)), payment for such service may only be made 
                if the claim for the service includes the 
                following:
                          (i) Information about which qualified 
                        clinical decision support mechanism was 
                        consulted by the ordering professional 
                        for the service.
                          (ii) Information regarding--
                                  (I) whether the service 
                                ordered would adhere to the 
                                applicable appropriate use 
                                criteria specified under 
                                paragraph (2);
                                  (II) whether the service 
                                ordered would not adhere to 
                                such criteria; or
                                  (III) whether such criteria 
                                was not applicable to the 
                                service ordered.
                          (iii) The national provider 
                        identifier of the ordering professional 
                        (if different from the furnishing 
                        professional).
                  (C) Exceptions.--The provisions of 
                subparagraphs (A) and (B) and paragraph (6)(A) 
                shall not apply to the following:
                          (i) Emergency services.--An 
                        applicable imaging service ordered for 
                        an individual with an emergency medical 
                        condition (as defined in section 
                        1867(e)(1)).
                          (ii) Inpatient services.--An 
                        applicable imaging service ordered for 
                        an inpatient and for which payment is 
                        made under part A.
                          (iii) Significant hardship.--An 
                        applicable imaging service ordered by 
                        an ordering professional who the 
                        Secretary may, on a case-by-case basis, 
                        exempt from the application of such 
                        provisions if the Secretary determines, 
                        subject to annual renewal, that 
                        consultation with applicable 
                        appropriate use criteria would result 
                        in a significant hardship, such as in 
                        the case of a professional who 
                        practices in a rural area without 
                        sufficient Internet access.
                  (D) Applicable payment system defined.--In 
                this subsection, the term ``applicable payment 
                system'' means the following:
                          (i) The physician fee schedule 
                        established under section 1848(b).
                          (ii) The prospective payment system 
                        for hospital outpatient department 
                        services under section 1833(t).
                          (iii) The ambulatory surgical center 
                        payment systems under section 1833(i).
          (5) Identification of outlier ordering 
        professionals.--
                  (A) In general.--With respect to applicable 
                imaging services furnished beginning with 2017, 
                the Secretary shall determine, on an annual 
                basis, no more than five percent of the total 
                number of ordering professionals who are 
                outlier ordering professionals.
                  (B) Outlier ordering professionals.--The 
                determination of an outlier ordering 
                professional shall--
                          (i) be based on low adherence to 
                        applicable appropriate use criteria 
                        specified under paragraph (2), which 
                        may be based on comparison to other 
                        ordering professionals; and
                          (ii) include data for ordering 
                        professionals for whom prior 
                        authorization under paragraph (6)(A) 
                        applies.
                  (C) Use of two years of data.--The Secretary 
                shall use two years of data to identify outlier 
                ordering professionals under this paragraph.
                  (D) Process.--The Secretary shall establish a 
                process for determining when an outlier 
                ordering professional is no longer an outlier 
                ordering professional.
                  (E) Consultation with stakeholders.--The 
                Secretary shall consult with physicians, 
                practitioners and other stakeholders in 
                developing methods to identify outlier ordering 
                professionals under this paragraph.
          (6) Prior authorization for ordering professionals 
        who are outliers.--
                  (A) In general.--Beginning January 1, 2020, 
                subject to paragraph (4)(C), with respect to 
                services furnished during a year, the Secretary 
                shall, for a period determined appropriate by 
                the Secretary, apply prior authorization for 
                applicable imaging services that are ordered by 
                an outlier ordering professional identified 
                under paragraph (5).
                  (B) Appropriate use criteria in prior 
                authorization.--In applying prior authorization 
                under subparagraph (A), the Secretary shall 
                utilize only the applicable appropriate use 
                criteria specified under this subsection.
                  (C) Funding.--For purposes of carrying out 
                this paragraph, the Secretary shall provide for 
                the transfer, from the Federal Supplementary 
                Medical Insurance Trust Fund under section 
                1841, of $5,000,000 to the Centers for Medicare 
                & Medicaid Services Program Management Account 
                for each of fiscal years 2019 through 2021. 
                Amounts transferred under the preceding 
                sentence shall remain available until expended.
          (7) Construction.--Nothing in this subsection shall 
        be construed as granting the Secretary the authority to 
        develop or initiate the development of clinical 
        practice guidelines or appropriate use criteria.

           *       *       *       *       *       *       *


                    Part E--Miscellaneous Provisions


              definitions of services, institutions, etc.

  Sec. 1861. For purposes of this title--

                            Spell of Illness

  (a) The term ``spell of illness'' with respect to any 
individual means a period of consecutive days--
          (1) beginning with the first day (not included in a 
        previous spell of illness) (A) on which such individual 
        is furnished inpatient hospital services, inpatient 
        critical access hospital services or extended care 
        services, and (B) which occurs in a month for which he 
        is entitled to benefits under part A, and
          (2) ending with the close of the first period of 60 
        consecutive days thereafter on each of which he is 
        neither an inpatient of a hospital or critical access 
        hospital nor an inpatient of a facility described in 
        section 1819(a)(1) or subsection (y)(1).

                      Inpatient Hospital Services

  (b) The term ``inpatient hospital services'' means the 
following items and services furnished to an inpatient of a 
hospital and (except as provided in paragraph (3)) by the 
hospital--
          (1) bed and board;
          (2) such nursing services and other related services, 
        such use of hospital facilities, and such medical 
        social services as are ordinarily furnished by the 
        hospital for the care and treatment of inpatients, and 
        such drugs, biologicals, supplies, appliances, and 
        equipment, for use in the hospital, as are ordinarily 
        furnished by such hospital for the care and treatment 
        of inpatients; and
          (3) such other diagnostic or therapeutic items or 
        services, furnished by the hospital or by others under 
        arrangements with them made by the hospital, as are 
        ordinarily furnished to inpatients either by such 
        hospital or by others under such arrangements;
excluding, however--
          (4) medical or surgical services provided by a 
        physician, resident, or intern, services described by 
        subsection (s)(2)(K), certified nurse-midwife services, 
        qualified psychologist services, and services of a 
        certified registered nurse anesthetist; and
          (5) the services of a private-duty nurse or other 
        private-duty attendant.
Paragraph (4) shall not apply to services provided in a 
hospital by--
          (6) an intern or a resident-in-training under a 
        teaching program approved by the Council on Medical 
        Education of the American Medical Association or, in 
        the case of an osteopathic hospital, approved by the 
        Committee on Hospitals of the Bureau of Professional 
        Education of the American Osteopathic Association, or, 
        in the case of services in a hospital or osteopathic 
        hospital by an intern or resident-in-training in the 
        field of dentistry, approved by the Council on Dental 
        Education of the American Dental Association, or in the 
        case of services in a hospital or osteopathic hospital 
        by an intern or resident-in-training in the field of 
        podiatry, approved by the Council on Podiatric Medical 
        Education of the American Podiatric Medical 
        Association; or
          (7) a physician where the hospital has a teaching 
        program approved as specified in paragraph (6), if (A) 
        the hospital elects to receive any payment due under 
        this title for reasonable costs of such services, and 
        (B) all physicians in such hospital agree not to bill 
        charges for professional services rendered in such 
        hospital to individuals covered under the insurance 
        program established by this title.

                Inpatient Psychiatric Hospital Services

  (c) The term ``inpatient psychiatric hospital services'' 
means inpatient hospital services furnished to an inpatient of 
a psychiatric hospital.

                                Supplier

  (d) The term ``supplier'' means, unless the context otherwise 
requires, a physician or other practitioner, a facility, or 
other entity (other than a provider of services) that furnishes 
items or services under this title.

                                Hospital

  (e) The term ``hospital'' (except for purposes of sections 
1814(d), 1814(f), and 1835(b), subsection (a)(2) of this 
section, paragraph (7) of this subsection, and subsection (i) 
of this section) means an institution which--
          (1) is primarily engaged in providing, by or under 
        the supervision of physicians, to inpatients (A) 
        diagnostic services and therapeutic services for 
        medical diagnosis, treatment, and care of injured, 
        disabled, or sick persons, or (B) rehabilitation 
        services for the rehabilitation of injured, disabled, 
        or sick persons;
          (2) maintains clinical records on all patients;
          (3) has bylaws in effect with respect to its staff of 
        physicians;
          (4) has a requirement that every patient with respect 
        to whom payment may be made under this title must be 
        under the care of a physician, except that a patient 
        receiving qualified psychologist services (as defined 
        in subsection (ii)) may be under the care of a clinical 
        psychologist with respect to such services to the 
        extent permitted under State law;
          (5) provides 24-hour nursing service rendered or 
        supervised by a registered professional nurse, and has 
        a licensed practical nurse or registered professional 
        nurse on duty at all times; except that until January 
        1, 1979, the Secretary is authorized to waive the 
        requirement of this paragraph for any one-year period 
        with respect to any institution, insofar as such 
        requirement relates to the provision of twenty-four-
        hour nursing service rendered or supervised by a 
        registered professional nurse (except that in any event 
        a registered professional nurse must be present on the 
        premises to render or supervise the nursing service 
        provided, during at least the regular daytime shift), 
        where immediately preceding such one-year period he 
        finds that--
                  (A) such institution is located in a rural 
                area and the supply of hospital services in 
                such area is not sufficient to meet the needs 
                of individuals residing therein,
                  (B) the failure of such institution to 
                qualify as a hospital would seriously reduce 
                the availability of such services to such 
                individuals, and
                  (C) such institution has made and continues 
                to make a good faith effort to comply with this 
                paragraph, but such compliance is impeded by 
                the lack of qualified nursing personnel in such 
                area;
          (6)(A) has in effect a hospital utilization review 
        plan which meets the requirements of subsection (k) and 
        (B) has in place a discharge planning process that 
        meets the requirements of subsection (ee);
          (7) in the case of an institution in any State in 
        which State or applicable local law provides for the 
        licensing of hospitals, (A) is licensed pursuant to 
        such law or (B) is approved, by the agency of such 
        State or locality responsible for licensing hospitals, 
        as meeting the standards established for such 
        licensing;
          (8) has in effect an overall plan and budget that 
        meets the requirements of subsection (z); and
          (9) meets such other requirements as the Secretary 
        finds necessary in the interest of the health and 
        safety of individuals who are furnished services in the 
        institution.
For purposes of subsection (a)(2), such term includes any 
institution which meets the requirements of paragraph (1) of 
this subsection. For purposes of sections 1814(d) and 1835(b) 
(including determination of whether an individual received 
inpatient hospital services or diagnostic services for purposes 
of such sections), section 1814(f)(2), and subsection (i) of 
this section, such term includes any institution which (i) 
meets the requirements of paragraphs (5) and (7) of this 
subsection, (ii) is not primarily engaged in providing the 
services described in section 1861(j)(1)(A) and (iii) is 
primarily engaged in providing, by or under the supervision of 
individuals referred to in paragraph (1) of section 1861(r), to 
inpatients diagnostic services and therapeutic services for 
medical diagnosis, treatment, and care of injured, disabled, or 
sick persons, or rehabilitation services for the rehabilitation 
of injured, disabled, or sick persons. For purposes of section 
1814(f)(1), such term includes an institution which (i) is a 
hospital for purposes of sections 1814(d), 1814(f)(2), and 
1835(b) and (ii) is accredited by a national accreditation body 
recognized by the Secretary under section 1865(a), or is 
accredited by or approved by a program of the country in which 
such institution is located if the Secretary finds the 
accreditation or comparable approval standards of such program 
to be essentially equivalent to those of such a national 
accreditation body.. Notwithstanding the preceding provisions 
of this subsection, such term shall not, except for purposes of 
subsection (a)(2), include any institution which is primarily 
for the care and treatment of mental diseases unless it is a 
psychiatric hospital (as defined in subsection (f)). The term 
``hospital'' also includes a religious nonmedical health care 
institution (as defined in subsection (ss)(1)), but only with 
respect to items and services ordinarily furnished by such 
institution to inpatients, and payment may be made with respect 
to services provided by or in such an institution only to such 
extent and under such conditions, limitations, and requirements 
(in addition to or in lieu of the conditions, limitations, and 
requirements otherwise applicable) as may be provided in 
regulations consistent with section 1821. For provisions 
deeming certain requirements of this subsection to be met in 
the case of accredited institutions, see section 1865. The term 
``hospital'' also includes a facility of fifty beds or less 
which is located in an area determined by the Secretary to meet 
the definition relating to a rural area described in 
subparagraph (A) of paragraph (5) of this subsection and which 
meets the other requirements of this subsection, except that--
          (A) with respect to the requirements for nursing 
        services applicable after December 31, 1978, such 
        requirements shall provide for temporary waiver of the 
        requirements, for such period as the Secretary deems 
        appropriate, where (i) the facility's failure to fully 
        comply with the requirements is attributable to a 
        temporary shortage of qualified nursing personnel in 
        the area in which the facility is located, (ii) a 
        registered professional nurse is present on the 
        premises to render or supervise the nursing service 
        provided during at least the regular daytime shift, and 
        (iii) the Secretary determines that the employment of 
        such nursing personnel as are available to the facility 
        during such temporary period will not adversely affect 
        the health and safety of patients;
          (B) with respect to the health and safety 
        requirements promulgated under paragraph (9), such 
        requirements shall be applied by the Secretary to a 
        facility herein defined in such manner as to assure 
        that personnel requirements take into account the 
        availability of technical personnel and the educational 
        opportunities for technical personnel in the area in 
        which such facility is located, and the scope of 
        services rendered by such facility; and the Secretary, 
        by regulations, shall provide for the continued 
        participation of such a facility where such personnel 
        requirements are not fully met, for such period as the 
        Secretary determines that (i) the facility is making 
        good faith efforts to fully comply with the personnel 
        requirements, (ii) the employment by the facility of 
        such personnel as are available to the facility will 
        not adversely affect the health and safety of patients, 
        and (iii) if the Secretary has determined that because 
        of the facility's waiver under this subparagraph the 
        facility should limit its scope of services in order 
        not to adversely affect the health and safety of the 
        facility's patients, the facility is so limiting the 
        scope of services it provides; and
          (C) with respect to the fire and safety requirements 
        promulgated under paragraph (9), the Secretary (i) may 
        waive, for such period as he deems appropriate, 
        specific provisions of such requirements which if 
        rigidly applied would result in unreasonable hardship 
        for such a facility and which, if not applied, would 
        not jeopardize the health and safety of patients, and 
        (ii) may accept a facility's compliance with all 
        applicable State codes relating to fire and safety in 
        lieu of compliance with the fire and safety 
        requirements promulgated under paragraph (9), if he 
        determines that such State has in effect fire and 
        safety codes, imposed by State law, which adequately 
        protect patients.
The term ``hospital'' does not include, unless the context 
otherwise requires, a critical access hospital (as defined in 
section 1861(mm)(1)).

                          Psychiatric Hospital

  (f) The term ``psychiatric hospital'' means an institution 
which--
          (1) is primarily engaged in providing, by or under 
        the supervision of a physician, psychiatric services 
        for the diagnosis and treatment of mentally ill 
        persons;
          (2) satisfies the requirements of paragraphs (3) 
        through (9) of subsection (e);
          (3) maintains clinical records on all patients and 
        maintains such records as the Secretary finds to be 
        necessary to determine the degree and intensity of the 
        treatment provided to individuals entitled to hospital 
        insurance benefits under part A; and
          (4) meets such staffing requirements as the Secretary 
        finds necessary for the institution to carry out an 
        active program of treatment for individuals who are 
        furnished services in the institution.
In the case of an institution which satisfies paragraphs (1) 
and (2) of the preceding sentence and which contains a distinct 
part which also satisfies paragraphs (3) and (4) of such 
sentence, such distinct part shall be considered to be a 
``psychiatric hospital''.

                Outpatient Occupational Therapy Services

  (g) The term ``outpatient occupational therapy services'' has 
the meaning given the term ``outpatient physical therapy 
services'' in subsection (p), except that ``occupational'' 
shall be substituted for ``physical'' each place it appears 
therein.

                         Extended Care Services

  (h) The term ``extended care services'' means the following 
items and services furnished to an inpatient of a skilled 
nursing facility and (except as provided in paragraphs (3), (6) 
and (7)) by such skilled nursing facility--
          (1) nursing care provided by or under the supervision 
        of a registered professional nurse;
          (2) bed and board in connection with the furnishing 
        of such nursing care;
          (3) physical or occupational therapy or speech-
        language pathology services furnished by the skilled 
        nursing facility or by others under arrangements with 
        them made by the facility;
          (4) medical social services;
          (5) such drugs, biologicals, supplies, appliances, 
        and equipment, furnished for use in the skilled nursing 
        facility, as are ordinarily furnished by such facility 
        for the care and treatment of inpatients;
          (6) medical services provided by an intern or 
        resident-in- training of a hospital with which the 
        facility has in effect a transfer agreement (meeting 
        the requirements of subsection (l)), under a teaching 
        program of such hospital approved as provided in the 
        last sentence of subsection (b), and other diagnostic 
        or therapeutic services provided by a hospital with 
        which the facility has such an agreement in effect; and
          (7) such other services necessary to the health of 
        the patients as are generally provided by skilled 
        nursing facilities, or by others under arrangements 
        with them made by the facility;
excluding, however, any item or service if it would not be 
included under subsection (b) if furnished to an inpatient of a 
hospital.

                  Post-Hospital Extended Care Services

  (i) The term ``post-hospital extended care services'' means 
extended care services furnished an individual after transfer 
from a hospital in which he was an inpatient for not less than 
3 consecutive days before his discharge from the hospital in 
connection with such transfer. For purposes of the preceding 
sentence, items and services shall be deemed to have been 
furnished to an individual after transfer from a hospital, and 
he shall be deemed to have been an inpatient in the hospital 
immediately before transfer therefrom, if he is admitted to the 
skilled nursing facility (A) within 30 days after discharge 
from such hospital, or (B) within such time as it would be 
medically appropriate to begin an active course of treatment, 
in the case of an individual whose condition is such that 
skilled nursing facility care would not be medically 
appropriate within 30 days after discharge from a hospital; and 
an individual shall be deemed not to have been discharged from 
a skilled nursing facility if, within 30 days after discharge 
therefrom, he is admitted to such facility or any other skilled 
nursing facility.

                        Skilled Nursing Facility

  (j) The term ``skilled nursing facility'' has the meaning 
given such term in section 1819(a).

                           Utilization Review

  (k) A utilization review plan of a hospital or skilled 
nursing facility shall be considered sufficient if it is 
applicable to services furnished by the institution to 
individuals entitled to insurance benefits under this title and 
if it provides--
          (1) for the review, on a sample or other basis, of 
        admissions to the institution, the duration of stays 
        therein, and the professional services (including drugs 
        and biologicals) furnished, (A) with respect to the 
        medical necessity of the services, and (B) for the 
        purpose of promoting the most efficient use of 
        available health facilities and services;
          (2) for such review to be made by either (A) a staff 
        committee of the institution composed of two or more 
        physicians (of which at least two must be physicians 
        described in subsection (r)(1) of this section), with 
        or without participation of other professional 
        personnel, or (B) a group outside the institution which 
        is similarly composed and (i) which is established by 
        the local medical society and some or all of the 
        hospitals and skilled nursing facilities in the 
        locality, or (ii) if (and for as long as) there has not 
        been established such a group which serves such 
        institution, which is established in such other manner 
        as may be approved by the Secretary;
          (3) for such review, in each case of inpatient 
        hospital services or extended care services furnished 
        to such an individual during a continuous period of 
        extended duration, as of such days of such period 
        (which may differ for different classes of cases) as 
        may be specified in regulations, with such review to be 
        made as promptly as possible, after each day so 
        specified, and in no event later than one week 
        following such day; and
          (4) for prompt notification to the institution, the 
        individual, and his attending physician of any finding 
        (made after opportunity for consultation to such 
        attending physician) by the physician members of such 
        committee or group that any further stay in the 
        institution is not medically necessary.
The review committee must be composed as provided in clause (B) 
of paragraph (2) rather than as provided in clause (A) of such 
paragraph in the case of any hospital or skilled nursing 
facility where, because of the small size of the institution, 
or (in the case of a skilled nursing facility) because of lack 
of an organized medical staff, or for such other reason or 
reasons as may be included in regulations, it is impracticable 
for the institution to have a properly functioning staff 
committee for the purposes of this subsection. If the Secretary 
determines that the utilization review procedures established 
pursuant to title XIX are superior in their effectiveness to 
the procedures required under this section, he may, to the 
extent that he deems it appropriate, require for purposes of 
this title that the procedures established pursuant to title 
XIX be utilized instead of the procedures required by this 
section.

    Agreements for Transfer Between Skilled Nursing Facilities and 
                               Hospitals

  (l) A hospital and a skilled nursing facility shall be 
considered to have a transfer agreement in effect if, by reason 
of a written agreement between them or (in case the two 
institutions are under common control) by reason of a written 
undertaking by the person or body which controls them, there is 
reasonable assurance that--
          (1) transfer of patients will be effected between the 
        hospital and the skilled nursing facility whenever such 
        transfer is medically appropriate as determined by the 
        attending physician; and
          (2) there will be interchange of medical and other 
        information necessary or useful in the care and 
        treatment of individuals transferred between the 
        institutions, or in determining whether such 
        individuals can be adequately cared for otherwise than 
        in either of such institutions.
Any skilled nursing facility which does not have such an 
agreement in effect, but which is found by a State agency (of 
the State in which such facility is situated) with which an 
agreement under section 1864 is in effect (or, in the case of a 
State in which no such agency has an agreement under section 
1864, by the Secretary) to have attempted in good faith to 
enter into such an agreement with a hospital sufficiently close 
to the facility to make feasible the transfer between them of 
patients and the information referred to in paragraph (2), 
shall be considered to have such an agreement in effect if and 
for so long as such agency (or the Secretary, as the case may 
be) finds that to do so is in the public interest and essential 
to assuring extended care services for persons in the community 
who are eligible for payments with respect to such services 
under this title.

                          Home Health Services

  (m) The term ``home health services'' means the following 
items and services furnished to an individual, who is under the 
care of a physician, by a home health agency or by others under 
arrangements with them made by such agency, under a plan (for 
furnishing such items and services to such individual) 
established and periodically reviewed by a physician, which 
items and services are, except as provided in paragraph (7), 
provided on a visiting basis in a place of residence used as 
such individual's home--
          (1) part-time or intermittent nursing care provided 
        by or under the supervision of a registered 
        professional nurse;
          (2) physical or occupational therapy or speech-
        language pathology services;
          (3) medical social services under the direction of a 
        physician;
          (4) to the extent permitted in regulations, part-time 
        or intermittent services of a home health aide who has 
        successfully completed a training program approved by 
        the Secretary;
          (5) medical supplies (including catheters, catheter 
        supplies, ostomy bags, and supplies related to ostomy 
        care, and a covered osteoporosis drug (as defined in 
        subsection (kk)), but excluding other drugs and 
        biologicals) and durable medical equipment while under 
        such a plan;
          (6) in the case of a home health agency which is 
        affiliated or under common control with a hospital, 
        medical services provided by an intern or resident-in-
        training of such hospital, under a teaching program of 
        such hospital approved as provided in the last sentence 
        of subsection (b); and
          (7) any of the foregoing items and services which are 
        provided on an outpatient basis, under arrangements 
        made by the home health agency, at a hospital or 
        skilled nursing facility, or at a rehabilitation center 
        which meets such standards as may be prescribed in 
        regulations, and--
                  (A) the furnishing of which involves the use 
                of equipment of such a nature that the items 
                and services cannot readily be made available 
                to the individual in such place of residence, 
                or
                  (B) which are furnished at such facility 
                while he is there to receive any such item or 
                service described in clause (A),
        but not including transportation of the individual in 
        connection with any such item or service;
excluding, however, any item or service if it would not be 
included under subsection (b) if furnished to an inpatient of a 
hospital. For purposes of paragraphs (1) and (4), the term 
``part-time or intermittent services'' means skilled nursing 
and home health aide services furnished any number of days per 
week as long as they are furnished (combined) less than 8 hours 
each day and 28 or fewer hours each week (or, subject to review 
on a case-by-case basis as to the need for care, less than 8 
hours each day and 35 or fewer hours per week). For purposes of 
sections 1814(a)(2)(C) and 1835(a)(2)(A), ``intermittent'' 
means skilled nursing care that is either provided or needed on 
fewer than 7 days each week, or less than 8 hours of each day 
for periods of 21 days or less (with extensions in exceptional 
circumstances when the need for additional care is finite and 
predictable).

                       Durable Medical Equipment

  (n) The term ``durable medical equipment'' includes iron 
lungs, oxygen tents, hospital beds, and wheelchairs (which may 
include a power-operated vehicle that may be appropriately used 
as a wheelchair, but only where the use of such a vehicle is 
determined to be necessary on the basis of the individual's 
medical and physical condition and the vehicle meets such 
safety requirements as the Secretary may prescribe) used in the 
patient's home (including an institution used as his home other 
than an institution that meets the requirements of subsection 
(e)(1) of this section or section 1819(a)(1)), whether 
furnished on a rental basis or purchased, and includes blood-
testing strips and blood glucose monitors for individuals with 
diabetes without regard to whether the individual has Type I or 
Type II diabetes or to the individual's use of insulin (as 
determined under standards established by the Secretary in 
consultation with the appropriate organizations); except that 
such term does not include such equipment furnished by a 
supplier who has used, for the demonstration and use of 
specific equipment, an individual who has not met such minimum 
training standards as the Secretary may establish with respect 
to the demonstration and use of such specific equipment. With 
respect to a seat-lift chair, such term includes only the seat-
lift mechanism and does not include the chair.

                           Home Health Agency

  (o) The term ``home health agency'' means a public agency or 
private organization, or a subdivision of such an agency or 
organization, which--
          (1) is primarily engaged in providing skilled nursing 
        services and other therapeutic services;
          (2) has policies, established by a group of 
        professional personnel (associated with the agency or 
        organization), including one or more physicians and one 
        or more registered professional nurses, to govern the 
        services (referred to in paragraph (1)) which it 
        provides, and provides for supervision of such services 
        by a physician or registered professional nurse;
          (3) maintains clinical records on all patients;
          (4) in the case of an agency or organization in any 
        State in which State or applicable local law provides 
        for the licensing of agencies or organizations of this 
        nature, (A) is licensed pursuant to such law, or (B) is 
        approved, by the agency of such State or locality 
        responsible for licensing agencies or organizations of 
        this nature, as meeting the standards established for 
        such licensing;
          (5) has in effect an overall plan and budget that 
        meets the requirements of subsection (z);
          (6) meets the conditions of participation specified 
        in section 1891(a) and such other conditions of 
        participation as the Secretary may find necessary in 
        the interest of the health and safety of individuals 
        who are furnished services by such agency or 
        organization;
          (7) provides the Secretary with a surety bond--
                  (A) in a form specified by the Secretary and 
                in an amount that is not less than the minimum 
                of $50,000; and
                  (B) that the Secretary determines is 
                commensurate with the volume of payments to the 
                home health agency; and
          (8) meets such additional requirements (including 
        conditions relating to bonding or establishing of 
        escrow accounts as the Secretary finds necessary for 
        the financial security of the program) as the Secretary 
        finds necessary for the effective and efficient 
        operation of the program;
except that for purposes of part A such term shall not include 
any agency or organization which is primarily for the care and 
treatment of mental diseases. The Secretary may waive the 
requirement of a surety bond under paragraph (7) in the case of 
an agency or organization that provides a comparable surety 
bond under State law.

                  Outpatient Physical Therapy Services

  (p) The term ``outpatient physical therapy services'' means 
physical therapy services furnished by a provider of services, 
a clinic, rehabilitation agency, or a public health agency, or 
by others under an arrangement with, and under the supervision 
of, such provider, clinic, rehabilitation agency, or public 
health agency to an individual as an outpatient--
          (1) who is under the care of a physician (as defined 
        in paragraph (1), (3), or (4) of section 1861(r)), and
          (2) with respect to whom a plan prescribing the type, 
        amount, and duration of physical therapy services that 
        are to be furnished such individual has been 
        established by a physician (as so defined) or by a 
        qualified physical therapist and is periodically 
        reviewed by a physician (as so defined);
excluding, however--
          (3) any item or service if it would not be included 
        under subsection (b) if furnished to an inpatient of a 
        hospital; and
          (4) any such service--
                  (A) if furnished by a clinic or 
                rehabilitation agency, or by others under 
                arrangements with such clinic or agency, unless 
                such clinic or rehabilitation agency--
                          (i) provides an adequate program of 
                        physical therapy services for 
                        outpatients and has the facilities and 
                        personnel required for such program or 
                        required for the supervision of such a 
                        program, in accordance with such 
                        requirements as the Secretary may 
                        specify,
                          (ii) has policies, established by a 
                        group of professional personnel, 
                        including one or more physicians 
                        (associated with the clinic or 
                        rehabilitation agency) and one or more 
                        qualified physical therapists, to 
                        govern the services (referred to in 
                        clause (i)) it provides,
                          (iii) maintains clinical records on 
                        all patients,
                          (iv) if such clinic or agency is 
                        situated in a State in which State or 
                        applicable local law provides for the 
                        licensing of institutions of this 
                        nature, (I) is licensed pursuant to 
                        such law, or (II) is approved by the 
                        agency of such State or locality 
                        responsible for licensing institutions 
                        of this nature, as meeting the 
                        standards established for such 
                        licensing; and
                          (v) meets such other conditions 
                        relating to the health and safety of 
                        individuals who are furnished services 
                        by such clinic or agency on an 
                        outpatient basis, as the Secretary may 
                        find necessary, and provides the 
                        Secretary on a continuing basis with a 
                        surety bond in a form specified by the 
                        Secretary and in an amount that is not 
                        less than $50,000, or
                  (B) if furnished by a public health agency, 
                unless such agency meets such other conditions 
                relating to health and safety of individuals 
                who are furnished services by such agency on an 
                outpatient basis, as the Secretary may find 
                necessary.
The term ``outpatient physical therapy services'' also includes 
physical therapy services furnished an individual by a physical 
therapist (in his office or in such individual's home) who 
meets licensing and other standards prescribed by the Secretary 
in regulations, otherwise than under an arrangement with and 
under the supervision of a provider of services, clinic, 
rehabilitation agency, or public health agency, if the 
furnishing of such services meets such conditions relating to 
health and safety as the Secretary may find necessary. In 
addition, such term includes physical therapy services which 
meet the requirements of the first sentence of this subsection 
except that they are furnished to an individual as an inpatient 
of a hospital or extended care facility. Nothing in this 
subsection shall be construed as requiring, with respect to 
outpatients who are not entitled to benefits under this title, 
a physical therapist to provide outpatient physical therapy 
services only to outpatients who are under the care of a 
physician or pursuant to a plan of care established by a 
physician. The Secretary may waive the requirement of a surety 
bond under paragraph (4)(A)(v) in the case of a clinic or 
agency that provides a comparable surety bond under State law.

                          Physicians' Services

  (q) The term ``physicians' services'' means professional 
services performed by physicians, including surgery, 
consultation, and home, office, and institutional calls (but 
not including services described in subsection (b)(6)).

                               Physician

  (r) The term ``physician'', when used in connection with the 
performance of any function or action, means (1) a doctor of 
medicine or osteopathy legally authorized to practice medicine 
and surgery by the State in which he performs such function or 
action (including a physician within the meaning of section 
1101(a)(7)), (2) a doctor of dental surgery or of dental 
medicine who is legally authorized to practice dentistry by the 
State in which he performs such function and who is acting 
within the scope of his license when he performs such 
functions, (3) a doctor of podiatric medicine for the purposes 
of subsections (k), (m), (p)(1), and (s) of this section and 
sections 1814(a), 1832(a)(2)(F)(ii), and 1835 but only with 
respect to functions which he is legally authorized to perform 
as such by the State in which he performs them, (4) a doctor of 
optometry, but only for purposes of subsection (p)(1) and with 
respect to the provision of items or services described in 
subsection (s) which he is legally authorized to perform as a 
doctor of optometry by the State in which he performs them, or 
(5) a chiropractor who is licensed as such by the State (or in 
a State which does not license chiropractors as such, is 
legally authorized to perform the services of a chiropractor in 
the jurisdiction in which he performs such services), and who 
meets uniform minimum standards promulgated by the Secretary, 
but only for the purpose of sections 1861(s)(1) and 
1861(s)(2)(A) and only with respect to treatment by means of 
manual manipulation of the spine (to correct a subluxation) 
which he is legally authorized to perform by the State or 
jurisdiction in which such treatment is provided. For the 
purposes of section 1862(a)(4) and subject to the limitations 
and conditions provided in the previous sentence, such term 
includes a doctor of one of the arts, specified in such 
previous sentence, legally authorized to practice such art in 
the country in which the inpatient hospital services (referred 
to in such section 1862(a)(4)) are furnished.

                   Medical and Other Health Services

  (s) The term ``medical and other health services'' means any 
of the following items or services:
          (1) physicians' services;
          (2)(A) services and supplies (including drugs and 
        biologicals which are not usually self-administered by 
        the patient) furnished as an incident to a physician's 
        professional service, of kinds which are commonly 
        furnished in physicians' offices and are commonly 
        either rendered without charge or included in the 
        physicians' bills (or would have been so included but 
        for the application of section 1847B);
          (B) hospital services (including drugs and 
        biologicals which are not usually self-administered by 
        the patient) incident to physicians' services rendered 
        to outpatients and partial hospitalization services 
        incident to such services;
          (C) diagnostic services which are--
                  (i) furnished to an individual as an 
                outpatient by a hospital or by others under 
                arrangements with them made by a hospital, and
                  (ii) ordinarily furnished by such hospital 
                (or by others under such arrangements) to its 
                outpatients for the purpose of diagnostic 
                study;
          (D) outpatient physical therapy services, outpatient 
        speech-language pathology services, and outpatient 
        occupational therapy services;
          (E) rural health clinic services and Federally 
        qualified health center services;
          (F) home dialysis supplies and equipment, self-care 
        home dialysis support services, and institutional 
        dialysis services and supplies, and, for items and 
        services furnished on or after January 1, 2011, renal 
        dialysis services (as defined in section 
        1881(b)(14)(B));
          (G) antigens (subject to quantity limitations 
        prescribed in regulations by the Secretary) prepared by 
        a physician, as defined in section 1861(r)(1), for a 
        particular patient, including antigens so prepared 
        which are forwarded to another qualified person 
        (including a rural health clinic) for administration to 
        such patient, from time to time, by or under the 
        supervision of another such physician;
          (H)(i) services furnished pursuant to a contract 
        under section 1876 to a member of an eligible 
        organization by a physician assistant or by a nurse 
        practitioner (as defined in subsection (aa)(5)) and 
        such services and supplies furnished as an incident to 
        his service to such a member as would otherwise be 
        covered under this part if furnished by a physician or 
        as an incident to a physician's service; and
          (ii) services furnished pursuant to a risk-sharing 
        contract under section 1876(g) to a member of an 
        eligible organization by a clinical psychologist (as 
        defined by the Secretary) or by a clinical social 
        worker (as defined in subsection (hh)(2)), and such 
        services and supplies furnished as an incident to such 
        clinical psychologist's services or clinical social 
        worker's services to such a member as would otherwise 
        be covered under this part if furnished by a physician 
        or as an incident to a physician's service;
          (I) blood clotting factors, for hemophilia patients 
        competent to use such factors to control bleeding 
        without medical or other supervision, and items related 
        to the administration of such factors, subject to 
        utilization controls deemed necessary by the Secretary 
        for the efficient use of such factors;
          (J) prescription drugs used in immunosuppressive 
        therapy furnished, to an individual who receives an 
        organ transplant for which payment is made under this 
        title;
          (K)(i) services which would be physicians' services 
        and services described in subsections (ww)(1) and (hhh) 
        if furnished by a physician (as defined in subsection 
        (r)(1)) and which are performed by a physician 
        assistant (as defined in subsection (aa)(5)) under the 
        supervision of a physician (as so defined) and which 
        the physician assistant is legally authorized to 
        perform by the State in which the services are 
        performed, and such services and supplies furnished as 
        incident to such services as would be covered under 
        subparagraph (A) if furnished 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,
          (ii) services which would be physicians' services and 
        services described in subsections (ww)(1) and (hhh) if 
        furnished by a physician (as defined in subsection 
        (r)(1)) and which are performed by a nurse practitioner 
        or clinical nurse specialist (as defined in subsection 
        (aa)(5)) working in collaboration (as defined in 
        subsection (aa)(6)) with a physician (as defined in 
        subsection (r)(1)) which the nurse practitioner or 
        clinical nurse specialist is legally authorized to 
        perform by the State in which the services are 
        performed, and such services and supplies furnished as 
        an incident to such services as would be covered under 
        subparagraph (A) if furnished 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;
          (L) certified nurse-midwife services;
          (M) qualified psychologist services;
          (N) clinical social worker services (as defined in 
        subsection (hh)(2));
          (O) erythropoietin for dialysis patients competent to 
        use such drug without medical or other supervision with 
        respect to the administration of such drug, subject to 
        methods and standards established by the Secretary by 
        regulation for the safe and effective use of such drug, 
        and items related to the administration of such drug;
          (P) prostate cancer screening tests (as defined in 
        subsection (oo));
          (Q) an oral drug (which is approved by the Federal 
        Food and Drug Administration) prescribed for use as an 
        anticancer chemotherapeutic agent for a given 
        indication, and containing an active ingredient (or 
        ingredients), which is the same indication and active 
        ingredient (or ingredients) as a drug which the carrier 
        determines would be covered pursuant to subparagraph 
        (A) or (B) if the drug could not be self-administered;
          (R) colorectal cancer screening tests (as defined in 
        subsection (pp));
          (S) diabetes outpatient self-management training 
        services (as defined in subsection (qq));
          (T) an oral drug (which is approved by the Federal 
        Food and Drug Administration) prescribed for use as an 
        acute anti-emetic used as part of an anticancer 
        chemotherapeutic regimen if the drug is administered by 
        a physician (or as prescribed by a physician)--
                  (i) for use immediately before, at, or within 
                48 hours after the time of the administration 
                of the anticancer chemotherapeutic agent; and
                  (ii) as a full replacement for the anti-
                emetic therapy which would otherwise be 
                administered intravenously;
          (U) screening for glaucoma (as defined in subsection 
        (uu)) for individuals determined to be at high risk for 
        glaucoma, individuals with a family history of glaucoma 
        and individuals with diabetes;
          (V) medical nutrition therapy services (as defined in 
        subsection (vv)(1)) in the case of a beneficiary with 
        diabetes or a renal disease who--
                  (i) has not received diabetes outpatient 
                self-management training services within a time 
                period determined by the Secretary;
                  (ii) is not receiving maintenance dialysis 
                for which payment is made under section 1881; 
                and
                  (iii) meets such other criteria determined by 
                the Secretary after consideration of protocols 
                established by dietitian or nutrition 
                professional organizations;
          (W) an initial preventive physical examination (as 
        defined in subsection (ww));
          (X) cardiovascular screening blood tests (as defined 
        in subsection (xx)(1));
          (Y) diabetes screening tests (as defined in 
        subsection (yy));
          (Z) intravenous immune globulin for the treatment of 
        primary immune deficiency diseases in the home (as 
        defined in subsection (zz));
          (AA) ultrasound screening for abdominal aortic 
        aneurysm (as defined in subsection (bbb)) for an 
        individual--
                  (i) who receives a referral for such an 
                ultrasound screening as a result of an initial 
                preventive physical examination (as defined in 
                section 1861(ww)(1));
                  (ii) who has not been previously furnished 
                such an ultrasound screening under this title; 
                and
                  (iii) who--
                          (I) has a family history of abdominal 
                        aortic aneurysm; or
                          (II) manifests risk factors included 
                        in a beneficiary category recommended 
                        for screening by the United States 
                        Preventive Services Task Force 
                        regarding abdominal aortic aneurysms;
          (BB) additional preventive services (described in 
        subsection (ddd)(1));
          (CC) items and services furnished under a cardiac 
        rehabilitation program (as defined in subsection 
        (eee)(1)) or under a pulmonary rehabilitation program 
        (as defined in subsection (fff)(1));
          (DD) items and services furnished under an intensive 
        cardiac rehabilitation program (as defined in 
        subsection (eee)(4));
          (EE) kidney disease education services (as defined in 
        subsection (ggg)); and
          (FF) personalized prevention plan services (as 
        defined in subsection (hhh));
          (3) diagnostic X-ray tests (including tests under the 
        supervision of a physician, furnished in a place of 
        residence used as the patient's home, if the 
        performance of such tests meets such conditions 
        relating to health and safety as the Secretary may find 
        necessary and including diagnostic mammography if 
        conducted by a facility that has a certificate (or 
        provisional certificate) issued under section 354 of 
        the Public Health Service Act), diagnostic laboratory 
        tests, and other diagnostic tests;
          (4) X-ray, radium, and radioactive isotope therapy, 
        including materials and services of technicians;
          (5) surgical dressings, and splints, casts, and other 
        devices used for reduction of fractures and 
        dislocations;
          (6) durable medical equipment;
          (7) ambulance service where the use of other methods 
        of transportation is contraindicated by the 
        individual's condition, but, subject to section 
        1834(l)(14), only to the extent provided in 
        regulations;
          (8) prosthetic devices (other than dental) which 
        replace all or part of an internal body organ 
        (including colostomy bags and supplies directly related 
        to colostomy care), including replacement of such 
        devices, and including one pair of conventional 
        eyeglasses or contact lenses furnished subsequent to 
        each cataract surgery with insertion of an intraocular 
        lens;
          (9) leg, arm, back, and neck braces, and artificial 
        legs, arms, and eyes, including replacements if 
        required because of a change in the patient's physical 
        condition;
          (10)(A) pneumococcal vaccine and its administration 
        and, subject to section 4071(b) of the Omnibus Budget 
        Reconciliation Act of 1987, influenza vaccine and its 
        administration; and
          (B) hepatitis B vaccine and its administration, 
        furnished to an individual who is at high or 
        intermediate risk of contracting hepatitis B (as 
        determined by the Secretary under regulations);
          (11) services of a certified registered nurse 
        anesthetist (as defined in subsection (bb));
          (12) subject to section 4072(e) of the Omnibus Budget 
        Reconciliation Act of 1987, extra-depth shoes with 
        inserts or custom molded shoes with inserts for an 
        individual with diabetes, if--
                  (A) the physician who is managing the 
                individual's diabetic condition (i) documents 
                that the individual has peripheral neuropathy 
                with evidence of callus formation, a history of 
                pre-ulcerative calluses, a history of previous 
                ulceration, foot deformity, or previous 
                amputation, or poor circulation, and (ii) 
                certifies that the individual needs such shoes 
                under a comprehensive plan of care related to 
                the individual's diabetic condition;
                  (B) the particular type of shoes are 
                prescribed by a podiatrist or other qualified 
                physician (as established by the Secretary); 
                and
                  (C) the shoes are fitted and furnished by a 
                podiatrist or other qualified individual (such 
                as a pedorthist or orthotist, as established by 
                the Secretary) who is not the physician 
                described in subparagraph (A) (unless the 
                Secretary finds that the physician is the only 
                such qualified individual in the area);
          (13) screening mammography (as defined in subsection 
        (jj));
          (14) screening pap smear and screening pelvic exam; 
        and
          (15) bone mass measurement (as defined in subsection 
        (rr)).
No diagnostic tests performed in any laboratory, including a 
laboratory that is part of a rural health clinic, or a hospital 
(which, for purposes of this sentence, means an institution 
considered a hospital for purposes of section 1814(d)) shall be 
included within paragraph (3) unless such laboratory--
          (16) if situated in any State in which State or 
        applicable local law provides for licensing of 
        establishments of this nature, (A) is licensed pursuant 
        to such law, or (B) is approved, by the agency of such 
        State or locality responsible for licensing 
        establishments of this nature, as meeting the standards 
        established for such licensing; and
          (17)(A) meets the certification requirements under 
        section 353 of the Public Health Service Act; and
          (B) meets such other conditions relating to the 
        health and safety of individuals with respect to whom 
        such tests are performed as the Secretary may find 
        necessary.
There shall be excluded from the diagnostic services specified 
in paragraph (2)(C) any item or service (except services 
referred to in paragraph (1)) which would not be included under 
subsection (b) if it were furnished to an inpatient of a 
hospital. None of the items and services referred to in the 
preceding paragraphs (other than paragraphs (1) and (2)(A)) of 
this subsection which are furnished to a patient of an 
institution which meets the definition of a hospital for 
purposes of section 1814(d) shall be included unless such other 
conditions are met as the Secretary may find necessary relating 
to health and safety of individuals with respect to whom such 
items and services are furnished.

                         Drugs and Biologicals

  (t)(1) The term ``drugs'' and the term ``biologicals'', 
except for purposes of subsection (m)(5) and paragraph (2), 
include only such drugs (including contrast agents) and 
biologicals, respectively, as are included (or approved for 
inclusion) in the United States Pharmacopoeia, the National 
Formulary, or the United States Homeopathic Pharmacopoeia, or 
in New Drugs or Accepted Dental Remedies (except for any drugs 
and biologicals unfavorably evaluated therein), or as are 
approved by the pharmacy and drug therapeutics committee (or 
equivalent committee) of the medical staff of the hospital 
furnishing such drugs and biologicals for use in such hospital.
  (2)(A) For purposes of paragraph (1), the term ``drugs'' also 
includes any drugs or biologicals used in an anticancer 
chemotherapeutic regimen for a medically accepted indication 
(as described in subparagraph (B)).
  (B) In subparagraph (A), the term ``medically accepted 
indication'', with respect to the use of a drug, includes any 
use which has been approved by the Food and Drug Administration 
for the drug, and includes another use of the drug if--
          (i) the drug has been approved by the Food and Drug 
        Administration; and
          (ii)(I) such use is supported by one or more 
        citations which are included (or approved for 
        inclusion) in one or more of the following compendia: 
        the American Hospital Formulary Service-Drug 
        Information, the American Medical Association Drug 
        Evaluations, the United States Pharmacopoeia-Drug 
        Information (or its successor publications), and other 
        authoritative compendia as identified by the Secretary, 
        unless the Secretary has determined that the use is not 
        medically appropriate or the use is identified as not 
        indicated in one or more such compendia, or
          (II) the carrier involved determines, based upon 
        guidance provided by the Secretary to carriers for 
        determining accepted uses of drugs, that such use is 
        medically accepted based on supportive clinical 
        evidence in peer reviewed medical literature appearing 
        in publications which have been identified for purposes 
        of this subclause by the Secretary.
The Secretary may revise the list of compendia in clause 
(ii)(I) as is appropriate for identifying medically accepted 
indications for drugs. On and after January 1, 2010, no 
compendia may be included on the list of compendia under this 
subparagraph unless the compendia has a publicly transparent 
process for evaluating therapies and for identifying potential 
conflicts of interests.

                          Provider of Services

  (u) The term ``provider of services'' means a hospital, 
critical access hospital, skilled nursing facility, 
comprehensive outpatient rehabilitation facility, home health 
agency, hospice program, or, for purposes of section 1814(g) 
and section 1835(e), a fund.

                            Reasonable Cost

  (v)(1)(A) The reasonable cost of any services shall be the 
cost actually incurred, excluding therefrom any part of 
incurred cost found to be unnecessary in the efficient delivery 
of needed health services, and shall be determined in 
accordance with regulations establishing the method or methods 
to be used, and the items to be included, in determining such 
costs for various types or classes of institutions, agencies, 
and services; except that in any case to which paragraph (2) or 
(3) applies, the amount of the payment determined under such 
paragraph with respect to the services involved shall be 
considered the reasonable cost of such services. In prescribing 
the regulations referred to in the preceding sentence, the 
Secretary shall consider, among other things, the principles 
generally applied by national organizations or established 
prepayment organizations (which have developed such principles) 
in computing the amount of payment, to be made by persons other 
than the recipients of services, to providers of services on 
account of services furnished to such recipients by such 
providers. Such regulations may provide for determination of 
the costs of services on a per diem, per unit, per capita, or 
other basis, may provide for using different methods in 
different circumstances, may provide for the use of estimates 
of costs of particular items or services, may provide for the 
establishment of limits on the direct or indirect overall 
incurred costs or incurred costs of specific items or services 
or groups of items or services to be recognized as reasonable 
based on estimates of the costs necessary in the efficient 
delivery of needed health services to individuals covered by 
the insurance programs established under this title, and may 
provide for the use of charges or a percentage of charges where 
this method reasonably reflects the costs. Such regulations 
shall (i) take into account both direct and indirect costs of 
providers of services (excluding therefrom any such costs, 
including standby costs, which are determined in accordance 
with regulations to be unnecessary in the efficient delivery of 
services covered by the insurance programs established under 
this title) in order that, under the methods of determining 
costs, the necessary costs of efficiently delivering covered 
services to individuals covered by the insurance programs 
established by this title will not be borne by individuals not 
so covered, and the costs with respect to individuals not so 
covered will not be borne by such insurance programs, and (ii) 
provide for the making of suitable retroactive corrective 
adjustments where, for a provider of services for any fiscal 
period, the aggregate reimbursement produced by the methods of 
determining costs proves to be either inadequate or excessive.
  (B) In the case of extended care services, the regulations 
under subparagraph (A) shall not include provision for specific 
recognition of a return on equity capital.
  (C) Where a hospital has an arrangement with a medical school 
under which the faculty of such school provides services at 
such hospital, an amount not in excess of the reasonable cost 
of such services to the medical school shall be included in 
determining the reasonable cost to the hospital of furnishing 
services--
          (i) for which payment may be made under part A, but 
        only if--
                  (I) payment for such services as furnished 
                under such arrangement would be made under part 
                A to the hospital had such services been 
                furnished by the hospital, and
                  (II) such hospital pays to the medical school 
                at least the reasonable cost of such services 
                to the medical school, or
          (ii) for which payment may be made under part B, but 
        only if such hospital pays to the medical school at 
        least the reasonable cost of such services to the 
        medical school.
  (D) Where (i) physicians furnish services which are either 
inpatient hospital services (including services in conjunction 
with the teaching programs of such hospital) by reason of 
paragraph (7) of subsection (b) or for which entitlement exists 
by reason of clause (II) of section 1832(a)(2)(B)(i), and (ii) 
such hospital (or medical school under arrangement with such 
hospital) incurs no actual cost in the furnishing of such 
services, the reasonable cost of such services shall (under 
regulations of the Secretary) be deemed to be the cost such 
hospital or medical school would have incurred had it paid a 
salary to such physicians rendering such services approximately 
equivalent to the average salary paid to all physicians 
employed by such hospital (or if such employment does not 
exist, or is minimal in such hospital, by similar hospitals in 
a geographic area of sufficient size to assure reasonable 
inclusion of sufficient physicians in development of such 
average salary).
  (E) Such regulations may, in the case of skilled nursing 
facilities in any State, provide for the use of rates, 
developed by the State in which such facilities are located, 
for the payment of the cost of skilled nursing facility 
services furnished under the State's plan approved under title 
XIX (and such rates may be increased by the Secretary on a 
class or size of institution or on a geographical basis by a 
percentage factor not in excess of 10 percent to take into 
account determinable items or services or other requirements 
under this title not otherwise included in the computation of 
such State rates), if the Secretary finds that such rates are 
reasonably related to (but not necessarily limited to) analyses 
undertaken by such State of costs of care in comparable 
facilities in such State. Notwithstanding the previous 
sentence, such regulations with respect to skilled nursing 
facilities shall take into account (in a manner consistent with 
subparagraph (A) and based on patient-days of services 
furnished) the costs (including the costs of services required 
to attain or maintain the highest practicable physical, mental, 
and psychosocial well-being of each resident eligible for 
benefits under this title) of such facilities complying with 
the requirements of subsections (b), (c), and (d) of section 
1819 (including the costs of conducting nurse aide training and 
competency evaluation programs and competency evaluation 
programs).
  (F) Such regulations shall require each provider of services 
(other than a fund) to make reports to the Secretary of 
information described in section 1121(a) in accordance with the 
uniform reporting system (established under such section) for 
that type of provider.
  (G)(i) In any case in which a hospital provides inpatient 
services to an individual that would constitute post-hospital 
extended care services if provided by a skilled nursing 
facility and a quality improvement organization (or, in the 
absence of such a qualified organization, the Secretary or such 
agent as the Secretary may designate) determines that inpatient 
hospital services for the individual are not medically 
necessary but post-hospital extended care services for the 
individual are medically necessary and such extended care 
services are not otherwise available to the individual (as 
determined in accordance with criteria established by the 
Secretary) at the time of such determination, payment for such 
services provided to the individual shall continue to be made 
under this title at the payment rate described in clause (ii) 
during the period in which--
          (I) such post-hospital extended care services for the 
        individual are medically necessary and not otherwise 
        available to the individual (as so determined),
          (II) inpatient hospital services for the individual 
        are not medically necessary, and
          (III) the individual is entitled to have payment made 
        for post-hospital extended care services under this 
        title,
except that if the Secretary determines that there is not an 
excess of hospital beds in such hospital and (subject to clause 
(iv)) there is not an excess of hospital beds in the area of 
such hospital, such payment shall be made (during such period) 
on the basis of the amount otherwise payable under part A with 
respect to inpatient hospital services.
  (ii)(I) Except as provided in subclause (II), the payment 
rate referred to in clause (i) is a rate equal to the estimated 
adjusted State-wide average rate per patient-day paid for 
services provided in skilled nursing facilities under the State 
plan approved under title XIX for the State in which such 
hospital is located, or, if the State in which the hospital is 
located does not have a State plan approved under title XIX, 
the estimated adjusted State-wide average allowable costs per 
patient-day for extended care services under this title in that 
State.
  (II) If a hospital has a unit which is a skilled nursing 
facility, the payment rate referred to in clause (i) for the 
hospital is a rate equal to the lesser of the rate described in 
subclause (I) or the allowable costs in effect under this title 
for extended care services provided to patients of such unit.
  (iii) Any day on which an individual receives inpatient 
services for which payment is made under this subparagraph 
shall, for purposes of this Act (other than this subparagraph), 
be deemed to be a day on which the individual received 
inpatient hospital services.
  (iv) In determining under clause (i), in the case of a public 
hospital, whether or not there is an excess of hospital beds in 
the area of such hospital, such determination shall be made on 
the basis of only the public hospitals (including the hospital) 
which are in the area of the hospital and which are under 
common ownership with that hospital.
  (H) In determining such reasonable cost with respect to home 
health agencies, the Secretary may not include--
          (i) any costs incurred in connection with bonding or 
        establishing an escrow account by any such agency as a 
        result of the surety bond requirement described in 
        subsection (o)(7) and the financial security 
        requirement described in subsection (o)(8);
          (ii) in the case of home health agencies to which the 
        surety bond requirement described in subsection (o)(7) 
        and the financial security requirement described in 
        subsection (o)(8) apply, any costs attributed to 
        interest charged such an agency in connection with 
        amounts borrowed by the agency to repay overpayments 
        made under this title to the agency, except that such 
        costs may be included in reasonable cost if the 
        Secretary determines that the agency was acting in good 
        faith in borrowing the amounts;
          (iii) in the case of contracts entered into by a home 
        health agency after the date of the enactment of this 
        subparagraph for the purpose of having services 
        furnished for or on behalf of such agency, any cost 
        incurred by such agency pursuant to any such contract 
        which is entered into for a period exceeding five 
        years; and
          (iv) in the case of contracts entered into by a home 
        health agency before the date of the enactment of this 
        subparagraph for the purpose of having services 
        furnished for or on behalf of such agency, any cost 
        incurred by such agency pursuant to any such contract, 
        which determines the amount payable by the home health 
        agency on the basis of a percentage of the agency's 
        reimbursement or claim for reimbursement for services 
        furnished by the agency, to the extent that such cost 
        exceeds the reasonable value of the services furnished 
        on behalf of such agency.
  (I) In determining such reasonable cost, the Secretary may 
not include any costs incurred by a provider with respect to 
any services furnished in connection with matters for which 
payment may be made under this title and furnished pursuant to 
a contract between the provider and any of its subcontractors 
which is entered into after the date of the enactment of this 
subparagraph and the value or cost of which is $10,000 or more 
over a twelve-month period unless the contract contains a 
clause to the effect that--
          (i) until the expiration of four years after the 
        furnishing of such services pursuant to such contract, 
        the subcontractor shall make available, upon written 
        request by the Secretary, or upon request by the 
        Comptroller General, or any of their duly authorized 
        representatives, the contract, and books, documents and 
        records of such subcontractor that are necessary to 
        certify the nature and extent of such costs, and
          (ii) if the subcontractor carries out any of the 
        duties of the contract through a subcontract, with a 
        value or cost of $10,000 or more over a twelve-month 
        period, with a related organization, such subcontract 
        shall contain a clause to the effect that until the 
        expiration of four years after the furnishing of such 
        services pursuant to such subcontract, the related 
        organization shall make available, upon written request 
        by the Secretary, or upon request by the Comptroller 
        General, or any of their duly authorized 
        representatives, the subcontract, and books, documents 
        and records of such organization that are necessary to 
        verify the nature and extent of such costs.
The Secretary shall prescribe in regulation criteria and 
procedures which the Secretary shall use in obtaining access to 
books, documents, and records under clauses required in 
contracts and subcontracts under this subparagraph.
  (J) Such regulations may not provide for any inpatient 
routine salary cost differential as a reimbursable cost for 
hospitals and skilled nursing facilities.
  (K)(i) The Secretary shall issue regulations that provide, to 
the extent feasible, for the establishment of limitations on 
the amount of any costs or charges that shall be considered 
reasonable with respect to services provided on an outpatient 
basis by hospitals (other than bona fide emergency services as 
defined in clause (ii)) or clinics (other than rural health 
clinics), which are reimbursed on a cost basis or on the basis 
of cost related charges, and by physicians utilizing such 
outpatient facilities. Such limitations shall be reasonably 
related to the charges in the same area for similar services 
provided in physicians' offices. Such regulations shall provide 
for exceptions to such limitations in cases where similar 
services are not generally available in physicians' offices in 
the area to individuals entitled to benefits under this title.
  (ii) For purposes of clause (i), the term ``bona fide 
emergency services'' means services provided in a hospital 
emergency room after the sudden onset of a medical condition 
manifesting itself by acute symptoms of sufficient severity 
(including severe pain) such that the absence of immediate 
medical attention could reasonably be expected to result in--
          (I) placing the patient's health in serious jeopardy;
          (II) serious impairment to bodily functions; or
          (III) serious dysfunction of any bodily organ or 
        part.
  (L)(i) The Secretary, in determining the amount of the 
payments that may be made under this title with respect to 
services furnished by home health agencies, may not recognize 
as reasonable (in the efficient delivery of such services) 
costs for the provision of such services by an agency to the 
extent these costs exceed (on the aggregate for the agency) for 
cost reporting periods beginning on or after--
          (I) July 1, 1985, and before July 1, 1986, 120 
        percent of the mean of the labor-related and nonlabor 
        per visit costs for freestanding home health agencies,
          (II) July 1, 1986, and before July 1, 1987, 115 
        percent of such mean,
          (III) July 1, 1987, and before October 1, 1997, 112 
        percent of such mean,
          (IV) October 1, 1997, and before October 1, 1998, 105 
        percent of the median of the labor-related and nonlabor 
        per visit costs for freestanding home health agencies, 
        or
          (V) October 1, 1998, 106 percent of such median.
  (ii) Effective for cost reporting periods beginning on or 
after July 1, 1986, such limitations shall be applied on an 
aggregate basis for the agency, rather than on a discipline 
specific basis. The Secretary may provide for such exemptions 
and exceptions to such limitation as he deems appropriate.
  (iii) Not later than July 1, 1991, and annually thereafter 
(but not for cost reporting periods beginning on or after July 
1, 1994, and before July 1, 1996, or on or after July 1, 1997, 
and before October 1, 1997), the Secretary shall establish 
limits under this subparagraph for cost reporting periods 
beginning on or after such date by utilizing the area wage 
index applicable under section 1886(d)(3)(E) and determined 
using the survey of the most recent available wages and wage-
related costs of hospitals located in the geographic area in 
which the home health service is furnished (determined without 
regard to whether such hospitals have been reclassified to a 
new geographic area pursuant to section 1886(d)(8)(B), a 
decision of the Medicare Geographic Classification Review Board 
under section 1886(d)(10), or a decision of the Secretary).
  (iv) In establishing limits under this subparagraph for cost 
reporting periods beginning after September 30, 1997, the 
Secretary shall not take into account any changes in the home 
health market basket, as determined by the Secretary, with 
respect to cost reporting periods which began on or after July 
1, 1994, and before July 1, 1996.
  (v) For services furnished by home health agencies for cost 
reporting periods beginning on or after October 1, 1997, 
subject to clause (viii)(I), the Secretary shall provide for an 
interim system of limits. Payment shall not exceed the costs 
determined under the preceding provisions of this subparagraph 
or, if lower, the product of--
          (I) an agency-specific per beneficiary annual 
        limitation calculated based 75 percent on 98 percent of 
        the reasonable costs (including nonroutine medical 
        supplies) for the agency's 12-month cost reporting 
        period ending during fiscal year 1994, and based 25 
        percent on 98 percent of the standardized regional 
        average of such costs for the agency's census division, 
        as applied to such agency, for cost reporting periods 
        ending during fiscal year 1994, such costs updated by 
        the home health market basket index; and
          (II) the agency's unduplicated census count of 
        patients (entitled to benefits under this title) for 
        the cost reporting period subject to the limitation.
  (vi) For services furnished by home health agencies for cost 
reporting periods beginning on or after October 1, 1997, the 
following rules apply:
          (I) For new providers and those providers without a 
        12-month cost reporting period ending in fiscal year 
        1994 subject to clauses (viii)(II) and (viii)(III), the 
        per beneficiary limitation shall be equal to the median 
        of these limits (or the Secretary's best estimates 
        thereof) applied to other home health agencies as 
        determined by the Secretary. A home health agency that 
        has altered its corporate structure or name shall not 
        be considered a new provider for this purpose.
          (II) For beneficiaries who use services furnished by 
        more than one home health agency, the per beneficiary 
        limitations shall be prorated among the agencies.
  (vii)(I) Not later than January 1, 1998, the Secretary shall 
establish per visit limits applicable for fiscal year 1998, and 
not later than April 1, 1998, the Secretary shall establish per 
beneficiary limits under clause (v)(I) for fiscal year 1998.
  (II) Not later than August 1 of each year (beginning in 1998) 
the Secretary shall establish the limits applicable under this 
subparagraph for services furnished during the fiscal year 
beginning October 1 of the year.
  (viii)(I) In the case of a provider with a 12-month cost 
reporting period ending in fiscal year 1994, if the limit 
imposed under clause (v) (determined without regard to this 
subclause) for a cost reporting period beginning during or 
after fiscal year 1999 is less than the median described in 
clause (vi)(I) (but determined as if any reference in clause 
(v) to ``98 percent'' were a reference to ``100 percent''), the 
limit otherwise imposed under clause (v) for such provider and 
period shall be increased by \1/3\ of such difference.
  (II) Subject to subclause (IV), for new providers and those 
providers without a 12-month cost reporting period ending in 
fiscal year 1994, but for which the first cost reporting period 
begins before fiscal year 1999, for cost reporting periods 
beginning during or after fiscal year 1999, the per beneficiary 
limitation described in clause (vi)(I) shall be equal to the 
median described in such clause (determined as if any reference 
in clause (v) to ``98 percent'' were a reference to ``100 
percent'').
  (III) Subject to subclause (IV), in the case of a new 
provider for which the first cost reporting period begins 
during or after fiscal year 1999, the limitation applied under 
clause (vi)(I) (but only with respect to such provider) shall 
be equal to 75 percent of the median described in clause 
(vi)(I).
  (IV) In the case of a new provider or a provider without a 
12-month cost reporting period ending in fiscal year 1994, 
subclause (II) shall apply, instead of subclause (III), to a 
home health agency which filed an application for home health 
agency provider status under this title before September 15, 
1998, or which was approved as a branch of its parent agency 
before such date and becomes a subunit of the parent agency or 
a separate agency on or after such date.
  (V) Each of the amounts specified in subclauses (I) through 
(III) are such amounts as adjusted under clause (iii) to 
reflect variations in wages among different areas.
  (ix) Notwithstanding the per beneficiary limit under clause 
(viii), if the limit imposed under clause (v) (determined 
without regard to this clause) for a cost reporting period 
beginning during or after fiscal year 2000 is less than the 
median described in clause (vi)(I) (but determined as if any 
reference in clause (v) to ``98 percent'' were a reference to 
``100 percent''), the limit otherwise imposed under clause (v) 
for such provider and period shall be increased by 2 percent.
  (x) Notwithstanding any other provision of this subparagraph, 
in updating any limit under this subparagraph by a home health 
market basket index for cost reporting periods beginning during 
each of fiscal years 2000, 2002, and 2003, the update otherwise 
provided shall be reduced by 1.1 percentage points. With 
respect to cost reporting periods beginning during fiscal year 
2001, the update to any limit under this subparagraph shall be 
the home health market basket index.
  (M) Such regulations shall provide that costs respecting care 
provided by a provider of services, pursuant to an assurance 
under title VI or XVI of the Public Health Service Act that the 
provider will make available a reasonable volume of services to 
persons unable to pay therefor, shall not be allowable as 
reasonable costs.
  (N) In determining such reasonable costs, costs incurred for 
activities directly related to influencing employees respecting 
unionization may not be included.
  (O)(i) In establishing an appropriate allowance for 
depreciation and for interest on capital indebtedness with 
respect to an asset of a provider of services which has 
undergone a change of ownership, such regulations shall 
provide, except as provided in clause (iii), that the valuation 
of the asset after such change of ownership shall be the 
historical cost of the asset, as recognized under this title, 
less depreciation allowed, to the owner of record as of the 
date of enactment of the Balanced Budget Act of 1997 (or, in 
the case of an asset not in existence as of that date, the 
first owner of record of the asset after that date).
  (ii) Such regulations shall not recognize, as reasonable in 
the provision of health care services, costs (including legal 
fees, accounting and administrative costs, travel costs, and 
the costs of feasibility studies) attributable to the 
negotiation or settlement of the sale or purchase of any 
capital asset (by acquisition or merger) for which any payment 
has previously been made under this title.
  (iii) In the case of the transfer of a hospital from 
ownership by a State to ownership by a nonprofit corporation 
without monetary consideration, the basis for capital 
allowances to the new owner shall be the book value of the 
hospital to the State at the time of the transfer.
  (P) If such regulations provide for the payment for a return 
on equity capital (other than with respect to costs of 
inpatient hospital services), the rate of return to be 
recognized, for determining the reasonable cost of services 
furnished in a cost reporting period, shall be equal to the 
average of the rates of interest, for each of the months any 
part of which is included in the period, on obligations issued 
for purchase by the Federal Hospital Insurance Trust Fund.
  (Q) Except as otherwise explicitly authorized, the Secretary 
is not authorized to limit the rate of increase on allowable 
costs of approved medical educational activities.
  (R) In determining such reasonable cost, costs incurred by a 
provider of services representing a beneficiary in an 
unsuccessful appeal of a determination described in section 
1869(b) shall not be allowable as reasonable costs.
  (S)(i) Such regulations shall not include provision for 
specific recognition of any return on equity capital with 
respect to hospital outpatient departments.
  (ii)(I) Such regulations shall provide that, in determining 
the amount of the payments that may be made under this title 
with respect to all the capital-related costs of outpatient 
hospital services, the Secretary shall reduce the amounts of 
such payments otherwise established under this title by 15 
percent for payments attributable to portions of cost reporting 
periods occurring during fiscal year 1990, by 15 percent for 
payments attributable to portions of cost reporting periods 
occurring during fiscal year 1991, and by 10 percent for 
payments attributable to portions of cost reporting periods 
occurring during fiscal years 1992 through 1999 and until the 
first date that the prospective payment system under section 
1833(t) is implemented.
  (II) The Secretary shall reduce the reasonable cost of 
outpatient hospital services (other than the capital-related 
costs of such services) otherwise determined pursuant to 
section 1833(a)(2)(B)(i)(I) by 5.8 percent for payments 
attributable to portions of cost reporting periods occurring 
during fiscal years 1991 through 1999 and until the first date 
that the prospective payment system under section 1833(t) is 
implemented.
  (III) Subclauses (I) and (II) shall not apply to payments 
with respect to the costs of hospital outpatient services 
provided by any hospital that is a sole community hospital (as 
defined in section 1886(d)(5)(D)(iii)) or a critical access 
hospital (as defined in section 1861(mm)(1)).
  (IV) In applying subclauses (I) and (II) to services for 
which payment is made on the basis of a blend amount under 
section 1833(i)(3)(A)(ii) or 1833(n)(1)(A)(ii), the costs 
reflected in the amounts described in sections 
1833(i)(3)(B)(i)(I) and 1833(n)(1)(B)(i)(I), respectively, 
shall be reduced in accordance with such subclause.
  (T) In determining such reasonable costs for hospitals, no 
reduction in copayments under section 1833(t)(8)(B) shall be 
treated as a bad debt and the amount of bad debts otherwise 
treated as allowable costs which are attributable to the 
deductibles and coinsurance amounts under this title shall be 
reduced--
          (i) for cost reporting periods beginning during 
        fiscal year 1998, by 25 percent of such amount 
        otherwise allowable,
          (ii) for cost reporting periods beginning during 
        fiscal year 1999, by 40 percent of such amount 
        otherwise allowable,
          (iii) for cost reporting periods beginning during 
        fiscal year 2000, by 45 percent of such amount 
        otherwise allowable,
          (iv) for cost reporting periods beginning during 
        fiscal years 2001 through 2012, by 30 percent of such 
        amount otherwise allowable, and
          (v) for cost reporting periods beginning during 
        fiscal year 2013 or a subsequent fiscal year, by 35 
        percent of such amount otherwise allowable.
  (U) In determining the reasonable cost of ambulance services 
(as described in subsection (s)(7)) provided during fiscal year 
1998, during fiscal year 1999, and during so much of fiscal 
year 2000 as precedes January 1, 2000, the Secretary shall not 
recognize the costs per trip in excess of costs recognized as 
reasonable for ambulance services provided on a per trip basis 
during the previous fiscal year (after application of this 
subparagraph), increased by the percentage increase in the 
consumer price index for all urban consumers (U.S. city 
average) as estimated by the Secretary for the 12-month period 
ending with the midpoint of the fiscal year involved reduced by 
1.0 percentage point. For ambulance services provided after 
June 30, 1998, the Secretary may provide that claims for such 
services must include a code (or codes) under a uniform coding 
system specified by the Secretary that identifies the services 
furnished.
  (V) In determining such reasonable costs for skilled nursing 
facilities and (beginning with respect to cost reporting 
periods beginning during fiscal year 2013) for covered skilled 
nursing services described in section 1888(e)(2)(A) furnished 
by hospital providers of extended care services (as described 
in section 1883), the amount of bad debts otherwise treated as 
allowed costs which are attributable to the coinsurance amounts 
under this title for individuals who are entitled to benefits 
under part A and--
          (i) are not described in section 1935(c)(6)(A)(ii) 
        shall be reduced by--
          (I) for cost reporting periods beginning on or after 
        October 1, 2005, but before fiscal year 2013, 30 
        percent of such amount otherwise allowable; and
          (II) for cost reporting periods beginning during 
        fiscal year 2013 or a subsequent fiscal year, by 35 
        percent of such amount otherwise allowable.
          (ii) are described in such section--
          (I) for cost reporting periods beginning on or after 
        October 1, 2005, but before fiscal year 2013, shall not 
        be reduced;
          (II) for cost reporting periods beginning during 
        fiscal year 2013, shall be reduced by 12 percent of 
        such amount otherwise allowable;
          (III) for cost reporting periods beginning during 
        fiscal year 2014, shall be reduced by 24 percent of 
        such amount otherwise allowable; and
          (IV) for cost reporting periods beginning during a 
        subsequent fiscal year, shall be reduced by 35 percent 
        of such amount otherwise allowable.
  (W)(i) In determining such reasonable costs for providers 
described in clause (ii), the amount of bad debts otherwise 
treated as allowable costs which are attributable to 
deductibles and coinsurance amounts under this title shall be 
reduced--
          (I) for cost reporting periods beginning during 
        fiscal year 2013, by 12 percent of such amount 
        otherwise allowable;
          (II) for cost reporting periods beginning during 
        fiscal year 2014, by 24 percent of such amount 
        otherwise allowable; and
          (III) for cost reporting periods beginning during a 
        subsequent fiscal year, by 35 percent of such amount 
        otherwise allowable.
  (ii) A provider described in this clause is a provider of 
services not described in subparagraph (T) or (V), a supplier, 
or any other type of entity that receives payment for bad debts 
under the authority under subparagraph (A).
  (2)(A) If the bed and board furnished as part of inpatient 
hospital services (including inpatient tuberculosis hospital 
services and inpatient psychiatric hospital services) or post-
hospital extended care services is in accommodations more 
expensive than semi-private accommodations, the amount taken 
into account for purposes of payment under this title with 
respect to such services may not exceed the amount that would 
be taken into account with respect to such services if 
furnished in such semi-private accommodations unless the more 
expensive accommodations were required for medical reasons.
  (B) Where a provider of services which has an agreement in 
effect under this title furnishes to an individual items or 
services which are in excess of or more expensive than the 
items or services with respect to which payment may be made 
under part A or part B, as the case may be, the Secretary shall 
take into account for purposes of payment to such provider of 
services only the items or services with respect to which such 
payment may be made.
  (3) If the bed and board furnished as part of inpatient 
hospital services (including inpatient tuberculosis hospital 
services and inpatient psychiatric hospital services) or post-
hospital extended care services is in accommodations other 
than, but not more expensive than, semi-private accommodations 
and the use of such other accommodations rather than semi-
private accommodations was neither at the request of the 
patient nor for a reason which the Secretary determines is 
consistent with the purposes of this title, the amount of the 
payment with respect to such bed and board under part A shall 
be the amount otherwise payable under this title for such bed 
and board furnished in semi-private accommodations minus the 
difference between the charge customarily made by the hospital 
or skilled nursing facility for bed and board in semi-private 
accommodations and the charge customarily made by it for bed 
and board in the accommodations furnished.
  (4) If a provider of services furnishes items or services to 
an individual which are in excess of or more expensive than the 
items or services determined to be necessary in the efficient 
delivery of needed health services and charges are imposed for 
such more expensive items or services under the authority 
granted in section 1866(a)(2)(B)(ii), the amount of payment 
with respect to such items or services otherwise due such 
provider in any fiscal period shall be reduced to the extent 
that such payment plus such charges exceed the cost actually 
incurred for such items or services in the fiscal period in 
which such charges are imposed.
  (5)(A) Where physical therapy services, occupational therapy 
services, speech therapy services, or other therapy services or 
services of other health-related personnel (other than 
physicians) are furnished under an arrangement with a provider 
of services or other organization, specified in the first 
sentence of subsection (p) (including through the operation of 
subsection (g)) the amount included in any payment to such 
provider or other organization under this title as the 
reasonable cost of such services (as furnished under such 
arrangements) shall not exceed an amount equal to the salary 
which would reasonably have been paid for such services 
(together with any additional costs that would have been 
incurred by the provider or other organization) to the person 
performing them if they had been performed in an employment 
relationship with such provider or other organization (rather 
than under such arrangement) plus the cost of such other 
expenses (including a reasonable allowance for traveltime and 
other reasonable types of expense related to any differences in 
acceptable methods of organization for the provision of such 
therapy) incurred by such person, as the Secretary may in 
regulations determine to be appropriate.
  (B) Notwithstanding the provisions of subparagraph (A), if a 
provider of services or other organization specified in the 
first sentence of section 1861(p) requires the services of a 
therapist on a limited part-time basis, or only to perform 
intermittent services, the Secretary may make payment on the 
basis of a reasonable rate per unit of service, even though 
such rate is greater per unit of time than salary related 
amounts, where he finds that such greater payment is, in the 
aggregate, less than the amount that would have been paid if 
such organization had employed a therapist on a full- or part-
time salary basis.
  (6) For purposes of this subsection, the term ``semi-private 
accommodations'' means two-bed, three-bed, or four-bed 
accommodations.
  (7)(A) For limitation on Federal participation for capital 
expenditures which are out of conformity with a comprehensive 
plan of a State or areawide planning agency, see section 1122.
  (B) For further limitations on reasonable cost and 
determination of payment amounts for operating costs of 
inpatient hospital services and waivers for certain States, see 
section 1886.
  (C) For provisions restricting payment for provider-based 
physicians' services and for payments under certain percentage 
arrangements, see section 1887.
  (D) For further limitations on reasonable cost and 
determination of payment amounts for routine service costs of 
skilled nursing facilities, see subsections (a) through (c) of 
section 1888.
  (8) Items unrelated to patient care.--Reasonable costs do not 
include costs for the following--
          (i) entertainment, including tickets to sporting and 
        other entertainment events;
          (ii) gifts or donations;
          (iii) personal use of motor vehicles;
          (iv) costs for fines and penalties resulting from 
        violations of Federal, State, or local laws; and
          (v) education expenses for spouses or other 
        dependents of providers of services, their employees or 
        contractors.

                   Arrangements for Certain Services

  (w)(1) The term ``arrangements'' is limited to arrangements 
under which receipt of payment by the hospital, critical access 
hospital, skilled nursing facility, home health agency, or 
hospice program (whether in its own right or as agent), with 
respect to services for which an individual is entitled to have 
payment made under this title, discharges the liability of such 
individual or any other person to pay for the services.
  (2) Utilization review activities conducted, in accordance 
with the requirements of the program established under part B 
of title XI of the Social Security Act with respect to services 
furnished by a hospital or critical access hospital to patients 
insured under part A of this title or entitled to have payment 
made for such services under part B of this title or under a 
State plan approved under title XIX, by a quality improvement 
organization designated for the area in which such hospital or 
critical access hospital is located shall be deemed to have 
been conducted pursuant to arrangements between such hospital 
or critical access hospital and such organization under which 
such hospital or critical access hospital is obligated to pay 
to such organization, as a condition of receiving payment for 
hospital or critical access hospital services so furnished 
under this part or under such a State plan, such amount as is 
reasonably incurred and requested (as determined under 
regulations of the Secretary) by such organization in 
conducting such review activities with respect to services 
furnished by such hospital or critical access hospital to such 
patients.

                        State and United States

  (x) The terms ``State'' and ``United States'' have the 
meaning given to them by subsections (h) and (i), respectively, 
of section 210.

     Extended Care in Religious Nonmedical Health Care Institutions

  (y)(1) The term ``skilled nursing facility'' also includes a 
religious nonmedical health care institution (as defined in 
subsection (ss)(1)), but only (except for purposes of 
subsection (a)(2)) with respect to items and services 
ordinarily furnished by such an institution to inpatients, and 
payment may be made with respect to services provided by or in 
such an institution only to such extent and under such 
conditions, limitations, and requirements (in addition to or in 
lieu of the conditions, limitations, and requirements otherwise 
applicable) as may be provided in regulations consistent with 
section 1821.
  (2) Notwithstanding any other provision of this title, 
payment under part A may not be made for services furnished an 
individual in a skilled nursing facility to which paragraph (1) 
applies unless such individual elects, in accordance with 
regulations, for a spell of illness to have such services 
treated as post-hospital extended care services for purposes of 
such part; and payment under part A may not be made for post-
hospital extended care services--
          (A) furnished an individual during such spell of 
        illness in a skilled nursing facility to which 
        paragraph (1) applies after--
                  (i) such services have been furnished to him 
                in such a facility for 30 days during such 
                spell, or
                  (ii) such services have been furnished to him 
                during such spell in a skilled nursing facility 
                to which such paragraph does not apply; or
          (B) furnished an individual during such spell of 
        illness in a skilled nursing facility to which 
        paragraph (1) does not apply after such services have 
        been furnished to him during such spell in a skilled 
        nursing facility to which such paragraph applies.
  (3) The amount payable under part A for post-hospital 
extended care services furnished an individual during any spell 
of illness in a skilled nursing facility to which paragraph (1) 
applies shall be reduced by a coinsurance amount equal to one-
eighth of the inpatient hospital deductible for each day before 
the 31st day on which he is furnished such services in such a 
facility during such spell (and the reduction under this 
paragraph shall be in lieu of any reduction under section 
1813(a)(3)).
  (4) For purposes of subsection (i), the determination of 
whether services furnished by or in an institution described in 
paragraph (1) constitute post-hospital extended care services 
shall be made in accordance with and subject to such 
conditions, limitations, and requirements as may be provided in 
regulations.

                         Institutional Planning

  (z) An overall plan and budget of a hospital, skilled nursing 
facility, comprehensive outpatient rehabilitation facility, or 
home health agency shall be considered sufficient if it--
          (1) provides for an annual operating budget which 
        includes all anticipated income and expenses related to 
        items which would, under generally accepted accounting 
        principles, be considered income and expense items 
        (except that nothing in this paragraph shall require 
        that there be prepared, in connection with any budget, 
        an item-by-item identification of the components of 
        each type of anticipated expenditure or income);
          (2)(A) provides for a capital expenditures plan for 
        at least a 3-year period (including the year to which 
        the operating budget described in paragraph (1) is 
        applicable) which includes and identifies in detail the 
        anticipated sources of financing for, and the 
        objectives of, each anticipated expenditure in excess 
        of $600,000 (or such lesser amount as may be 
        established by the State under section 1122(g)(1) in 
        which the hospital is located) related to the 
        acquisition of land, the improvement of land, 
        buildings, and equipment, and the replacement, 
        modernization, and expansion of the buildings and 
        equipment which would, under generally accepted 
        accounting principles, be considered capital items;
          (B) provides that such plan is submitted to the 
        agency designated under section 1122(b), or if no such 
        agency is designated, to the appropriate health 
        planning agency in the State (but this subparagraph 
        shall not apply in the case of a facility exempt from 
        review under section 1122 by reason of section 
        1122(j));
          (3) provides for review and updating at least 
        annually; and
          (4) is prepared, under the direction of the governing 
        body of the institution or agency, by a committee 
        consisting of representatives of the governing body, 
        the administrative staff, and the medical staff (if 
        any) of the institution or agency.

  Rural Health Clinic Services and Federally Qualified Health Center 
                                Services

  (aa)(1) The term ``rural health clinic services'' means --
          (A) physicians' services and such services and 
        supplies as are covered under section 1861(s)(2)(A) if 
        furnished as an incident to a physician's professional 
        service and items and services described in section 
        1861(s)(10),
          (B) such services furnished by a physician assistant 
        or a nurse practitioner (as defined in paragraph (5)), 
        by a clinical psychologist (as defined by the 
        Secretary) or by a clinical social worker (as defined 
        in subsection (hh)(1)), and such services and supplies 
        furnished as an incident to his service as would 
        otherwise be covered if furnished by a physician or as 
        an incident to a physician's service, and
          (C) in the case of a rural health clinic located in 
        an area in which there exists a shortage of home health 
        agencies, part-time or intermittent nursing care and 
        related medical supplies (other than drugs and 
        biologicals) furnished by a registered professional 
        nurse or licensed practical nurse to a homebound 
        individual under a written plan of treatment (i) 
        established and periodically reviewed by a physician 
        described in paragraph (2)(B), or (ii) established by a 
        nurse practitioner or physician assistant and 
        periodically reviewed and approved by a physician 
        described in paragraph (2)(B),
when furnished to an individual as an outpatient of a rural 
health clinic.
  (2) The term ``rural health clinic'' means a facility which 
--
          (A) is primarily engaged in furnishing to outpatients 
        services described in subparagraphs (A) and (B) of 
        paragraph (1);
          (B) in the case of a facility which is not a 
        physician-directed clinic, has an arrangement 
        (consistent with the provisions of State and local law 
        relative to the practice, performance, and delivery of 
        health services) with one or more physicians (as 
        defined in subsection (r)(1)) under which provision is 
        made for the periodic review by such physicians of 
        covered services furnished by physician assistants and 
        nurse practitioners, the supervision and guidance by 
        such physicians of physician assistants and nurse 
        practitioners, the preparation by such physicians of 
        such medical orders for care and treatment of clinic 
        patients as may be necessary, and the availability of 
        such physicians for such referral of and consultation 
        for patients as is necessary and for advice and 
        assistance in the management of medical emergencies; 
        and, in the case of a physician-directed clinic, has 
        one or more of its staff physicians perform the 
        activities accomplished through such an arrangement;
          (C) maintains clinical records on all patients;
          (D) has arrangements with one or more hospitals, 
        having agreements in effect under section 1866, for the 
        referral and admission of patients requiring inpatient 
        services or such diagnostic or other specialized 
        services as are not available at the clinic;
          (E) has written policies, which are developed with 
        the advice of (and with provision for review of such 
        policies from time to time by) a group of professional 
        personnel, including one or more physicians and one or 
        more physician assistants or nurse practitioners, to 
        govern those services described in paragraph (1) which 
        it furnishes;
          (F) has a physician, physician assistant, or nurse 
        practitioner responsible for the execution of policies 
        described in subparagraph (E) and relating to the 
        provision of the clinic's services;
          (G) directly provides routine diagnostic services, 
        including clinical laboratory services, as prescribed 
        in regulations by the Secretary, and has prompt access 
        to additional diagnostic services from facilities 
        meeting requirements under this title;
          (H) in compliance with State and Federal law, has 
        available for administering to patients of the clinic 
        at least such drugs and biologicals as are determined 
        by the Secretary to be necessary for the treatment of 
        emergency cases (as defined in regulations) and has 
        appropriate procedures or arrangements for storing, 
        administering, and dispensing any drugs and 
        biologicals;
          (I) has a quality assessment and performance 
        improvement program, and appropriate procedures for 
        review of utilization of clinic services, as the 
        Secretary may specify;
          (J) has a nurse practitioner, a physician assistant, 
        or a certified nurse-midwife (as defined in subsection 
        (gg)) available to furnish patient care services not 
        less than 50 percent of the time the clinic operates; 
        and
          (K) meets such other requirements as the Secretary 
        may find necessary in the interest of the health and 
        safety of the individuals who are furnished services by 
        the clinic.
For the purposes of this title, such term includes only a 
facility which (i) is located in an area that is not an 
urbanized area (as defined by the Bureau of the Census) and in 
which there are insufficient numbers of needed health care 
practitioners (as determined by the Secretary), and that, 
within the previous 4-year period, has been designated by the 
chief executive officer of the State and certified by the 
Secretary as an area with a shortage of personal health 
services or designated by the Secretary either (I) as an area 
with a shortage of personal health services under section 
330(b)(3) or 1302(7) of the Public Health Service Act, (II) as 
a health professional shortage area described in section 
332(a)(1)(A) of that Act because of its shortage of primary 
medical care manpower, (III) as a high impact area described in 
section 329(a)(5) of that Act, of (IV) as an area which 
includes a population group which the Secretary determines has 
a health manpower shortage under section 332(a)(1)(B) of that 
Act, (ii) has filed an agreement with the Secretary by which it 
agrees not to charge any individual or other person for items 
or services for which such individual is entitled to have 
payment made under this title, except for the amount of any 
deductible or coinsurance amount imposed with respect to such 
items or services (not in excess of the amount customarily 
charged for such items and services by such clinic), pursuant 
to subsections (a) and (b) of section 1833, (iii) employs a 
physician assistant or nurse practitioner, and (iv) is not a 
rehabilitation agency or a facility which is primarily for the 
care and treatment of mental diseases. A facility that is in 
operation and qualifies as a rural health clinic under this 
title or title XIX and that subsequently fails to satisfy the 
requirement of clause (i) shall be considered, for purposes of 
this title and title XIX, as still satisfying the requirement 
of such clause if it is determined, in accordance with criteria 
established by the Secretary in regulations, to be essential to 
the delivery of primary care services that would otherwise be 
unavailable in the geographic area served by the clinic. If a 
State agency has determined under section 1864(a) that a 
facility is a rural health clinic and the facility has applied 
to the Secretary for approval as such a clinic, the Secretary 
shall notify the facility of the Secretary's approval or 
disapproval not later than 60 days after the date of the State 
agency determination or the application (whichever is later).
  (3) The term ``Federally qualified health center services'' 
means--
          (A) services of the type described in subparagraphs 
        (A) through (C) of paragraph (1) and preventive 
        services (as defined in section 1861(ddd)(3)); and
          (B) preventive primary health services that a center 
        is required to provide under section 330 of the Public 
        Health Service Act,
when furnished to an individual as an outpatient of a Federally 
qualified health center by the center or by a health care 
professional under contract with the center and, for this 
purpose, any reference to a rural health clinic or a physician 
described in paragraph (2)(B) is deemed a reference to a 
Federally qualified health center or a physician at the center, 
respectively.
  (4) The term ``Federally qualified health center'' means an 
entity which--
          (A)(i) is receiving a grant under section 330 of the 
        Public Health Service Act, or
          (ii)(I) is receiving funding from such a grant under 
        a contract with the recipient of such a grant, and (II) 
        meets the requirements to receive a grant under section 
        330 of such Act;
          (B) based on the recommendation of the Health 
        Resources and Services Administration within the Public 
        Health Service, is determined by the Secretary to meet 
        the requirements for receiving such a grant;
          (C) was treated by the Secretary, for purposes of 
        part B, as a comprehensive Federally funded health 
        center as of January 1, 1990; or
          (D) is an outpatient health program or facility 
        operated by a tribe or tribal organization under the 
        Indian Self-Determination Act or by an urban Indian 
        organization receiving funds under title V of the 
        Indian Health Care Improvement Act.
  (5)(A) The term ``physician assistant'' and the term ``nurse 
practitioner'' mean, for purposes of this title, a physician 
assistant or nurse practitioner who performs such services as 
such individual is legally authorized to perform (in the State 
in which the individual performs such services) in accordance 
with State law (or the State regulatory mechanism provided by 
State law), and who meets such training, education, and 
experience requirements (or any combination thereof) as the 
Secretary may prescribe in regulations.
  (B) The term ``clinical nurse specialist'' means, for 
purposes of this title, an individual who--
          (i) is a registered nurse and is licensed to practice 
        nursing in the State in which the clinical nurse 
        specialist services are performed; and
          (ii) holds a master's degree in a defined clinical 
        area of nursing from an accredited educational 
        institution.
  (6) The term ``collaboration'' means a process in which a 
nurse practitioner works with a physician to deliver health 
care services within the scope of the practitioner's 
professional expertise, with medical direction and appropriate 
supervision as provided for in jointly developed guidelines or 
other mechanisms as defined by the law of the State in which 
the services are performed.
  (7)(A) The Secretary shall waive for a 1-year period the 
requirements of paragraph (2) that a rural health clinic employ 
a physician assistant, nurse practitioner or certified nurse 
midwife or that such clinic require such providers to furnish 
services at least 50 percent of the time that the clinic 
operates for any facility that requests such waiver if the 
facility demonstrates that the facility has been unable, 
despite reasonable efforts, to hire a physician assistant, 
nurse practitioner, or certified nurse-midwife in the previous 
90-day period.
  (B) The Secretary may not grant such a waiver under 
subparagraph (A) to a facility if the request for the waiver is 
made less than 6 months after the date of the expiration of any 
previous such waiver for the facility, or if the facility has 
not yet been determined to meet the requirements (including 
subparagraph (J) of the first sentence of paragraph (2)) of a 
rural health clinic.
  (C) A waiver which is requested under this paragraph shall be 
deemed granted unless such request is denied by the Secretary 
within 60 days after the date such request is received.

          Services of a Certified Registered Nurse Anesthetist

  (bb)(1) The term ``services of a certified registered nurse 
anesthetist'' means anesthesia services and related care 
furnished by a certified registered nurse anesthetist (as 
defined in paragraph (2)) which the nurse anesthetist is 
legally authorized to perform as such by the State in which the 
services are furnished.
  (2) The term ``certified registered nurse anesthetist'' means 
a certified registered nurse anesthetist licensed by the State 
who meets such education, training, and other requirements 
relating to anesthesia services and related care as the 
Secretary may prescribe. In prescribing such requirements the 
Secretary may use the same requirements as those established by 
a national organization for the certification of nurse 
anesthetists. Such term also includes, as prescribed by the 
Secretary, an anesthesiologist assistant.

       Comprehensive Outpatient Rehabilitation Facility Services

  (cc)(1) The term ``comprehensive outpatient rehabilitation 
facility services'' means the following items and services 
furnished by a physician or other qualified professional 
personnel (as defined in regulations by the Secretary) to an 
individual who is an outpatient of a comprehensive outpatient 
rehabilitation facility under a plan (for furnishing such items 
and services to such individual) established and periodically 
reviewed by a physician--
          (A) physicians' services;
          (B) physical therapy, occupational therapy, speech-
        language pathology services, and respiratory therapy;
          (C) prosthetic and orthotic devices, including 
        testing, fitting, or training in the use of prosthetic 
        and orthotic devices;
          (D) social and psychological services;
          (E) nursing care provided by or under the supervision 
        of a registered professional nurse;
          (F) drugs and biologicals which cannot, as determined 
        in accordance with regulations, be self-administered;
          (G) supplies and durable medical equipment; and
          (H) such other items and services as are medically 
        necessary for the rehabilitation of the patient and are 
        ordinarily furnished by comprehensive outpatient 
        rehabilitation facilities,
excluding, however, any item or service if it would not be 
included under subsection (b) if furnished to an inpatient of a 
hospital. In the case of physical therapy, occupational 
therapy, and speech pathology services, there shall be no 
requirement that the item or service be furnished at any single 
fixed location if the item or service is furnished pursuant to 
such plan and payments are not otherwise made for the item or 
service under this title.
  (2) The term ``comprehensive outpatient rehabilitation 
facility'' means a facility which--
          (A) is primarily engaged in providing (by or under 
        the supervision of physicians) diagnostic, therapeutic, 
        and restorative services to outpatients for the 
        rehabilitation of injured, disabled, or sick persons;
          (B) provides at least the following comprehensive 
        outpatient rehabilitation services: (i) physicians' 
        services (rendered by physicians, as defined in section 
        1861(r)(1), who are available at the facility on a 
        full- or part-time basis); (ii) physical therapy; and 
        (iii) social or psychological services;
          (C) maintains clinical records on all patients;
          (D) has policies established by a group of 
        professional personnel (associated with the facility), 
        including one or more physicians defined in subsection 
        (r)(1) to govern the comprehensive outpatient 
        rehabilitation services it furnishes, and provides for 
        the carrying out of such policies by a full- or part-
        time physician referred to in subparagraph (B)(i);
          (E) has a requirement that every patient must be 
        under the care of a physician;
          (F) in the case of a facility in any State in which 
        State or applicable local law provides for the 
        licensing of facilities of this nature (i) is licensed 
        pursuant to such law, or (ii) is approved by the agency 
        of such State or locality, responsible for licensing 
        facilities of this nature, as meeting the standards 
        established for such licensing;
          (G) has in effect a utilization review plan in 
        accordance with regulations prescribed by the 
        Secretary;
          (H) has in effect an overall plan and budget that 
        meets the requirements of subsection (z);
          (I) provides the Secretary on a continuing basis with 
        a surety bond in a form specified by the Secretary and 
        in an amount that is not less than $50,000; and
          (J) meets such other conditions of participation as 
        the Secretary may find necessary in the interest of the 
        health and safety of individuals who are furnished 
        services by such facility, including conditions 
        concerning qualifications of personnel in these 
        facilities.
The Secretary may waive the requirement of a surety bond under 
subparagraph (I) in the case of a facility that provides a 
comparable surety bond under State law.

                     Hospice Care; Hospice Program

  (dd)(1) The term ``hospice care'' means the following items 
and services provided to a terminally ill individual by, or by 
others under arrangements made by, a hospice program under a 
written plan (for providing such care to such individual) 
established and periodically reviewed by the individual's 
attending physician and by the medical director (and by the 
interdisciplinary group described in paragraph (2)(B)) of the 
program--
          (A) nursing care provided by or under the supervision 
        of a registered professional nurse,
          (B) physical or occupational therapy, or speech-
        language pathology services,
          (C) medical social services under the direction of a 
        physician,
          (D)(i) services of a home health aide who has 
        successfully completed a training program approved by 
        the Secretary and (ii) homemaker services,
          (E) medical supplies (including drugs and 
        biologicals) and the use of medical appliances, while 
        under such a plan,
          (F) physicians' services,
          (G) short-term inpatient care (including both respite 
        care and procedures necessary for pain control and 
        acute and chronic symptom management) in an inpatient 
        facility meeting such conditions as the Secretary 
        determines to be appropriate to provide such care, but 
        such respite care may be provided only on an 
        intermittent, nonroutine, and occasional basis and may 
        not be provided consecutively over longer than five 
        days,
          (H) counseling (including dietary counseling) with 
        respect to care of the terminally ill individual and 
        adjustment to his death, and
          (I) any other item or service which is specified in 
        the plan and for which payment may otherwise be made 
        under this title.
The care and services described in subparagraphs (A) and (D) 
may be provided on a 24-hour, continuous basis only during 
periods of crisis (meeting criteria established by the 
Secretary) and only as necessary to maintain the terminally ill 
individual at home.
  (2) The term ``hospice program'' means a public agency or 
private organization (or a subdivision thereof) which--
          (A)(i) is primarily engaged in providing the care and 
        services described in paragraph (1) and makes such 
        services available (as needed) on a 24-hour basis and 
        which also provides bereavement counseling for the 
        immediate family of terminally ill individuals and 
        services described in section 1812(a)(5),
          (ii) provides for such care and services in 
        individuals' homes, on an outpatient basis, and on a 
        short-term inpatient basis, directly or under 
        arrangements made by the agency or organization, except 
        that--
                  (I) the agency or organization must routinely 
                provide directly substantially all of each of 
                the services described in subparagraphs (A), 
                (C), and (H) of paragraph (1), except as 
                otherwise provided in paragraph (5), and
                  (II) in the case of other services described 
                in paragraph (1) which are not provided 
                directly by the agency or organization, the 
                agency or organization must maintain 
                professional management responsibility for all 
                such services furnished to an individual, 
                regardless of the location or facility in which 
                such services are furnished; and
          (iii) provides assurances satisfactory to the 
        Secretary that the aggregate number of days of 
        inpatient care described in paragraph (1)(G) provided 
        in any 12-month period to individuals who have an 
        election in effect under section 1812(d) with respect 
        to that agency or organization does not exceed 20 
        percent of the aggregate number of days during that 
        period on which such elections for such individuals are 
        in effect;
          (B) has an interdisciplinary group of personnel 
        which--
                  (i) includes at least--
                          (I) one physician (as defined in 
                        subsection (r)(1)),
                          (II) one registered professional 
                        nurse, and
                          (III) one social worker,
        employed by or, in the case of a physician described in 
        subclause (I), under contract with the agency or 
        organization, and also includes at least one pastoral 
        or other counselor,
                  (ii) provides (or supervises the provision 
                of) the care and services described in 
                paragraph (1), and
                  (iii) establishes the policies governing the 
                provision of such care and services;
          (C) maintains central clinical records on all 
        patients;
          (D) does not discontinue the hospice care it provides 
        with respect to a patient because of the inability of 
        the patient to pay for such care;
          (E)(i) utilizes volunteers in its provision of care 
        and services in accordance with standards set by the 
        Secretary, which standards shall ensure a continuing 
        level of effort to utilize such volunteers, and (ii) 
        maintains records on the use of these volunteers and 
        the cost savings and expansion of care and services 
        achieved through the use of these volunteers;
          (F) in the case of an agency or organization in any 
        State in which State or applicable local law provides 
        for the licensing of agencies or organizations of this 
        nature, is licensed pursuant to such law; and
          (G) 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 such agency or organization.
  (3)(A) An individual is considered to be ``terminally ill'' 
if the individual has a medical prognosis that the individual's 
life expectancy is 6 months or less.
  (B) The term ``attending physician'' means, with respect to 
an individual, the physician (as defined in subsection (r)(1)) 
or nurse practitioner (as defined in subsection (aa)(5)), who 
may be employed by a hospice program, whom the individual 
identifies as having the most significant role in the 
determination and delivery of medical care to the individual at 
the time the individual makes an election to receive hospice 
care.
  (4)(A) An entity which is certified as a provider of services 
other than a hospice program shall be considered, for purposes 
of certification as a hospice program, to have met any 
requirements under paragraph (2) which are also the same 
requirements for certification as such other type of provider. 
The Secretary shall coordinate surveys for determining 
certification under this title so as to provide, to the extent 
feasible, for simultaneous surveys of an entity which seeks to 
be certified as a hospice program and as a provider of services 
of another type.
  (B) Any entity which is certified as a hospice program and as 
a provider of another type shall have separate provider 
agreements under section 1866 and shall file separate cost 
reports with respect to costs incurred in providing hospice 
care and in providing other services and items under this 
title.
  (C) Any entity that is certified as a hospice program shall 
be subject to a standard survey by an appropriate State or 
local survey agency, or an approved accreditation agency, as 
determined by the Secretary, not less frequently than once 
every 36 months beginning 6 months after the date of the 
enactment of this subparagraph and ending September 30, 2025.
  (5)(A) The Secretary may waive the requirements of paragraph 
(2)(A)(ii)(I) for an agency or organization with respect to all 
or part of the nursing care described in paragraph (1)(A) if 
such agency or organization--
          (i) is located in an area which is not an urbanized 
        area (as defined by the Bureau of the Census);
          (ii) was in operation on or before January 1, 1983; 
        and
          (iii) has demonstrated a good faith effort (as 
        determined by the Secretary) to hire a sufficient 
        number of nurses to provide such nursing care directly.
  (B) Any waiver, which is in such form and containing such 
information as the Secretary may require and which is requested 
by an agency or organization under subparagraph (A) or (C), 
shall be deemed to be granted unless such request is denied by 
the Secretary within 60 days after the date such request is 
received by the Secretary. The granting of a waiver under 
subparagraph (A) or (C) shall not preclude the granting of any 
subsequent waiver request should such a waiver again become 
necessary.
  (C) The Secretary may waive the requirements of paragraph 
(2)(A)(i) and (2)(A)(ii) for an agency or organization with 
respect to the services described in paragraph (1)(B) and, with 
respect to dietary counseling, paragraph (1)(H), if such agency 
or organization--
          (i) is located in an area which is not an urbanized 
        area (as defined by the Bureau of Census), and
          (ii) demonstrates to the satisfaction of the 
        Secretary that the agency or organization has been 
        unable, despite diligent efforts, to recruit 
        appropriate personnel.
  (D) In extraordinary, exigent, or other non-routine 
circumstances, such as unanticipated periods of high patient 
loads, staffing shortages due to illness or other events, or 
temporary travel of a patient outside a hospice program's 
service area, a hospice program may enter into arrangements 
with another hospice program for the provision by that other 
program of services described in paragraph (2)(A)(ii)(I). The 
provisions of paragraph (2)(A)(ii)(II) shall apply with respect 
to the services provided under such arrangements.
  (E) A hospice program may provide services described in 
paragraph (1)(A) other than directly by the program if the 
services are highly specialized services of a registered 
professional nurse and are provided non-routinely and so 
infrequently so that the provision of such services directly 
would be impracticable and prohibitively expensive.

                       Discharge Planning Process

  (ee)(1) A discharge planning process of a hospital shall be 
considered sufficient if it is applicable to services furnished 
by the hospital to individuals entitled to benefits under this 
title and if it meets the guidelines and standards established 
by the Secretary under paragraph (2).
  (2) The Secretary shall develop guidelines and standards for 
the discharge planning process in order to ensure a timely and 
smooth transition to the most appropriate type of and setting 
for post-hospital or rehabilitative care. The guidelines and 
standards shall include the following:
          (A) The hospital must identify, at an early stage of 
        hospitalization, those patients who are likely to 
        suffer adverse health consequences upon discharge in 
        the absence of adequate discharge planning.
          (B) Hospitals must provide a discharge planning 
        evaluation for patients identified under subparagraph 
        (A) and for other patients upon the request of the 
        patient, patient's representative, or patient's 
        physician.
          (C) Any discharge planning evaluation must be made on 
        a timely basis to ensure that appropriate arrangements 
        for post-hospital care will be made before discharge 
        and to avoid unnecessary delays in discharge.
          (D) A discharge planning evaluation must include an 
        evaluation of a patient's likely need for appropriate 
        post-hospital services, including hospice care and 
        post-hospital extended care services, and the 
        availability of those services, including the 
        availability of home health services through 
        individuals and entities that participate in the 
        program under this title and that serve the area in 
        which the patient resides and that request to be listed 
        by the hospital as available and, in the case of 
        individuals who are likely to need post-hospital 
        extended care services, the availability of such 
        services through facilities that participate in the 
        program under this title and that serve the area in 
        which the patient resides.
          (E) The discharge planning evaluation must be 
        included in the patient's medical record for use in 
        establishing an appropriate discharge plan and the 
        results of the evaluation must be discussed with the 
        patient (or the patient's representative).
          (F) Upon the request of a patient's physician, the 
        hospital must arrange for the development and initial 
        implementation of a discharge plan for the patient.
          (G) Any discharge planning evaluation or discharge 
        plan required under this paragraph must be developed 
        by, or under the supervision of, a registered 
        professional nurse, social worker, or other 
        appropriately qualified personnel.
          (H) Consistent with section 1802, the discharge plan 
        shall--
                  (i) not specify or otherwise limit the 
                qualified provider which may provide post-
                hospital home health services, and
                  (ii) identify (in a form and manner specified 
                by the Secretary) any entity to whom the 
                individual is referred in which the hospital 
                has a disclosable financial interest (as 
                specified by the Secretary consistent with 
                section 1866(a)(1)(S)) or which has such an 
                interest in the hospital.
  (3) With respect to a discharge plan for an individual who is 
enrolled with a Medicare+Choice organization under a 
Medicare+Choice plan and is furnished inpatient hospital 
services by a hospital under a contract with the organization--
          (A) the discharge planning evaluation under paragraph 
        (2)(D) is not required to include information on the 
        availability of home health services through 
        individuals and entities which do not have a contract 
        with the organization; and
          (B) notwithstanding subparagraph (H)(i), the plan may 
        specify or limit the provider (or providers) of post-
        hospital home health services or other post-hospital 
        services under the plan.

                    Partial Hospitalization Services

  (ff)(1) The term ``partial hospitalization services'' means 
the items and services described in paragraph (2) prescribed by 
a physician and provided under a program described in paragraph 
(3) under the supervision of a physician pursuant to an 
individualized, written plan of treatment established and 
periodically reviewed by a physician (in consultation with 
appropriate staff participating in such program), which plan 
sets forth the physician's diagnosis, the type, amount, 
frequency, and duration of the items and services provided 
under the plan, and the goals for treatment under the plan.
  (2) The items and services described in this paragraph are--
          (A) individual and group therapy with physicians or 
        psychologists (or other mental health professionals to 
        the extent authorized under State law),
          (B) occupational therapy requiring the skills of a 
        qualified occupational therapist,
          (C) services of social workers, trained psychiatric 
        nurses, and other staff trained to work with 
        psychiatric patients,
          (D) drugs and biologicals furnished for therapeutic 
        purposes (which cannot, as determined in accordance 
        with regulations, be self-administered),
          (E) individualized activity therapies that are not 
        primarily recreational or diversionary,
          (F) family counseling (the primary purpose of which 
        is treatment of the individual's condition),
          (G) patient training and education (to the extent 
        that training and educational activities are closely 
        and clearly related to individual's care and 
        treatment),
          (H) diagnostic services, and
          (I) such other items and services as the Secretary 
        may provide (but in no event to include meals and 
        transportation);
that are reasonable and necessary for the diagnosis or active 
treatment of the individual's condition, reasonably expected to 
improve or maintain the individual's condition and functional 
level and to prevent relapse or hospitalization, and furnished 
pursuant to such guidelines relating to frequency and duration 
of services as the Secretary shall by regulation establish 
(taking into account accepted norms of medical practice and the 
reasonable expectation of patient improvement).
  (3)(A) A program described in this paragraph is a program 
which is furnished by a hospital to its outpatients or by a 
community mental health center (as defined in subparagraph 
(B)), and which is a distinct and organized intensive 
ambulatory treatment service offering less than 24-hour-daily 
care other than in an individual's home or in an inpatient or 
residential setting.
  (B) For purposes of subparagraph (A), the term ``community 
mental health center'' means an entity that--
          (i)(I) provides the mental health services described 
        in section 1913(c)(1) of the Public Health Service Act; 
        or
          (II) in the case of an entity operating in a State 
        that by law precludes the entity from providing itself 
        the service described in subparagraph (E) of such 
        section, provides for such service by contract with an 
        approved organization or entity (as determined by the 
        Secretary);
          (ii) meets applicable licensing or certification 
        requirements for community mental health centers in the 
        State in which it is located;
          (iii) provides at least 40 percent of its services to 
        individuals who are not eligible for benefits under 
        this title; and
          (iv) meets such additional conditions as the 
        Secretary shall specify to ensure (I) the health and 
        safety of individuals being furnished such services, 
        (II) the effective and efficient furnishing of such 
        services, and (III) the compliance of such entity with 
        the criteria described in section 1931(c)(1) of the 
        Public Health Service Act.

                    Certified Nurse-Midwife Services

  (gg)(1) The term ``certified nurse-midwife services'' means 
such services furnished by a certified nurse-midwife (as 
defined in paragraph (2)) and such services and supplies 
furnished as an incident to the nurse-midwife's service which 
the certified nurse-midwife is legally authorized to perform 
under State law (or the State regulatory mechanism provided by 
State law) as would otherwise be covered if furnished by a 
physician or as an incident to a physicians' service.
  (2) The term ``certified nurse-midwife'' means a registered 
nurse who has successfully completed a program of study and 
clinical experience meeting guidelines prescribed by the 
Secretary, or has been certified by an organization recognized 
by the Secretary.

        Clinical Social Worker; Clinical Social Worker Services

  (hh)(1) The term ``clinical social worker'' means an 
individual who--
          (A) possesses a master's or doctor's degree in social 
        work;
          (B) after obtaining such degree has performed at 
        least 2 years of supervised clinical social work; and
          (C)(i) is licensed or certified as a clinical social 
        worker by the State in which the services are 
        performed, or
          (ii) in the case of an individual in a State which 
        does not provide for licensure or certification--
                  (I) has completed at least 2 years or 3,000 
                hours of post-master's degree supervised 
                clinical social work practice under the 
                supervision of a master's level social worker 
                in an appropriate setting (as determined by the 
                Secretary), and
                  (II) meets such other criteria as the 
                Secretary establishes.
  (2) The term ``clinical social worker services'' means 
services performed by a clinical social worker (as defined in 
paragraph (1)) for the diagnosis and treatment of mental 
illnesses (other than services furnished to an inpatient of a 
hospital 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) which the clinical 
social worker is legally authorized to perform under State law 
(or the State regulatory mechanism provided by State law) of 
the State in which such services are performed as would 
otherwise be covered if furnished by a physician or as an 
incident to a physician's professional service.

                    Qualified Psychologist Services

  (ii) The term ``qualified psychologist services'' means such 
services and such services and supplies furnished as an 
incident to his service furnished by a clinical psychologist 
(as defined by the Secretary) which the psychologist is legally 
authorized to perform under State law (or the State regulatory 
mechanism provided by State law) as would otherwise be covered 
if furnished by a physician or as an incident to a physician's 
service.

                         Screening Mammography

  (jj) The term ``screening mammography'' means a radiologic 
procedure provided to a woman for the purpose of early 
detection of breast cancer and includes a physician's 
interpretation of the results of the procedure.

                       Covered Osteoporosis Drug

  (kk) The term ``covered osteoporosis drug'' means an 
injectable drug approved for the treatment of post-menopausal 
osteoporosis provided to an individual by a home health agency 
if, in accordance with regulations promulgated by the 
Secretary--
          (1) the individual's attending physician certifies 
        that the individual has suffered a bone fracture 
        related to post-menopausal osteoporosis and that the 
        individual is unable to learn the skills needed to 
        self-administer such drug or is otherwise physically or 
        mentally incapable of self-administering such drug; and
          (2) the individual is confined to the individual's 
        home (except when receiving items and services referred 
        to in subsection (m)(7)).

         Speech-Language Pathology Services; Audiology Services

  (ll)(1) The term ``speech-language pathology services'' means 
such speech, language, and related function assessment and 
rehabilitation services furnished by a qualified speech-
language pathologist as the speech-language pathologist is 
legally authorized to perform under State law (or the State 
regulatory mechanism provided by State law) as would otherwise 
be covered if furnished by a physician.
  (2) The term ``outpatient speech-language pathology 
services'' has the meaning given the term ``outpatient physical 
therapy services'' in subsection (p), except that in applying 
such subsection--
          (A) ``speech-language pathology'' shall be 
        substituted for ``physical therapy'' each place it 
        appears; and
          (B) ``speech-language pathologist'' shall be 
        substituted for ``physical therapist'' each place it 
        appears.
  (3) The term ``audiology services'' means such hearing and 
balance assessment services furnished by a qualified 
audiologist as the audiologist is legally authorized to perform 
under State law (or the State regulatory mechanism provided by 
State law), as would otherwise be covered if furnished by a 
physician.
  (4) In this subsection:
          (A) The term ``qualified speech-language 
        pathologist'' means an individual with a master's or 
        doctoral degree in speech-language pathology who--
                  (i) is licensed as a speech-language 
                pathologist by the State in which the 
                individual furnishes such services, or
                  (ii) in the case of an individual who 
                furnishes services in a State which does not 
                license speech-language pathologists, has 
                successfully completed 350 clock hours of 
                supervised clinical practicum (or is in the 
                process of accumulating such supervised 
                clinical experience), performed not less than 9 
                months of supervised full-time speech-language 
                pathology services after obtaining a master's 
                or doctoral degree in speech-language pathology 
                or a related field, and successfully completed 
                a national examination in speech-language 
                pathology approved by the Secretary.
          (B) The term ``qualified audiologist'' means an 
        individual with a master's or doctoral degree in 
        audiology who--
                  (i) is licensed as an audiologist by the 
                State in which the individual furnishes such 
                services, or
                  (ii) in the case of an individual who 
                furnishes services in a State which does not 
                license audiologists, has successfully 
                completed 350 clock hours of supervised 
                clinical practicum (or is in the process of 
                accumulating such supervised clinical 
                experience), performed not less than 9 months 
                of supervised full-time audiology services 
                after obtaining a master's or doctoral degree 
                in audiology or a related field, and 
                successfully completed a national examination 
                in audiology approved by the Secretary.

      Critical Access Hospital; Critical Access Hospital Services

  (mm)(1) The term ``critical access hospital'' means a 
facility certified by the Secretary as a critical access 
hospital under section 1820(e).
  (2) The term ``inpatient critical access hospital services'' 
means items and services, furnished to an inpatient of a 
critical access hospital by such facility, that would be 
inpatient hospital services if furnished to an inpatient of a 
hospital by a hospital.
  (3) The term ``outpatient critical access hospital services'' 
means medical and other health services furnished by a critical 
access hospital on an outpatient basis.

               Screening Pap Smear; Screening Pelvic Exam

  (nn)(1) The term ``screening pap smear'' means a diagnostic 
laboratory test consisting of a routine exfoliative cytology 
test (Papanicolaou test) provided to a woman for the purpose of 
early detection of cervical or vaginal cancer and includes a 
physician's interpretation of the results of the test, if the 
individual involved has not had such a test during the 
preceding 2 years, or during the preceding year in the case of 
a woman described in paragraph (3).
  (2) The term ``screening pelvic exam'' means a pelvic 
examination provided to a woman if the woman involved has not 
had such an examination during the preceding 2 years, or during 
the preceding year in the case of a woman described in 
paragraph (3), and includes a clinical breast examination.
  (3) A woman described in this paragraph is a woman who--
          (A) is of childbearing age and has had a test 
        described in this subsection during any of the 
        preceding 3 years that indicated the presence of 
        cervical or vaginal cancer or other abnormality; or
          (B) is at high risk of developing cervical or vaginal 
        cancer (as determined pursuant to factors identified by 
        the Secretary).

                    Prostate Cancer Screening Tests

  (oo)(1) The term ``prostate cancer screening test'' means a 
test that consists of any (or all) of the procedures described 
in paragraph (2) provided for the purpose of early detection of 
prostate cancer to a man over 50 years of age who has not had 
such a test during the preceding year.
  (2) The procedures described in this paragraph are as 
follows:
          (A) A digital rectal examination.
          (B) A prostate-specific antigen blood test.
          (C) For years beginning after 2002, such other 
        procedures as the Secretary finds appropriate for the 
        purpose of early detection of prostate cancer, taking 
        into account changes in technology and standards of 
        medical practice, availability, effectiveness, costs, 
        and such other factors as the Secretary considers 
        appropriate.

                   Colorectal Cancer Screening Tests

  (pp)(1) The term ``colorectal cancer screening test'' means 
any of the following procedures furnished to an individual for 
the purpose of early detection of colorectal cancer:
          (A) Screening fecal-occult blood test.
          (B) Screening flexible sigmoidoscopy.
          (C) Screening colonoscopy.
          (D) Such other tests or procedures, and modifications 
        to tests and procedures under this subsection, with 
        such frequency and payment limits, as the Secretary 
        determines appropriate, in consultation with 
        appropriate organizations.
  (2) An ``individual at high risk for colorectal cancer'' is 
an individual who, because of family history, prior experience 
of cancer or precursor neoplastic polyps, a history of chronic 
digestive disease condition (including inflammatory bowel 
disease, Crohn's Disease, or ulcerative colitis), the presence 
of any appropriate recognized gene markers for colorectal 
cancer, or other predisposing factors, faces a high risk for 
colorectal cancer.

         Diabetes Outpatient Self-Management Training Services

  (qq)(1) The term ``diabetes outpatient self-management 
training services'' means educational and training services 
furnished (at such times as the Secretary determines 
appropriate) to an individual with diabetes by a certified 
provider (as described in paragraph (2)(A)) in an outpatient 
setting by an individual or entity who meets the quality 
standards described in paragraph (2)(B), but only if the 
physician who is managing the individual's diabetic condition 
certifies that such services are needed under a comprehensive 
plan of care related to the individual's diabetic condition to 
ensure therapy compliance or to provide the individual with 
necessary skills and knowledge (including skills related to the 
self-administration of injectable drugs) to participate in the 
management of the individual's condition.
  (2) In paragraph (1)--
          (A) a ``certified provider'' is a physician, or other 
        individual or entity designated by the Secretary, that, 
        in addition to providing diabetes outpatient self-
        management training services, provides other items or 
        services for which payment may be made under this 
        title; and
          (B) a physician, or such other individual or entity, 
        meets the quality standards described in this paragraph 
        if the physician, or individual or entity, meets 
        quality standards established by the Secretary, except 
        that the physician or other individual or entity shall 
        be deemed to have met such standards if the physician 
        or other individual or entity meets applicable 
        standards originally established by the National 
        Diabetes Advisory Board and subsequently revised by 
        organizations who participated in the establishment of 
        standards by such Board, or is recognized by an 
        organization that represents individuals (including 
        individuals under this title) with diabetes as meeting 
        standards for furnishing the services.

                         Bone Mass Measurement

  (rr)(1) The term ``bone mass measurement'' means a radiologic 
or radioisotopic procedure or other procedure approved by the 
Food and Drug Administration performed on a qualified 
individual (as defined in paragraph (2)) for the purpose of 
identifying bone mass or detecting bone loss or determining 
bone quality, and includes a physician's interpretation of the 
results of the procedure.
  (2) For purposes of this subsection, the term ``qualified 
individual'' means an individual who is (in accordance with 
regulations prescribed by the Secretary)--
          (A) an estrogen-deficient woman at clinical risk for 
        osteoporosis;
          (B) an individual with vertebral abnormalities;
          (C) an individual receiving long-term glucocorticoid 
        steroid therapy;
          (D) an individual with primary hyperparathyroidism; 
        or
          (E) an individual being monitored to assess the 
        response to or efficacy of an approved osteoporosis 
        drug therapy.
  (3) The Secretary shall establish such standards regarding 
the frequency with which a qualified individual shall be 
eligible to be provided benefits for bone mass measurement 
under this title.

              Religious Nonmedical Health Care Institution

  (ss)(1) The term ``religious nonmedical health care 
institution'' means an institution that--
                  (A) is described in subsection (c)(3) of 
                section 501 of the Internal Revenue Code of 
                1986 and is exempt from taxes under subsection 
                (a) of such section;
                  (B) is lawfully operated under all applicable 
                Federal, State, and local laws and regulations;
                  (C) provides only nonmedical nursing items 
                and services exclusively to patients who choose 
                to rely solely upon a religious method of 
                healing and for whom the acceptance of medical 
                health services would be inconsistent with 
                their religious beliefs;
                  (D) provides such nonmedical items and 
                services exclusively through nonmedical nursing 
                personnel who are experienced in caring for the 
                physical needs of such patients;
                  (E) provides such nonmedical items and 
                services to inpatients on a 24-hour basis;
                  (F) on the basis of its religious beliefs, 
                does not provide through its personnel or 
                otherwise medical items and services (including 
                any medical screening, examination, diagnosis, 
                prognosis, treatment, or the administration of 
                drugs) for its patients;
                  (G)(i) is not owned by, under common 
                ownership with, or has an ownership interest 
                in, a provider of medical treatment or 
                services;
                  (ii) is not affiliated with--
                          (I) a provider of medical treatment 
                        or services, or
                          (II) an individual who has an 
                        ownership interest in a provider of 
                        medical treatment or services;
                  (H) has in effect a utilization review plan 
                which--
                          (i) provides for the review of 
                        admissions to the institution, of the 
                        duration of stays therein, of cases of 
                        continuous extended duration, and of 
                        the items and services furnished by the 
                        institution,
                          (ii) requires that such reviews be 
                        made by an appropriate committee of the 
                        institution that includes the 
                        individuals responsible for overall 
                        administration and for supervision of 
                        nursing personnel at the institution,
                          (iii) provides that records be 
                        maintained of the meetings, decisions, 
                        and actions of such committee, and
                          (iv) meets such other requirements as 
                        the Secretary finds necessary to 
                        establish an effective utilization 
                        review plan;
                  (I) provides the Secretary with such 
                information as the Secretary may require to 
                implement section 1821, including information 
                relating to quality of care and coverage 
                determinations; and
                  (J) meets such other requirements as the 
                Secretary finds necessary in the interest of 
                the health and safety of individuals who are 
                furnished services in the institution.
  (2) To the extent that the Secretary finds that the 
accreditation of an institution by a State, regional, or 
national agency or association provides reasonable assurances 
that any or all of the requirements of paragraph (1) are met or 
exceeded, the Secretary may treat such institution as meeting 
the condition or conditions with respect to which the Secretary 
made such finding.
  (3)(A)(i) In administering this subsection and section 1821, 
the Secretary shall not require any patient of a religious 
nonmedical health care institution to undergo medical 
screening, examination, diagnosis, prognosis, or treatment or 
to accept any other medical health care service, if such 
patient (or legal representative of the patient) objects 
thereto on religious grounds.
  (ii) Clause (i) shall not be construed as preventing the 
Secretary from requiring under section 1821(a)(2) the provision 
of sufficient information regarding an individual's condition 
as a condition for receipt of benefits under part A for 
services provided in such an institution.
  (B)(i) In administering this subsection and section 1821, the 
Secretary shall not subject a religious nonmedical health care 
institution or its personnel to any medical supervision, 
regulation, or control, insofar as such supervision, 
regulation, or control would be contrary to the religious 
beliefs observed by the institution or such personnel.
  (ii) Clause (i) shall not be construed as preventing the 
Secretary from reviewing items and services billed by the 
institution to the extent the Secretary determines such review 
to be necessary to determine whether such items and services 
were not covered under part A, are excessive, or are 
fraudulent.
  (4)(A) For purposes of paragraph (1)(G)(i), an ownership 
interest of less than 5 percent shall not be taken into 
account.
  (B) For purposes of paragraph (1)(G)(ii), none of the 
following shall be considered to create an affiliation:
          (i) An individual serving as an uncompensated 
        director, trustee, officer, or other member of the 
        governing body of a religious nonmedical health care 
        institution.
          (ii) An individual who is a director, trustee, 
        officer, employee, or staff member of a religious 
        nonmedical health care institution having a family 
        relationship with an individual who is affiliated with 
        (or has an ownership interest in) a provider of medical 
        treatment or services.
          (iii) An individual or entity furnishing goods or 
        services as a vendor to both providers of medical 
        treatment or services and religious nonmedical health 
        care institutions.

 Post-Institutional Home Health Services; Home Health Spell of Illness

  (tt)(1) The term ``post-institutional home health services'' 
means home health services furnished to an individual--
          (A) after discharge from a hospital or critical 
        access hospital in which the individual was an 
        inpatient for not less than 3 consecutive days before 
        such discharge if such home health services were 
        initiated within 14 days after the date of such 
        discharge; or
          (B) after discharge from a skilled nursing facility 
        in which the individual was provided post-hospital 
        extended care services if such home health services 
        were initiated within 14 days after the date of such 
        discharge.
  (2) The term ``home health spell of illness'' with respect to 
any individual means a period of consecutive days--
          (A) beginning with the first day (not included in a 
        previous home health spell of illness) (i) on which 
        such individual is furnished post-institutional home 
        health services, and (ii) which occurs in a month for 
        which the individual is entitled to benefits under part 
        A, and
          (B) ending with the close of the first period of 60 
        consecutive days thereafter on each of which the 
        individual is neither an inpatient of a hospital or 
        critical access hospital nor an inpatient of a facility 
        described in section 1819(a)(1) or subsection (y)(1) 
        nor provided home health services.

                         Screening for Glaucoma

  (uu) The term ``screening for glaucoma'' means a dilated eye 
examination with an intraocular pressure measurement, and a 
direct ophthalmoscopy or a slit-lamp biomicroscopic examination 
for the early detection of glaucoma which is furnished by or 
under the direct supervision of an optometrist or 
ophthalmologist who is legally authorized to furnish such 
services under State law (or the State regulatory mechanism 
provided by State law) of the State in which the services are 
furnished, as would otherwise be covered if furnished by a 
physician or as an incident to a physician's professional 
service, if the individual involved has not had such an 
examination in the preceding year.

 Medical Nutrition Therapy Services; Registered Dietitian or Nutrition 
                              Professional

  (vv)(1) The term ``medical nutrition therapy services'' means 
nutritional diagnostic, therapy, and counseling services for 
the purpose of disease management which are furnished by a 
registered dietitian or nutrition professional (as defined in 
paragraph (2)) pursuant to a referral by a physician (as 
defined in subsection (r)(1)).
  (2) Subject to paragraph (3), the term ``registered dietitian 
or nutrition professional'' means an individual who--
          (A) holds a baccalaureate or higher degree granted by 
        a regionally accredited college or university in the 
        United States (or an equivalent foreign degree) with 
        completion of the academic requirements of a program in 
        nutrition or dietetics, as accredited by an appropriate 
        national accreditation organization recognized by the 
        Secretary for this purpose;
          (B) has completed at least 900 hours of supervised 
        dietetics practice under the supervision of a 
        registered dietitian or nutrition professional; and
          (C)(i) is licensed or certified as a dietitian or 
        nutrition professional by the State in which the 
        services are performed; or
          (ii) in the case of an individual in a State that 
        does not provide for such licensure or certification, 
        meets such other criteria as the Secretary establishes.
  (3) Subparagraphs (A) and (B) of paragraph (2) shall not 
apply in the case of an individual who, as of the date of the 
enactment of this subsection, is licensed or certified as a 
dietitian or nutrition professional by the State in which 
medical nutrition therapy services are performed.

                Initial Preventive Physical Examination

  (ww)(1) The term ``initial preventive physical examination'' 
means physicians' services consisting of a physical examination 
(including measurement of height, weight body mass index,, and 
blood pressure) with the goal of health promotion and disease 
detection and includes education, counseling, and referral with 
respect to screening and other preventive services described in 
paragraph (2) and end-of-life planning (as defined in paragraph 
(3)) upon the agreement with the individual, but does not 
include clinical laboratory tests.
  (2) The screening and other preventive services described in 
this paragraph include the following:
          (A) Pneumococcal, influenza, and hepatitis B vaccine 
        and administration under subsection (s)(10).
          (B) Screening mammography as defined in subsection 
        (jj).
          (C) Screening pap smear and screening pelvic exam as 
        defined in subsection (nn).
          (D) Prostate cancer screening tests as defined in 
        subsection (oo).
          (E) Colorectal cancer screening tests as defined in 
        subsection (pp).
          (F) Diabetes outpatient self-management training 
        services as defined in subsection (qq)(1).
          (G) Bone mass measurement as defined in subsection 
        (rr).
          (H) Screening for glaucoma as defined in subsection 
        (uu).
          (I) Medical nutrition therapy services as defined in 
        subsection (vv).
          (J) Cardiovascular screening blood tests as defined 
        in subsection (xx)(1).
          (K) Diabetes screening tests as defined in subsection 
        (yy).
          (L) Ultrasound screening for abdominal aortic 
        aneurysm as defined in section 1861(bbb).
          (M) An electrocardiogram.
          (N) Additional preventive services (as defined in 
        subsection (ddd)(1)).
  (3) For purposes of paragraph (1), the term ``end-of-life 
planning'' means verbal or written information regarding--
          (A) an individual's ability to prepare an advance 
        directive in the case that an injury or illness causes 
        the individual to be unable to make health care 
        decisions; and
          (B) whether or not the physician is willing to follow 
        the individual's wishes as expressed in an advance 
        directive.

                  Cardiovascular Screening Blood Test

  (xx)(1) The term ``cardiovascular screening blood test'' 
means a blood test for the early detection of cardiovascular 
disease (or abnormalities associated with an elevated risk of 
cardiovascular disease) that tests for the following:
          (A) Cholesterol levels and other lipid or 
        triglyceride levels.
          (B) Such other indications associated with the 
        presence of, or an elevated risk for, cardiovascular 
        disease as the Secretary may approve for all 
        individuals (or for some individuals determined by the 
        Secretary to be at risk for cardiovascular disease), 
        including indications measured by noninvasive testing.
The Secretary may not approve an indication under subparagraph 
(B) for any individual unless a blood test for such is 
recommended by the United States Preventive Services Task 
Force.
  (2) The Secretary shall establish standards, in consultation 
with appropriate organizations, regarding the frequency for 
each type of cardiovascular screening blood tests, except that 
such frequency may not be more often than once every 2 years.

                        Diabetes Screening Tests

  (yy)(1) The term ``diabetes screening tests'' means testing 
furnished to an individual at risk for diabetes (as defined in 
paragraph (2)) for the purpose of early detection of diabetes, 
including--
          (A) a fasting plasma glucose test; and
          (B) such other tests, and modifications to tests, as 
        the Secretary determines appropriate, in consultation 
        with appropriate organizations.
  (2) For purposes of paragraph (1), the term ``individual at 
risk for diabetes'' means an individual who has any of the 
following risk factors for diabetes:
          (A) Hypertension.
          (B) Dyslipidemia.
          (C) Obesity, defined as a body mass index greater 
        than or equal to 30 kg/m2.
          (D) Previous identification of an elevated impaired 
        fasting glucose.
          (E) Previous identification of impaired glucose 
        tolerance.
          (F) A risk factor consisting of at least 2 of the 
        following characteristics:
                  (i) Overweight, defined as a body mass index 
                greater than 25, but less than 30, kg/
                m2.
                  (ii) A family history of diabetes.
                  (iii) A history of gestational diabetes 
                mellitus or delivery of a baby weighing greater 
                than 9 pounds.
                  (iv) 65 years of age or older.
  (3) The Secretary shall establish standards, in consultation 
with appropriate organizations, regarding the frequency of 
diabetes screening tests, except that such frequency may not be 
more often than twice within the 12-month period following the 
date of the most recent diabetes screening test of that 
individual.

                      Intravenous Immune Globulin

  (zz) The term ``intravenous immune globulin'' means an 
approved pooled plasma derivative for the treatment in the 
patient's home of a patient with a diagnosed primary immune 
deficiency disease, but not including items or services related 
to the administration of the derivative, if a physician 
determines administration of the derivative in the patient's 
home is medically appropriate.

     Extended Care in Religious Nonmedical Health Care Institutions

  (aaa)(1) The term ``home health agency'' also includes a 
religious nonmedical health care institution (as defined in 
subsection (ss)(1)), but only with respect to items and 
services ordinarily furnished by such an institution to 
individuals in their homes, and that are comparable to items 
and services furnished to individuals by a home health agency 
that is not religious nonmedical health care institution.
  (2)(A) Subject to subparagraphs (B), payment may be made with 
respect to services provided by such an institution only to 
such extent and under such conditions, limitations, and 
requirements (in addition to or in lieu of the conditions, 
limitations, and requirements otherwise applicable) as may be 
provided in regulations consistent with section 1821.
  (B) Notwithstanding any other provision of this title, 
payment may not be made under subparagraph (A)--
          (i) in a year insofar as such payments exceed 
        $700,000; and
          (ii) after December 31, 2006.

           Ultrasound Screening for Abdominal Aortic Aneurysm

  (bbb) The term ``ultrasound screening for abdominal aortic 
aneurysm'' means--
          (1) a procedure using sound waves (or such other 
        procedures using alternative technologies, of 
        commensurate accuracy and cost, that the Secretary may 
        specify) provided for the early detection of abdominal 
        aortic aneurysm; and
          (2) includes a physician's interpretation of the 
        results of the procedure.

                        Long-Term Care Hospital

  (ccc) The term ``long-term care hospital'' means a hospital 
which--
          (1) is primarily engaged in providing inpatient 
        services, by or under the supervision of a physician, 
        to Medicare beneficiaries whose medically complex 
        conditions require a long hospital stay and programs of 
        care provided by a long-term care hospital;
          (2) has an average inpatient length of stay (as 
        determined by the Secretary) of greater than 25 days, 
        or meets the requirements of clause (II) of section 
        1886(d)(1)(B)(iv);
          (3) satisfies the requirements of subsection (e); and
          (4) meets the following facility criteria:
                  (A) the institution has a patient review 
                process, documented in the patient medical 
                record, that screens patients prior to 
                admission for appropriateness of admission to a 
                long-term care hospital, validates within 48 
                hours of admission that patients meet admission 
                criteria for long-term care hospitals, 
                regularly evaluates patients throughout their 
                stay for continuation of care in a long-term 
                care hospital, and assesses the available 
                discharge options when patients no longer meet 
                such continued stay criteria;
                  (B) the institution has active physician 
                involvement with patients during their 
                treatment through an organized medical staff, 
                physician-directed treatment with physician on-
                site availability on a daily basis to review 
                patient progress, and consulting physicians on 
                call and capable of being at the patient's side 
                within a moderate period of time, as determined 
                by the Secretary; and
                  (C) the institution has interdisciplinary 
                team treatment for patients, requiring 
                interdisciplinary teams of health care 
                professionals, including physicians, to prepare 
                and carry out an individualized treatment plan 
                for each patient.

          Additional Preventive Services; Preventive Services

  (ddd)(1) The term ``additional preventive services'' means 
services not described in subparagraph (A) or (C) of paragraph 
(3) that identify medical conditions or risk factors and that 
the Secretary determines are--
          (A) reasonable and necessary for the prevention or 
        early detection of an illness or disability;
          (B) recommended with a grade of A or B by the United 
        States Preventive Services Task Force; and
          (C) appropriate for individuals entitled to benefits 
        under part A or enrolled under part B.
  (2) In making determinations under paragraph (1) regarding 
the coverage of a new service, the Secretary shall use the 
process for making national coverage determinations (as defined 
in section 1869(f)(1)(B)) under this title. As part of the use 
of such process, the Secretary may conduct an assessment of the 
relation between predicted outcomes and the expenditures for 
such service and may take into account the results of such 
assessment in making such determination.
  (3) The term ``preventive services'' means the following:
          (A) The screening and preventive services described 
        in subsection (ww)(2) (other than the service described 
        in subparagraph (M) of such subsection).
          (B) An initial preventive physical examination (as 
        defined in subsection (ww)).
          (C) Personalized prevention plan services (as defined 
        in subsection (hhh)(1)).

   Cardiac Rehabilitation Program; Intensive Cardiac Rehabilitation 
                                Program

  (eee)(1) The term ``cardiac rehabilitation program'' means a 
physician-supervised program (as described in paragraph (2)) 
that furnishes the items and services described in paragraph 
(3).
  (2) A program described in this paragraph is a program under 
which--
          (A) items and services under the program are 
        delivered--
                  (i) in a physician's office;
                  (ii) in a hospital on an outpatient basis; or
                  (iii) in other settings determined 
                appropriate by the Secretary.
          (B) a physician is immediately available and 
        accessible for medical consultation and medical 
        emergencies at all times items and services are being 
        furnished under the program, except that, in the case 
        of items and services furnished under such a program in 
        a hospital, such availability shall be presumed; and
          (C) individualized treatment is furnished under a 
        written plan established, reviewed, and signed by a 
        physician every 30 days that describes--
                  (i) the individual's diagnosis;
                  (ii) the type, amount, frequency, and 
                duration of the items and services furnished 
                under the plan; and
                  (iii) the goals set for the individual under 
                the plan.
  (3) The items and services described in this paragraph are--
          (A) physician-prescribed exercise;
          (B) cardiac risk factor modification, including 
        education, counseling, and behavioral intervention (to 
        the extent such education, counseling, and behavioral 
        intervention is closely related to the individual's 
        care and treatment and is tailored to the individual's 
        needs);
          (C) psychosocial assessment;
          (D) outcomes assessment; and
          (E) such other items and services as the Secretary 
        may determine, but only if such items and services 
        are--
                  (i) reasonable and necessary for the 
                diagnosis or active treatment of the 
                individual's condition;
                  (ii) reasonably expected to improve or 
                maintain the individual's condition and 
                functional level; and
                  (iii) furnished under such guidelines 
                relating to the frequency and duration of such 
                items and services as the Secretary shall 
                establish, taking into account accepted norms 
                of medical practice and the reasonable 
                expectation of improvement of the individual.
  (4)(A) The term ``intensive cardiac rehabilitation program'' 
means a physician-supervised program (as described in paragraph 
(2)) that furnishes the items and services described in 
paragraph (3) and has shown, in peer-reviewed published 
research, that it accomplished--
          (i) one or more of the following:
                  (I) positively affected the progression of 
                coronary heart disease; or
                  (II) reduced the need for coronary bypass 
                surgery; or
                  (III) reduced the need for percutaneous 
                coronary interventions; and
          (ii) a statistically significant reduction in 5 or 
        more of the following measures from their level before 
        receipt of cardiac rehabilitation services to their 
        level after receipt of such services:
                  (I) low density lipoprotein;
                  (II) triglycerides;
                  (III) body mass index;
                  (IV) systolic blood pressure;
                  (V) diastolic blood pressure; or
                  (VI) the need for cholesterol, blood 
                pressure, and diabetes medications.
  (B) To be eligible for an intensive cardiac rehabilitation 
program, an individual must have--
          (i) had an acute myocardial infarction within the 
        preceding 12 months;
          (ii) had coronary bypass surgery;
          (iii) stable angina pectoris;
          (iv) had heart valve repair or replacement;
          (v) had percutaneous transluminal coronary 
        angioplasty (PTCA) or coronary stenting; or
          (vi) had a heart or heart-lung transplant.
  (C) An intensive cardiac rehabilitation program may be 
provided in a series of 72 one-hour sessions (as defined in 
section 1848(b)(5)), up to 6 sessions per day, over a period of 
up to 18 weeks.
  (5) The Secretary shall establish standards to ensure that a 
physician with expertise in the management of individuals with 
cardiac pathophysiology who is licensed to practice medicine in 
the State in which a cardiac rehabilitation program (or the 
intensive cardiac rehabilitation program, as the case may be) 
is offered--
          (A) is responsible for such program; and
          (B) in consultation with appropriate staff, is 
        involved substantially in directing the progress of 
        individual in the program.

                    Pulmonary Rehabilitation Program

  (fff)(1) The term ``pulmonary rehabilitation program'' means 
a physician-supervised program (as described in subsection 
(eee)(2) with respect to a program under this subsection) that 
furnishes the items and services described in paragraph (2).
  (2) The items and services described in this paragraph are--
          (A) physician-prescribed exercise;
          (B) education or training (to the extent the 
        education or training is closely and clearly related to 
        the individual's care and treatment and is tailored to 
        such individual's needs);
          (C) psychosocial assessment;
          (D) outcomes assessment; and
          (E) such other items and services as the Secretary 
        may determine, but only if such items and services 
        are--
                  (i) reasonable and necessary for the 
                diagnosis or active treatment of the 
                individual's condition;
                  (ii) reasonably expected to improve or 
                maintain the individual's condition and 
                functional level; and
                  (iii) furnished under such guidelines 
                relating to the frequency and duration of such 
                items and services as the Secretary shall 
                establish, taking into account accepted norms 
                of medical practice and the reasonable 
                expectation of improvement of the individual.
  (3) The Secretary shall establish standards to ensure that a 
physician with expertise in the management of individuals with 
respiratory pathophysiology who is licensed to practice 
medicine in the State in which a pulmonary rehabilitation 
program is offered--
          (A) is responsible for such program; and
          (B) in consultation with appropriate staff, is 
        involved substantially in directing the progress of 
        individual in the program.

                   Kidney Disease Education Services

  (ggg)(1) The term ``kidney disease education services'' means 
educational services that are--
          (A) furnished to an individual with stage IV chronic 
        kidney disease who, according to accepted clinical 
        guidelines identified by the Secretary, will require 
        dialysis or a kidney transplant;
          (B) furnished, upon the referral of the physician 
        managing the individual's kidney condition, by a 
        qualified person (as defined in paragraph (2)); and
          (C) designed--
                  (i) to provide comprehensive information 
                (consistent with the standards set under 
                paragraph (3)) regarding--
                          (I) the management of comorbidities, 
                        including for purposes of delaying the 
                        need for dialysis;
                          (II) the prevention of uremic 
                        complications; and
                          (III) each option for renal 
                        replacement therapy (including 
                        hemodialysis and peritoneal dialysis at 
                        home and in-center as well as vascular 
                        access options and transplantation);
                  (ii) to ensure that the individual has the 
                opportunity to actively participate in the 
                choice of therapy; and
                  (iii) to be tailored to meet the needs of the 
                individual involved.
  (2)(A) The term ``qualified person'' means--
          (i) a physician (as defined in section 1861(r)(1)) or 
        a physician assistant, nurse practitioner, or clinical 
        nurse specialist (as defined in section 1861(aa)(5)), 
        who furnishes services for which payment may be made 
        under the fee schedule established under section 1848; 
        and
          (ii) a provider of services located in a rural area 
        (as defined in section 1886(d)(2)(D)).
  (B) Such term does not include a provider of services (other 
than a provider of services described in subparagraph (A)(ii)) 
or a renal dialysis facility.
  (3) The Secretary shall set standards for the content of such 
information to be provided under paragraph (1)(C)(i) after 
consulting with physicians, other health professionals, health 
educators, professional organizations, accrediting 
organizations, kidney patient organizations, dialysis 
facilities, transplant centers, network organizations described 
in section 1881(c)(2), and other knowledgeable persons. To the 
extent possible the Secretary shall consult with persons or 
entities described in the previous sentence, other than a 
dialysis facility, that has not received industry funding from 
a drug or biological manufacturer or dialysis facility.
  (4) No individual shall be furnished more than 6 sessions of 
kidney disease education services under this title.

                         Annual Wellness Visit

  (hhh)(1) The term ``personalized prevention plan services'' 
means the creation of a plan for an individual--
          (A) that includes a health risk assessment (that 
        meets the guidelines established by the Secretary under 
        paragraph (4)(A)) of the individual that is completed 
        prior to or as part of the same visit with a health 
        professional described in paragraph (3); and
          (B) that--
                  (i) takes into account the results of the 
                health risk assessment; and
                  (ii) may contain the elements described in 
                paragraph (2).
  (2) Subject to paragraph (4)(H), the elements described in 
this paragraph are the following:
          (A) The establishment of, or an update to, the 
        individual's medical and family history.
          (B) A list of current providers and suppliers that 
        are regularly involved in providing medical care to the 
        individual (including a list of all prescribed 
        medications).
          (C) A measurement of height, weight, body mass index 
        (or waist circumference, if appropriate), blood 
        pressure, and other routine measurements.
          (D) Detection of any cognitive impairment.
          (E) The establishment of, or an update to, the 
        following:
                  (i) A screening schedule for the next 5 to 10 
                years, as appropriate, based on recommendations 
                of the United States Preventive Services Task 
                Force and the Advisory Committee on 
                Immunization Practices, and the individual's 
                health status, screening history, and age-
                appropriate preventive services covered under 
                this title.
                  (ii) A list of risk factors and conditions 
                for which primary, secondary, or tertiary 
                prevention interventions are recommended or are 
                underway, including any mental health 
                conditions or any such risk factors or 
                conditions that have been identified through an 
                initial preventive physical examination (as 
                described under subsection (ww)(1)), and a list 
                of treatment options and their associated risks 
                and benefits.
          (F) The furnishing of personalized health advice and 
        a referral, as appropriate, to health education or 
        preventive counseling services or programs aimed at 
        reducing identified risk factors and improving self-
        management, or community-based lifestyle interventions 
        to reduce health risks and promote self-management and 
        wellness, including weight loss, physical activity, 
        smoking cessation, fall prevention, and nutrition.
          (G) Any other element determined appropriate by the 
        Secretary.
  (3) A health professional described in this paragraph is--
          (A) a physician;
          (B) a practitioner described in clause (i) of section 
        1842(b)(18)(C); or
          (C) a medical professional (including a health 
        educator, registered dietitian, or nutrition 
        professional) or a team of medical professionals, as 
        determined appropriate by the Secretary, under the 
        supervision of a physician.
  (4)(A) For purposes of paragraph (1)(A), the Secretary, not 
later than 1 year after the date of enactment of this 
subsection, shall establish publicly available guidelines for 
health risk assessments. Such guidelines shall be developed in 
consultation with relevant groups and entities and shall 
provide that a health risk assessment--
          (i) identify chronic diseases, injury risks, 
        modifiable risk factors, and urgent health needs of the 
        individual; and
          (ii) may be furnished--
                  (I) through an interactive telephonic or web-
                based program that meets the standards 
                established under subparagraph (B);
                  (II) during an encounter with a health care 
                professional;
                  (III) through community-based prevention 
                programs; or
                  (IV) through any other means the Secretary 
                determines appropriate to maximize 
                accessibility and ease of use by beneficiaries, 
                while ensuring the privacy of such 
                beneficiaries.
  (B) Not later than 1 year after the date of enactment of this 
subsection, the Secretary shall establish standards for 
interactive telephonic or web-based programs used to furnish 
health risk assessments under subparagraph (A)(ii)(I). The 
Secretary may utilize any health risk assessment developed 
under section 4004(f) of the Patient Protection and Affordable 
Care Act as part of the requirement to develop a personalized 
prevention plan to comply with this subparagraph.
  (C)(i) Not later than 18 months after the date of enactment 
of this subsection, the Secretary shall develop and make 
available to the public a health risk assessment model. Such 
model shall meet the guidelines under subparagraph (A) and may 
be used to meet the requirement under paragraph (1)(A).
  (ii) Any health risk assessment that meets the guidelines 
under subparagraph (A) and is approved by the Secretary may be 
used to meet the requirement under paragraph (1)(A).
  (D) The Secretary may coordinate with community-based 
entities (including State Health Insurance Programs, Area 
Agencies on Aging, Aging and Disability Resource Centers, and 
the Administration on Aging) to--
          (i) ensure that health risk assessments are 
        accessible to beneficiaries; and
          (ii) provide appropriate support for the completion 
        of health risk assessments by beneficiaries.
  (E) The Secretary shall establish procedures to make 
beneficiaries and providers aware of the requirement that a 
beneficiary complete a health risk assessment prior to or at 
the same time as receiving personalized prevention plan 
services.
  (F) To the extent practicable, the Secretary shall encourage 
the use of, integration with, and coordination of health 
information technology (including use of technology that is 
compatible with electronic medical records and personal health 
records) and may experiment with the use of personalized 
technology to aid in the development of self-management skills 
and management of and adherence to provider recommendations in 
order to improve the health status of beneficiaries.
  (G) A beneficiary shall be eligible to receive only an 
initial preventive physical examination (as defined under 
subsection (ww)(1)) during the 12-month period after the date 
that the beneficiary's coverage begins under part B and shall 
be eligible to receive personalized prevention plan services 
under this subsection each year thereafter provided that the 
beneficiary has not received either an initial preventive 
physical examination or personalized prevention plan services 
within the preceding 12-month period.
  (H) The Secretary shall issue guidance that--
          (i) identifies elements under paragraph (2) that are 
        required to be provided to a beneficiary as part of 
        their first visit for personalized prevention plan 
        services; and
          (ii) establishes a yearly schedule for appropriate 
        provision of such elements thereafter.

           *       *       *       *       *       *       *


      B. Changes in Existing Law Proposed by the Bill, as Reported

    In compliance with clause 3(e)(1)(B) of rule XIII of the 
Rules of the House of Representatives, changes in existing law 
proposed by the bill, as reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

SOCIAL SECURITY ACT

           *       *       *       *       *       *       *



TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED

           *       *       *       *       *       *       *



   Part B--Supplementary Medical Insurance Benefits for the Aged and 
Disabled

           *       *       *       *       *       *       *



        SPECIAL PAYMENT RULES FOR PARTICULAR ITEMS AND SERVICES

  Sec. 1834. (a) Payment for Durable Medical Equipment.--
          (1) General rule for payment.--
                  (A) In general.--With respect to a covered 
                item (as defined in paragraph (13)) for which 
                payment is determined under this subsection, 
                payment shall be made in the frequency 
                specified in paragraphs (2) through (7) and in 
                an amount equal to 80 percent of the payment 
                basis described in subparagraph (B).
                  (B) Payment basis.--Subject to subparagraph 
                (F)(i), the payment basis described in this 
                subparagraph is the lesser of--
                          (i) the actual charge for the item, 
                        or
                          (ii) the payment amount recognized 
                        under paragraphs (2) through (7) of 
                        this subsection for the item;
                except that clause (i) shall not apply if the 
                covered item is furnished by a public home 
                health agency (or by another home health agency 
                which demonstrates to the satisfaction of the 
                Secretary that a significant portion of its 
                patients are low income) free of charge or at 
                nominal charges to the public.
                  (C) Exclusive payment rule.--Subject to 
                subparagraph (F)(ii), this subsection shall 
                constitute the exclusive provision of this 
                title for payment for covered items under this 
                part or under part A to a home health agency.
                  (D) Reduction in fee schedules for certain 
                items.--With respect to a seat-lift chair or 
                transcutaneous electrical nerve stimulator 
                furnished on or after April 1, 1990, the 
                Secretary shall reduce the payment amount 
                applied under subparagraph (B)(ii) for such an 
                item by 15 percent, and, in the case of a 
                transcutaneous electrical nerve stimulator 
                furnished on or after January 1, 1991, the 
                Secretary shall further reduce such payment 
                amount (as previously reduced) by 45 percent.
                  (E) Clinical conditions for coverage.--
                          (i) In general.--The Secretary shall 
                        establish standards for clinical 
                        conditions for payment for covered 
                        items under this subsection.
                          (ii) Requirements.--The standards 
                        established under clause (i) shall 
                        include the specification of types or 
                        classes of covered items that require, 
                        as a condition of payment under this 
                        subsection, a face-to-face examination 
                        of the individual by a physician (as 
                        defined in section 1861(r)), a 
                        physician assistant, nurse 
                        practitioner, or a clinical nurse 
                        specialist (as those terms are defined 
                        in section 1861(aa)(5)) and a 
                        prescription for the item.
                          (iii) Priority of establishment of 
                        standards.--In establishing the 
                        standards under this subparagraph, the 
                        Secretary shall first establish 
                        standards for those covered items for 
                        which the Secretary determines there 
                        has been a proliferation of use, 
                        consistent findings of charges for 
                        covered items that are not delivered, 
                        or consistent findings of falsification 
                        of documentation to provide for payment 
                        of such covered items under this part.
                          (iv) Standards for power 
                        wheelchairs.--Effective on the date of 
                        the enactment of this subparagraph, in 
                        the case of a covered item consisting 
                        of a motorized or power wheelchair for 
                        an individual, payment may not be made 
                        for such covered item unless a 
                        physician (as defined in section 
                        1861(r)(1)), a physician assistant, 
                        nurse practitioner, or a clinical nurse 
                        specialist (as those terms are defined 
                        in section 1861(aa)(5)) has conducted a 
                        face-to-face examination of the 
                        individual and written a prescription 
                        for the item.
                          (v) Limitation on payment for covered 
                        items.--Payment may not be made for a 
                        covered item under this subsection 
                        unless the item meets any standards 
                        established under this subparagraph for 
                        clinical condition of coverage.
                  (F) Application of competitive acquisition; 
                limitation of inherent reasonableness 
                authority.--In the case of covered items 
                furnished on or after January 1, 2011, subject 
                to subparagraphs (G) and (H), that are included 
                in a competitive acquisition program in a 
                competitive acquisition area under section 
                1847(a)--
                          (i) the payment basis under this 
                        subsection for such items and services 
                        furnished in such area shall be the 
                        payment basis determined under such 
                        competitive acquisition program;
                          (ii) the Secretary may (and, in the 
                        case of covered items furnished on or 
                        after January 1, 2016, subject to 
                        clause (iii), shall) use information on 
                        the payment determined under such 
                        competitive acquisition programs to 
                        adjust the payment amount otherwise 
                        recognized under subparagraph (B)(ii) 
                        for an area that is not a competitive 
                        acquisition area under section 1847 and 
                        in the case of such adjustment, 
                        paragraph (10)(B) shall not be applied; 
                        and
                          (iii) in the case of covered items 
                        furnished on or after January 1, 2016, 
                        the Secretary shall continue to make 
                        such adjustments described in clause 
                        (ii) as, under such competitive 
                        acquisition programs, additional 
                        covered items are phased in or 
                        information is updated as contracts 
                        under section 1847 are recompeted in 
                        accordance with section 1847(b)(3)(B).
                  (G) Use of information on competitive bid 
                rates.--The Secretary shall specify by 
                regulation the methodology to be used in 
                applying the provisions of subparagraph (F)(ii) 
                and subsection (h)(1)(H)(ii). In promulgating 
                such regulation, the Secretary shall consider 
                the costs of items and services in areas in 
                which such provisions would be applied compared 
                to the payment rates for such items and 
                services in competitive acquisition areas.
                  (H) Diabetic supplies.--
                          (i) In general.--On or after the date 
                        described in clause (ii), the payment 
                        amount under this part for diabetic 
                        supplies, including testing strips, 
                        that are non-mail order items (as 
                        defined by the Secretary) shall be 
                        equal to the single payment amounts 
                        established under the national mail 
                        order competition for diabetic supplies 
                        under section 1847.
                          (ii) Date described.--The date 
                        described in this clause is the date of 
                        the implementation of the single 
                        payment amounts under the national mail 
                        order competition for diabetic supplies 
                        under section 1847.
                  (I) Treatment of vacuum erection systems.--
                Effective for items and services furnished on 
                and after July 1, 2015, vacuum erection systems 
                described as prosthetic devices described in 
                section 1861(s)(8) shall be treated in the same 
                manner as erectile dysfunction drugs are 
                treated for purposes of section 1860D-
                2(e)(2)(A).
          (2) Payment for inexpensive and other routinely 
        purchased durable medical equipment.--
                  (A) In general.--Payment for an item of 
                durable medical equipment (as defined in 
                paragraph (13))--
                          (i) the purchase price of which does 
                        not exceed $150,
                          (ii) which the Secretary determines 
                        is acquired at least 75 percent of the 
                        time by purchase, [or]
                          (iii) which is an accessory used in 
                        conjunction with a nebulizer, 
                        aspirator, or a ventilator excluded 
                        under paragraph (3)(A), or
                          (iv) in the case of devices furnished 
                        on or after October 1, 2015, and before 
                        October 1, 2018, which serves as a 
                        speech generating device or which is an 
                        accessory that is needed for the 
                        individual to effectively utilize such 
                        a device,
                shall be made on a rental basis or in a lump-
                sum amount for the purchase of the item. The 
                payment amount recognized for purchase or 
                rental of such equipment is the amount 
                specified in subparagraph (B) for purchase or 
                rental, except that the total amount of 
                payments with respect to an item may not exceed 
                the payment amount specified in subparagraph 
                (B) with respect to the purchase of the item.
                  (B) Payment amount.--For purposes of 
                subparagraph (A), the amount specified in this 
                subparagraph, with respect to the purchase or 
                rental of an item furnished in a carrier 
                service area--
                          (i) in 1989 and in 1990 is the 
                        average reasonable charge in the area 
                        for the purchase or rental, 
                        respectively, of the item for the 12-
                        month period ending on June 30, 1987, 
                        increased by the percentage increase in 
                        the consumer price index for all urban 
                        consumers (U.S. city average) for the 
                        6-month period ending with December 
                        1987;
                          (ii) in 1991 is the sum of (I) 67 
                        percent of the local payment amount for 
                        the item or device computed under 
                        subparagraph (C)(i)(I) for 1991, and 
                        (II) 33 percent of the national limited 
                        payment amount for the item or device 
                        computed under subparagraph (C)(ii) for 
                        1991;
                          (iii) in 1992 is the sum of (I) 33 
                        percent of the local payment amount for 
                        the item or device computed under 
                        subparagraph (C)(i)(II) for 1992, and 
                        (II) 67 percent of the national limited 
                        payment amount for the item or device 
                        computed under subparagraph (C)(ii) for 
                        1992; and
                          (iv) in 1993 and each subsequent year 
                        is the national limited payment amount 
                        for the item or device computed under 
                        subparagraph (C)(ii) for that year 
                        (reduced by 10 percent, in the case of 
                        a blood glucose testing strip furnished 
                        after 1997 for an individual with 
                        diabetes).
                  (C) Computation of local payment amount and 
                national limited payment amount.--For purposes 
                of subparagraph (B)--
                          (i) the local payment amount for an 
                        item or device for a year is equal to--
                                  (I) for 1991, the amount 
                                specified in subparagraph 
                                (B)(i) for 1990 increased by 
                                the covered item update for 
                                1991, and
                                  (II) for 1992, 1993, and 1994 
                                the amount determined under 
                                this clause for the preceding 
                                year increased by the covered 
                                item update for the year; and
                          (ii) the national limited payment 
                        amount for an item or device for a year 
                        is equal to--
                                  (I) for 1991, the local 
                                payment amount determined under 
                                clause (i) for such item or 
                                device for that year, except 
                                that the national limited 
                                payment amount may not exceed 
                                100 percent of the weighted 
                                average of all local payment 
                                amounts determined under such 
                                clause for such item for that 
                                year and may not be less than 
                                85 percent of the weighted 
                                average of all local payment 
                                amounts determined under such 
                                clause for such item,
                                  (II) for 1992 and 1993, the 
                                amount determined under this 
                                clause for the preceding year 
                                increased by the covered item 
                                update for such subsequent 
                                year,
                                  (III) for 1994, the local 
                                payment amount determined under 
                                clause (i) for such item or 
                                device for that year, except 
                                that the national limited 
                                payment amount may not exceed 
                                100 percent of the median of 
                                all local payment amounts 
                                determined under such clause 
                                for such item for that year and 
                                may not be less than 85 percent 
                                of the median of all local 
                                payment amounts determined 
                                under such clause for such item 
                                or device for that year, and
                                  (IV) for each subsequent 
                                year, the amount determined 
                                under this clause for the 
                                preceding year increased by the 
                                covered item update for such 
                                subsequent year.
          (3) Payment for items requiring frequent and 
        substantial servicing.--
                  (A) In general.--Payment for a covered item 
                (such as IPPB machines and ventilators, 
                excluding ventilators that are either 
                continuous airway pressure devices or 
                intermittent assist devices with continuous 
                airway pressure devices) for which there must 
                be frequent and substantial servicing in order 
                to avoid risk to the patient's health shall be 
                made on a monthly basis for the rental of the 
                item and the amount recognized is the amount 
                specified in subparagraph (B).
                  (B) Payment amount.--For purposes of 
                subparagraph (A), the amount specified in this 
                subparagraph, with respect to an item or device 
                furnished in a carrier service area--
                          (i) in 1989 and in 1990 is the 
                        average reasonable charge in the area 
                        for the rental of the item or device 
                        for the 12-month period ending with 
                        June 1987, increased by the percentage 
                        increase in the consumer price index 
                        for all urban consumers (U.S. city 
                        average) for the 6-month period ending 
                        with December 1987;
                          (ii) in 1991 is the sum of (I) 67 
                        percent of the local payment amount for 
                        the item or device computed under 
                        subparagraph (C)(i)(I) for 1991, and 
                        (II) 33 percent of the national limited 
                        payment amount for the item or device 
                        computed under subparagraph (C)(ii) for 
                        1991;
                          (iii) in 1992 is the sum of (I) 33 
                        percent of the local payment amount for 
                        the item or device computed under 
                        subparagraph (C)(i)(II) for 1992, and 
                        (II) 67 percent of the national limited 
                        payment amount for the item or device 
                        computed under subparagraph (C)(ii) for 
                        1992; and
                          (iv) in 1993 and each subsequent year 
                        is the national limited payment amount 
                        for the item or device computed under 
                        subparagraph (C)(ii) for that year.
                  (C) Computation of local payment amount and 
                national limited payment amount.--For purposes 
                of subparagraph (B)--
                          (i) the local payment amount for an 
                        item or device for a year is equal to--
                                  (I) for 1991, the amount 
                                specified in subparagraph 
                                (B)(i) for 1990 increased by 
                                the covered item update for 
                                1991, and
                                  (II) for 1992, 1993, and 1994 
                                the amount determined under 
                                this clause for the preceding 
                                year increased by the covered 
                                item update for the year; and
                          (ii) the national limited payment 
                        amount for an item or device for a year 
                        is equal to--
                                  (I) for 1991, the local 
                                payment amount determined under 
                                clause (i) for such item or 
                                device for that year, except 
                                that the national limited 
                                payment amount may not exceed 
                                100 percent of the weighted 
                                average of all local payment 
                                amounts determined under such 
                                clause for such item for that 
                                year and may not be less than 
                                85 percent of the weighted 
                                average of all local payment 
                                amounts determined under such 
                                clause for such item,
                                  (II) for 1992 and 1993, the 
                                amount determined under this 
                                clause for the preceding year 
                                increased by the covered item 
                                update for such subsequent 
                                year,
                                  (III) for 1994, the local 
                                payment amount determined under 
                                clause (i) for such item or 
                                device for that year, except 
                                that the national limited 
                                payment amount may not exceed 
                                100 percent of the median of 
                                all local payment amounts 
                                determined under such clause 
                                for such item for that year and 
                                may not be less than 85 percent 
                                of the median of all local 
                                payment amounts determined 
                                under such clause for such item 
                                or device for that year, and
                                  (IV) for each subsequent 
                                year, the amount determined 
                                under this clause for the 
                                preceding year increased by the 
                                covered item update for such 
                                subsequent year.
          (4) Payment for certain customized items.--Payment 
        with respect to a covered item that is uniquely 
        constructed or substantially modified to meet the 
        specific needs of an individual patient, and for that 
        reason cannot be grouped with similar items for 
        purposes of payment under this title, shall be made in 
        a lump-sum amount (A) for the purchase of the item in a 
        payment amount based upon the carrier's individual 
        consideration for that item, and (B) for the reasonable 
        and necessary maintenance and servicing for parts and 
        labor not covered by the supplier's or manufacturer's 
        warranty, when necessary during the period of medical 
        need, and the amount recognized for such maintenance 
        and servicing shall be paid on a lump-sum, as needed 
        basis based upon the carrier's individual consideration 
        for that item. In the case of a wheelchair furnished on 
        or after January 1, 1992, the wheelchair shall be 
        treated as a customized item for purposes of this 
        paragraph if the wheelchair has been measured, fitted, 
        or adapted in consideration of the patient's body size, 
        disability, period of need, or intended use, and has 
        been assembled by a supplier or ordered from a 
        manufacturer who makes available customized features, 
        modifications, or components for wheelchairs that are 
        intended for an individual patient's use in accordance 
        with instructions from the patient's physician.
          (5) Payment for oxygen and oxygen equipment.--
                  (A) In general.--Payment for oxygen and 
                oxygen equipment shall be made on a monthly 
                basis in the monthly payment amount recognized 
                under paragraph (9) for oxygen and oxygen 
                equipment (other than portable oxygen 
                equipment), subject to subparagraphs (B), (C), 
                (E), and (F).
                  (B) Add-on for portable oxygen equipment.--
                When portable oxygen equipment is used, but 
                subject to subparagraph (D), the payment amount 
                recognized under subparagraph (A) shall be 
                increased by the monthly payment amount 
                recognized under paragraph (9) for portable 
                oxygen equipment.
                  (C) Volume adjustment.--When the attending 
                physician prescribes an oxygen flow rate--
                          (i) exceeding 4 liters per minute, 
                        the payment amount recognized under 
                        subparagraph (A), subject to 
                        subparagraph (D), shall be increased by 
                        50 percent, or
                          (ii) of less than 1 liter per minute, 
                        the payment amount recognized under 
                        subparagraph (A) shall be decreased by 
                        50 percent.
                  (D) Limit on adjustment.--When portable 
                oxygen equipment is used and the attending 
                physician prescribes an oxygen flow rate 
                exceeding 4 liters per minute, there shall only 
                be an increase under either subparagraph (B) or 
                (C), whichever increase is larger, and not 
                under both such subparagraphs.
                  (E) Recertification for patients receiving 
                home oxygen therapy.--In the case of a patient 
                receiving home oxygen therapy services who, at 
                the time such services are initiated, has an 
                initial arterial blood gas value at or above a 
                partial pressure of 56 or an arterial oxygen 
                saturation at or above 89 percent (or such 
                other values, pressures, or criteria as the 
                Secretary may specify) no payment may be made 
                under this part for such services after the 
                expiration of the 90-day period that begins on 
                the date the patient first receives such 
                services unless the patient's attending 
                physician certifies that, on the basis of a 
                follow-up test of the patient's arterial blood 
                gas value or arterial oxygen saturation 
                conducted during the final 30 days of such 90-
                day period, there is a medical need for the 
                patient to continue to receive such services.
                  (F) Rental Cap.--
                          (i) In general.--Payment for oxygen 
                        equipment (including portable oxygen 
                        equipment) under this paragraph may not 
                        extend over a period of continuous use 
                        (as determined by the Secretary) of 
                        longer than 36 months.
                          (ii) Payments and rules after rental 
                        cap.--After the 36th continuous month 
                        during which payment is made for the 
                        equipment under this paragraph--
                                  (I) the supplier furnishing 
                                such equipment under this 
                                subsection shall continue to 
                                furnish the equipment during 
                                any period of medical need for 
                                the remainder of the reasonable 
                                useful lifetime of the 
                                equipment, as determined by the 
                                Secretary;
                                  (II) payments for oxygen 
                                shall continue to be made in 
                                the amount recognized for 
                                oxygen under paragraph (9) for 
                                the period of medical need; and
                                  (III) maintenance and 
                                servicing payments shall, if 
                                the Secretary determines such 
                                payments are reasonable and 
                                necessary, be made (for parts 
                                and labor not covered by the 
                                supplier's or manufacturer's 
                                warranty, as determined by the 
                                Secretary to be appropriate for 
                                the equipment), and such 
                                payments shall be in an amount 
                                determined to be appropriate by 
                                the Secretary.
          (6) Payment for other covered items (other than 
        durable medical equipment).--Payment for other covered 
        items (other than durable medical equipment and other 
        covered items described in paragraph (3), (4), or (5)) 
        shall be made in a lump-sum amount for the purchase of 
        the item in the amount of the purchase price recognized 
        under paragraph (8).
          (7) Payment for other items of durable medical 
        equipment.--
                  (A) Payment.--In the case of an item of 
                durable medical equipment not described in 
                paragraphs (2) through (6), the following rules 
                shall apply:
                          (i) Rental.--
                                  (I) In general.--Except as 
                                provided in clause (iii), 
                                payment for the item shall be 
                                made on a monthly basis for the 
                                rental of the item during the 
                                period of medical need (but 
                                payments under this clause may 
                                not extend over a period of 
                                continuous use (as determined 
                                by the Secretary) of longer 
                                than 13 months).
                                  (II) Payment amount.--Subject 
                                to subclause (III) and 
                                subparagraph (B), the amount 
                                recognized for the item, for 
                                each of the first 3 months of 
                                such period, is 10 percent of 
                                the purchase price recognized 
                                under paragraph (8) with 
                                respect to the item, and, for 
                                each of the remaining months of 
                                such period, is 7.5 percent of 
                                such purchase price.
                                  (III) Special rule for power-
                                driven wheelchairs.--For 
                                purposes of payment for power-
                                driven wheelchairs, subclause 
                                (II) shall be applied by 
                                substituting ``15 percent'' and 
                                ``6 percent'' for ``10 
                                percent'' and ``7.5 percent'', 
                                respectively.
                          (ii) Ownership after rental.--On the 
                        first day that begins after the 13th 
                        continuous month during which payment 
                        is made for the rental of an item under 
                        clause (i), the supplier of the item 
                        shall transfer title to the item to the 
                        individual.
                          (iii) Purchase agreement option for 
                        complex, rehabilitative power-driven 
                        wheelchairs.--In the case of a complex, 
                        rehabilitative power-driven wheelchair, 
                        at the time the supplier furnishes the 
                        item, the supplier shall offer the 
                        individual the option to purchase the 
                        item, and payment for such item shall 
                        be made on a lump-sum basis if the 
                        individual exercises such option.
                          (iv) Maintenance and servicing.--
                        After the supplier transfers title to 
                        the item under clause (ii) or in the 
                        case of a power-driven wheelchair for 
                        which a purchase agreement has been 
                        entered into under clause (iii), 
                        maintenance and servicing payments 
                        shall, if the Secretary determines such 
                        payments are reasonable and necessary, 
                        be made (for parts and labor not 
                        covered by the supplier's or 
                        manufacturer's warranty, as determined 
                        by the Secretary to be appropriate for 
                        the particular type of durable medical 
                        equipment), and such payments shall be 
                        in an amount determined to be 
                        appropriate by the Secretary.
                  (B) Range for rental amounts.--
                          (i) For 1989.--For items furnished 
                        during 1989, the payment amount 
                        recognized under subparagraph (A)(i) 
                        shall not be more than 115 percent, and 
                        shall not be less than 85 percent, of 
                        the prevailing charge established for 
                        rental of the item in January 1987, 
                        increased by the percentage increase in 
                        the consumer price index for all urban 
                        consumers (U.S. city average) for the 
                        6-month period ending with December 
                        1987.
                          (ii) For 1990.--For items furnished 
                        during 1990, clause (i) shall apply in 
                        the same manner as it applies to items 
                        furnished during 1989.
                  (C) Replacement of items.--
                          (i) Establishment of reasonable 
                        useful lifetime.--In accordance with 
                        clause (iii), the Secretary shall 
                        determine and establish a reasonable 
                        useful lifetime for items of durable 
                        medical equipment for which payment may 
                        be made under this paragraph.
                          (ii) Payment for replacement items.--
                        If the reasonable lifetime of such an 
                        item, as so established, has been 
                        reached during a continuous period of 
                        medical need, or the carrier determines 
                        that the item is lost or irreparably 
                        damaged, the patient may elect to have 
                        payment for an item serving as a 
                        replacement for such item made--
                                  (I) on a monthly basis for 
                                the rental of the replacement 
                                item in accordance with 
                                subparagraph (A); or
                                  (II) in the case of an item 
                                for which a purchase agreement 
                                has been entered into under 
                                subparagraph (A)(iii), in a 
                                lump-sum amount for the 
                                purchase of the item.
                          (iii) Length of reasonable useful 
                        lifetime.--The reasonable useful 
                        lifetime of an item of durable medical 
                        equipment under this subparagraph shall 
                        be equal to 5 years, except that, if 
                        the Secretary determines that, on the 
                        basis of prior experience in making 
                        payments for such an item under this 
                        title, a reasonable useful lifetime of 
                        5 years is not appropriate with respect 
                        to a particular item, the Secretary 
                        shall establish an alternative 
                        reasonable lifetime for such item.
          (8) Purchase price recognized for miscellaneous 
        devices and items.--For purposes of paragraphs (6) and 
        (7), the amount that is recognized under this paragraph 
        as the purchase price for a covered item is the amount 
        described in subparagraph (C) of this paragraph, 
        determined as follows:
                  (A) Computation of local purchase price.--
                Each carrier under section 1842 shall compute a 
                base local purchase price for the item as 
                follows:
                          (i) The carrier shall compute a base 
                        local purchase price, for each item 
                        described--
                                  (I) in paragraph (6) equal to 
                                the average reasonable charge 
                                in the locality for the 
                                purchase of the item for the 
                                12-month period ending with 
                                June 1987, or
                                  (II) in paragraph (7) equal 
                                to the average of the purchase 
                                prices on the claims submitted 
                                on an assignment-related basis 
                                for the unused item supplied 
                                during the 6-month period 
                                ending with December 1986.
                          (ii) The carrier shall compute a 
                        local purchase price, with respect to 
                        the furnishing of each particular 
                        item--
                                  (I) in 1989 and 1990, equal 
                                to the base local purchase 
                                price computed under clause (i) 
                                increased by the percentage 
                                increase in the consumer price 
                                index for all urban consumers 
                                (U.S. city average) for the 6-
                                month period ending with 
                                December 1987,
                                  (II) in 1991, equal to the 
                                local purchase price computed 
                                under this clause for the 
                                previous year, increased by the 
                                covered item update for 1991, 
                                and decreased by the percentage 
                                by which the average of the 
                                reasonable charges for claims 
                                paid for all items described in 
                                paragraph (7) is lower than the 
                                average of the purchase prices 
                                submitted for such items during 
                                the final 9 months of 1988; or
                                  (III) in 1992, 1993, and 1994 
                                equal to the local purchase 
                                price computed under this 
                                clause for the previous year 
                                increased by the covered item 
                                update for the year.
                  (B) Computation of national limited purchase 
                price.--With respect to the furnishing of a 
                particular item in a year, the Secretary shall 
                compute a national limited purchase price--
                          (i) for 1991, equal to the local 
                        purchase price computed under 
                        subparagraph (A)(ii) for the item for 
                        the year, except that such national 
                        limited purchase price may not exceed 
                        100 percent of the weighted average of 
                        all local purchase prices for the item 
                        computed under such subparagraph for 
                        the year, and may not be less than 85 
                        percent of the weighted average of all 
                        local purchase prices for the item 
                        computed under such subparagraph for 
                        the year;
                          (ii) for 1992 and 1993, the amount 
                        determined under this subparagraph for 
                        the preceding year increased by the 
                        covered item update for such subsequent 
                        year;
                          (iii) for 1994, the local purchase 
                        price computed under subparagraph 
                        (A)(ii) for the item for the year, 
                        except that such national limited 
                        purchase price may not exceed 100 
                        percent of the median of all local 
                        purchase prices computed for the item 
                        under such subparagraph for the year 
                        and may not be less than 85 percent of 
                        the median of all local purchase prices 
                        computed under such subparagraph for 
                        the item for the year; and
                          (iv) for each subsequent year, equal 
                        to the amount determined under this 
                        subparagraph for the preceding year 
                        increased by the covered item update 
                        for such subsequent year.
                  (C) Purchase price recognized.--For purposes 
                of paragraphs (6) and (7), the amount that is 
                recognized under this paragraph as the purchase 
                price for each item furnished--
                          (i) in 1989 or 1990, is 100 percent 
                        of the local purchase price computed 
                        under subparagraph (A)(ii)(I);
                          (ii) in 1991, is the sum of (I) 67 
                        percent of the local purchase price 
                        computed under subparagraph (A)(ii)(II) 
                        for 1991, and (II) 33 percent of the 
                        national limited purchase price 
                        computed under subparagraph (B) for 
                        1991;
                          (iii) in 1992, is the sum of (I) 33 
                        percent of the local purchase price 
                        computed under subparagraph 
                        (A)(ii)(III) for 1992, and (II) 67 
                        percent of the national limited 
                        purchase price computed under 
                        subparagraph (B) for 1992; and
                          (iv) in 1993 or a subsequent year, is 
                        the national limited purchase price 
                        computed under subparagraph (B) for 
                        that year.
          (9) Monthly payment amount recognized with respect to 
        oxygen and oxygen equipment.--For purposes of paragraph 
        (5), the amount that is recognized under this paragraph 
        for payment for oxygen and oxygen equipment is the 
        monthly payment amount described in subparagraph (C) of 
        this paragraph. Such amount shall be computed 
        separately (i) for all items of oxygen and oxygen 
        equipment (other than portable oxygen equipment) and 
        (ii) for portable oxygen equipment (each such group 
        referred to in this paragraph as an ``item'').
                  (A) Computation of local monthly payment 
                rate.--Each carrier under this section shall 
                compute a base local payment rate for each item 
                as follows:
                          (i) The carrier shall compute a base 
                        local average monthly payment rate per 
                        beneficiary as an amount equal to (I) 
                        the total reasonable charges for the 
                        item during the 12-month period ending 
                        with December 1986, divided by (II) the 
                        total number of months for all 
                        beneficiaries receiving the item in the 
                        area during the 12-month period for 
                        which the carrier made payment for the 
                        item under this title.
                          (ii) The carrier shall compute a 
                        local average monthly payment rate for 
                        the item applicable--
                                  (I) to 1989 and 1990, equal 
                                to 95 percent of the base local 
                                average monthly payment rate 
                                computed under clause (i) for 
                                the item increased by the 
                                percentage increase in the 
                                consumer price index for all 
                                urban consumers (U.S. city 
                                average) for the 6-month period 
                                ending with December 1987, or
                                  (II) to 1991, 1992, 1993, and 
                                1994 equal to the local average 
                                monthly payment rate computed 
                                under this clause for the item 
                                for the previous year increased 
                                by the covered item increase 
                                for the year.
                  (B) Computation of national limited monthly 
                payment rate.--With respect to the furnishing 
                of an item in a year, the Secretary shall 
                compute a national limited monthly payment rate 
                equal to--
                          (i) for 1991, the local monthly 
                        payment rate computed under 
                        subparagraph (A)(ii)(II) for the item 
                        for the year, except that such national 
                        limited monthly payment rate may not 
                        exceed 100 percent of the weighted 
                        average of all local monthly payment 
                        rates computed for the item under such 
                        subparagraph for the year, and may not 
                        be less than 85 percent of the weighted 
                        average of all local monthly payment 
                        rates computed for the item under such 
                        subparagraph for the year;
                          (ii) for 1992 and 1993, the amount 
                        determined under this subparagraph for 
                        the preceding year increased by the 
                        covered item update for such subsequent 
                        year;
                          (iii) for 1994, the local monthly 
                        payment rate computed under 
                        subparagraph (A)(ii) for the item for 
                        the year, except that such national 
                        limited monthly payment rate may not 
                        exceed 100 percent of the median of all 
                        local monthly payment rates computed 
                        for the item under such subparagraph 
                        for the year and may not be less than 
                        85 percent of the median of all local 
                        monthly payment rates computed for the 
                        item under such subparagraph for the 
                        year;
                          (iv) for 1995, 1996, and 1997, equal 
                        to the amount determined under this 
                        subparagraph for the preceding year 
                        increased by the covered item update 
                        for such subsequent year;
                          (v) for 1998, 75 percent of the 
                        amount determined under this 
                        subparagraph for 1997; and
                          (vi) for 1999 and each subsequent 
                        year, 70 percent of the amount 
                        determined under this subparagraph for 
                        1997.
                  (C) Monthly payment amount recognized.--For 
                purposes of paragraph (5), the amount that is 
                recognized under this paragraph as the base 
                monthly payment amount for each item 
                furnished--
                          (i) in 1989 and in 1990, is 100 
                        percent of the local average monthly 
                        payment rate computed under 
                        subparagraph (A)(ii) for the item;
                          (ii) in 1991, is the sum of (I) 67 
                        percent of the local average monthly 
                        payment rate computed under 
                        subparagraph (A)(ii)(II) for the item 
                        for 1991, and (II) 33 percent of the 
                        national limited monthly payment rate 
                        computed under subparagraph (B)(i) for 
                        the item for 1991;
                          (iii) in 1992, is the sum of (I) 33 
                        percent of the local average monthly 
                        payment rate computed under 
                        subparagraph (A)(ii)(II) for the item 
                        for 1992, and (II) 67 percent of the 
                        national limited monthly payment rate 
                        computed under subparagraph (B)(ii) for 
                        the item for 1992; and
                          (iv) in a subsequent year, is the 
                        national limited monthly payment rate 
                        computed under subparagraph (B) for the 
                        item for that year.
          (10) Exceptions and adjustments.--
                  (A) Areas outside continental united 
                states.--Exceptions to the amounts recognized 
                under the previous provisions of this 
                subsection shall be made to take into account 
                the unique circumstances of covered items 
                furnished in Alaska, Hawaii, or Puerto Rico.
                  (B) Adjustment for inherent reasonableness.--
                The Secretary is authorized to apply the 
                provisions of paragraphs (8) and (9) of section 
                1842(b) to covered items and suppliers of such 
                items and payments under this subsection in an 
                area and with respect to covered items and 
                services for which the Secretary does not make 
                a payment amount adjustment under paragraph 
                (1)(F).
                  (C) Transcutaneous electrical nerve 
                stimulator (tens).--In order to permit an 
                attending physician time to determine whether 
                the purchase of a transcutaneous electrical 
                nerve stimulator is medically appropriate for a 
                particular patient, the Secretary may determine 
                an appropriate payment amount for the initial 
                rental of such item for a period of not more 
                than 2 months. If such item is subsequently 
                purchased, the payment amount with respect to 
                such purchase is the payment amount determined 
                under paragraph (2).
          (11) Improper billing and requirement of physician 
        order.--
                  (A) Improper billing for certain rental 
                items.--Notwithstanding any other provision of 
                this title, a supplier of a covered item for 
                which payment is made under this subsection and 
                which is furnished on a rental basis shall 
                continue to supply the item without charge 
                (other than a charge provided under this 
                subsection for the maintenance and servicing of 
                the item) after rental payments may no longer 
                be made under this subsection. If a supplier 
                knowingly and willfully violates the previous 
                sentence, the Secretary may apply sanctions 
                against the supplier under section 1842(j)(2) 
                in the same manner such sanctions may apply 
                with respect to a physician.
                  (B) Requirement of physician order.--
                          (i) In general.--The Secretary is 
                        authorized to require, for specified 
                        covered items, that payment may be made 
                        under this subsection with respect to 
                        the item only if a physician enrolled 
                        under section 1866(j) or an eligible 
                        professional under section 
                        1848(k)(3)(B) that is enrolled under 
                        section 1866(j) has communicated to the 
                        supplier, before delivery of the item, 
                        a written order for the item.
                          (ii) Requirement for face to face 
                        encounter.--The Secretary shall require 
                        that such an order be written pursuant 
                        to a physician, a physician assistant, 
                        a nurse practitioner, or a clinical 
                        nurse specialist (as those terms are 
                        defined in section 1861(aa)(5)) 
                        documenting such physician, physician 
                        assistant, practitioner, or specialist 
                        has had a face-to-face encounter 
                        (including through use of telehealth 
                        under subsection (m) and other than 
                        with respect to encounters that are 
                        incident to services involved) with the 
                        individual involved during the 6-month 
                        period preceding such written order, or 
                        other reasonable timeframe as 
                        determined by the Secretary.
          (12) Regional carriers.--The Secretary may designate, 
        by regulation under section 1842, one carrier for one 
        or more entire regions to process all claims within the 
        region for covered items under this section.
          (13) Covered item.--In this subsection, the term 
        ``covered item'' means durable medical equipment (as 
        defined in section 1861(n)), including such equipment 
        described in section 1861(m)(5), but not including 
        implantable items for which payment may be made under 
        section 1833(t).
          (14) Covered item update.--In this subsection, the 
        term ``covered item update'' means, with respect to a 
        year--
                  (A) for 1991 and 1992, the percentage 
                increase in the consumer price index for all 
                urban consumers (U.S. city average) for the 12-
                month period ending with June of the previous 
                year reduced by 1 percentage point;
                  (B) for 1993, 1994, 1995, 1996, and 1997, the 
                percentage increase in the consumer price index 
                for all urban consumers (U.S. city average) for 
                the 12-month period ending with June of the 
                previous year;
                  (C) for each of the years 1998 through 2000, 
                0 percentage points;
                  (D) for 2001, the percentage increase in the 
                consumer price index for all urban consumers 
                (U.S. city average) for the 12-month period 
                ending with June 2000;
                  (E) for 2002, 0 percentage points;
                  (F) for 2003, the percentage increase in the 
                consumer price index for all urban consumers 
                (U.S. urban average) for the 12-month period 
                ending with June of 2002;
                  (G) for 2004 through 2006--
                          (i) subject to clause (ii), in the 
                        case of class III medical devices 
                        described in section 513(a)(1)(C) of 
                        the Federal Food, Drug, and Cosmetic 
                        Act (21 U.S.C. 360(c)(1)(C)), the 
                        percentage increase described in 
                        subparagraph (B) for the year involved; 
                        and
                          (ii) in the case of covered items not 
                        described in clause (i), 0 percentage 
                        points;
                  (H) for 2007--
                          (i) subject to clause (ii), in the 
                        case of class III medical devices 
                        described in section 513(a)(1)(C) of 
                        the Federal Food, Drug, and Cosmetic 
                        Act (21 U.S.C. 360(c)(1)(C)), the 
                        percentage change determined by the 
                        Secretary to be appropriate taking into 
                        account recommendations contained in 
                        the report of the Comptroller General 
                        of the United States under section 
                        302(c)(1)(B) of the Medicare 
                        Prescription Drug, Improvement, and 
                        Modernization Act of 2003; and
                          (ii) in the case of covered items not 
                        described in clause (i), 0 percentage 
                        points;
                  (I) for 2008--
                          (i) subject to clause (ii), in the 
                        case of class III medical devices 
                        described in section 513(a)(1)(C) of 
                        the Federal Food, Drug, and Cosmetic 
                        Act (21 U.S.C. 360(c)(1)(C)), the 
                        percentage increase described in 
                        subparagraph (B) (as applied to the 
                        payment amount for 2007 determined 
                        after the application of the percentage 
                        change under subparagraph (H)(i)); and
                          (ii) in the case of covered items not 
                        described in clause (i), 0 percentage 
                        points;
                  (J) for 2009--
                          (i) in the case of items and services 
                        furnished in any geographic area, if 
                        such items or services were selected 
                        for competitive acquisition in any area 
                        under the competitive acquisition 
                        program under section 
                        1847(a)(1)(B)(i)(I) before July 1, 
                        2008, including related accessories but 
                        only if furnished with such items and 
                        services selected for such competition 
                        and diabetic supplies but only if 
                        furnished through mail order, - 9.5 
                        percent; or
                          (ii) in the case of other items and 
                        services, the percentage increase in 
                        the consumer price index for all urban 
                        consumers (U.S. urban average) for the 
                        12-month period ending with June 2008;
                  (K) for 2010, the percentage increase in the 
                consumer price index for all urban consumers 
                (U.S. urban average) for the 12-month period 
                ending with June of the previous year; and
                  (L) for 2011 and each subsequent year--
                          (i) the percentage increase in the 
                        consumer price index for all urban 
                        consumers (United States city average) 
                        for the 12-month period ending with 
                        June of the previous year, reduced by--
                          (ii) the productivity adjustment 
                        described in section 
                        1886(b)(3)(B)(xi)(II).
        The application of subparagraph (L)(ii) may result in 
        the covered item update under this paragraph being less 
        than 0.0 for a year, and may result in payment rates 
        under this subsection for a year being less than such 
        payment rates for the preceding year.
          (15) Advance determinations of coverage for certain 
        items.--
                  (A) Development of lists of items by 
                secretary.--The Secretary may develop and 
                periodically update a list of items for which 
                payment may be made under this subsection that 
                the Secretary determines, on the basis of prior 
                payment experience, are frequently subject to 
                unnecessary utilization throughout a carrier's 
                entire service area or a portion of such area.
                  (B) Development of lists of suppliers by 
                secretary.--The Secretary may develop and 
                periodically update a list of suppliers of 
                items for which payment may be made under this 
                subsection with respect to whom--
                          (i) the Secretary has found that a 
                        substantial number of claims for 
                        payment under this part for items 
                        furnished by the supplier have been 
                        denied on the basis of the application 
                        of section 1862(a)(1); or
                          (ii) the Secretary has identified a 
                        pattern of overutilization resulting 
                        from the business practice of the 
                        supplier.
                  (C) Determinations of coverage in advance.--A 
                carrier shall determine in advance of delivery 
                of an item whether payment for the item may not 
                be made because the item is not covered or 
                because of the application of section 
                1862(a)(1) if--
                          (i) the item is included on the list 
                        developed by the Secretary under 
                        subparagraph (A);
                          (ii) the item is furnished by a 
                        supplier included on the list developed 
                        by the Secretary under subparagraph 
                        (B); or
                          (iii) the item is a customized item 
                        (other than inexpensive items specified 
                        by the Secretary) and the patient to 
                        whom the item is to be furnished or the 
                        supplier requests that such advance 
                        determination be made.
          (16) Disclosure of information and surety bond.--The 
        Secretary shall not provide for the issuance (or 
        renewal) of a provider number for a supplier of durable 
        medical equipment, for purposes of payment under this 
        part for durable medical equipment furnished by the 
        supplier, unless the supplier provides the Secretary on 
        a continuing basis--
                  (A) with--
                          (i) full and complete information as 
                        to the identity of each person with an 
                        ownership or control interest (as 
                        defined in section 1124(a)(3)) in the 
                        supplier or in any subcontractor (as 
                        defined by the Secretary in 
                        regulations) in which the supplier 
                        directly or indirectly has a 5 percent 
                        or more ownership interest; and
                          (ii) to the extent determined to be 
                        feasible under regulations of the 
                        Secretary, the name of any disclosing 
                        entity (as defined in section 
                        1124(a)(2)) with respect to which a 
                        person with such an ownership or 
                        control interest in the supplier is a 
                        person with such an ownership or 
                        control interest in the disclosing 
                        entity; and
                  (B) with a surety bond in a form specified by 
                the Secretary and in an amount that is not less 
                than $50,000 that the Secretary determines is 
                commensurate with the volume of the billing of 
                the supplier.
        The Secretary may waive the requirement of a bond under 
        subparagraph (B) in the case of a supplier that 
        provides a comparable surety bond under State law. The 
        Secretary, at the Secretary's discretion, may impose 
        the requirements of the first sentence with respect to 
        some or all providers of items or services under part A 
        or some or all suppliers or other persons (other than 
        physicians or other practitioners, as defined in 
        section 1842(b)(18)(C)) who furnish items or services 
        under this part.
          (17) Prohibition against unsolicited telephone 
        contacts by suppliers.--
                  (A) In general.--A supplier of a covered item 
                under this subsection may not contact an 
                individual enrolled under this part by 
                telephone regarding the furnishing of a covered 
                item to the individual unless 1 of the 
                following applies:
                          (i) The individual has given written 
                        permission to the supplier to make 
                        contact by telephone regarding the 
                        furnishing of a covered item.
                          (ii) The supplier has furnished a 
                        covered item to the individual and the 
                        supplier is contacting the individual 
                        only regarding the furnishing of such 
                        covered item.
                          (iii) If the contact is regarding the 
                        furnishing of a covered item other than 
                        a covered item already furnished to the 
                        individual, the supplier has furnished 
                        at least 1 covered item to the 
                        individual during the 15-month period 
                        preceding the date on which the 
                        supplier makes such contact.
                  (B) Prohibiting payment for items furnished 
                subsequent to unsolicited contacts.--If a 
                supplier knowingly contacts an individual in 
                violation of subparagraph (A), no payment may 
                be made under this part for any item 
                subsequently furnished to the individual by the 
                supplier.
                  (C) Exclusion from program for suppliers 
                engaging in pattern of unsolicited contacts.--
                If a supplier knowingly contacts individuals in 
                violation of subparagraph (A) to such an extent 
                that the supplier's conduct establishes a 
                pattern of contacts in violation of such 
                subparagraph, the Secretary shall exclude the 
                supplier from participation in the programs 
                under this Act, in accordance with the 
                procedures set forth in subsections (c), (f), 
                and (g) of section 1128.
          (18) Refund of amounts collected for certain 
        disallowed items.--
                  (A) In general.--If a nonparticipating 
                supplier furnishes to an individual enrolled 
                under this part a covered item for which no 
                payment may be made under this part by reason 
                of paragraph (17)(B), the supplier shall refund 
                on a timely basis to the patient (and shall be 
                liable to the patient for) any amounts 
                collected from the patient for the item, 
                unless--
                          (i) the supplier establishes that the 
                        supplier did not know and could not 
                        reasonably have been expected to know 
                        that payment may not be made for the 
                        item by reason of paragraph (17)(B), or
                          (ii) before the item was furnished, 
                        the patient was informed that payment 
                        under this part may not be made for 
                        that item and the patient has agreed to 
                        pay for that item.
                  (B) Sanctions.--If a supplier knowingly and 
                willfully fails to make refunds in violation of 
                subparagraph (A), the Secretary may apply 
                sanctions against the supplier in accordance 
                with section 1842(j)(2).
                  (C) Notice.--Each carrier with a contract in 
                effect under this part with respect to 
                suppliers of covered items shall send any 
                notice of denial of payment for covered items 
                by reason of paragraph (17)(B) and for which 
                payment is not requested on an assignment-
                related basis to the supplier and the patient 
                involved.
                  (D) Timely basis defined.--A refund under 
                subparagraph (A) is considered to be on a 
                timely basis only if--
                          (i) in the case of a supplier who 
                        does not request reconsideration or 
                        seek appeal on a timely basis, the 
                        refund is made within 30 days after the 
                        date the supplier receives a denial 
                        notice under subparagraph (C), or
                          (ii) in the case in which such a 
                        reconsideration or appeal is taken, the 
                        refund is made within 15 days after the 
                        date the supplier receives notice of an 
                        adverse determination on 
                        reconsideration or appeal.
          (19) Certain upgraded items.--
                  (A) Individual's right to choose upgraded 
                item.--Notwithstanding any other provision of 
                this title, the Secretary may issue regulations 
                under which an individual may purchase or rent 
                from a supplier an item of upgraded durable 
                medical equipment for which payment would be 
                made under this subsection if the item were a 
                standard item.
                  (B) Payments to supplier.--In the case of the 
                purchase or rental of an upgraded item under 
                subparagraph (A)--
                          (i) the supplier shall receive 
                        payment under this subsection with 
                        respect to such item as if such item 
                        were a standard item; and
                          (ii) the individual purchasing or 
                        renting the item shall pay the supplier 
                        an amount equal to the difference 
                        between the supplier's charge and the 
                        amount under clause (i).
                In no event may the supplier's charge for an 
                upgraded item exceed the applicable fee 
                schedule amount (if any) for such item.
                  (C) Consumer protection safeguards.--Any 
                regulations under subparagraph (A) shall 
                provide for consumer protection standards with 
                respect to the furnishing of upgraded equipment 
                under subparagraph (A). Such regulations shall 
                provide for--
                          (i) determination of fair market 
                        prices with respect to an upgraded 
                        item;
                          (ii) full disclosure of the 
                        availability and price of standard 
                        items and proof of receipt of such 
                        disclosure information by the 
                        beneficiary before the furnishing of 
                        the upgraded item;
                          (iii) conditions of participation for 
                        suppliers in the billing arrangement;
                          (iv) sanctions of suppliers who are 
                        determined to engage in coercive or 
                        abusive practices, including exclusion; 
                        and
                          (v) such other safeguards as the 
                        Secretary determines are necessary.
          (20) Identification of quality standards.--
                  (A) In general.--Subject to subparagraph (C), 
                the Secretary shall establish and implement 
                quality standards for suppliers of items and 
                services described in subparagraph (D) to be 
                applied by recognized independent accreditation 
                organizations (as designated under subparagraph 
                (B)) and with which such suppliers shall be 
                required to comply in order to--
                          (i) furnish any such item or service 
                        for which payment is made under this 
                        part; and
                          (ii) receive or retain a provider or 
                        supplier number used to submit claims 
                        for reimbursement for any such item or 
                        service for which payment may be made 
                        under this title.
                  (B) Designation of independent accreditation 
                organizations.--Not later than the date that is 
                1 year after the date on which the Secretary 
                implements the quality standards under 
                subparagraph (A), notwithstanding section 
                1865(a), the Secretary shall designate and 
                approve one or more independent accreditation 
                organizations for purposes of such 
                subparagraph.
                  (C) Quality standards.--The quality standards 
                described in subparagraph (A) may not be less 
                stringent than the quality standards that would 
                otherwise apply if this paragraph did not apply 
                and shall include consumer services standards.
                  (D) Items and services described.--The items 
                and services described in this subparagraph are 
                the following items and services, as the 
                Secretary determines appropriate:
                          (i) Covered items (as defined in 
                        paragraph (13)) for which payment may 
                        otherwise be made under this 
                        subsection.
                          (ii) Prosthetic devices and orthotics 
                        and prosthetics described in section 
                        1834(h)(4).
                          (iii) Items and services described in 
                        section 1842(s)(2).
                  (E) Implementation.--The Secretary may 
                establish by program instruction or otherwise 
                the quality standards under this paragraph, 
                including subparagraph (F), after consultation 
                with representatives of relevant parties. Such 
                standards shall be applied prospectively and 
                shall be published on the Internet website of 
                the Centers for Medicare & Medicaid Services.
                  (F) Application of accreditation 
                requirement.--In implementing quality standards 
                under this paragraph--
                          (i) subject to clause (ii) and 
                        subparagraph (G), the Secretary shall 
                        require suppliers furnishing items and 
                        services described in subparagraph (D) 
                        on or after October 1, 2009, directly 
                        or as a subcontractor for another 
                        entity, to have submitted to the 
                        Secretary evidence of accreditation by 
                        an accreditation organization 
                        designated under subparagraph (B) as 
                        meeting applicable quality standards, 
                        except that the Secretary shall not 
                        require under this clause pharmacies to 
                        obtain such accreditation before 
                        January 1, 2010, except that the 
                        Secretary shall not require a pharmacy 
                        to have submitted to the Secretary such 
                        evidence of accreditation prior to 
                        January 1, 2011; and
                          (ii) in applying such standards and 
                        the accreditation requirement of clause 
                        (i) with respect to eligible 
                        professionals (as defined in section 
                        1848(k)(3)(B)), and including such 
                        other persons, such as orthotists and 
                        prosthetists, as specified by the 
                        Secretary, furnishing such items and 
                        services--
                                  (I) such standards and 
                                accreditation requirement shall 
                                not apply to such professionals 
                                and persons unless the 
                                Secretary determines that the 
                                standards being applied are 
                                designed specifically to be 
                                applied to such professionals 
                                and persons; and
                                  (II) the Secretary may exempt 
                                such professionals and persons 
                                from such standards and 
                                requirement if the Secretary 
                                determines that licensing, 
                                accreditation, or other 
                                mandatory quality requirements 
                                apply to such professionals and 
                                persons with respect to the 
                                furnishing of such items and 
                                services.
                  (G) Application of accreditation requirement 
                to certain pharmacies.--
                          (i) In general.--With respect to 
                        items and services furnished on or 
                        after January 1, 2011, in implementing 
                        quality standards under this 
                        paragraph--
                                  (I) subject to subclause 
                                (II), in applying such 
                                standards and the accreditation 
                                requirement of subparagraph 
                                (F)(i) with respect to 
                                pharmacies described in clause 
                                (ii) furnishing such items and 
                                services, such standards and 
                                accreditation requirement shall 
                                not apply to such pharmacies; 
                                and
                                  (II) the Secretary may apply 
                                to such pharmacies an 
                                alternative accreditation 
                                requirement established by the 
                                Secretary if the Secretary 
                                determines such alternative 
                                accreditation requirement is 
                                more appropriate for such 
                                pharmacies.
                          (ii) Pharmacies described.--A 
                        pharmacy described in this clause is a 
                        pharmacy that meets each of the 
                        following criteria:
                                  (I) The total billings by the 
                                pharmacy for such items and 
                                services under this title are 
                                less than 5 percent of total 
                                pharmacy sales, as determined 
                                based on the average total 
                                pharmacy sales for the previous 
                                3 calendar years, 3 fiscal 
                                years, or other yearly period 
                                specified by the Secretary.
                                  (II) The pharmacy has been 
                                enrolled under section 1866(j) 
                                as a supplier of durable 
                                medical equipment, prosthetics, 
                                orthotics, and supplies, has 
                                been issued (which may include 
                                the renewal of) a provider 
                                number for at least 5 years, 
                                and for which a final adverse 
                                action (as defined in section 
                                424.57(a) of title 42, Code of 
                                Federal Regulations) has not 
                                been imposed in the past 5 
                                years.
                                  (III) The pharmacy submits to 
                                the Secretary an attestation, 
                                in a form and manner, and at a 
                                time, specified by the 
                                Secretary, that the pharmacy 
                                meets the criteria described in 
                                subclauses (I) and (II). Such 
                                attestation shall be subject to 
                                section 1001 of title 18, 
                                United States Code.
                                  (IV) The pharmacy agrees to 
                                submit materials as requested 
                                by the Secretary, or during the 
                                course of an audit conducted on 
                                a random sample of pharmacies 
                                selected annually, to verify 
                                that the pharmacy meets the 
                                criteria described in 
                                subclauses (I) and (II). 
                                Materials submitted under the 
                                preceding sentence shall 
                                include a certification by an 
                                accountant on behalf of the 
                                pharmacy or the submission of 
                                tax returns filed by the 
                                pharmacy during the relevant 
                                periods, as requested by the 
                                Secretary.
          (21) Special payment rule for specified items and 
        supplies.--
                  (A) In general.--Notwithstanding the 
                preceding provisions of this subsection, for 
                specified items and supplies (described in 
                subparagraph (B)) furnished during 2005, the 
                payment amount otherwise determined under this 
                subsection for such specified items and 
                supplies shall be reduced by the percentage 
                difference between--
                          (i) the amount of payment otherwise 
                        determined for the specified item or 
                        supply under this subsection for 2002, 
                        and
                          (ii) the amount of payment for the 
                        specified item or supply under chapter 
                        89 of title 5, United States Code, as 
                        identified in the column entitled 
                        ``Median FEHP Price'' in the table 
                        entitled ``SUMMARY OF MEDICARE PRICES 
                        COMPARED TO VA, MEDICAID, RETAIL, AND 
                        FEHP PRICES FOR 16 ITEMS'' included in 
                        the Testimony of the Inspector General 
                        before the Senate Committee on 
                        Appropriations, June 12, 2002, or any 
                        subsequent report by the Inspector 
                        General.
                  (B) Specified item or supply described.--For 
                purposes of subparagraph (A), a specified item 
                or supply means oxygen and oxygen equipment, 
                standard wheelchairs (including standard power 
                wheelchairs), nebulizers, diabetic supplies 
                consisting of lancets and testing strips, 
                hospital beds, and air mattresses, but only if 
                the HCPCS code for the item or supply is 
                identified in a table referred to in 
                subparagraph (A)(ii).
                  (C) Application of update to special payment 
                amount.--The covered item update under 
                paragraph (14) for specified items and supplies 
                for 2006 and each subsequent year shall be 
                applied to the payment amount under 
                subparagraph (A) unless payment is made for 
                such items and supplies under section 1847.
          (22) Special payment rule for diabetic supplies.--
        Notwithstanding the preceding provisions of this 
        subsection, for purposes of determining the payment 
        amount under this subsection for diabetic supplies 
        furnished on or after the first day of the calendar 
        quarter during 2013 that is at least 30 days after the 
        date of the enactment of this paragraph and before the 
        date described in paragraph (1)(H)(ii), the Secretary 
        shall recalculate and apply the covered item update 
        under paragraph (14) as if subparagraph (J)(i) of such 
        paragraph was amended by striking ``but only if 
        furnished through mail order''.
  (b) Fee Schedules for Radiologist Services.--
          (1) Development.--The Secretary shall develop--
                  (A) a relative value scale to serve as the 
                basis for the payment for radiologist services 
                under this part, and
                  (B) using such scale and appropriate 
                conversion factors and subject to subsection 
                (c)(1)(A), fee schedules (on a regional, 
                statewide, locality, or carrier service area 
                basis) for payment for radiologist services 
                under this part, to be implemented for such 
                services furnished during 1989.
          (2) Consultation.--In carrying out paragraph (1), the 
        Secretary shall regularly consult closely with the 
        Physician Payment Review Commission, the American 
        College of Radiology, and other organizations 
        representing physicians or suppliers who furnish 
        radiologist services and shall share with them the data 
        and data analysis being used to make the determinations 
        under paragraph (1), including data on variations in 
        current medicare payments by geographic area, and by 
        service and physician specialty.
          (3) Considerations.--In developing the relative value 
        scale and fee schedules under paragraph (1), the 
        Secretary--
                  (A) shall take into consideration variations 
                in the cost of furnishing such services among 
                geographic areas and among different sites 
                where services are furnished, and
                  (B) may also take into consideration such 
                other factors respecting the manner in which 
                physicians in different specialties furnish 
                such services as may be appropriate to assure 
                that payment amounts are equitable and designed 
                to promote effective and efficient provision of 
                radiologist services by physicians in the 
                different specialties.
          (4) Savings.--
                  (A) Budget neutral fee schedules.--The 
                Secretary shall develop preliminary fee 
                schedules for 1989, which are designed to 
                result in the same amount of aggregate payments 
                (net of any coinsurance and deductibles under 
                sections 1833(a)(1)(J) and 1833(b)) for 
                radiologist services furnished in 1989 as would 
                have been made if this subsection had not been 
                enacted.
                  (B) Initial savings.--The fee schedules 
                established for payment purposes under this 
                subsection for services furnished in 1989 shall 
                be 97 percent of the amounts permitted under 
                these preliminary fee schedules developed under 
                subparagraph (A).
                  (C)  1990 fee schedules.--For radiologist 
                services (other than portable X-ray services) 
                furnished under this part during 1990, after 
                March 31 of such year, the conversion factors 
                used under this subsection shall be 96 percent 
                of the conversion factors that applied under 
                this subsection as of December 31, 1989.
                  (D)  1991 fee schedules.--For radiologist 
                services (other than portable X-ray services) 
                furnished under this part during 1991, the 
                conversion factors used in a locality under 
                this subsection shall, subject to clause (vii), 
                be reduced to the adjusted conversion factor 
                for the locality determined as follows:
                          (i) National weighted average 
                        conversion factor.--The Secretary shall 
                        estimate the national weighted average 
                        of the conversion factors used under 
                        this subsection for services furnished 
                        during 1990 beginning on April 1, using 
                        the best available data.
                          (ii) Reduced national weighted 
                        average.--The national weighted average 
                        estimated under clause (i) shall be 
                        reduced by 13 percent.
                          (iii) Computation of 1990 locality 
                        index relative to national average.--
                        The Secretary shall establish an index 
                        which reflects, for each locality, the 
                        ratio of the conversion factor used in 
                        the locality under this subsection to 
                        the national weighted average estimated 
                        under clause (i).
                          (iv) Adjusted conversion factor.--The 
                        adjusted conversion factor for the 
                        professional or technical component of 
                        a service in a locality is the sum of 
                        \1/2\ of the locally-adjusted amount 
                        determined under clause (v) and \1/2\ 
                        of the GPCI-adjusted amount determined 
                        under clause (vi).
                          (v) Locally-adjusted amount.--For 
                        purposes of clause (iv), the locally 
                        adjusted amount determined under this 
                        clause is the product of (I) the 
                        national weighted average conversion 
                        factor computed under clause (ii), and 
                        (II) the index value established under 
                        clause (iii) for the locality.
                          (vi) GPCI-adjusted amount.--For 
                        purposes of clause (iv), the GPCI-
                        adjusted amount determined under this 
                        clause is the sum of--
                                  (I) the product of (a) the 
                                portion of the reduced national 
                                weighted average conversion 
                                factor computed under clause 
                                (ii) which is attributable to 
                                physician work and (b) the 
                                geographic work index value for 
                                the locality (specified in 
                                Addendum C to the Model Fee 
                                Schedule for Physician Services 
                                (published on September 4, 
                                1990, 55 Federal Register pp. 
                                36238-36243)); and
                                  (II) the product of (a) the 
                                remaining portion of the 
                                reduced national weighted 
                                average conversion factor 
                                computed under clause (ii), and 
                                (b) the geographic practice 
                                cost index value specified in 
                                section 1842(b)(14)(C)(iv) for 
                                the locality.
                        In applying this clause with respect to 
                        the professional component of a 
                        service, 80 percent of the conversion 
                        factor shall be considered to be 
                        attributable to physician work and with 
                        respect to the technical component of 
                        the service, 0 percent shall be 
                        considered to be attributable to 
                        physician work.
                          (vii) Limits on conversion factor.--
                        The conversion factor to be applied to 
                        a locality to the professional or 
                        technical component of a service shall 
                        not be reduced under this subparagraph 
                        by more than 9.5 percent below the 
                        conversion factor applied in the 
                        locality under subparagraph (C) to such 
                        component, but in no case shall the 
                        conversion factor be less than 60 
                        percent of the national weighted 
                        average of the conversion factors 
                        (computed under clause (i)).
                  (E) Rule for certain scanning services.--In 
                the case of the technical components of 
                magnetic resonance imaging (MRI) services and 
                computer assisted tomography (CAT) services 
                furnished after December 31, 1990, the amount 
                otherwise payable shall be reduced by 10 
                percent.
                  (F) Subsequent updating.--For radiologist 
                services furnished in subsequent years, the fee 
                schedules shall be the schedules for the 
                previous year updated by the percentage 
                increase in the MEI (as defined in section 
                1842(i)(3)) for the year.
                  (G) Nonparticipating physicians and 
                suppliers.--Each fee schedule so established 
                shall provide that the payment rate recognized 
                for nonparticipating physicians and suppliers 
                is equal to the appropriate percent (as defined 
                in section 1842(b)(4)(A)(iv)) of the payment 
                rate recognized for participating physicians 
                and suppliers.
          (5) Limiting charges of nonparticipating physicians 
        and suppliers.--
                  (A) In general.--In the case of radiologist 
                services furnished after January 1, 1989, for 
                which payment is made under a fee schedule 
                under this subsection, if a nonparticipating 
                physician or supplier furnishes the service to 
                an individual entitled to benefits under this 
                part, the physician or supplier may not charge 
                the individual more than the limiting charge 
                (as defined in subparagraph (B)).
                  (B) Limiting charge defined.--In subparagraph 
                (A), the term ``limiting charge'' means, with 
                respect to a service furnished--
                          (i) in 1989, 125 percent of the 
                        amount specified for the service in the 
                        appropriate fee schedule established 
                        under paragraph (1),
                          (ii) in 1990, 120 percent of the 
                        amount specified for the service in the 
                        appropriate fee schedule established 
                        under paragraph (1), and
                          (iii) after 1990, 115 percent of the 
                        amount specified for the service in the 
                        appropriate fee schedule established 
                        under paragraph (1).
                  (C) Enforcement.--If a physician or supplier 
                knowingly and willfully bills in violation of 
                subparagraph (A), the Secretary may apply 
                sanctions against such physician or supplier in 
                accordance with section 1842(j)(2) in the same 
                manner as such sanctions may apply to a 
                physician.
          (6) Radiologist services defined.--For the purposes 
        of this subsection and section 1833(a)(1)(J), the term 
        ``radiologist services'' only includes radiology 
        services performed by, or under the direction or 
        supervision of, a physician--
                  (A) who is certified, or eligible to be 
                certified, by the American Board of Radiology, 
                or
                  (B) for whom radiology services account for 
                at least 50 percent of the total amount of 
                charges made under this part.
  (c) Payment and Standards for Screening Mammography.--
          (1) In general.--With respect to expenses incurred 
        for screening mammography (as defined in section 
        1861(jj)), payment may be made only--
                  (A) for screening mammography conducted 
                consistent with the frequency permitted under 
                paragraph (2); and
                  (B) if the screening mammography is conducted 
                by a facility that has a certificate (or 
                provisional certificate) issued under section 
                354 of the Public Health Service Act.
          (2) Frequency covered.--
                  (A) In general.--Subject to revision by the 
                Secretary under subparagraph (B)--
                          (i) no payment may be made under this 
                        part for screening mammography 
                        performed on a woman under 35 years of 
                        age;
                          (ii) payment may be made under this 
                        part for only one screening mammography 
                        performed on a woman over 34 years of 
                        age, but under 40 years of age; and
                          (iii) in the case of a woman over 39 
                        years of age, payment may not be made 
                        under this part for screening 
                        mammography performed within 11 months 
                        following the month in which a previous 
                        screening mammography was performed.
                  (B) Revision of frequency.--
                          (i) Review.--The Secretary, in 
                        consultation with the Director of the 
                        National Cancer Institute, shall review 
                        periodically the appropriate frequency 
                        for performing screening mammography, 
                        based on age and such other factors as 
                        the Secretary believes to be pertinent.
                          (ii) Revision of frequency.--The 
                        Secretary, taking into consideration 
                        the review made under clause (i), may 
                        revise from time to time the frequency 
                        with which screening mammography may be 
                        paid for under this subsection.
  (d) Frequency Limits and Payment for Colorectal Cancer 
Screening Tests.--
          (1) Screening fecal-occult blood tests.--
                  (A) Payment amount.--The payment amount for 
                colorectal cancer screening tests consisting of 
                screening fecal-occult blood tests is equal to 
                the payment amount established for diagnostic 
                fecal-occult blood tests under section 1833(h).
                  (B) Frequency limit.--No payment may be made 
                under this part for a colorectal cancer 
                screening test consisting of a screening fecal-
                occult blood test--
                          (i) if the individual is under 50 
                        years of age; or
                          (ii) if the test is performed within 
                        the 11 months after a previous 
                        screening fecal-occult blood test.
          (2) Screening flexible sigmoidoscopies.--
                  (A) Fee schedule.--With respect to colorectal 
                cancer screening tests consisting of screening 
                flexible sigmoidoscopies, payment under section 
                1848 shall be consistent with payment under 
                such section for similar or related services.
                  (B) Payment limit.--In the case of screening 
                flexible sigmoidoscopy services, payment under 
                this part shall not exceed such amount as the 
                Secretary specifies, based upon the rates 
                recognized for diagnostic flexible 
                sigmoidoscopy services.
                  (C) Facility payment limit.--
                          (i) In general.--Notwithstanding 
                        subsections (i)(2)(A) and (t) of 
                        section 1833, in the case of screening 
                        flexible sigmoidoscopy services 
                        furnished on or after January 1, 1999, 
                        that--
                                  (I) in accordance with 
                                regulations, may be performed 
                                in an ambulatory surgical 
                                center and for which the 
                                Secretary permits ambulatory 
                                surgical center payments under 
                                this part, and
                                  (II) are performed in an 
                                ambulatory surgical center or 
                                hospital outpatient department,
                        payment under this part shall be based 
                        on the lesser of the amount under the 
                        fee schedule that would apply to such 
                        services if they were performed in a 
                        hospital outpatient department in an 
                        area or the amount under the fee 
                        schedule that would apply to such 
                        services if they were performed in an 
                        ambulatory surgical center in the same 
                        area.
                          (ii) Limitation on coinsurance.--
                        Notwithstanding any other provision of 
                        this title, in the case of a 
                        beneficiary who receives the services 
                        described in clause (i)--
                                  (I) in computing the amount 
                                of any applicable copayment, 
                                the computation of such 
                                coinsurance shall be based upon 
                                the fee schedule under which 
                                payment is made for the 
                                services, and
                                  (II) the amount of such 
                                coinsurance is equal to 25 
                                percent of the payment amount 
                                under the fee schedule 
                                described in subclause (I).
                  (D) Special rule for detected lesions.--If 
                during the course of such screening flexible 
                sigmoidoscopy, a lesion or growth is detected 
                which results in a biopsy or removal of the 
                lesion or growth, payment under this part shall 
                not be made for the screening flexible 
                sigmoidoscopy but shall be made for the 
                procedure classified as a flexible 
                sigmoidoscopy with such biopsy or removal.
                  (E) Frequency limit.--No payment may be made 
                under this part for a colorectal cancer 
                screening test consisting of a screening 
                flexible sigmoidoscopy--
                          (i) if the individual is under 50 
                        years of age; or
                          (ii) if the procedure is performed 
                        within the 47 months after a previous 
                        screening flexible sigmoidoscopy or, in 
                        the case of an individual who is not at 
                        high risk for colorectal cancer, if the 
                        procedure is performed within the 119 
                        months after a previous screening 
                        colonoscopy.
          (3) Screening colonoscopy.--
                  (A) Fee schedule.--With respect to colorectal 
                cancer screening test consisting of a screening 
                colonoscopy, payment under section 1848 shall 
                be consistent with payment amounts under such 
                section for similar or related services.
                  (B) Payment limit.--In the case of screening 
                colonoscopy services, payment under this part 
                shall not exceed such amount as the Secretary 
                specifies, based upon the rates recognized for 
                diagnostic colonoscopy services.
                  (C) Facility payment limit.--
                          (i) In general.--Notwithstanding 
                        subsections (i)(2)(A) and (t) of 
                        section 1833, in the case of screening 
                        colonoscopy services furnished on or 
                        after January 1, 1999, that are 
                        performed in an ambulatory surgical 
                        center or a hospital outpatient 
                        department, payment under this part 
                        shall be based on the lesser of the 
                        amount under the fee schedule that 
                        would apply to such services if they 
                        were performed in a hospital outpatient 
                        department in an area or the amount 
                        under the fee schedule that would apply 
                        to such services if they were performed 
                        in an ambulatory surgical center in the 
                        same area.
                          (ii) Limitation on coinsurance.--
                        Notwithstanding any other provision of 
                        this title, in the case of a 
                        beneficiary who receives the services 
                        described in clause (i)--
                                  (I) in computing the amount 
                                of any applicable coinsurance, 
                                the computation of such 
                                coinsurance shall be based upon 
                                the fee schedule under which 
                                payment is made for the 
                                services, and
                                  (II) the amount of such 
                                coinsurance is equal to 25 
                                percent of the payment amount 
                                under the fee schedule 
                                described in subclause (I).
                  (D) Special rule for detected lesions.--If 
                during the course of such screening 
                colonoscopy, a lesion or growth is detected 
                which results in a biopsy or removal of the 
                lesion or growth, payment under this part shall 
                not be made for the screening colonoscopy but 
                shall be made for the procedure classified as a 
                colonoscopy with such biopsy or removal.
                  (E) Frequency limit.--No payment may be made 
                under this part for a colorectal cancer 
                screening test consisting of a screening 
                colonoscopy for individuals at high risk for 
                colorectal cancer if the procedure is performed 
                within the 23 months after a previous screening 
                colonoscopy or for other individuals if the 
                procedure is performed within the 119 months 
                after a previous screening colonoscopy or 
                within 47 months after a previous screening 
                flexible sigmoidoscopy.
  (e) Accreditation Requirement for Advanced Diagnostic Imaging 
Services.--
          (1) In general.--
                  (A) In general.--Beginning with January 1, 
                2012, with respect to the technical component 
                of advanced diagnostic imaging services for 
                which payment is made under the fee schedule 
                established under section 1848(b) and that are 
                furnished by a supplier, payment may only be 
                made if such supplier is accredited by an 
                accreditation organization designated by the 
                Secretary under paragraph (2)(B)(i).
                  (B) Advanced diagnostic imaging services 
                defined.--In this subsection, the term 
                ``advanced diagnostic imaging services'' 
                includes--
                          (i) diagnostic magnetic resonance 
                        imaging, computed tomography, and 
                        nuclear medicine (including positron 
                        emission tomography); and
                          (ii) such other diagnostic imaging 
                        services, including services described 
                        in section 1848(b)(4)(B) (excluding X-
                        ray, ultrasound, and fluoroscopy), as 
                        specified by the Secretary in 
                        consultation with physician specialty 
                        organizations and other stakeholders.
                  (C) Supplier defined.--In this subsection, 
                the term ``supplier'' has the meaning given 
                such term in section 1861(d).
          (2) Accreditation organizations.--
                  (A) Factors for designation of accreditation 
                organizations.--The Secretary shall consider 
                the following factors in designating 
                accreditation organizations under subparagraph 
                (B)(i) and in reviewing and modifying the list 
                of accreditation organizations designated 
                pursuant to subparagraph (C):
                          (i) The ability of the organization 
                        to conduct timely reviews of 
                        accreditation applications.
                          (ii) Whether the organization has 
                        established a process for the timely 
                        integration of new advanced diagnostic 
                        imaging services into the 
                        organization's accreditation program.
                          (iii) Whether the organization uses 
                        random site visits, site audits, or 
                        other strategies for ensuring 
                        accredited suppliers maintain adherence 
                        to the criteria described in paragraph 
                        (3).
                          (iv) The ability of the organization 
                        to take into account the capacities of 
                        suppliers located in a rural area (as 
                        defined in section 1886(d)(2)(D)).
                          (v) Whether the organization has 
                        established reasonable fees to be 
                        charged to suppliers applying for 
                        accreditation.
                          (vi) Such other factors as the 
                        Secretary determines appropriate.
                  (B) Designation.--Not later than January 1, 
                2010, the Secretary shall designate 
                organizations to accredit suppliers furnishing 
                the technical component of advanced diagnostic 
                imaging services. The list of accreditation 
                organizations so designated may be modified 
                pursuant to subparagraph (C).
                  (C) Review and modification of list of 
                accreditation organizations.--
                          (i) In general.--The Secretary shall 
                        review the list of accreditation 
                        organizations designated under 
                        subparagraph (B) taking into account 
                        the factors under subparagraph (A). 
                        Taking into account the results of such 
                        review, the Secretary may, by 
                        regulation, modify the list of 
                        accreditation organizations designated 
                        under subparagraph (B).
                          (ii) Special rule for accreditations 
                        done prior to removal from list of 
                        designated accreditation 
                        organizations.--In the case where the 
                        Secretary removes an organization from 
                        the list of accreditation organizations 
                        designated under subparagraph (B), any 
                        supplier that is accredited by the 
                        organization during the period 
                        beginning on the date on which the 
                        organization is designated as an 
                        accreditation organization under 
                        subparagraph (B) and ending on the date 
                        on which the organization is removed 
                        from such list shall be considered to 
                        have been accredited by an organization 
                        designated by the Secretary under 
                        subparagraph (B) for the remaining 
                        period such accreditation is in effect.
          (3) Criteria for accreditation.--The Secretary shall 
        establish procedures to ensure that the criteria used 
        by an accreditation organization designated under 
        paragraph (2)(B) to evaluate a supplier that furnishes 
        the technical component of advanced diagnostic imaging 
        services for the purpose of accreditation of such 
        supplier is specific to each imaging modality. Such 
        criteria shall include--
                  (A) standards for qualifications of medical 
                personnel who are not physicians and who 
                furnish the technical component of advanced 
                diagnostic imaging services;
                  (B) standards for qualifications and 
                responsibilities of medical directors and 
                supervising physicians, including standards 
                that recognize the considerations described in 
                paragraph (4);
                  (C) procedures to ensure that equipment used 
                in furnishing the technical component of 
                advanced diagnostic imaging services meets 
                performance specifications;
                  (D) standards that require the supplier have 
                procedures in place to ensure the safety of 
                persons who furnish the technical component of 
                advanced diagnostic imaging services and 
                individuals to whom such services are 
                furnished;
                  (E) standards that require the establishment 
                and maintenance of a quality assurance and 
                quality control program by the supplier that is 
                adequate and appropriate to ensure the 
                reliability, clarity, and accuracy of the 
                technical quality of diagnostic images produced 
                by such supplier; and
                  (F) any other standards or procedures the 
                Secretary determines appropriate.
          (4) Recognition in standards for the evaluation of 
        medical directors and supervising physicians.--The 
        standards described in paragraph (3)(B) shall recognize 
        whether a medical director or supervising physician--
                  (A) in a particular specialty receives 
                training in advanced diagnostic imaging 
                services in a residency program;
                  (B) has attained, through experience, the 
                necessary expertise to be a medical director or 
                a supervising physician;
                  (C) has completed any continuing medical 
                education courses relating to such services; or
                  (D) has met such other standards as the 
                Secretary determines appropriate.
          (5) Rule for accreditations made prior to 
        designation.--In the case of a supplier that is 
        accredited before January 1, 2010, by an accreditation 
        organization designated by the Secretary under 
        paragraph (2)(B) as of January 1, 2010, such supplier 
        shall be considered to have been accredited by an 
        organization designated by the Secretary under such 
        paragraph as of January 1, 2012, for the remaining 
        period such accreditation is in effect.
  (f) Reduction in Payments for Physician Pathology Services 
During 1991.--
          (1) In general.--For physician pathology services 
        furnished under this part during 1991, the prevailing 
        charges used in a locality under this part shall be 7 
        percent below the prevailing charges used in the 
        locality under this part in 1990 after March 31.
          (2) Limitation.--The prevailing charge for the 
        technical and professional components of an physician 
        pathology service furnished by a physician through an 
        independent laboratory shall not be reduced pursuant to 
        paragraph (1) to the extent that such reduction would 
        reduce such prevailing charge below 115 percent of the 
        prevailing charge for the professional component of 
        such service when furnished by a hospital-based 
        physician in the same locality. For purposes of the 
        preceding sentence, an independent laboratory is a 
        laboratory that is independent of a hospital and 
        separate from the attending or consulting physicians' 
        office.
  (g) Payment for Outpatient Critical Access Hospital 
Services.--
          (1) In general.--The amount of payment for outpatient 
        critical access hospital services of a critical access 
        hospital is equal to 101 percent of the reasonable 
        costs of the hospital in providing such services, 
        unless the hospital makes the election under paragraph 
        (2).
          (2) Election of cost-based hospital outpatient 
        service payment plus fee schedule for professional 
        services.--A critical access hospital may elect to be 
        paid for outpatient critical access hospital services 
        amounts equal to the sum of the following, less the 
        amount that such hospital may charge as described in 
        section 1866(a)(2)(A):
                  (A) Facility fee.--With respect to facility 
                services, not including any services for which 
                payment may be made under subparagraph (B), 101 
                percent of the reasonable costs of the critical 
                access hospital in providing such services.
                  (B) Fee schedule for professional services.--
                With respect to professional services otherwise 
                included within outpatient critical access 
                hospital services, 115 percent of such amounts 
                as would otherwise be paid under this part if 
                such services were not included in outpatient 
                critical access hospital services. Subsections 
                (x) and (y) of section 1833 shall not be taken 
                into account in determining the amounts that 
                would otherwise be paid pursuant to the 
                preceding sentence.
        The Secretary may not require, as a condition for 
        applying subparagraph (B) with respect to a critical 
        access hospital, that each physician or other 
        practitioner providing professional services in the 
        hospital must assign billing rights with respect to 
        such services, except that such subparagraph shall not 
        apply to those physicians and practitioners who have 
        not assigned such billing rights.
          (3) Disregarding charges.--The payment amounts under 
        this subsection shall be determined without regard to 
        the amount of the customary or other charge.
          (4) Treatment of clinical diagnostic laboratory 
        services.--No coinsurance, deductible, copayment, or 
        other cost-sharing otherwise applicable under this part 
        shall apply with respect to clinical diagnostic 
        laboratory services furnished as an outpatient critical 
        access hospital service. Nothing in this title shall be 
        construed as providing for payment for clinical 
        diagnostic laboratory services furnished as part of 
        outpatient critical access hospital services, other 
        than on the basis described in this subsection. For 
        purposes of the preceding sentence and section 
        1861(mm)(3), clinical diagnostic laboratory services 
        furnished by a critical access hospital shall be 
        treated as being furnished as part of outpatient 
        critical access services without regard to whether the 
        individual with respect to whom such services are 
        furnished is physically present in the critical access 
        hospital, or in a skilled nursing facility or a clinic 
        (including a rural health clinic) that is operated by a 
        critical access hospital, at the time the specimen is 
        collected.
          (5) Coverage of costs for certain emergency room on-
        call providers.--In determining the reasonable costs of 
        outpatient critical access hospital services under 
        paragraphs (1) and (2)(A), the Secretary shall 
        recognize as allowable costs, amounts (as defined by 
        the Secretary) for reasonable compensation and related 
        costs for physicians, physician assistants, nurse 
        practitioners, and clinical nurse specialists who are 
        on-call (as defined by the Secretary) to provide 
        emergency services but who are not present on the 
        premises of the critical access hospital involved, and 
        are not otherwise furnishing services covered under 
        this title and are not on-call at any other provider or 
        facility.
  (h) Payment for Prosthetic Devices and Orthotics and 
Prosthetics.--
          (1) General rule for payment.--
                  (A) In general.--Payment under this 
                subsection for prosthetic devices and orthotics 
                and prosthetics shall be made in a lump-sum 
                amount for the purchase of the item in an 
                amount equal to 80 percent of the payment basis 
                described in subparagraph (B).
                  (B) Payment basis.--Except as provided in 
                subparagraphs (C), (E), and (H)(i), the payment 
                basis described in this subparagraph is the 
                lesser of--
                          (i) the actual charge for the item; 
                        or
                          (ii) the amount recognized under 
                        paragraph (2) as the purchase price for 
                        the item.
                  (C) Exception for certain public home health 
                agencies.--Subparagraph (B)(i) shall not apply 
                to an item furnished by a public home health 
                agency (or by another home health agency which 
                demonstrates to the satisfaction of the 
                Secretary that a significant portion of its 
                patients are low income) free of charge or at 
                nominal charges to the public.
                  (D) Exclusive payment rule.--Subject to 
                subparagraph (H)(ii), this subsection shall 
                constitute the exclusive provision of this 
                title for payment for prosthetic devices, 
                orthotics, and prosthetics under this part or 
                under part A to a home health agency.
                  (E) Exception for certain items.--Payment for 
                ostomy supplies, tracheostomy supplies, and 
                urologicals shall be made in accordance with 
                subparagraphs (B) and (C) of section 
                1834(a)(2).
                  (F) Special payment rules for certain 
                prosthetics and custom-fabricated orthotics.--
                          (i) In general.--No payment shall be 
                        made under this subsection for an item 
                        of custom-fabricated orthotics 
                        described in clause (ii) or for an item 
                        of prosthetics unless such item is--
                                  (I) furnished by a qualified 
                                practitioner; and
                                  (II) fabricated by a 
                                qualified practitioner or a 
                                qualified supplier at a 
                                facility that meets such 
                                criteria as the Secretary 
                                determines appropriate.
                          (ii) Description of custom-fabricated 
                        item.--
                                  (I) In general.--An item 
                                described in this clause is an 
                                item of custom-fabricated 
                                orthotics that requires 
                                education, training, and 
                                experience to custom-fabricate 
                                and that is included in a list 
                                established by the Secretary in 
                                subclause (II). Such an item 
                                does not include shoes and shoe 
                                inserts.
                                  (II) List of items.--The 
                                Secretary, in consultation with 
                                appropriate experts in 
                                orthotics (including national 
                                organizations representing 
                                manufacturers of orthotics), 
                                shall establish and update as 
                                appropriate a list of items to 
                                which this subparagraph 
                                applies. No item may be 
                                included in such list unless 
                                the item is individually 
                                fabricated for the patient over 
                                a positive model of the 
                                patient.
                          (iii) Qualified practitioner 
                        defined.--In this subparagraph, the 
                        term ``qualified practitioner'' means a 
                        physician or other individual who--
                                  (I) is a qualified physical 
                                therapist or a qualified 
                                occupational therapist;
                                  (II) in the case of a State 
                                that provides for the licensing 
                                of orthotics and prosthetics, 
                                is licensed in orthotics or 
                                prosthetics by the State in 
                                which the item is supplied; or
                                  (III) in the case of a State 
                                that does not provide for the 
                                licensing of orthotics and 
                                prosthetics, is specifically 
                                trained and educated to provide 
                                or manage the provision of 
                                prosthetics and custom-designed 
                                or -fabricated orthotics, and 
                                is certified by the American 
                                Board for Certification in 
                                Orthotics and Prosthetics, Inc. 
                                or by the Board for Orthotist/
                                Prosthetist Certification, or 
                                is credentialed and approved by 
                                a program that the Secretary 
                                determines, in consultation 
                                with appropriate experts in 
                                orthotics and prosthetics, has 
                                training and education 
                                standards that are necessary to 
                                provide such prosthetics and 
                                orthotics.
                          (iv) Qualified supplier defined.--In 
                        this subparagraph, the term ``qualified 
                        supplier'' means any entity that is 
                        accredited by the American Board for 
                        Certification in Orthotics and 
                        Prosthetics, Inc. or by the Board for 
                        Orthotist/Prosthetist Certification, or 
                        accredited and approved by a program 
                        that the Secretary determines has 
                        accreditation and approval standards 
                        that are essentially equivalent to 
                        those of such Board.
                  (G) Replacement of prosthetic devices and 
                parts.--
                          (i) In general.--Payment shall be 
                        made for the replacement of prosthetic 
                        devices which are artificial limbs, or 
                        for the replacement of any part of such 
                        devices, without regard to continuous 
                        use or useful lifetime restrictions if 
                        an ordering physician determines that 
                        the provision of a replacement device, 
                        or a replacement part of such a device, 
                        is necessary because of any of the 
                        following:
                                  (I) A change in the 
                                physiological condition of the 
                                patient.
                                  (II) An irreparable change in 
                                the condition of the device, or 
                                in a part of the device.
                                  (III) The condition of the 
                                device, or the part of the 
                                device, requires repairs and 
                                the cost of such repairs would 
                                be more than 60 percent of the 
                                cost of a replacement device, 
                                or, as the case may be, of the 
                                part being replaced.
                          (ii) Confirmation may be required if 
                        device or part being replaced is less 
                        than 3 years old.--If a physician 
                        determines that a replacement device, 
                        or a replacement part, is necessary 
                        pursuant to clause (i)--
                                  (I) such determination shall 
                                be controlling; and
                                  (II) such replacement device 
                                or part shall be deemed to be 
                                reasonable and necessary for 
                                purposes of section 
                                1862(a)(1)(A);
                        except that if the device, or part, 
                        being replaced is less than 3 years old 
                        (calculated from the date on which the 
                        beneficiary began to use the device or 
                        part), the Secretary may also require 
                        confirmation of necessity of the 
                        replacement device or replacement part, 
                        as the case may be.
                  (H) Application of competitive acquisition to 
                orthotics; limitation of inherent 
                reasonableness authority.--In the case of 
                orthotics described in paragraph (2)(C) of 
                section 1847(a) furnished on or after January 
                1, 2009, subject to subsection (a)(1)(G), that 
                are included in a competitive acquisition 
                program in a competitive acquisition area under 
                such section--
                          (i) the payment basis under this 
                        subsection for such orthotics furnished 
                        in such area shall be the payment basis 
                        determined under such competitive 
                        acquisition program; and
                          (ii) the Secretary may use 
                        information on the payment determined 
                        under such competitive acquisition 
                        programs to adjust the payment amount 
                        otherwise recognized under subparagraph 
                        (B)(ii) for an area that is not a 
                        competitive acquisition area under 
                        section 1847, and in the case of such 
                        adjustment, paragraphs (8) and (9) of 
                        section 1842(b) shall not be applied.
          (2) Purchase price recognized.--For purposes of 
        paragraph (1), the amount that is recognized under this 
        paragraph as the purchase price for prosthetic devices, 
        orthotics, and prosthetics is the amount described in 
        subparagraph (C) of this paragraph, determined as 
        follows:
                  (A) Computation of local purchase price.--
                Each carrier under section 1842 shall compute a 
                base local purchase price for the item as 
                follows:
                          (i) The carrier shall compute a base 
                        local purchase price for each item 
                        equal to the average reasonable charge 
                        in the locality for the purchase of the 
                        item for the 12-month period ending 
                        with June 1987.
                          (ii) The carrier shall compute a 
                        local purchase price, with respect to 
                        the furnishing of each particular 
                        item--
                                  (I) in 1989 and 1990, equal 
                                to the base local purchase 
                                price computed under clause (i) 
                                increased by the percentage 
                                increase in the consumer price 
                                index for all urban consumers 
                                (United States city average) 
                                for the 6-month period ending 
                                with December 1987, or
                                  (II) in 1991, 1992 or 1993, 
                                equal to the local purchase 
                                price computed under this 
                                clause for the previous year 
                                increased by the applicable 
                                percentage increase for the 
                                year.
                  (B) Computation of regional purchase price.--
                With respect to the furnishing of a particular 
                item in each region (as defined by the 
                Secretary), the Secretary shall compute a 
                regional purchase price--
                          (i) for 1992, equal to the average 
                        (weighted by relative volume of all 
                        claims among carriers) of the local 
                        purchase prices for the carriers in the 
                        region computed under subparagraph 
                        (A)(ii)(II) for the year, and
                          (ii) for each subsequent year, equal 
                        to the regional purchase price computed 
                        under this subparagraph for the 
                        previous year increased by the 
                        applicable percentage increase for the 
                        year.
                  (C) Purchase price recognized.--For purposes 
                of paragraph (1) and subject to subparagraph 
                (D), the amount that is recognized under this 
                paragraph as the purchase price for each item 
                furnished--
                          (i) in 1989, 1990, or 1991, is 100 
                        percent of the local purchase price 
                        computed under subparagraph (A)(ii);
                          (ii) in 1992, is the sum of (I) 75 
                        percent of the local purchase price 
                        computed under subparagraph (A)(ii)(II) 
                        for 1992, and (II) 25 percent of the 
                        regional purchase price computed under 
                        subparagraph (B) for 1992;
                          (iii) in 1993, is the sum of (I) 50 
                        percent of the local purchase price 
                        computed under subparagraph (A)(ii)(II) 
                        for 1993, and (II) 50 percent of the 
                        regional purchase price computed under 
                        subparagraph (B) for 1993; and
                          (iv) in 1994 or a subsequent year, is 
                        the regional purchase price computed 
                        under subparagraph (B) for that year.
                  (D) Range on amount recognized.--The amount 
                that is recognized under subparagraph (C) as 
                the purchase price for an item furnished--
                          (i) in 1992, may not exceed 125 
                        percent, and may not be lower than 85 
                        percent, of the average of the purchase 
                        prices recognized under such 
                        subparagraph for all the carrier 
                        service areas in the United States in 
                        that year; and
                          (ii) in a subsequent year, may not 
                        exceed 120 percent, and may not be 
                        lower than 90 percent, of the average 
                        of the purchase prices recognized under 
                        such subparagraph for all the carrier 
                        service areas in the United States in 
                        that year.
          (3) Applicability of certain provisions relating to 
        durable medical equipment.--Paragraphs (12) and (17) 
        and subparagraphs (A) and (B) of paragraph (10) and 
        paragraph (11) of subsection (a) shall apply to 
        prosthetic devices, orthotics, and prosthetics in the 
        same manner as such provisions apply to covered items 
        under such subsection.
          (4) Definitions.--In this subsection--
                  (A) the term ``applicable percentage 
                increase'' means--
                          (i) for 1991, 0 percent;
                          (ii) for 1992 and 1993, the 
                        percentage increase in the consumer 
                        price index for all urban consumers 
                        (United States city average) for the 
                        12-month period ending with June of the 
                        previous year;
                          (iii) for 1994 and 1995, 0 percent;
                          (iv) for 1996 and 1997, the 
                        percentage increase in the consumer 
                        price index for all urban consumers 
                        (United States city average) for the 
                        12-month period ending with June of the 
                        previous year;
                          (v) for each of the years 1998 
                        through 2000, 1 percent;
                          (vi) for 2001, the percentage 
                        increase in the consumer price index 
                        for all urban consumers (U.S. city 
                        average) for the 12-month period ending 
                        with June 2000;
                          (vii) for 2002, 1 percent;
                          (viii) for 2003, the percentage 
                        increase in the consumer price index 
                        for all urban consumers (United States 
                        city average) for the 12-month period 
                        ending with June of the previous year;
                          (ix) for 2004, 2005, and 2006, 0 
                        percent;
                          (x) for for each of 2007 through 
                        2010, the percentage increase in the 
                        consumer price index for all urban 
                        consumers (United States city average) 
                        for the 12-month period ending with 
                        June of the previous year; and
                          (xi) for 2011 and each subsequent 
                        year--
                                  (I) the percentage increase 
                                in the consumer price index for 
                                all urban consumers (United 
                                States city average) for the 
                                12-month period ending with 
                                June of the previous year, 
                                reduced by--
                                  (II) the productivity 
                                adjustment described in section 
                                1886(b)(3)(B)(xi)(II).
                  (B) the term ``prosthetic devices'' has the 
                meaning given such term in section 1861(s)(8), 
                except that such term does not include 
                parenteral and enteral nutrition nutrients, 
                supplies, and equipment and does not include an 
                implantable item for which payment may be made 
                under section 1833(t); and
                  (C) the term ``orthotics and prosthetics'' 
                has the meaning given such term in section 
                1861(s)(9) (and includes shoes described in 
                section 1861(s)(12)), but does not include 
                intraocular lenses or medical supplies 
                (including catheters, catheter supplies, ostomy 
                bags, and supplies related to ostomy care) 
                furnished by a home health agency under section 
                1861(m)(5).
        The application of subparagraph (A)(xi)(II) may result 
        in the applicable percentage increase under 
        subparagraph (A) being less than 0.0 for a year, and 
        may result in payment rates under this subsection for a 
        year being less than such payment rates for the 
        preceding year.
  (i) Payment for Surgical Dressings.--
          (1) In general.--Payment under this subsection for 
        surgical dressings (described in section 1861(s)(5)) 
        shall be made in a lump sum amount for the purchase of 
        the item in an amount equal to 80 percent of the lesser 
        of--
                  (A) the actual charge for the item; or
                  (B) a payment amount determined in accordance 
                with the methodology described in subparagraphs 
                (B) and (C) of subsection (a)(2) (except that 
                in applying such methodology, the national 
                limited payment amount referred to in such 
                subparagraphs shall be initially computed based 
                on local payment amounts using average 
                reasonable charges for the 12-month period 
                ending December 31, 1992, increased by the 
                covered item updates described in such 
                subsection for 1993 and 1994).
          (2) Exceptions.--Paragraph (1) shall not apply to 
        surgical dressings that are--
                  (A) furnished as an incident to a physician's 
                professional service; or
                  (B) furnished by a home health agency.
  (j) Requirements for Suppliers of Medical Equipment and 
Supplies.--
          (1) Issuance and renewal of supplier number.--
                  (A) Payment.--Except as provided in 
                subparagraph (C), no payment may be made under 
                this part after the date of the enactment of 
                the Social Security Act Amendments of 1994 for 
                items furnished by a supplier of medical 
                equipment and supplies unless such supplier 
                obtains (and renews at such intervals as the 
                Secretary may require) a supplier number.
                  (B) Standards for possessing a supplier 
                number.--A supplier may not obtain a supplier 
                number unless--
                          (i) for medical equipment and 
                        supplies furnished on or after the date 
                        of the enactment of the Social Security 
                        Act Amendments of 1994 and before 
                        January 1, 1996, the supplier meets 
                        standards prescribed by the Secretary 
                        in regulations issued on June 18, 1992; 
                        and
                          (ii) for medical equipment and 
                        supplies furnished on or after January 
                        1, 1996, the supplier meets revised 
                        standards prescribed by the Secretary 
                        (in consultation with representatives 
                        of suppliers of medical equipment and 
                        supplies, carriers, and consumers) that 
                        shall include requirements that the 
                        supplier--
                                  (I) comply with all 
                                applicable State and Federal 
                                licensure and regulatory 
                                requirements;
                                  (II) maintain a physical 
                                facility on an appropriate 
                                site;
                                  (III) have proof of 
                                appropriate liability 
                                insurance; and
                                  (IV) meet such other 
                                requirements as the Secretary 
                                may specify.
                  (C) Exception for items furnished as incident 
                to a physician's service.--Subparagraph (A) 
                shall not apply with respect to medical 
                equipment and supplies furnished incident to a 
                physician's service.
                  (D) Prohibition against multiple supplier 
                numbers.--The Secretary may not issue more than 
                one supplier number to any supplier of medical 
                equipment and supplies unless the issuance of 
                more than one number is appropriate to identify 
                subsidiary or regional entities under the 
                supplier's ownership or control.
                  (E) Prohibition against delegation of 
                supplier determinations.--The Secretary may not 
                delegate (other than by contract under section 
                1842) the responsibility to determine whether 
                suppliers meet the standards necessary to 
                obtain a supplier number.
          (2) Certificates of medical necessity.--
                  (A) Limitation on information provided by 
                suppliers on certificates of medical 
                necessity.--
                          (i) In general.--Effective 60 days 
                        after the date of the enactment of the 
                        Social Security Act Amendments of 1994, 
                        a supplier of medical equipment and 
                        supplies may distribute to physicians, 
                        or to individuals entitled to benefits 
                        under this part, a certificate of 
                        medical necessity for commercial 
                        purposes which contains no more than 
                        the following information completed by 
                        the supplier:
                                  (I) An identification of the 
                                supplier and the beneficiary to 
                                whom such medical equipment and 
                                supplies are furnished.
                                  (II) A description of such 
                                medical equipment and supplies.
                                  (III) Any product code 
                                identifying such medical 
                                equipment and supplies.
                                  (IV) Any other administrative 
                                information (other than 
                                information relating to the 
                                beneficiary's medical 
                                condition) identified by the 
                                Secretary.
                          (ii) Information on payment amount 
                        and charges.--If a supplier distributes 
                        a certificate of medical necessity 
                        containing any of the information 
                        permitted to be supplied under clause 
                        (i), the supplier shall also list on 
                        the certificate of medical necessity 
                        the fee schedule amount and the 
                        supplier's charge for the medical 
                        equipment or supplies being furnished 
                        prior to distribution of such 
                        certificate to the physician.
                          (iii) Penalty.--Any supplier of 
                        medical equipment and supplies who 
                        knowingly and willfully distributes a 
                        certificate of medical necessity in 
                        violation of clause (i) or fails to 
                        provide the information required under 
                        clause (ii) is subject to a civil money 
                        penalty in an amount not to exceed 
                        $1,000 for each such certificate of 
                        medical necessity so distributed. The 
                        provisions of section 1128A (other than 
                        subsections (a) and (b)) shall apply to 
                        civil money penalties under this 
                        subparagraph in the same manner as they 
                        apply to a penalty or proceeding under 
                        section 1128A(a).
                  (B) Definition.--For purposes of this 
                paragraph, the term ``certificate of medical 
                necessity'' means a form or other document 
                containing information required by the carrier 
                to be submitted to show that an item is 
                reasonable and necessary for the diagnosis or 
                treatment of illness or injury or to improve 
                the functioning of a malformed body member.
          (3) Coverage and review criteria.--The Secretary 
        shall annually review the coverage and utilization of 
        items of medical equipment and supplies to determine 
        whether such items should be made subject to coverage 
        and utilization review criteria, and if appropriate, 
        shall develop and apply such criteria to such items.
          (4) Limitation on patient liability.--If a supplier 
        of medical equipment and supplies (as defined in 
        paragraph (5))--
                  (A) furnishes an item or service to a 
                beneficiary for which no payment may be made by 
                reason of paragraph (1);
                  (B) furnishes an item or service to a 
                beneficiary for which payment is denied in 
                advance under subsection (a)(15); or
                  (C) furnishes an item or service to a 
                beneficiary for which payment is denied under 
                section 1862(a)(1);
        any expenses incurred for items and services furnished 
        to an individual by such a supplier not on an assigned 
        basis shall be the responsibility of such supplier. The 
        individual shall have no financial responsibility for 
        such expenses and the supplier shall refund on a timely 
        basis to the individual (and shall be liable to the 
        individual for) any amounts collected from the 
        individual for such items or services. The provisions 
        of subsection (a)(18) shall apply to refunds required 
        under the previous sentence in the same manner as such 
        provisions apply to refunds under such subsection.
          (5) Definition.--The term ``medical equipment and 
        supplies'' means--
                  (A) durable medical equipment (as defined in 
                section 1861(n));
                  (B) prosthetic devices (as described in 
                section 1861(s)(8));
                  (C) orthotics and prosthetics (as described 
                in section 1861(s)(9));
                  (D) surgical dressings (as described in 
                section 1861(s)(5));
                  (E) such other items as the Secretary may 
                determine; and
                  (F) for purposes of paragraphs (1) and (3)--
                          (i) home dialysis supplies and 
                        equipment (as described in section 
                        1861(s)(2)(F)),
                          (ii) immunosuppressive drugs (as 
                        described in section 1861(s)(2)(J)),
                          (iii) therapeutic shoes for diabetics 
                        (as described in section 1861(s)(12)),
                          (iv) oral drugs prescribed for use as 
                        an anticancer therapeutic agent (as 
                        described in section 1861(s)(2)(Q)), 
                        and
                          (v) self-administered erythropoetin 
                        (as described in section 
                        1861(s)(2)(P)).
  (k) Payment for Outpatient Therapy Services and Comprehensive 
Outpatient Rehabilitation Services.--
          (1) In general.--With respect to services described 
        in section 1833(a)(8) or 1833(a)(9) for which payment 
        is determined under this subsection, the payment basis 
        shall be--
                  (A) for services furnished during 1998, the 
                amount determined under paragraph (2); or
                  (B) for services furnished during a 
                subsequent year, 80 percent of the lesser of--
                          (i) the actual charge for the 
                        services, or
                          (ii) the applicable fee schedule 
                        amount (as defined in paragraph (3)) 
                        for the services.
          (2) Payment in 1998 based upon adjusted reasonable 
        costs.--The amount under this paragraph for services is 
        the lesser of--
                  (A) the charges imposed for the services, or
                  (B) the adjusted reasonable costs (as defined 
                in paragraph (4)) for the services,
        less 20 percent of the amount of the charges imposed 
        for such services.
          (3) Applicable fee schedule amount.--In this 
        subsection, the term ``applicable fee schedule amount'' 
        means, with respect to services furnished in a year, 
        the amount determined under the fee schedule 
        established under section 1848 for such services 
        furnished during the year or, if there is no such fee 
        schedule established for such services, the amount 
        determined under the fee schedule established for such 
        comparable services as the Secretary specifies.
          (4) Adjusted reasonable costs.--In paragraph (2), the 
        term ``adjusted reasonable costs'' means, with respect 
        to any services, reasonable costs determined for such 
        services, reduced by 10 percent. The 10-percent 
        reduction shall not apply to services described in 
        section 1833(a)(8)(B) (relating to services provided by 
        hospitals).
          (5) Uniform coding.--For claims for services 
        submitted on or after April 1, 1998, for which the 
        amount of payment is determined under this subsection, 
        the claim shall include a code (or codes) under a 
        uniform coding system specified by the Secretary that 
        identifies the services furnished.
          (6) Restraint on billing.--The provisions of 
        subparagraphs (A) and (B) of section 1842(b)(18) shall 
        apply to therapy services for which payment is made 
        under this subsection in the same manner as they apply 
        to services provided by a practitioner described in 
        section 1842(b)(18)(C).
          (7) Adjustment in discount for certain multiple 
        therapy services.--In the case of therapy services 
        furnished on or after April 1, 2013, and for which 
        payment is made under this subsection pursuant to the 
        applicable fee schedule amount (as defined in paragraph 
        (3)), instead of the 25 percent multiple procedure 
        payment reduction specified in the final rule published 
        by the Secretary in the Federal Register on November 
        29, 2010, the reduction percentage shall be 50 percent.
  (l) Establishment of Fee Schedule for Ambulance Services.--
          (1) In general.--The Secretary shall establish a fee 
        schedule for payment for ambulance services whether 
        provided directly by a supplier or provider or under 
        arrangement with a provider under this part through a 
        negotiated rulemaking process described in title 5, 
        United States Code, and in accordance with the 
        requirements of this subsection.
          (2) Considerations.--In establishing such fee 
        schedule, the Secretary shall--
                  (A) establish mechanisms to control increases 
                in expenditures for ambulance services under 
                this part;
                  (B) establish definitions for ambulance 
                services which link payments to the type of 
                services provided;
                  (C) consider appropriate regional and 
                operational differences;
                  (D) consider adjustments to payment rates to 
                account for inflation and other relevant 
                factors; and
                  (E) phase in the application of the payment 
                rates under the fee schedule in an efficient 
                and fair manner consistent with paragraph (11), 
                except that such phase-in shall provide for 
                full payment of any national mileage rate for 
                ambulance services provided by suppliers that 
                are paid by carriers in any of the 50 States 
                where payment by a carrier for such services 
                for all such suppliers in such State did not, 
                prior to the implementation of the fee 
                schedule, include a separate amount for all 
                mileage within the county from which the 
                beneficiary is transported.
          (3) Savings.--In establishing such fee schedule, the 
        Secretary shall--
                  (A) ensure that the aggregate amount of 
                payments made for ambulance services under this 
                part during 2000 does not exceed the aggregate 
                amount of payments which would have been made 
                for such services under this part during such 
                year if the amendments made by section 4531(a) 
                of the Balanced Budget Act of 1997 continued in 
                effect, except that in making such 
                determination the Secretary shall assume an 
                update in such payments for 2002 equal to 
                percentage increase in the consumer price index 
                for all urban consumers (U.S. city average) for 
                the 12-month period ending with June of the 
                previous year reduced in the case of 2002 by 
                1.0 percentage points;
                  (B) set the payment amounts provided under 
                the fee schedule for services furnished in 2001 
                and each subsequent year at amounts equal to 
                the payment amounts under the fee schedule for 
                services furnished during the previous year, 
                increased, subject to subparagraph (C) and the 
                succeeding sentence of this paragraph, by the 
                percentage increase in the consumer price index 
                for all urban consumers (U.S. city average) for 
                the 12-month period ending with June of the 
                previous year reduced in the case of 2002 by 
                1.0 percentage points; and
                  (C) for 2011 and each subsequent year, after 
                determining the percentage increase under 
                subparagraph (B) for the year, reduce such 
                percentage increase by the productivity 
                adjustment described in section 
                1886(b)(3)(B)(xi)(II).
        The application of subparagraph (C) may result in the 
        percentage increase under subparagraph (B) being less 
        than 0.0 for a year, and may result in payment rates 
        under the fee schedule under this subsection for a year 
        being less than such payment rates for the preceding 
        year.
          (4) Consultation.--In establishing the fee schedule 
        for ambulance services under this subsection, the 
        Secretary shall consult with various national 
        organizations representing individuals and entities who 
        furnish and regulate ambulance services and share with 
        such organizations relevant data in establishing such 
        schedule.
          (5) Limitation on review.--There shall be no 
        administrative or judicial review under section 1869 or 
        otherwise of the amounts established under the fee 
        schedule for ambulance services under this subsection, 
        including matters described in paragraph (2).
          (6) Restraint on billing.--The provisions of 
        subparagraphs (A) and (B) of section 1842(b)(18) shall 
        apply to ambulance services for which payment is made 
        under this subsection in the same manner as they apply 
        to services provided by a practitioner described in 
        section 1842(b)(18)(C).
          (7) Coding system.--The Secretary may require the 
        claim for any services for which the amount of payment 
        is determined under this subsection to include a code 
        (or codes) under a uniform coding system specified by 
        the Secretary that identifies the services furnished.
          (8) Services furnished by critical access 
        hospitals.--Notwithstanding any other provision of this 
        subsection, the Secretary shall pay 101 percent of the 
        reasonable costs incurred in furnishing ambulance 
        services if such services are furnished--
                  (A) by a critical access hospital (as defined 
                in section 1861(mm)(1)), or
                  (B) by an entity that is owned and operated 
                by a critical access hospital,
        but only if the critical access hospital or entity is 
        the only provider or supplier of ambulance services 
        that is located within a 35-mile drive of such critical 
        access hospital.
          (9) Transitional assistance for rural providers.--In 
        the case of ground ambulance services furnished on or 
        after July 1, 2001, and before January 1, 2004, for 
        which the transportation originates in a rural area (as 
        defined in section 1886(d)(2)(D)) or in a rural census 
        tract of a metropolitan statistical area (as determined 
        under the most recent modification of the Goldsmith 
        Modification, originally published in the Federal 
        Register on February 27, 1992 (57 Fed. Reg. 6725)), the 
        fee schedule established under this subsection shall 
        provide that, with respect to the payment rate for 
        mileage for a trip above 17 miles, and up to 50 miles, 
        the rate otherwise established shall be increased by 
        not less than \1/2\ of the additional payment per mile 
        established for the first 17 miles of such a trip 
        originating in a rural area.
          (10) Phase-in providing floor using blend of fee 
        schedule and regional fee schedules.--In carrying out 
        the phase-in under paragraph (2)(E) for each level of 
        ground service furnished in a year, the portion of the 
        payment amount that is based on the fee schedule shall 
        be the greater of the amount determined under such fee 
        schedule (without regard to this paragraph) or the 
        following blended rate of the fee schedule under 
        paragraph (1) and of a regional fee schedule for the 
        region involved:
                  (A) For 2004 (for services furnished on or 
                after July 1, 2004), the blended rate shall be 
                based 20 percent on the fee schedule under 
                paragraph (1) and 80 percent on the regional 
                fee schedule.
                  (B) For 2005, the blended rate shall be based 
                40 percent on the fee schedule under paragraph 
                (1) and 60 percent on the regional fee 
                schedule.
                  (C) For 2006, the blended rate shall be based 
                60 percent on the fee schedule under paragraph 
                (1) and 40 percent on the regional fee 
                schedule.
                  (D) For 2007, 2008, and 2009, the blended 
                rate shall be based 80 percent on the fee 
                schedule under paragraph (1) and 20 percent on 
                the regional fee schedule.
                  (E) For 2010 and each succeeding year, the 
                blended rate shall be based 100 percent on the 
                fee schedule under paragraph (1).
        For purposes of this paragraph, the Secretary shall 
        establish a regional fee schedule for each of the nine 
        census divisions (referred to in section 1886(d)(2)) 
        using the methodology (used in establishing the fee 
        schedule under paragraph (1)) to calculate a regional 
        conversion factor and a regional mileage payment rate 
        and using the same payment adjustments and the same 
        relative value units as used in the fee schedule under 
        such paragraph.
          (11) Adjustment in payment for certain long trips.--
        In the case of ground ambulance services furnished on 
        or after July 1, 2004, and before January 1, 2009, 
        regardless of where the transportation originates, the 
        fee schedule established under this subsection shall 
        provide that, with respect to the payment rate for 
        mileage for a trip above 50 miles the per mile rate 
        otherwise established shall be increased by \1/4\ of 
        the payment per mile otherwise applicable to miles in 
        excess of 50 miles in such trip.
          (12) Assistance for rural providers furnishing 
        services in low population density areas.--
                  (A) In general.--In the case of ground 
                ambulance services furnished on or after July 
                1, 2004, and before January 1, 2018, for which 
                the transportation originates in a qualified 
                rural area (identified under subparagraph 
                (B)(iii)), the Secretary shall provide for a 
                percent increase in the base rate of the fee 
                schedule for a trip established under this 
                subsection. In establishing such percent 
                increase, the Secretary shall estimate the 
                average cost per trip for such services (not 
                taking into account mileage) in the lowest 
                quartile as compared to the average cost per 
                trip for such services (not taking into account 
                mileage) in the highest quartile of all rural 
                county populations.
                  (B) Identification of qualified rural 
                areas.--
                          (i) Determination of population 
                        density in area.--Based upon data from 
                        the United States decennial census for 
                        the year 2000, the Secretary shall 
                        determine, for each rural area, the 
                        population density for that area.
                          (ii) Ranking of areas.--The Secretary 
                        shall rank each such area based on such 
                        population density.
                          (iii) Identification of qualified 
                        rural areas.--The Secretary shall 
                        identify those areas (in subparagraph 
                        (A) referred to as ``qualified rural 
                        areas'') with the lowest population 
                        densities that represent, if each such 
                        area were weighted by the population of 
                        such area (as used in computing such 
                        population densities), an aggregate 
                        total of 25 percent of the total of the 
                        population of all such areas.
                          (iv) Rural area.--For purposes of 
                        this paragraph, the term ``rural area'' 
                        has the meaning given such term in 
                        section 1886(d)(2)(D). If feasible, the 
                        Secretary shall treat a rural census 
                        tract of a metropolitan statistical 
                        area (as determined under the most 
                        recent modification of the Goldsmith 
                        Modification, originally published in 
                        the Federal Register on February 27, 
                        1992 (57 Fed. Reg. 6725) as a rural 
                        area for purposes of this paragraph.
                          (v) Judicial review.--There shall be 
                        no administrative or judicial review 
                        under section 1869, 1878, or otherwise, 
                        respecting the identification of an 
                        area under this subparagraph.
          (13) Temporary increase for ground ambulance 
        services.--
                  (A) In general.--After computing the rates 
                with respect to ground ambulance services under 
                the other applicable provisions of this 
                subsection, in the case of such services 
                furnished on or after July 1, 2004, and before 
                January 1, 2007, and for such services 
                furnished on or after July 1, 2008, and before 
                January 1, 2018, for which the transportation 
                originates in--
                          (i) a rural area described in 
                        paragraph (9) or in a rural census 
                        tract described in such paragraph, the 
                        fee schedule established under this 
                        section shall provide that the rate for 
                        the service otherwise established, 
                        after the application of any increase 
                        under paragraphs (11) and (12), shall 
                        be increased by 2 percent (or 3 percent 
                        if such service is furnished on or 
                        after July 1, 2008, and before January 
                        1, 2018); and
                          (ii) an area not described in clause 
                        (i), the fee schedule established under 
                        this subsection shall provide that the 
                        rate for the service otherwise 
                        established, after the application of 
                        any increase under paragraph (11), 
                        shall be increased by 1 percent (or 2 
                        percent if such service is furnished on 
                        or after July 1, 2008, and before 
                        January 1, 2018).
                  (B) Application of increased payments after 
                applicable period.--The increased payments 
                under subparagraph (A) shall not be taken into 
                account in calculating payments for services 
                furnished after the applicable period specified 
                in such subparagraph.
          (14) Providing appropriate coverage of rural air 
        ambulance services.--
                  (A) In general.--The regulations described in 
                section 1861(s)(7) shall provide, to the extent 
                that any ambulance services (whether ground or 
                air) may be covered under such section, that a 
                rural air ambulance service (as defined in 
                subparagraph (C)) is reimbursed under this 
                subsection at the air ambulance rate if the air 
                ambulance service--
                          (i) is reasonable and necessary based 
                        on the health condition of the 
                        individual being transported at or 
                        immediately prior to the time of the 
                        transport; and
                          (ii) complies with equipment and crew 
                        requirements established by the 
                        Secretary.
                  (B) Satisfaction of requirement of medically 
                necessary.--The requirement of subparagraph 
                (A)(i) is deemed to be met for a rural air 
                ambulance service if--
                          (i) subject to subparagraph (D), such 
                        service is requested by a physician or 
                        other qualified medical personnel (as 
                        specified by the Secretary) who 
                        certifies or reasonably determines that 
                        the individual's condition is such that 
                        the time needed to transport the 
                        individual by land or the instability 
                        of transportation by land poses a 
                        threat to the individual's survival or 
                        seriously endangers the individual's 
                        health; or
                          (ii) such service is furnished 
                        pursuant to a protocol that is 
                        established by a State or regional 
                        emergency medical service (EMS) agency 
                        and recognized or approved by the 
                        Secretary under which the use of an air 
                        ambulance is recommended, if such 
                        agency does not have an ownership 
                        interest in the entity furnishing such 
                        service.
                  (C) Rural air ambulance service defined.--For 
                purposes of this paragraph, the term ``rural 
                air ambulance service'' means fixed wing and 
                rotary wing air ambulance service in which the 
                point of pick up of the individual occurs in a 
                rural area (as defined in section 
                1886(d)(2)(D)) or in a rural census tract of a 
                metropolitan statistical area (as determined 
                under the most recent modification of the 
                Goldsmith Modification, originally published in 
                the Federal Register on February 27, 1992 (57 
                Fed. Reg. 6725)).
                  (D) Limitation.--
                          (i) In general.--Subparagraph (B)(i) 
                        shall not apply if there is a financial 
                        or employment relationship between the 
                        person requesting the rural air 
                        ambulance service and the entity 
                        furnishing the ambulance service, or an 
                        entity under common ownership with the 
                        entity furnishing the air ambulance 
                        service, or a financial relationship 
                        between an immediate family member of 
                        such requester and such an entity.
                          (ii) Exception.--Where a hospital and 
                        the entity furnishing rural air 
                        ambulance services are under common 
                        ownership, clause (i) shall not apply 
                        to remuneration (through employment or 
                        other relationship) by the hospital of 
                        the requester or immediate family 
                        member if the remuneration is for 
                        provider-based physician services 
                        furnished in a hospital (as described 
                        in section 1887) which are reimbursed 
                        under part A and the amount of the 
                        remuneration is unrelated directly or 
                        indirectly to the provision of rural 
                        air ambulance services.
          (15) Payment adjustment for non-emergency ambulance 
        transports for esrd beneficiaries.--The fee schedule 
        amount otherwise applicable under the preceding 
        provisions of this subsection shall be reduced by 10 
        percent for ambulance services furnished on or after 
        October 1, 2013, consisting of non-emergency basic life 
        support services involving transport of an individual 
        with end-stage renal disease for renal dialysis 
        services (as described in section 1881(b)(14)(B)) 
        furnished other than on an emergency basis by a 
        provider of services or a renal dialysis facility.
          (16) Prior authorization for repetitive scheduled 
        non-emergent ambulance transports.--
                  (A) In general.--Beginning January 1, 2017, 
                if the expansion to all States of the model of 
                prior authorization described in paragraph (2) 
                of section 515(a) of the Medicare Access and 
                CHIP Reauthorization Act of 2015 meets the 
                requirements described in paragraphs (1) 
                through (3) of section 1115A(c), then the 
                Secretary shall expand such model to all 
                States.
                  (B) Funding.--The Secretary shall use funds 
                made available under section 1893(h)(10) to 
                carry out this paragraph.
                  (C) Clarification regarding budget 
                neutrality.--Nothing in this paragraph may be 
                construed to limit or modify the application of 
                section 1115A(b)(3)(B) to models described in 
                such section, including with respect to the 
                model described in subparagraph (A) and 
                expanded beginning on January 1, 2017, under 
                such subparagraph.
  (m) Payment for Telehealth Services.--
          (1) In general.--The Secretary shall pay for 
        telehealth services that are furnished via a 
        telecommunications system by a physician (as defined in 
        section 1861(r)) or a practitioner (described in 
        section 1842(b)(18)(C)) to an eligible telehealth 
        individual enrolled under this part notwithstanding 
        that the individual physician or practitioner providing 
        the telehealth service is not at the same location as 
        the beneficiary. For purposes of the preceding 
        sentence, in the case of any Federal telemedicine 
        demonstration program conducted in Alaska or Hawaii, 
        the term ``telecommunications system'' includes store-
        and-forward technologies that provide for the 
        asynchronous transmission of health care information in 
        single or multimedia formats.
          (2) Payment amount.--
                  (A) Distant site.--The Secretary shall pay to 
                a physician or practitioner located at a 
                distant site that furnishes a telehealth 
                service to an eligible telehealth individual an 
                amount equal to the amount that such physician 
                or practitioner would have been paid under this 
                title had such service been furnished without 
                the use of a telecommunications system.
                  (B) Facility fee for originating site.--With 
                respect to a telehealth service, subject to 
                section 1833(a)(1)(U), there shall be paid to 
                the originating site a facility fee equal to--
                          (i) for the period beginning on 
                        October 1, 2001, and ending on December 
                        31, 2001, and for 2002, $20; and
                          (ii) for a subsequent year, the 
                        facility fee specified in clause (i) or 
                        this clause for the preceding year 
                        increased by the percentage increase in 
                        the MEI (as defined in section 
                        1842(i)(3)) for such subsequent year.
                  (C) Telepresenter not required.--Nothing in 
                this subsection shall be construed as requiring 
                an eligible telehealth individual to be 
                presented by a physician or practitioner at the 
                originating site for the furnishing of a 
                service via a telecommunications system, unless 
                it is medically necessary (as determined by the 
                physician or practitioner at the distant site).
          (3) Limitation on beneficiary charges.--
                  (A) Physician and practitioner.--The 
                provisions of section 1848(g) and subparagraphs 
                (A) and (B) of section 1842(b)(18) shall apply 
                to a physician or practitioner receiving 
                payment under this subsection in the same 
                manner as they apply to physicians or 
                practitioners under such sections.
                  (B) Originating site.--The provisions of 
                section 1842(b)(18) shall apply to originating 
                sites receiving a facility fee in the same 
                manner as they apply to practitioners under 
                such section.
          (4) Definitions.--For purposes of this subsection:
                  (A) Distant site.--The term ``distant site'' 
                means the site at which the physician or 
                practitioner is located at the time the service 
                is provided via a telecommunications system.
                  (B) Eligible telehealth individual.--The term 
                ``eligible telehealth individual'' means an 
                individual enrolled under this part who 
                receives a telehealth service furnished at an 
                originating site.
                  (C) Originating site.--
                          (i) In general.--The term 
                        ``originating site'' means only those 
                        sites described in clause (ii) at which 
                        the eligible telehealth individual is 
                        located at the time the service is 
                        furnished via a telecommunications 
                        system and only if such site is 
                        located--
                                  (I) in an area that is 
                                designated as a rural health 
                                professional shortage area 
                                under section 332(a)(1)(A) of 
                                the Public Health Service Act 
                                (42 U.S.C. 254e(a)(1)(A));
                                  (II) in a county that is not 
                                included in a Metropolitan 
                                Statistical Area; or
                                  (III) from an entity that 
                                participates in a Federal 
                                telemedicine demonstration 
                                project that has been approved 
                                by (or receives funding from) 
                                the Secretary of Health and 
                                Human Services as of December 
                                31, 2000.
                          (ii) Sites described.--The sites 
                        referred to in clause (i) are the 
                        following sites:
                                  (I) The office of a physician 
                                or practitioner.
                                  (II) A critical access 
                                hospital (as defined in section 
                                1861(mm)(1)).
                                  (III) A rural health clinic 
                                (as defined in section 
                                1861(aa)(2)).
                                  (IV) A Federally qualified 
                                health center (as defined in 
                                section 1861(aa)(4)).
                                  (V) A hospital (as defined in 
                                section 1861(e)).
                                  (VI) A hospital-based or 
                                critical access hospital-based 
                                renal dialysis center 
                                (including satellites).
                                  (VII) A skilled nursing 
                                facility (as defined in section 
                                1819(a)).
                                  (VIII) A community mental 
                                health center (as defined in 
                                section 1861(ff)(3)(B)).
                  (D) Physician.--The term ``physician'' has 
                the meaning given that term in section 1861(r).
                  (E) Practitioner.--The term ``practitioner'' 
                has the meaning given that term in section 
                1842(b)(18)(C).
                  (F) Telehealth service.--
                          (i) In general.--The term 
                        ``telehealth service'' means 
                        professional consultations, office 
                        visits, and office psychiatry services 
                        (identified as of July 1, 2000, by 
                        HCPCS codes 99241-99275, 99201-99215, 
                        90804-90809, and 90862 (and as 
                        subsequently modified by the 
                        Secretary)), and any additional service 
                        specified by the Secretary.
                          (ii) Yearly update.--The Secretary 
                        shall establish a process that 
                        provides, on an annual basis, for the 
                        addition or deletion of services (and 
                        HCPCS codes), as appropriate, to those 
                        specified in clause (i) for authorized 
                        payment under paragraph (1).
  (n) Authority To Modify or Eliminate Coverage of Certain 
Preventive Services.--Notwithstanding any other provision of 
this title, effective beginning on January 1, 2010, if the 
Secretary determines appropriate, the Secretary may--
          (1) modify--
                  (A) the coverage of any preventive service 
                described in subparagraph (A) of section 
                1861(ddd)(3) to the extent that such 
                modification is consistent with the 
                recommendations of the United States Preventive 
                Services Task Force; and
                  (B) the services included in the initial 
                preventive physical examination described in 
                subparagraph (B) of such section; and
          (2) provide that no payment shall be made under this 
        title for a preventive service described in 
        subparagraph (A) of such section that has not received 
        a grade of A, B, C, or I by such Task Force.
  (o) Development and Implementation of Prospective Payment 
System.--
          (1) Development.--
                  (A) In general.--The Secretary shall develop 
                a prospective payment system for payment for 
                Federally qualified health center services 
                furnished by Federally qualified health centers 
                under this title. Such system shall include a 
                process for appropriately describing the 
                services furnished by Federally qualified 
                health centers and shall establish payment 
                rates for specific payment codes based on such 
                appropriate descriptions of services. Such 
                system shall be established to take into 
                account the type, intensity, and duration of 
                services furnished by Federally qualified 
                health centers. Such system may include 
                adjustments, including geographic adjustments, 
                determined appropriate by the Secretary.
                  (B) Collection of data and evaluation.--By 
                not later than January 1, 2011, the Secretary 
                shall require Federally qualified health 
                centers to submit to the Secretary such 
                information as the Secretary may require in 
                order to develop and implement the prospective 
                payment system under this subsection, including 
                the reporting of services using HCPCS codes.
          (2) Implementation.--
                  (A) In general.--Notwithstanding section 
                1833(a)(3)(A), the Secretary shall provide, for 
                cost reporting periods beginning on or after 
                October 1, 2014, for payments of prospective 
                payment rates for Federally qualified health 
                center services furnished by Federally 
                qualified health centers under this title in 
                accordance with the prospective payment system 
                developed by the Secretary under paragraph (1).
                  (B) Payments.--
                          (i) Initial payments.--The Secretary 
                        shall implement such prospective 
                        payment system so that the estimated 
                        aggregate amount of prospective payment 
                        rates (determined prior to the 
                        application of section 1833(a)(1)(Z)) 
                        under this title for Federally 
                        qualified health center services in the 
                        first year that such system is 
                        implemented is equal to 100 percent of 
                        the estimated amount of reasonable 
                        costs (determined without the 
                        application of a per visit payment 
                        limit or productivity screen and prior 
                        to the application of section 
                        1866(a)(2)(A)(ii)) that would have 
                        occurred for such services under this 
                        title in such year if the system had 
                        not been implemented.
                          (ii) Payments in subsequent years.--
                        Payment rates in years after the year 
                        of implementation of such system shall 
                        be the payment rates in the previous 
                        year increased--
                                  (I) in the first year after 
                                implementation of such system, 
                                by the percentage increase in 
                                the MEI (as defined in section 
                                1842(i)(3)) for the year 
                                involved; and
                                  (II) in subsequent years, by 
                                the percentage increase in a 
                                market basket of Federally 
                                qualified health center goods 
                                and services as promulgated 
                                through regulations, or if such 
                                an index is not available, by 
                                the percentage increase in the 
                                MEI (as defined in section 
                                1842(i)(3)) for the year 
                                involved.
                  (C) Preparation for pps implementation.--
                Notwithstanding any other provision of law, the 
                Secretary may establish and implement by 
                program instruction or otherwise the payment 
                codes to be used under the prospective payment 
                system under this section.
  (p) Quality Incentives To Promote Patient Safety and Public 
Health in Computed Tomography.--
          (1) Quality incentives.--In the case of an applicable 
        computed tomography service (as defined in paragraph 
        (2)) for which payment is made under an applicable 
        payment system (as defined in paragraph (3)) and that 
        is furnished on or after January 1, 2016, using 
        equipment that is not consistent with the CT equipment 
        standard (described in paragraph (4)), the payment 
        amount for such service shall be reduced by the 
        applicable percentage (as defined in paragraph (5)).
          (2) Applicable computed tomography services 
        defined.--In this subsection, the term ``applicable 
        computed tomography service'' means a service billed 
        using diagnostic radiological imaging codes for 
        computed tomography (identified as of January 1, 2014, 
        by HCPCS codes 70450-70498, 71250-71275, 72125-72133, 
        72191-72194, 73200-73206, 73700-73706, 74150-74178, 
        74261-74263, and 75571-75574 (and any succeeding 
        codes).
          (3) Applicable payment system defined.--In this 
        subsection, the term ``applicable payment system'' 
        means the following:
                  (A) The technical component and the technical 
                component of the global fee under the fee 
                schedule established under section 1848(b).
                  (B) The prospective payment system for 
                hospital outpatient department services under 
                section 1833(t).
          (4) Consistency with ct equipment standard.--In this 
        subsection, the term ``not consistent with the CT 
        equipment standard'' means, with respect to an 
        applicable computed tomography service, that the 
        service was furnished using equipment that does not 
        meet each of the attributes of the National Electrical 
        Manufacturers Association (NEMA) Standard XR-29-2013, 
        entitled ``Standard Attributes on CT Equipment Related 
        to Dose Optimization and Management''. Through 
        rulemaking, the Secretary may apply successor 
        standards.
          (5) Applicable percentage defined.--In this 
        subsection, the term ``applicable percentage'' means--
                  (A) for 2016, 5 percent; and
                  (B) for 2017 and subsequent years, 15 
                percent.
          (6) Implementation.--
                  (A) Information.--The Secretary shall require 
                that information be provided and attested to by 
                a supplier and a hospital outpatient department 
                that indicates whether an applicable computed 
                tomography service was furnished that was not 
                consistent with the CT equipment standard 
                (described in paragraph (4)). Such information 
                may be included on a claim and may be a 
                modifier. Such information shall be verified, 
                as appropriate, as part of the periodic 
                accreditation of suppliers under section 
                1834(e) and hospitals under section 1865(a).
                  (B) Administration.--Chapter 35 of title 44, 
                United States Code, shall not apply to 
                information described in subparagraph (A).
  (q) Recognizing Appropriate Use Criteria for Certain Imaging 
Services.--
          (1) Program established.--
                  (A) In general.--The Secretary shall 
                establish a program to promote the use of 
                appropriate use criteria (as defined in 
                subparagraph (B)) for applicable imaging 
                services (as defined in subparagraph (C)) 
                furnished in an applicable setting (as defined 
                in subparagraph (D)) by ordering professionals 
                and furnishing professionals (as defined in 
                subparagraphs (E) and (F), respectively).
                  (B) Appropriate use criteria defined.--In 
                this subsection, the term ``appropriate use 
                criteria'' means criteria, only developed or 
                endorsed by national professional medical 
                specialty societies or other provider-led 
                entities, to assist ordering professionals and 
                furnishing professionals in making the most 
                appropriate treatment decision for a specific 
                clinical condition for an individual. To the 
                extent feasible, such criteria shall be 
                evidence-based.
                  (C) Applicable imaging service defined.--In 
                this subsection, the term ``applicable imaging 
                service'' means an advanced diagnostic imaging 
                service (as defined in subsection (e)(1)(B)) 
                for which the Secretary determines--
                          (i) one or more applicable 
                        appropriate use criteria specified 
                        under paragraph (2) apply;
                          (ii) there are one or more qualified 
                        clinical decision support mechanisms 
                        listed under paragraph (3)(C); and
                          (iii) one or more of such mechanisms 
                        is available free of charge.
                  (D) Applicable setting defined.--In this 
                subsection, the term ``applicable setting'' 
                means a physician's office, a hospital 
                outpatient department (including an emergency 
                department), an ambulatory surgical center, and 
                any other provider-led outpatient setting 
                determined appropriate by the Secretary.
                  (E) Ordering professional defined.--In this 
                subsection, the term ``ordering professional'' 
                means a physician (as defined in section 
                1861(r)) or a practitioner described in section 
                1842(b)(18)(C) who orders an applicable imaging 
                service.
                  (F) Furnishing professional defined.--In this 
                subsection, the term ``furnishing 
                professional'' means a physician (as defined in 
                section 1861(r)) or a practitioner described in 
                section 1842(b)(18)(C) who furnishes an 
                applicable imaging service.
          (2) Establishment of applicable appropriate use 
        criteria.--
                  (A) In general.--Not later than November 15, 
                2015, the Secretary shall through rulemaking, 
                and in consultation with physicians, 
                practitioners, and other stakeholders, specify 
                applicable appropriate use criteria for 
                applicable imaging services only from among 
                appropriate use criteria developed or endorsed 
                by national professional medical specialty 
                societies or other provider-led entities.
                  (B) Considerations.--In specifying applicable 
                appropriate use criteria under subparagraph 
                (A), the Secretary shall take into account 
                whether the criteria--
                          (i) have stakeholder consensus;
                          (ii) are scientifically valid and 
                        evidence based; and
                          (iii) are based on studies that are 
                        published and reviewable by 
                        stakeholders.
                  (C) Revisions.--The Secretary shall review, 
                on an annual basis, the specified applicable 
                appropriate use criteria to determine if there 
                is a need to update or revise (as appropriate) 
                such specification of applicable appropriate 
                use criteria and make such updates or revisions 
                through rulemaking.
                  (D) Treatment of multiple applicable 
                appropriate use criteria.--In the case where 
                the Secretary determines that more than one 
                appropriate use criterion applies with respect 
                to an applicable imaging service, the Secretary 
                shall apply one or more applicable appropriate 
                use criteria under this paragraph for the 
                service.
          (3) Mechanisms for consultation with applicable 
        appropriate use criteria.--
                  (A) Identification of mechanisms to consult 
                with applicable appropriate use criteria.--
                          (i) In general.--The Secretary shall 
                        specify qualified clinical decision 
                        support mechanisms that could be used 
                        by ordering professionals to consult 
                        with applicable appropriate use 
                        criteria for applicable imaging 
                        services.
                          (ii) Consultation.--The Secretary 
                        shall consult with physicians, 
                        practitioners, health care technology 
                        experts, and other stakeholders in 
                        specifying mechanisms under this 
                        paragraph.
                          (iii) Inclusion of certain 
                        mechanisms.--Mechanisms specified under 
                        this paragraph may include any or all 
                        of the following that meet the 
                        requirements described in subparagraph 
                        (B)(ii):
                                  (I) Use of clinical decision 
                                support modules in certified 
                                EHR technology (as defined in 
                                section 1848(o)(4)).
                                  (II) Use of private sector 
                                clinical decision support 
                                mechanisms that are independent 
                                from certified EHR technology, 
                                which may include use of 
                                clinical decision support 
                                mechanisms available from 
                                medical specialty 
                                organizations.
                                  (III) Use of a clinical 
                                decision support mechanism 
                                established by the Secretary.
                  (B) Qualified clinical decision support 
                mechanisms.--
                          (i) In general.--For purposes of this 
                        subsection, a qualified clinical 
                        decision support mechanism is a 
                        mechanism that the Secretary determines 
                        meets the requirements described in 
                        clause (ii).
                          (ii) Requirements.--The requirements 
                        described in this clause are the 
                        following:
                                  (I) The mechanism makes 
                                available to the ordering 
                                professional applicable 
                                appropriate use criteria 
                                specified under paragraph (2) 
                                and the supporting 
                                documentation for the 
                                applicable imaging service 
                                ordered.
                                  (II) In the case where there 
                                is more than one applicable 
                                appropriate use criterion 
                                specified under such paragraph 
                                for an applicable imaging 
                                service, the mechanism 
                                indicates the criteria that it 
                                uses for the service.
                                  (III) The mechanism 
                                determines the extent to which 
                                an applicable imaging service 
                                ordered is consistent with the 
                                applicable appropriate use 
                                criteria so specified.
                                  (IV) The mechanism generates 
                                and provides to the ordering 
                                professional a certification or 
                                documentation that documents 
                                that the qualified clinical 
                                decision support mechanism was 
                                consulted by the ordering 
                                professional.
                                  (V) The mechanism is updated 
                                on a timely basis to reflect 
                                revisions to the specification 
                                of applicable appropriate use 
                                criteria under such paragraph.
                                  (VI) The mechanism meets 
                                privacy and security standards 
                                under applicable provisions of 
                                law.
                                  (VII) The mechanism performs 
                                such other functions as 
                                specified by the Secretary, 
                                which may include a requirement 
                                to provide aggregate feedback 
                                to the ordering professional.
                  (C) List of mechanisms for consultation with 
                applicable appropriate use criteria.--
                          (i) Initial list.--Not later than 
                        April 1, 2016, the Secretary shall 
                        publish a list of mechanisms specified 
                        under this paragraph.
                          (ii) Periodic updating of list.--The 
                        Secretary shall identify on an annual 
                        basis the list of qualified clinical 
                        decision support mechanisms specified 
                        under this paragraph.
          (4) Consultation with applicable appropriate use 
        criteria.--
                  (A) Consultation by ordering professional.--
                Beginning with January 1, 2017, subject to 
                subparagraph (C), with respect to an applicable 
                imaging service ordered by an ordering 
                professional that would be furnished in an 
                applicable setting and paid for under an 
                applicable payment system (as defined in 
                subparagraph (D)), an ordering professional 
                shall--
                          (i) consult with a qualified decision 
                        support mechanism listed under 
                        paragraph (3)(C); and
                          (ii) provide to the furnishing 
                        professional the information described 
                        in clauses (i) through (iii) of 
                        subparagraph (B).
                  (B) Reporting by furnishing professional.--
                Beginning with January 1, 2017, subject to 
                subparagraph (C), with respect to an applicable 
                imaging service furnished in an applicable 
                setting and paid for under an applicable 
                payment system (as defined in subparagraph 
                (D)), payment for such service may only be made 
                if the claim for the service includes the 
                following:
                          (i) Information about which qualified 
                        clinical decision support mechanism was 
                        consulted by the ordering professional 
                        for the service.
                          (ii) Information regarding--
                                  (I) whether the service 
                                ordered would adhere to the 
                                applicable appropriate use 
                                criteria specified under 
                                paragraph (2);
                                  (II) whether the service 
                                ordered would not adhere to 
                                such criteria; or
                                  (III) whether such criteria 
                                was not applicable to the 
                                service ordered.
                          (iii) The national provider 
                        identifier of the ordering professional 
                        (if different from the furnishing 
                        professional).
                  (C) Exceptions.--The provisions of 
                subparagraphs (A) and (B) and paragraph (6)(A) 
                shall not apply to the following:
                          (i) Emergency services.--An 
                        applicable imaging service ordered for 
                        an individual with an emergency medical 
                        condition (as defined in section 
                        1867(e)(1)).
                          (ii) Inpatient services.--An 
                        applicable imaging service ordered for 
                        an inpatient and for which payment is 
                        made under part A.
                          (iii) Significant hardship.--An 
                        applicable imaging service ordered by 
                        an ordering professional who the 
                        Secretary may, on a case-by-case basis, 
                        exempt from the application of such 
                        provisions if the Secretary determines, 
                        subject to annual renewal, that 
                        consultation with applicable 
                        appropriate use criteria would result 
                        in a significant hardship, such as in 
                        the case of a professional who 
                        practices in a rural area without 
                        sufficient Internet access.
                  (D) Applicable payment system defined.--In 
                this subsection, the term ``applicable payment 
                system'' means the following:
                          (i) The physician fee schedule 
                        established under section 1848(b).
                          (ii) The prospective payment system 
                        for hospital outpatient department 
                        services under section 1833(t).
                          (iii) The ambulatory surgical center 
                        payment systems under section 1833(i).
          (5) Identification of outlier ordering 
        professionals.--
                  (A) In general.--With respect to applicable 
                imaging services furnished beginning with 2017, 
                the Secretary shall determine, on an annual 
                basis, no more than five percent of the total 
                number of ordering professionals who are 
                outlier ordering professionals.
                  (B) Outlier ordering professionals.--The 
                determination of an outlier ordering 
                professional shall--
                          (i) be based on low adherence to 
                        applicable appropriate use criteria 
                        specified under paragraph (2), which 
                        may be based on comparison to other 
                        ordering professionals; and
                          (ii) include data for ordering 
                        professionals for whom prior 
                        authorization under paragraph (6)(A) 
                        applies.
                  (C) Use of two years of data.--The Secretary 
                shall use two years of data to identify outlier 
                ordering professionals under this paragraph.
                  (D) Process.--The Secretary shall establish a 
                process for determining when an outlier 
                ordering professional is no longer an outlier 
                ordering professional.
                  (E) Consultation with stakeholders.--The 
                Secretary shall consult with physicians, 
                practitioners and other stakeholders in 
                developing methods to identify outlier ordering 
                professionals under this paragraph.
          (6) Prior authorization for ordering professionals 
        who are outliers.--
                  (A) In general.--Beginning January 1, 2020, 
                subject to paragraph (4)(C), with respect to 
                services furnished during a year, the Secretary 
                shall, for a period determined appropriate by 
                the Secretary, apply prior authorization for 
                applicable imaging services that are ordered by 
                an outlier ordering professional identified 
                under paragraph (5).
                  (B) Appropriate use criteria in prior 
                authorization.--In applying prior authorization 
                under subparagraph (A), the Secretary shall 
                utilize only the applicable appropriate use 
                criteria specified under this subsection.
                  (C) Funding.--For purposes of carrying out 
                this paragraph, the Secretary shall provide for 
                the transfer, from the Federal Supplementary 
                Medical Insurance Trust Fund under section 
                1841, of $5,000,000 to the Centers for Medicare 
                & Medicaid Services Program Management Account 
                for each of fiscal years 2019 through 2021. 
                Amounts transferred under the preceding 
                sentence shall remain available until expended.
          (7) Construction.--Nothing in this subsection shall 
        be construed as granting the Secretary the authority to 
        develop or initiate the development of clinical 
        practice guidelines or appropriate use criteria.

           *       *       *       *       *       *       *


                    Part E--Miscellaneous Provisions


              definitions of services, institutions, etc.

  Sec. 1861. For purposes of this title--

                            Spell of Illness

  (a) The term ``spell of illness'' with respect to any 
individual means a period of consecutive days--
          (1) beginning with the first day (not included in a 
        previous spell of illness) (A) on which such individual 
        is furnished inpatient hospital services, inpatient 
        critical access hospital services or extended care 
        services, and (B) which occurs in a month for which he 
        is entitled to benefits under part A, and
          (2) ending with the close of the first period of 60 
        consecutive days thereafter on each of which he is 
        neither an inpatient of a hospital or critical access 
        hospital nor an inpatient of a facility described in 
        section 1819(a)(1) or subsection (y)(1).

                      Inpatient Hospital Services

  (b) The term ``inpatient hospital services'' means the 
following items and services furnished to an inpatient of a 
hospital and (except as provided in paragraph (3)) by the 
hospital--
          (1) bed and board;
          (2) such nursing services and other related services, 
        such use of hospital facilities, and such medical 
        social services as are ordinarily furnished by the 
        hospital for the care and treatment of inpatients, and 
        such drugs, biologicals, supplies, appliances, and 
        equipment, for use in the hospital, as are ordinarily 
        furnished by such hospital for the care and treatment 
        of inpatients; and
          (3) such other diagnostic or therapeutic items or 
        services, furnished by the hospital or by others under 
        arrangements with them made by the hospital, as are 
        ordinarily furnished to inpatients either by such 
        hospital or by others under such arrangements;
excluding, however--
          (4) medical or surgical services provided by a 
        physician, resident, or intern, services described by 
        subsection (s)(2)(K), certified nurse-midwife services, 
        qualified psychologist services, and services of a 
        certified registered nurse anesthetist; and
          (5) the services of a private-duty nurse or other 
        private-duty attendant.
Paragraph (4) shall not apply to services provided in a 
hospital by--
          (6) an intern or a resident-in-training under a 
        teaching program approved by the Council on Medical 
        Education of the American Medical Association or, in 
        the case of an osteopathic hospital, approved by the 
        Committee on Hospitals of the Bureau of Professional 
        Education of the American Osteopathic Association, or, 
        in the case of services in a hospital or osteopathic 
        hospital by an intern or resident-in-training in the 
        field of dentistry, approved by the Council on Dental 
        Education of the American Dental Association, or in the 
        case of services in a hospital or osteopathic hospital 
        by an intern or resident-in-training in the field of 
        podiatry, approved by the Council on Podiatric Medical 
        Education of the American Podiatric Medical 
        Association; or
          (7) a physician where the hospital has a teaching 
        program approved as specified in paragraph (6), if (A) 
        the hospital elects to receive any payment due under 
        this title for reasonable costs of such services, and 
        (B) all physicians in such hospital agree not to bill 
        charges for professional services rendered in such 
        hospital to individuals covered under the insurance 
        program established by this title.

                Inpatient Psychiatric Hospital Services

  (c) The term ``inpatient psychiatric hospital services'' 
means inpatient hospital services furnished to an inpatient of 
a psychiatric hospital.

                                Supplier

  (d) The term ``supplier'' means, unless the context otherwise 
requires, a physician or other practitioner, a facility, or 
other entity (other than a provider of services) that furnishes 
items or services under this title.

                                Hospital

  (e) The term ``hospital'' (except for purposes of sections 
1814(d), 1814(f), and 1835(b), subsection (a)(2) of this 
section, paragraph (7) of this subsection, and subsection (i) 
of this section) means an institution which--
          (1) is primarily engaged in providing, by or under 
        the supervision of physicians, to inpatients (A) 
        diagnostic services and therapeutic services for 
        medical diagnosis, treatment, and care of injured, 
        disabled, or sick persons, or (B) rehabilitation 
        services for the rehabilitation of injured, disabled, 
        or sick persons;
          (2) maintains clinical records on all patients;
          (3) has bylaws in effect with respect to its staff of 
        physicians;
          (4) has a requirement that every patient with respect 
        to whom payment may be made under this title must be 
        under the care of a physician, except that a patient 
        receiving qualified psychologist services (as defined 
        in subsection (ii)) may be under the care of a clinical 
        psychologist with respect to such services to the 
        extent permitted under State law;
          (5) provides 24-hour nursing service rendered or 
        supervised by a registered professional nurse, and has 
        a licensed practical nurse or registered professional 
        nurse on duty at all times; except that until January 
        1, 1979, the Secretary is authorized to waive the 
        requirement of this paragraph for any one-year period 
        with respect to any institution, insofar as such 
        requirement relates to the provision of twenty-four-
        hour nursing service rendered or supervised by a 
        registered professional nurse (except that in any event 
        a registered professional nurse must be present on the 
        premises to render or supervise the nursing service 
        provided, during at least the regular daytime shift), 
        where immediately preceding such one-year period he 
        finds that--
                  (A) such institution is located in a rural 
                area and the supply of hospital services in 
                such area is not sufficient to meet the needs 
                of individuals residing therein,
                  (B) the failure of such institution to 
                qualify as a hospital would seriously reduce 
                the availability of such services to such 
                individuals, and
                  (C) such institution has made and continues 
                to make a good faith effort to comply with this 
                paragraph, but such compliance is impeded by 
                the lack of qualified nursing personnel in such 
                area;
          (6)(A) has in effect a hospital utilization review 
        plan which meets the requirements of subsection (k) and 
        (B) has in place a discharge planning process that 
        meets the requirements of subsection (ee);
          (7) in the case of an institution in any State in 
        which State or applicable local law provides for the 
        licensing of hospitals, (A) is licensed pursuant to 
        such law or (B) is approved, by the agency of such 
        State or locality responsible for licensing hospitals, 
        as meeting the standards established for such 
        licensing;
          (8) has in effect an overall plan and budget that 
        meets the requirements of subsection (z); and
          (9) meets such other requirements as the Secretary 
        finds necessary in the interest of the health and 
        safety of individuals who are furnished services in the 
        institution.
For purposes of subsection (a)(2), such term includes any 
institution which meets the requirements of paragraph (1) of 
this subsection. For purposes of sections 1814(d) and 1835(b) 
(including determination of whether an individual received 
inpatient hospital services or diagnostic services for purposes 
of such sections), section 1814(f)(2), and subsection (i) of 
this section, such term includes any institution which (i) 
meets the requirements of paragraphs (5) and (7) of this 
subsection, (ii) is not primarily engaged in providing the 
services described in section 1861(j)(1)(A) and (iii) is 
primarily engaged in providing, by or under the supervision of 
individuals referred to in paragraph (1) of section 1861(r), to 
inpatients diagnostic services and therapeutic services for 
medical diagnosis, treatment, and care of injured, disabled, or 
sick persons, or rehabilitation services for the rehabilitation 
of injured, disabled, or sick persons. For purposes of section 
1814(f)(1), such term includes an institution which (i) is a 
hospital for purposes of sections 1814(d), 1814(f)(2), and 
1835(b) and (ii) is accredited by a national accreditation body 
recognized by the Secretary under section 1865(a), or is 
accredited by or approved by a program of the country in which 
such institution is located if the Secretary finds the 
accreditation or comparable approval standards of such program 
to be essentially equivalent to those of such a national 
accreditation body.. Notwithstanding the preceding provisions 
of this subsection, such term shall not, except for purposes of 
subsection (a)(2), include any institution which is primarily 
for the care and treatment of mental diseases unless it is a 
psychiatric hospital (as defined in subsection (f)). The term 
``hospital'' also includes a religious nonmedical health care 
institution (as defined in subsection (ss)(1)), but only with 
respect to items and services ordinarily furnished by such 
institution to inpatients, and payment may be made with respect 
to services provided by or in such an institution only to such 
extent and under such conditions, limitations, and requirements 
(in addition to or in lieu of the conditions, limitations, and 
requirements otherwise applicable) as may be provided in 
regulations consistent with section 1821. For provisions 
deeming certain requirements of this subsection to be met in 
the case of accredited institutions, see section 1865. The term 
``hospital'' also includes a facility of fifty beds or less 
which is located in an area determined by the Secretary to meet 
the definition relating to a rural area described in 
subparagraph (A) of paragraph (5) of this subsection and which 
meets the other requirements of this subsection, except that--
          (A) with respect to the requirements for nursing 
        services applicable after December 31, 1978, such 
        requirements shall provide for temporary waiver of the 
        requirements, for such period as the Secretary deems 
        appropriate, where (i) the facility's failure to fully 
        comply with the requirements is attributable to a 
        temporary shortage of qualified nursing personnel in 
        the area in which the facility is located, (ii) a 
        registered professional nurse is present on the 
        premises to render or supervise the nursing service 
        provided during at least the regular daytime shift, and 
        (iii) the Secretary determines that the employment of 
        such nursing personnel as are available to the facility 
        during such temporary period will not adversely affect 
        the health and safety of patients;
          (B) with respect to the health and safety 
        requirements promulgated under paragraph (9), such 
        requirements shall be applied by the Secretary to a 
        facility herein defined in such manner as to assure 
        that personnel requirements take into account the 
        availability of technical personnel and the educational 
        opportunities for technical personnel in the area in 
        which such facility is located, and the scope of 
        services rendered by such facility; and the Secretary, 
        by regulations, shall provide for the continued 
        participation of such a facility where such personnel 
        requirements are not fully met, for such period as the 
        Secretary determines that (i) the facility is making 
        good faith efforts to fully comply with the personnel 
        requirements, (ii) the employment by the facility of 
        such personnel as are available to the facility will 
        not adversely affect the health and safety of patients, 
        and (iii) if the Secretary has determined that because 
        of the facility's waiver under this subparagraph the 
        facility should limit its scope of services in order 
        not to adversely affect the health and safety of the 
        facility's patients, the facility is so limiting the 
        scope of services it provides; and
          (C) with respect to the fire and safety requirements 
        promulgated under paragraph (9), the Secretary (i) may 
        waive, for such period as he deems appropriate, 
        specific provisions of such requirements which if 
        rigidly applied would result in unreasonable hardship 
        for such a facility and which, if not applied, would 
        not jeopardize the health and safety of patients, and 
        (ii) may accept a facility's compliance with all 
        applicable State codes relating to fire and safety in 
        lieu of compliance with the fire and safety 
        requirements promulgated under paragraph (9), if he 
        determines that such State has in effect fire and 
        safety codes, imposed by State law, which adequately 
        protect patients.
The term ``hospital'' does not include, unless the context 
otherwise requires, a critical access hospital (as defined in 
section 1861(mm)(1)).

                          Psychiatric Hospital

  (f) The term ``psychiatric hospital'' means an institution 
which--
          (1) is primarily engaged in providing, by or under 
        the supervision of a physician, psychiatric services 
        for the diagnosis and treatment of mentally ill 
        persons;
          (2) satisfies the requirements of paragraphs (3) 
        through (9) of subsection (e);
          (3) maintains clinical records on all patients and 
        maintains such records as the Secretary finds to be 
        necessary to determine the degree and intensity of the 
        treatment provided to individuals entitled to hospital 
        insurance benefits under part A; and
          (4) meets such staffing requirements as the Secretary 
        finds necessary for the institution to carry out an 
        active program of treatment for individuals who are 
        furnished services in the institution.
In the case of an institution which satisfies paragraphs (1) 
and (2) of the preceding sentence and which contains a distinct 
part which also satisfies paragraphs (3) and (4) of such 
sentence, such distinct part shall be considered to be a 
``psychiatric hospital''.

                Outpatient Occupational Therapy Services

  (g) The term ``outpatient occupational therapy services'' has 
the meaning given the term ``outpatient physical therapy 
services'' in subsection (p), except that ``occupational'' 
shall be substituted for ``physical'' each place it appears 
therein.

                         Extended Care Services

  (h) The term ``extended care services'' means the following 
items and services furnished to an inpatient of a skilled 
nursing facility and (except as provided in paragraphs (3), (6) 
and (7)) by such skilled nursing facility--
          (1) nursing care provided by or under the supervision 
        of a registered professional nurse;
          (2) bed and board in connection with the furnishing 
        of such nursing care;
          (3) physical or occupational therapy or speech-
        language pathology services furnished by the skilled 
        nursing facility or by others under arrangements with 
        them made by the facility;
          (4) medical social services;
          (5) such drugs, biologicals, supplies, appliances, 
        and equipment, furnished for use in the skilled nursing 
        facility, as are ordinarily furnished by such facility 
        for the care and treatment of inpatients;
          (6) medical services provided by an intern or 
        resident-in- training of a hospital with which the 
        facility has in effect a transfer agreement (meeting 
        the requirements of subsection (l)), under a teaching 
        program of such hospital approved as provided in the 
        last sentence of subsection (b), and other diagnostic 
        or therapeutic services provided by a hospital with 
        which the facility has such an agreement in effect; and
          (7) such other services necessary to the health of 
        the patients as are generally provided by skilled 
        nursing facilities, or by others under arrangements 
        with them made by the facility;
excluding, however, any item or service if it would not be 
included under subsection (b) if furnished to an inpatient of a 
hospital.

                  Post-Hospital Extended Care Services

  (i) The term ``post-hospital extended care services'' means 
extended care services furnished an individual after transfer 
from a hospital in which he was an inpatient for not less than 
3 consecutive days before his discharge from the hospital in 
connection with such transfer. For purposes of the preceding 
sentence, items and services shall be deemed to have been 
furnished to an individual after transfer from a hospital, and 
he shall be deemed to have been an inpatient in the hospital 
immediately before transfer therefrom, if he is admitted to the 
skilled nursing facility (A) within 30 days after discharge 
from such hospital, or (B) within such time as it would be 
medically appropriate to begin an active course of treatment, 
in the case of an individual whose condition is such that 
skilled nursing facility care would not be medically 
appropriate within 30 days after discharge from a hospital; and 
an individual shall be deemed not to have been discharged from 
a skilled nursing facility if, within 30 days after discharge 
therefrom, he is admitted to such facility or any other skilled 
nursing facility.

                        Skilled Nursing Facility

  (j) The term ``skilled nursing facility'' has the meaning 
given such term in section 1819(a).

                           Utilization Review

  (k) A utilization review plan of a hospital or skilled 
nursing facility shall be considered sufficient if it is 
applicable to services furnished by the institution to 
individuals entitled to insurance benefits under this title and 
if it provides--
          (1) for the review, on a sample or other basis, of 
        admissions to the institution, the duration of stays 
        therein, and the professional services (including drugs 
        and biologicals) furnished, (A) with respect to the 
        medical necessity of the services, and (B) for the 
        purpose of promoting the most efficient use of 
        available health facilities and services;
          (2) for such review to be made by either (A) a staff 
        committee of the institution composed of two or more 
        physicians (of which at least two must be physicians 
        described in subsection (r)(1) of this section), with 
        or without participation of other professional 
        personnel, or (B) a group outside the institution which 
        is similarly composed and (i) which is established by 
        the local medical society and some or all of the 
        hospitals and skilled nursing facilities in the 
        locality, or (ii) if (and for as long as) there has not 
        been established such a group which serves such 
        institution, which is established in such other manner 
        as may be approved by the Secretary;
          (3) for such review, in each case of inpatient 
        hospital services or extended care services furnished 
        to such an individual during a continuous period of 
        extended duration, as of such days of such period 
        (which may differ for different classes of cases) as 
        may be specified in regulations, with such review to be 
        made as promptly as possible, after each day so 
        specified, and in no event later than one week 
        following such day; and
          (4) for prompt notification to the institution, the 
        individual, and his attending physician of any finding 
        (made after opportunity for consultation to such 
        attending physician) by the physician members of such 
        committee or group that any further stay in the 
        institution is not medically necessary.
The review committee must be composed as provided in clause (B) 
of paragraph (2) rather than as provided in clause (A) of such 
paragraph in the case of any hospital or skilled nursing 
facility where, because of the small size of the institution, 
or (in the case of a skilled nursing facility) because of lack 
of an organized medical staff, or for such other reason or 
reasons as may be included in regulations, it is impracticable 
for the institution to have a properly functioning staff 
committee for the purposes of this subsection. If the Secretary 
determines that the utilization review procedures established 
pursuant to title XIX are superior in their effectiveness to 
the procedures required under this section, he may, to the 
extent that he deems it appropriate, require for purposes of 
this title that the procedures established pursuant to title 
XIX be utilized instead of the procedures required by this 
section.

    Agreements for Transfer Between Skilled Nursing Facilities and 
                               Hospitals

  (l) A hospital and a skilled nursing facility shall be 
considered to have a transfer agreement in effect if, by reason 
of a written agreement between them or (in case the two 
institutions are under common control) by reason of a written 
undertaking by the person or body which controls them, there is 
reasonable assurance that--
          (1) transfer of patients will be effected between the 
        hospital and the skilled nursing facility whenever such 
        transfer is medically appropriate as determined by the 
        attending physician; and
          (2) there will be interchange of medical and other 
        information necessary or useful in the care and 
        treatment of individuals transferred between the 
        institutions, or in determining whether such 
        individuals can be adequately cared for otherwise than 
        in either of such institutions.
Any skilled nursing facility which does not have such an 
agreement in effect, but which is found by a State agency (of 
the State in which such facility is situated) with which an 
agreement under section 1864 is in effect (or, in the case of a 
State in which no such agency has an agreement under section 
1864, by the Secretary) to have attempted in good faith to 
enter into such an agreement with a hospital sufficiently close 
to the facility to make feasible the transfer between them of 
patients and the information referred to in paragraph (2), 
shall be considered to have such an agreement in effect if and 
for so long as such agency (or the Secretary, as the case may 
be) finds that to do so is in the public interest and essential 
to assuring extended care services for persons in the community 
who are eligible for payments with respect to such services 
under this title.

                          Home Health Services

  (m) The term ``home health services'' means the following 
items and services furnished to an individual, who is under the 
care of a physician, by a home health agency or by others under 
arrangements with them made by such agency, under a plan (for 
furnishing such items and services to such individual) 
established and periodically reviewed by a physician, which 
items and services are, except as provided in paragraph (7), 
provided on a visiting basis in a place of residence used as 
such individual's home--
          (1) part-time or intermittent nursing care provided 
        by or under the supervision of a registered 
        professional nurse;
          (2) physical or occupational therapy or speech-
        language pathology services;
          (3) medical social services under the direction of a 
        physician;
          (4) to the extent permitted in regulations, part-time 
        or intermittent services of a home health aide who has 
        successfully completed a training program approved by 
        the Secretary;
          (5) medical supplies (including catheters, catheter 
        supplies, ostomy bags, and supplies related to ostomy 
        care, and a covered osteoporosis drug (as defined in 
        subsection (kk)), but excluding other drugs and 
        biologicals) and durable medical equipment while under 
        such a plan;
          (6) in the case of a home health agency which is 
        affiliated or under common control with a hospital, 
        medical services provided by an intern or resident-in-
        training of such hospital, under a teaching program of 
        such hospital approved as provided in the last sentence 
        of subsection (b); and
          (7) any of the foregoing items and services which are 
        provided on an outpatient basis, under arrangements 
        made by the home health agency, at a hospital or 
        skilled nursing facility, or at a rehabilitation center 
        which meets such standards as may be prescribed in 
        regulations, and--
                  (A) the furnishing of which involves the use 
                of equipment of such a nature that the items 
                and services cannot readily be made available 
                to the individual in such place of residence, 
                or
                  (B) which are furnished at such facility 
                while he is there to receive any such item or 
                service described in clause (A),
        but not including transportation of the individual in 
        connection with any such item or service;
excluding, however, any item or service if it would not be 
included under subsection (b) if furnished to an inpatient of a 
hospital. For purposes of paragraphs (1) and (4), the term 
``part-time or intermittent services'' means skilled nursing 
and home health aide services furnished any number of days per 
week as long as they are furnished (combined) less than 8 hours 
each day and 28 or fewer hours each week (or, subject to review 
on a case-by-case basis as to the need for care, less than 8 
hours each day and 35 or fewer hours per week). For purposes of 
sections 1814(a)(2)(C) and 1835(a)(2)(A), ``intermittent'' 
means skilled nursing care that is either provided or needed on 
fewer than 7 days each week, or less than 8 hours of each day 
for periods of 21 days or less (with extensions in exceptional 
circumstances when the need for additional care is finite and 
predictable).

                       Durable Medical Equipment

  (n) The term ``durable medical equipment'' includes iron 
lungs, oxygen tents, hospital beds, and wheelchairs (which may 
include a power-operated vehicle that may be appropriately used 
as a wheelchair, but only where the use of such a vehicle is 
determined to be necessary on the basis of the individual's 
medical and physical condition and the vehicle meets such 
safety requirements as the Secretary may prescribe) used in the 
patient's home (including an institution used as his home other 
than an institution that meets the requirements of subsection 
(e)(1) of this section or section 1819(a)(1)), whether 
furnished on a rental basis or purchased, and includes blood-
testing strips and blood glucose monitors for individuals with 
diabetes without regard to whether the individual has Type I or 
Type II diabetes or to the individual's use of insulin (as 
determined under standards established by the Secretary in 
consultation with the appropriate organizations) and eye 
tracking and gaze interaction accessories for speech generating 
devices furnished to individuals with a demonstrated medical 
need for such accessories; except that such term does not 
include such equipment furnished by a supplier who has used, 
for the demonstration and use of specific equipment, an 
individual who has not met such minimum training standards as 
the Secretary may establish with respect to the demonstration 
and use of such specific equipment. With respect to a seat-lift 
chair, such term includes only the seat-lift mechanism and does 
not include the chair.

                           Home Health Agency

  (o) The term ``home health agency'' means a public agency or 
private organization, or a subdivision of such an agency or 
organization, which--
          (1) is primarily engaged in providing skilled nursing 
        services and other therapeutic services;
          (2) has policies, established by a group of 
        professional personnel (associated with the agency or 
        organization), including one or more physicians and one 
        or more registered professional nurses, to govern the 
        services (referred to in paragraph (1)) which it 
        provides, and provides for supervision of such services 
        by a physician or registered professional nurse;
          (3) maintains clinical records on all patients;
          (4) in the case of an agency or organization in any 
        State in which State or applicable local law provides 
        for the licensing of agencies or organizations of this 
        nature, (A) is licensed pursuant to such law, or (B) is 
        approved, by the agency of such State or locality 
        responsible for licensing agencies or organizations of 
        this nature, as meeting the standards established for 
        such licensing;
          (5) has in effect an overall plan and budget that 
        meets the requirements of subsection (z);
          (6) meets the conditions of participation specified 
        in section 1891(a) and such other conditions of 
        participation as the Secretary may find necessary in 
        the interest of the health and safety of individuals 
        who are furnished services by such agency or 
        organization;
          (7) provides the Secretary with a surety bond--
                  (A) in a form specified by the Secretary and 
                in an amount that is not less than the minimum 
                of $50,000; and
                  (B) that the Secretary determines is 
                commensurate with the volume of payments to the 
                home health agency; and
          (8) meets such additional requirements (including 
        conditions relating to bonding or establishing of 
        escrow accounts as the Secretary finds necessary for 
        the financial security of the program) as the Secretary 
        finds necessary for the effective and efficient 
        operation of the program;
except that for purposes of part A such term shall not include 
any agency or organization which is primarily for the care and 
treatment of mental diseases. The Secretary may waive the 
requirement of a surety bond under paragraph (7) in the case of 
an agency or organization that provides a comparable surety 
bond under State law.

                  Outpatient Physical Therapy Services

  (p) The term ``outpatient physical therapy services'' means 
physical therapy services furnished by a provider of services, 
a clinic, rehabilitation agency, or a public health agency, or 
by others under an arrangement with, and under the supervision 
of, such provider, clinic, rehabilitation agency, or public 
health agency to an individual as an outpatient--
          (1) who is under the care of a physician (as defined 
        in paragraph (1), (3), or (4) of section 1861(r)), and
          (2) with respect to whom a plan prescribing the type, 
        amount, and duration of physical therapy services that 
        are to be furnished such individual has been 
        established by a physician (as so defined) or by a 
        qualified physical therapist and is periodically 
        reviewed by a physician (as so defined);
excluding, however--
          (3) any item or service if it would not be included 
        under subsection (b) if furnished to an inpatient of a 
        hospital; and
          (4) any such service--
                  (A) if furnished by a clinic or 
                rehabilitation agency, or by others under 
                arrangements with such clinic or agency, unless 
                such clinic or rehabilitation agency--
                          (i) provides an adequate program of 
                        physical therapy services for 
                        outpatients and has the facilities and 
                        personnel required for such program or 
                        required for the supervision of such a 
                        program, in accordance with such 
                        requirements as the Secretary may 
                        specify,
                          (ii) has policies, established by a 
                        group of professional personnel, 
                        including one or more physicians 
                        (associated with the clinic or 
                        rehabilitation agency) and one or more 
                        qualified physical therapists, to 
                        govern the services (referred to in 
                        clause (i)) it provides,
                          (iii) maintains clinical records on 
                        all patients,
                          (iv) if such clinic or agency is 
                        situated in a State in which State or 
                        applicable local law provides for the 
                        licensing of institutions of this 
                        nature, (I) is licensed pursuant to 
                        such law, or (II) is approved by the 
                        agency of such State or locality 
                        responsible for licensing institutions 
                        of this nature, as meeting the 
                        standards established for such 
                        licensing; and
                          (v) meets such other conditions 
                        relating to the health and safety of 
                        individuals who are furnished services 
                        by such clinic or agency on an 
                        outpatient basis, as the Secretary may 
                        find necessary, and provides the 
                        Secretary on a continuing basis with a 
                        surety bond in a form specified by the 
                        Secretary and in an amount that is not 
                        less than $50,000, or
                  (B) if furnished by a public health agency, 
                unless such agency meets such other conditions 
                relating to health and safety of individuals 
                who are furnished services by such agency on an 
                outpatient basis, as the Secretary may find 
                necessary.
The term ``outpatient physical therapy services'' also includes 
physical therapy services furnished an individual by a physical 
therapist (in his office or in such individual's home) who 
meets licensing and other standards prescribed by the Secretary 
in regulations, otherwise than under an arrangement with and 
under the supervision of a provider of services, clinic, 
rehabilitation agency, or public health agency, if the 
furnishing of such services meets such conditions relating to 
health and safety as the Secretary may find necessary. In 
addition, such term includes physical therapy services which 
meet the requirements of the first sentence of this subsection 
except that they are furnished to an individual as an inpatient 
of a hospital or extended care facility. Nothing in this 
subsection shall be construed as requiring, with respect to 
outpatients who are not entitled to benefits under this title, 
a physical therapist to provide outpatient physical therapy 
services only to outpatients who are under the care of a 
physician or pursuant to a plan of care established by a 
physician. The Secretary may waive the requirement of a surety 
bond under paragraph (4)(A)(v) in the case of a clinic or 
agency that provides a comparable surety bond under State law.

                          Physicians' Services

  (q) The term ``physicians' services'' means professional 
services performed by physicians, including surgery, 
consultation, and home, office, and institutional calls (but 
not including services described in subsection (b)(6)).

                               Physician

  (r) The term ``physician'', when used in connection with the 
performance of any function or action, means (1) a doctor of 
medicine or osteopathy legally authorized to practice medicine 
and surgery by the State in which he performs such function or 
action (including a physician within the meaning of section 
1101(a)(7)), (2) a doctor of dental surgery or of dental 
medicine who is legally authorized to practice dentistry by the 
State in which he performs such function and who is acting 
within the scope of his license when he performs such 
functions, (3) a doctor of podiatric medicine for the purposes 
of subsections (k), (m), (p)(1), and (s) of this section and 
sections 1814(a), 1832(a)(2)(F)(ii), and 1835 but only with 
respect to functions which he is legally authorized to perform 
as such by the State in which he performs them, (4) a doctor of 
optometry, but only for purposes of subsection (p)(1) and with 
respect to the provision of items or services described in 
subsection (s) which he is legally authorized to perform as a 
doctor of optometry by the State in which he performs them, or 
(5) a chiropractor who is licensed as such by the State (or in 
a State which does not license chiropractors as such, is 
legally authorized to perform the services of a chiropractor in 
the jurisdiction in which he performs such services), and who 
meets uniform minimum standards promulgated by the Secretary, 
but only for the purpose of sections 1861(s)(1) and 
1861(s)(2)(A) and only with respect to treatment by means of 
manual manipulation of the spine (to correct a subluxation) 
which he is legally authorized to perform by the State or 
jurisdiction in which such treatment is provided. For the 
purposes of section 1862(a)(4) and subject to the limitations 
and conditions provided in the previous sentence, such term 
includes a doctor of one of the arts, specified in such 
previous sentence, legally authorized to practice such art in 
the country in which the inpatient hospital services (referred 
to in such section 1862(a)(4)) are furnished.

                   Medical and Other Health Services

  (s) The term ``medical and other health services'' means any 
of the following items or services:
          (1) physicians' services;
          (2)(A) services and supplies (including drugs and 
        biologicals which are not usually self-administered by 
        the patient) furnished as an incident to a physician's 
        professional service, of kinds which are commonly 
        furnished in physicians' offices and are commonly 
        either rendered without charge or included in the 
        physicians' bills (or would have been so included but 
        for the application of section 1847B);
          (B) hospital services (including drugs and 
        biologicals which are not usually self-administered by 
        the patient) incident to physicians' services rendered 
        to outpatients and partial hospitalization services 
        incident to such services;
          (C) diagnostic services which are--
                  (i) furnished to an individual as an 
                outpatient by a hospital or by others under 
                arrangements with them made by a hospital, and
                  (ii) ordinarily furnished by such hospital 
                (or by others under such arrangements) to its 
                outpatients for the purpose of diagnostic 
                study;
          (D) outpatient physical therapy services, outpatient 
        speech-language pathology services, and outpatient 
        occupational therapy services;
          (E) rural health clinic services and Federally 
        qualified health center services;
          (F) home dialysis supplies and equipment, self-care 
        home dialysis support services, and institutional 
        dialysis services and supplies, and, for items and 
        services furnished on or after January 1, 2011, renal 
        dialysis services (as defined in section 
        1881(b)(14)(B));
          (G) antigens (subject to quantity limitations 
        prescribed in regulations by the Secretary) prepared by 
        a physician, as defined in section 1861(r)(1), for a 
        particular patient, including antigens so prepared 
        which are forwarded to another qualified person 
        (including a rural health clinic) for administration to 
        such patient, from time to time, by or under the 
        supervision of another such physician;
          (H)(i) services furnished pursuant to a contract 
        under section 1876 to a member of an eligible 
        organization by a physician assistant or by a nurse 
        practitioner (as defined in subsection (aa)(5)) and 
        such services and supplies furnished as an incident to 
        his service to such a member as would otherwise be 
        covered under this part if furnished by a physician or 
        as an incident to a physician's service; and
          (ii) services furnished pursuant to a risk-sharing 
        contract under section 1876(g) to a member of an 
        eligible organization by a clinical psychologist (as 
        defined by the Secretary) or by a clinical social 
        worker (as defined in subsection (hh)(2)), and such 
        services and supplies furnished as an incident to such 
        clinical psychologist's services or clinical social 
        worker's services to such a member as would otherwise 
        be covered under this part if furnished by a physician 
        or as an incident to a physician's service;
          (I) blood clotting factors, for hemophilia patients 
        competent to use such factors to control bleeding 
        without medical or other supervision, and items related 
        to the administration of such factors, subject to 
        utilization controls deemed necessary by the Secretary 
        for the efficient use of such factors;
          (J) prescription drugs used in immunosuppressive 
        therapy furnished, to an individual who receives an 
        organ transplant for which payment is made under this 
        title;
          (K)(i) services which would be physicians' services 
        and services described in subsections (ww)(1) and (hhh) 
        if furnished by a physician (as defined in subsection 
        (r)(1)) and which are performed by a physician 
        assistant (as defined in subsection (aa)(5)) under the 
        supervision of a physician (as so defined) and which 
        the physician assistant is legally authorized to 
        perform by the State in which the services are 
        performed, and such services and supplies furnished as 
        incident to such services as would be covered under 
        subparagraph (A) if furnished 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,
          (ii) services which would be physicians' services and 
        services described in subsections (ww)(1) and (hhh) if 
        furnished by a physician (as defined in subsection 
        (r)(1)) and which are performed by a nurse practitioner 
        or clinical nurse specialist (as defined in subsection 
        (aa)(5)) working in collaboration (as defined in 
        subsection (aa)(6)) with a physician (as defined in 
        subsection (r)(1)) which the nurse practitioner or 
        clinical nurse specialist is legally authorized to 
        perform by the State in which the services are 
        performed, and such services and supplies furnished as 
        an incident to such services as would be covered under 
        subparagraph (A) if furnished 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;
          (L) certified nurse-midwife services;
          (M) qualified psychologist services;
          (N) clinical social worker services (as defined in 
        subsection (hh)(2));
          (O) erythropoietin for dialysis patients competent to 
        use such drug without medical or other supervision with 
        respect to the administration of such drug, subject to 
        methods and standards established by the Secretary by 
        regulation for the safe and effective use of such drug, 
        and items related to the administration of such drug;
          (P) prostate cancer screening tests (as defined in 
        subsection (oo));
          (Q) an oral drug (which is approved by the Federal 
        Food and Drug Administration) prescribed for use as an 
        anticancer chemotherapeutic agent for a given 
        indication, and containing an active ingredient (or 
        ingredients), which is the same indication and active 
        ingredient (or ingredients) as a drug which the carrier 
        determines would be covered pursuant to subparagraph 
        (A) or (B) if the drug could not be self-administered;
          (R) colorectal cancer screening tests (as defined in 
        subsection (pp));
          (S) diabetes outpatient self-management training 
        services (as defined in subsection (qq));
          (T) an oral drug (which is approved by the Federal 
        Food and Drug Administration) prescribed for use as an 
        acute anti-emetic used as part of an anticancer 
        chemotherapeutic regimen if the drug is administered by 
        a physician (or as prescribed by a physician)--
                  (i) for use immediately before, at, or within 
                48 hours after the time of the administration 
                of the anticancer chemotherapeutic agent; and
                  (ii) as a full replacement for the anti-
                emetic therapy which would otherwise be 
                administered intravenously;
          (U) screening for glaucoma (as defined in subsection 
        (uu)) for individuals determined to be at high risk for 
        glaucoma, individuals with a family history of glaucoma 
        and individuals with diabetes;
          (V) medical nutrition therapy services (as defined in 
        subsection (vv)(1)) in the case of a beneficiary with 
        diabetes or a renal disease who--
                  (i) has not received diabetes outpatient 
                self-management training services within a time 
                period determined by the Secretary;
                  (ii) is not receiving maintenance dialysis 
                for which payment is made under section 1881; 
                and
                  (iii) meets such other criteria determined by 
                the Secretary after consideration of protocols 
                established by dietitian or nutrition 
                professional organizations;
          (W) an initial preventive physical examination (as 
        defined in subsection (ww));
          (X) cardiovascular screening blood tests (as defined 
        in subsection (xx)(1));
          (Y) diabetes screening tests (as defined in 
        subsection (yy));
          (Z) intravenous immune globulin for the treatment of 
        primary immune deficiency diseases in the home (as 
        defined in subsection (zz));
          (AA) ultrasound screening for abdominal aortic 
        aneurysm (as defined in subsection (bbb)) for an 
        individual--
                  (i) who receives a referral for such an 
                ultrasound screening as a result of an initial 
                preventive physical examination (as defined in 
                section 1861(ww)(1));
                  (ii) who has not been previously furnished 
                such an ultrasound screening under this title; 
                and
                  (iii) who--
                          (I) has a family history of abdominal 
                        aortic aneurysm; or
                          (II) manifests risk factors included 
                        in a beneficiary category recommended 
                        for screening by the United States 
                        Preventive Services Task Force 
                        regarding abdominal aortic aneurysms;
          (BB) additional preventive services (described in 
        subsection (ddd)(1));
          (CC) items and services furnished under a cardiac 
        rehabilitation program (as defined in subsection 
        (eee)(1)) or under a pulmonary rehabilitation program 
        (as defined in subsection (fff)(1));
          (DD) items and services furnished under an intensive 
        cardiac rehabilitation program (as defined in 
        subsection (eee)(4));
          (EE) kidney disease education services (as defined in 
        subsection (ggg)); and
          (FF) personalized prevention plan services (as 
        defined in subsection (hhh));
          (3) diagnostic X-ray tests (including tests under the 
        supervision of a physician, furnished in a place of 
        residence used as the patient's home, if the 
        performance of such tests meets such conditions 
        relating to health and safety as the Secretary may find 
        necessary and including diagnostic mammography if 
        conducted by a facility that has a certificate (or 
        provisional certificate) issued under section 354 of 
        the Public Health Service Act), diagnostic laboratory 
        tests, and other diagnostic tests;
          (4) X-ray, radium, and radioactive isotope therapy, 
        including materials and services of technicians;
          (5) surgical dressings, and splints, casts, and other 
        devices used for reduction of fractures and 
        dislocations;
          (6) durable medical equipment;
          (7) ambulance service where the use of other methods 
        of transportation is contraindicated by the 
        individual's condition, but, subject to section 
        1834(l)(14), only to the extent provided in 
        regulations;
          (8) prosthetic devices (other than dental) which 
        replace all or part of an internal body organ 
        (including colostomy bags and supplies directly related 
        to colostomy care), including replacement of such 
        devices, and including one pair of conventional 
        eyeglasses or contact lenses furnished subsequent to 
        each cataract surgery with insertion of an intraocular 
        lens;
          (9) leg, arm, back, and neck braces, and artificial 
        legs, arms, and eyes, including replacements if 
        required because of a change in the patient's physical 
        condition;
          (10)(A) pneumococcal vaccine and its administration 
        and, subject to section 4071(b) of the Omnibus Budget 
        Reconciliation Act of 1987, influenza vaccine and its 
        administration; and
          (B) hepatitis B vaccine and its administration, 
        furnished to an individual who is at high or 
        intermediate risk of contracting hepatitis B (as 
        determined by the Secretary under regulations);
          (11) services of a certified registered nurse 
        anesthetist (as defined in subsection (bb));
          (12) subject to section 4072(e) of the Omnibus Budget 
        Reconciliation Act of 1987, extra-depth shoes with 
        inserts or custom molded shoes with inserts for an 
        individual with diabetes, if--
                  (A) the physician who is managing the 
                individual's diabetic condition (i) documents 
                that the individual has peripheral neuropathy 
                with evidence of callus formation, a history of 
                pre-ulcerative calluses, a history of previous 
                ulceration, foot deformity, or previous 
                amputation, or poor circulation, and (ii) 
                certifies that the individual needs such shoes 
                under a comprehensive plan of care related to 
                the individual's diabetic condition;
                  (B) the particular type of shoes are 
                prescribed by a podiatrist or other qualified 
                physician (as established by the Secretary); 
                and
                  (C) the shoes are fitted and furnished by a 
                podiatrist or other qualified individual (such 
                as a pedorthist or orthotist, as established by 
                the Secretary) who is not the physician 
                described in subparagraph (A) (unless the 
                Secretary finds that the physician is the only 
                such qualified individual in the area);
          (13) screening mammography (as defined in subsection 
        (jj));
          (14) screening pap smear and screening pelvic exam; 
        and
          (15) bone mass measurement (as defined in subsection 
        (rr)).
No diagnostic tests performed in any laboratory, including a 
laboratory that is part of a rural health clinic, or a hospital 
(which, for purposes of this sentence, means an institution 
considered a hospital for purposes of section 1814(d)) shall be 
included within paragraph (3) unless such laboratory--
          (16) if situated in any State in which State or 
        applicable local law provides for licensing of 
        establishments of this nature, (A) is licensed pursuant 
        to such law, or (B) is approved, by the agency of such 
        State or locality responsible for licensing 
        establishments of this nature, as meeting the standards 
        established for such licensing; and
          (17)(A) meets the certification requirements under 
        section 353 of the Public Health Service Act; and
          (B) meets such other conditions relating to the 
        health and safety of individuals with respect to whom 
        such tests are performed as the Secretary may find 
        necessary.
There shall be excluded from the diagnostic services specified 
in paragraph (2)(C) any item or service (except services 
referred to in paragraph (1)) which would not be included under 
subsection (b) if it were furnished to an inpatient of a 
hospital. None of the items and services referred to in the 
preceding paragraphs (other than paragraphs (1) and (2)(A)) of 
this subsection which are furnished to a patient of an 
institution which meets the definition of a hospital for 
purposes of section 1814(d) shall be included unless such other 
conditions are met as the Secretary may find necessary relating 
to health and safety of individuals with respect to whom such 
items and services are furnished.

                         Drugs and Biologicals

  (t)(1) The term ``drugs'' and the term ``biologicals'', 
except for purposes of subsection (m)(5) and paragraph (2), 
include only such drugs (including contrast agents) and 
biologicals, respectively, as are included (or approved for 
inclusion) in the United States Pharmacopoeia, the National 
Formulary, or the United States Homeopathic Pharmacopoeia, or 
in New Drugs or Accepted Dental Remedies (except for any drugs 
and biologicals unfavorably evaluated therein), or as are 
approved by the pharmacy and drug therapeutics committee (or 
equivalent committee) of the medical staff of the hospital 
furnishing such drugs and biologicals for use in such hospital.
  (2)(A) For purposes of paragraph (1), the term ``drugs'' also 
includes any drugs or biologicals used in an anticancer 
chemotherapeutic regimen for a medically accepted indication 
(as described in subparagraph (B)).
  (B) In subparagraph (A), the term ``medically accepted 
indication'', with respect to the use of a drug, includes any 
use which has been approved by the Food and Drug Administration 
for the drug, and includes another use of the drug if--
          (i) the drug has been approved by the Food and Drug 
        Administration; and
          (ii)(I) such use is supported by one or more 
        citations which are included (or approved for 
        inclusion) in one or more of the following compendia: 
        the American Hospital Formulary Service-Drug 
        Information, the American Medical Association Drug 
        Evaluations, the United States Pharmacopoeia-Drug 
        Information (or its successor publications), and other 
        authoritative compendia as identified by the Secretary, 
        unless the Secretary has determined that the use is not 
        medically appropriate or the use is identified as not 
        indicated in one or more such compendia, or
          (II) the carrier involved determines, based upon 
        guidance provided by the Secretary to carriers for 
        determining accepted uses of drugs, that such use is 
        medically accepted based on supportive clinical 
        evidence in peer reviewed medical literature appearing 
        in publications which have been identified for purposes 
        of this subclause by the Secretary.
The Secretary may revise the list of compendia in clause 
(ii)(I) as is appropriate for identifying medically accepted 
indications for drugs. On and after January 1, 2010, no 
compendia may be included on the list of compendia under this 
subparagraph unless the compendia has a publicly transparent 
process for evaluating therapies and for identifying potential 
conflicts of interests.

                          Provider of Services

  (u) The term ``provider of services'' means a hospital, 
critical access hospital, skilled nursing facility, 
comprehensive outpatient rehabilitation facility, home health 
agency, hospice program, or, for purposes of section 1814(g) 
and section 1835(e), a fund.

                            Reasonable Cost

  (v)(1)(A) The reasonable cost of any services shall be the 
cost actually incurred, excluding therefrom any part of 
incurred cost found to be unnecessary in the efficient delivery 
of needed health services, and shall be determined in 
accordance with regulations establishing the method or methods 
to be used, and the items to be included, in determining such 
costs for various types or classes of institutions, agencies, 
and services; except that in any case to which paragraph (2) or 
(3) applies, the amount of the payment determined under such 
paragraph with respect to the services involved shall be 
considered the reasonable cost of such services. In prescribing 
the regulations referred to in the preceding sentence, the 
Secretary shall consider, among other things, the principles 
generally applied by national organizations or established 
prepayment organizations (which have developed such principles) 
in computing the amount of payment, to be made by persons other 
than the recipients of services, to providers of services on 
account of services furnished to such recipients by such 
providers. Such regulations may provide for determination of 
the costs of services on a per diem, per unit, per capita, or 
other basis, may provide for using different methods in 
different circumstances, may provide for the use of estimates 
of costs of particular items or services, may provide for the 
establishment of limits on the direct or indirect overall 
incurred costs or incurred costs of specific items or services 
or groups of items or services to be recognized as reasonable 
based on estimates of the costs necessary in the efficient 
delivery of needed health services to individuals covered by 
the insurance programs established under this title, and may 
provide for the use of charges or a percentage of charges where 
this method reasonably reflects the costs. Such regulations 
shall (i) take into account both direct and indirect costs of 
providers of services (excluding therefrom any such costs, 
including standby costs, which are determined in accordance 
with regulations to be unnecessary in the efficient delivery of 
services covered by the insurance programs established under 
this title) in order that, under the methods of determining 
costs, the necessary costs of efficiently delivering covered 
services to individuals covered by the insurance programs 
established by this title will not be borne by individuals not 
so covered, and the costs with respect to individuals not so 
covered will not be borne by such insurance programs, and (ii) 
provide for the making of suitable retroactive corrective 
adjustments where, for a provider of services for any fiscal 
period, the aggregate reimbursement produced by the methods of 
determining costs proves to be either inadequate or excessive.
  (B) In the case of extended care services, the regulations 
under subparagraph (A) shall not include provision for specific 
recognition of a return on equity capital.
  (C) Where a hospital has an arrangement with a medical school 
under which the faculty of such school provides services at 
such hospital, an amount not in excess of the reasonable cost 
of such services to the medical school shall be included in 
determining the reasonable cost to the hospital of furnishing 
services--
          (i) for which payment may be made under part A, but 
        only if--
                  (I) payment for such services as furnished 
                under such arrangement would be made under part 
                A to the hospital had such services been 
                furnished by the hospital, and
                  (II) such hospital pays to the medical school 
                at least the reasonable cost of such services 
                to the medical school, or
          (ii) for which payment may be made under part B, but 
        only if such hospital pays to the medical school at 
        least the reasonable cost of such services to the 
        medical school.
  (D) Where (i) physicians furnish services which are either 
inpatient hospital services (including services in conjunction 
with the teaching programs of such hospital) by reason of 
paragraph (7) of subsection (b) or for which entitlement exists 
by reason of clause (II) of section 1832(a)(2)(B)(i), and (ii) 
such hospital (or medical school under arrangement with such 
hospital) incurs no actual cost in the furnishing of such 
services, the reasonable cost of such services shall (under 
regulations of the Secretary) be deemed to be the cost such 
hospital or medical school would have incurred had it paid a 
salary to such physicians rendering such services approximately 
equivalent to the average salary paid to all physicians 
employed by such hospital (or if such employment does not 
exist, or is minimal in such hospital, by similar hospitals in 
a geographic area of sufficient size to assure reasonable 
inclusion of sufficient physicians in development of such 
average salary).
  (E) Such regulations may, in the case of skilled nursing 
facilities in any State, provide for the use of rates, 
developed by the State in which such facilities are located, 
for the payment of the cost of skilled nursing facility 
services furnished under the State's plan approved under title 
XIX (and such rates may be increased by the Secretary on a 
class or size of institution or on a geographical basis by a 
percentage factor not in excess of 10 percent to take into 
account determinable items or services or other requirements 
under this title not otherwise included in the computation of 
such State rates), if the Secretary finds that such rates are 
reasonably related to (but not necessarily limited to) analyses 
undertaken by such State of costs of care in comparable 
facilities in such State. Notwithstanding the previous 
sentence, such regulations with respect to skilled nursing 
facilities shall take into account (in a manner consistent with 
subparagraph (A) and based on patient-days of services 
furnished) the costs (including the costs of services required 
to attain or maintain the highest practicable physical, mental, 
and psychosocial well-being of each resident eligible for 
benefits under this title) of such facilities complying with 
the requirements of subsections (b), (c), and (d) of section 
1819 (including the costs of conducting nurse aide training and 
competency evaluation programs and competency evaluation 
programs).
  (F) Such regulations shall require each provider of services 
(other than a fund) to make reports to the Secretary of 
information described in section 1121(a) in accordance with the 
uniform reporting system (established under such section) for 
that type of provider.
  (G)(i) In any case in which a hospital provides inpatient 
services to an individual that would constitute post-hospital 
extended care services if provided by a skilled nursing 
facility and a quality improvement organization (or, in the 
absence of such a qualified organization, the Secretary or such 
agent as the Secretary may designate) determines that inpatient 
hospital services for the individual are not medically 
necessary but post-hospital extended care services for the 
individual are medically necessary and such extended care 
services are not otherwise available to the individual (as 
determined in accordance with criteria established by the 
Secretary) at the time of such determination, payment for such 
services provided to the individual shall continue to be made 
under this title at the payment rate described in clause (ii) 
during the period in which--
          (I) such post-hospital extended care services for the 
        individual are medically necessary and not otherwise 
        available to the individual (as so determined),
          (II) inpatient hospital services for the individual 
        are not medically necessary, and
          (III) the individual is entitled to have payment made 
        for post-hospital extended care services under this 
        title,
except that if the Secretary determines that there is not an 
excess of hospital beds in such hospital and (subject to clause 
(iv)) there is not an excess of hospital beds in the area of 
such hospital, such payment shall be made (during such period) 
on the basis of the amount otherwise payable under part A with 
respect to inpatient hospital services.
  (ii)(I) Except as provided in subclause (II), the payment 
rate referred to in clause (i) is a rate equal to the estimated 
adjusted State-wide average rate per patient-day paid for 
services provided in skilled nursing facilities under the State 
plan approved under title XIX for the State in which such 
hospital is located, or, if the State in which the hospital is 
located does not have a State plan approved under title XIX, 
the estimated adjusted State-wide average allowable costs per 
patient-day for extended care services under this title in that 
State.
  (II) If a hospital has a unit which is a skilled nursing 
facility, the payment rate referred to in clause (i) for the 
hospital is a rate equal to the lesser of the rate described in 
subclause (I) or the allowable costs in effect under this title 
for extended care services provided to patients of such unit.
  (iii) Any day on which an individual receives inpatient 
services for which payment is made under this subparagraph 
shall, for purposes of this Act (other than this subparagraph), 
be deemed to be a day on which the individual received 
inpatient hospital services.
  (iv) In determining under clause (i), in the case of a public 
hospital, whether or not there is an excess of hospital beds in 
the area of such hospital, such determination shall be made on 
the basis of only the public hospitals (including the hospital) 
which are in the area of the hospital and which are under 
common ownership with that hospital.
  (H) In determining such reasonable cost with respect to home 
health agencies, the Secretary may not include--
          (i) any costs incurred in connection with bonding or 
        establishing an escrow account by any such agency as a 
        result of the surety bond requirement described in 
        subsection (o)(7) and the financial security 
        requirement described in subsection (o)(8);
          (ii) in the case of home health agencies to which the 
        surety bond requirement described in subsection (o)(7) 
        and the financial security requirement described in 
        subsection (o)(8) apply, any costs attributed to 
        interest charged such an agency in connection with 
        amounts borrowed by the agency to repay overpayments 
        made under this title to the agency, except that such 
        costs may be included in reasonable cost if the 
        Secretary determines that the agency was acting in good 
        faith in borrowing the amounts;
          (iii) in the case of contracts entered into by a home 
        health agency after the date of the enactment of this 
        subparagraph for the purpose of having services 
        furnished for or on behalf of such agency, any cost 
        incurred by such agency pursuant to any such contract 
        which is entered into for a period exceeding five 
        years; and
          (iv) in the case of contracts entered into by a home 
        health agency before the date of the enactment of this 
        subparagraph for the purpose of having services 
        furnished for or on behalf of such agency, any cost 
        incurred by such agency pursuant to any such contract, 
        which determines the amount payable by the home health 
        agency on the basis of a percentage of the agency's 
        reimbursement or claim for reimbursement for services 
        furnished by the agency, to the extent that such cost 
        exceeds the reasonable value of the services furnished 
        on behalf of such agency.
  (I) In determining such reasonable cost, the Secretary may 
not include any costs incurred by a provider with respect to 
any services furnished in connection with matters for which 
payment may be made under this title and furnished pursuant to 
a contract between the provider and any of its subcontractors 
which is entered into after the date of the enactment of this 
subparagraph and the value or cost of which is $10,000 or more 
over a twelve-month period unless the contract contains a 
clause to the effect that--
          (i) until the expiration of four years after the 
        furnishing of such services pursuant to such contract, 
        the subcontractor shall make available, upon written 
        request by the Secretary, or upon request by the 
        Comptroller General, or any of their duly authorized 
        representatives, the contract, and books, documents and 
        records of such subcontractor that are necessary to 
        certify the nature and extent of such costs, and
          (ii) if the subcontractor carries out any of the 
        duties of the contract through a subcontract, with a 
        value or cost of $10,000 or more over a twelve-month 
        period, with a related organization, such subcontract 
        shall contain a clause to the effect that until the 
        expiration of four years after the furnishing of such 
        services pursuant to such subcontract, the related 
        organization shall make available, upon written request 
        by the Secretary, or upon request by the Comptroller 
        General, or any of their duly authorized 
        representatives, the subcontract, and books, documents 
        and records of such organization that are necessary to 
        verify the nature and extent of such costs.
The Secretary shall prescribe in regulation criteria and 
procedures which the Secretary shall use in obtaining access to 
books, documents, and records under clauses required in 
contracts and subcontracts under this subparagraph.
  (J) Such regulations may not provide for any inpatient 
routine salary cost differential as a reimbursable cost for 
hospitals and skilled nursing facilities.
  (K)(i) The Secretary shall issue regulations that provide, to 
the extent feasible, for the establishment of limitations on 
the amount of any costs or charges that shall be considered 
reasonable with respect to services provided on an outpatient 
basis by hospitals (other than bona fide emergency services as 
defined in clause (ii)) or clinics (other than rural health 
clinics), which are reimbursed on a cost basis or on the basis 
of cost related charges, and by physicians utilizing such 
outpatient facilities. Such limitations shall be reasonably 
related to the charges in the same area for similar services 
provided in physicians' offices. Such regulations shall provide 
for exceptions to such limitations in cases where similar 
services are not generally available in physicians' offices in 
the area to individuals entitled to benefits under this title.
  (ii) For purposes of clause (i), the term ``bona fide 
emergency services'' means services provided in a hospital 
emergency room after the sudden onset of a medical condition 
manifesting itself by acute symptoms of sufficient severity 
(including severe pain) such that the absence of immediate 
medical attention could reasonably be expected to result in--
          (I) placing the patient's health in serious jeopardy;
          (II) serious impairment to bodily functions; or
          (III) serious dysfunction of any bodily organ or 
        part.
  (L)(i) The Secretary, in determining the amount of the 
payments that may be made under this title with respect to 
services furnished by home health agencies, may not recognize 
as reasonable (in the efficient delivery of such services) 
costs for the provision of such services by an agency to the 
extent these costs exceed (on the aggregate for the agency) for 
cost reporting periods beginning on or after--
          (I) July 1, 1985, and before July 1, 1986, 120 
        percent of the mean of the labor-related and nonlabor 
        per visit costs for freestanding home health agencies,
          (II) July 1, 1986, and before July 1, 1987, 115 
        percent of such mean,
          (III) July 1, 1987, and before October 1, 1997, 112 
        percent of such mean,
          (IV) October 1, 1997, and before October 1, 1998, 105 
        percent of the median of the labor-related and nonlabor 
        per visit costs for freestanding home health agencies, 
        or
          (V) October 1, 1998, 106 percent of such median.
  (ii) Effective for cost reporting periods beginning on or 
after July 1, 1986, such limitations shall be applied on an 
aggregate basis for the agency, rather than on a discipline 
specific basis. The Secretary may provide for such exemptions 
and exceptions to such limitation as he deems appropriate.
  (iii) Not later than July 1, 1991, and annually thereafter 
(but not for cost reporting periods beginning on or after July 
1, 1994, and before July 1, 1996, or on or after July 1, 1997, 
and before October 1, 1997), the Secretary shall establish 
limits under this subparagraph for cost reporting periods 
beginning on or after such date by utilizing the area wage 
index applicable under section 1886(d)(3)(E) and determined 
using the survey of the most recent available wages and wage-
related costs of hospitals located in the geographic area in 
which the home health service is furnished (determined without 
regard to whether such hospitals have been reclassified to a 
new geographic area pursuant to section 1886(d)(8)(B), a 
decision of the Medicare Geographic Classification Review Board 
under section 1886(d)(10), or a decision of the Secretary).
  (iv) In establishing limits under this subparagraph for cost 
reporting periods beginning after September 30, 1997, the 
Secretary shall not take into account any changes in the home 
health market basket, as determined by the Secretary, with 
respect to cost reporting periods which began on or after July 
1, 1994, and before July 1, 1996.
  (v) For services furnished by home health agencies for cost 
reporting periods beginning on or after October 1, 1997, 
subject to clause (viii)(I), the Secretary shall provide for an 
interim system of limits. Payment shall not exceed the costs 
determined under the preceding provisions of this subparagraph 
or, if lower, the product of--
          (I) an agency-specific per beneficiary annual 
        limitation calculated based 75 percent on 98 percent of 
        the reasonable costs (including nonroutine medical 
        supplies) for the agency's 12-month cost reporting 
        period ending during fiscal year 1994, and based 25 
        percent on 98 percent of the standardized regional 
        average of such costs for the agency's census division, 
        as applied to such agency, for cost reporting periods 
        ending during fiscal year 1994, such costs updated by 
        the home health market basket index; and
          (II) the agency's unduplicated census count of 
        patients (entitled to benefits under this title) for 
        the cost reporting period subject to the limitation.
  (vi) For services furnished by home health agencies for cost 
reporting periods beginning on or after October 1, 1997, the 
following rules apply:
          (I) For new providers and those providers without a 
        12-month cost reporting period ending in fiscal year 
        1994 subject to clauses (viii)(II) and (viii)(III), the 
        per beneficiary limitation shall be equal to the median 
        of these limits (or the Secretary's best estimates 
        thereof) applied to other home health agencies as 
        determined by the Secretary. A home health agency that 
        has altered its corporate structure or name shall not 
        be considered a new provider for this purpose.
          (II) For beneficiaries who use services furnished by 
        more than one home health agency, the per beneficiary 
        limitations shall be prorated among the agencies.
  (vii)(I) Not later than January 1, 1998, the Secretary shall 
establish per visit limits applicable for fiscal year 1998, and 
not later than April 1, 1998, the Secretary shall establish per 
beneficiary limits under clause (v)(I) for fiscal year 1998.
  (II) Not later than August 1 of each year (beginning in 1998) 
the Secretary shall establish the limits applicable under this 
subparagraph for services furnished during the fiscal year 
beginning October 1 of the year.
  (viii)(I) In the case of a provider with a 12-month cost 
reporting period ending in fiscal year 1994, if the limit 
imposed under clause (v) (determined without regard to this 
subclause) for a cost reporting period beginning during or 
after fiscal year 1999 is less than the median described in 
clause (vi)(I) (but determined as if any reference in clause 
(v) to ``98 percent'' were a reference to ``100 percent''), the 
limit otherwise imposed under clause (v) for such provider and 
period shall be increased by \1/3\ of such difference.
  (II) Subject to subclause (IV), for new providers and those 
providers without a 12-month cost reporting period ending in 
fiscal year 1994, but for which the first cost reporting period 
begins before fiscal year 1999, for cost reporting periods 
beginning during or after fiscal year 1999, the per beneficiary 
limitation described in clause (vi)(I) shall be equal to the 
median described in such clause (determined as if any reference 
in clause (v) to ``98 percent'' were a reference to ``100 
percent'').
  (III) Subject to subclause (IV), in the case of a new 
provider for which the first cost reporting period begins 
during or after fiscal year 1999, the limitation applied under 
clause (vi)(I) (but only with respect to such provider) shall 
be equal to 75 percent of the median described in clause 
(vi)(I).
  (IV) In the case of a new provider or a provider without a 
12-month cost reporting period ending in fiscal year 1994, 
subclause (II) shall apply, instead of subclause (III), to a 
home health agency which filed an application for home health 
agency provider status under this title before September 15, 
1998, or which was approved as a branch of its parent agency 
before such date and becomes a subunit of the parent agency or 
a separate agency on or after such date.
  (V) Each of the amounts specified in subclauses (I) through 
(III) are such amounts as adjusted under clause (iii) to 
reflect variations in wages among different areas.
  (ix) Notwithstanding the per beneficiary limit under clause 
(viii), if the limit imposed under clause (v) (determined 
without regard to this clause) for a cost reporting period 
beginning during or after fiscal year 2000 is less than the 
median described in clause (vi)(I) (but determined as if any 
reference in clause (v) to ``98 percent'' were a reference to 
``100 percent''), the limit otherwise imposed under clause (v) 
for such provider and period shall be increased by 2 percent.
  (x) Notwithstanding any other provision of this subparagraph, 
in updating any limit under this subparagraph by a home health 
market basket index for cost reporting periods beginning during 
each of fiscal years 2000, 2002, and 2003, the update otherwise 
provided shall be reduced by 1.1 percentage points. With 
respect to cost reporting periods beginning during fiscal year 
2001, the update to any limit under this subparagraph shall be 
the home health market basket index.
  (M) Such regulations shall provide that costs respecting care 
provided by a provider of services, pursuant to an assurance 
under title VI or XVI of the Public Health Service Act that the 
provider will make available a reasonable volume of services to 
persons unable to pay therefor, shall not be allowable as 
reasonable costs.
  (N) In determining such reasonable costs, costs incurred for 
activities directly related to influencing employees respecting 
unionization may not be included.
  (O)(i) In establishing an appropriate allowance for 
depreciation and for interest on capital indebtedness with 
respect to an asset of a provider of services which has 
undergone a change of ownership, such regulations shall 
provide, except as provided in clause (iii), that the valuation 
of the asset after such change of ownership shall be the 
historical cost of the asset, as recognized under this title, 
less depreciation allowed, to the owner of record as of the 
date of enactment of the Balanced Budget Act of 1997 (or, in 
the case of an asset not in existence as of that date, the 
first owner of record of the asset after that date).
  (ii) Such regulations shall not recognize, as reasonable in 
the provision of health care services, costs (including legal 
fees, accounting and administrative costs, travel costs, and 
the costs of feasibility studies) attributable to the 
negotiation or settlement of the sale or purchase of any 
capital asset (by acquisition or merger) for which any payment 
has previously been made under this title.
  (iii) In the case of the transfer of a hospital from 
ownership by a State to ownership by a nonprofit corporation 
without monetary consideration, the basis for capital 
allowances to the new owner shall be the book value of the 
hospital to the State at the time of the transfer.
  (P) If such regulations provide for the payment for a return 
on equity capital (other than with respect to costs of 
inpatient hospital services), the rate of return to be 
recognized, for determining the reasonable cost of services 
furnished in a cost reporting period, shall be equal to the 
average of the rates of interest, for each of the months any 
part of which is included in the period, on obligations issued 
for purchase by the Federal Hospital Insurance Trust Fund.
  (Q) Except as otherwise explicitly authorized, the Secretary 
is not authorized to limit the rate of increase on allowable 
costs of approved medical educational activities.
  (R) In determining such reasonable cost, costs incurred by a 
provider of services representing a beneficiary in an 
unsuccessful appeal of a determination described in section 
1869(b) shall not be allowable as reasonable costs.
  (S)(i) Such regulations shall not include provision for 
specific recognition of any return on equity capital with 
respect to hospital outpatient departments.
  (ii)(I) Such regulations shall provide that, in determining 
the amount of the payments that may be made under this title 
with respect to all the capital-related costs of outpatient 
hospital services, the Secretary shall reduce the amounts of 
such payments otherwise established under this title by 15 
percent for payments attributable to portions of cost reporting 
periods occurring during fiscal year 1990, by 15 percent for 
payments attributable to portions of cost reporting periods 
occurring during fiscal year 1991, and by 10 percent for 
payments attributable to portions of cost reporting periods 
occurring during fiscal years 1992 through 1999 and until the 
first date that the prospective payment system under section 
1833(t) is implemented.
  (II) The Secretary shall reduce the reasonable cost of 
outpatient hospital services (other than the capital-related 
costs of such services) otherwise determined pursuant to 
section 1833(a)(2)(B)(i)(I) by 5.8 percent for payments 
attributable to portions of cost reporting periods occurring 
during fiscal years 1991 through 1999 and until the first date 
that the prospective payment system under section 1833(t) is 
implemented.
  (III) Subclauses (I) and (II) shall not apply to payments 
with respect to the costs of hospital outpatient services 
provided by any hospital that is a sole community hospital (as 
defined in section 1886(d)(5)(D)(iii)) or a critical access 
hospital (as defined in section 1861(mm)(1)).
  (IV) In applying subclauses (I) and (II) to services for 
which payment is made on the basis of a blend amount under 
section 1833(i)(3)(A)(ii) or 1833(n)(1)(A)(ii), the costs 
reflected in the amounts described in sections 
1833(i)(3)(B)(i)(I) and 1833(n)(1)(B)(i)(I), respectively, 
shall be reduced in accordance with such subclause.
  (T) In determining such reasonable costs for hospitals, no 
reduction in copayments under section 1833(t)(8)(B) shall be 
treated as a bad debt and the amount of bad debts otherwise 
treated as allowable costs which are attributable to the 
deductibles and coinsurance amounts under this title shall be 
reduced--
          (i) for cost reporting periods beginning during 
        fiscal year 1998, by 25 percent of such amount 
        otherwise allowable,
          (ii) for cost reporting periods beginning during 
        fiscal year 1999, by 40 percent of such amount 
        otherwise allowable,
          (iii) for cost reporting periods beginning during 
        fiscal year 2000, by 45 percent of such amount 
        otherwise allowable,
          (iv) for cost reporting periods beginning during 
        fiscal years 2001 through 2012, by 30 percent of such 
        amount otherwise allowable, and
          (v) for cost reporting periods beginning during 
        fiscal year 2013 or a subsequent fiscal year, by 35 
        percent of such amount otherwise allowable.
  (U) In determining the reasonable cost of ambulance services 
(as described in subsection (s)(7)) provided during fiscal year 
1998, during fiscal year 1999, and during so much of fiscal 
year 2000 as precedes January 1, 2000, the Secretary shall not 
recognize the costs per trip in excess of costs recognized as 
reasonable for ambulance services provided on a per trip basis 
during the previous fiscal year (after application of this 
subparagraph), increased by the percentage increase in the 
consumer price index for all urban consumers (U.S. city 
average) as estimated by the Secretary for the 12-month period 
ending with the midpoint of the fiscal year involved reduced by 
1.0 percentage point. For ambulance services provided after 
June 30, 1998, the Secretary may provide that claims for such 
services must include a code (or codes) under a uniform coding 
system specified by the Secretary that identifies the services 
furnished.
  (V) In determining such reasonable costs for skilled nursing 
facilities and (beginning with respect to cost reporting 
periods beginning during fiscal year 2013) for covered skilled 
nursing services described in section 1888(e)(2)(A) furnished 
by hospital providers of extended care services (as described 
in section 1883), the amount of bad debts otherwise treated as 
allowed costs which are attributable to the coinsurance amounts 
under this title for individuals who are entitled to benefits 
under part A and--
          (i) are not described in section 1935(c)(6)(A)(ii) 
        shall be reduced by--
          (I) for cost reporting periods beginning on or after 
        October 1, 2005, but before fiscal year 2013, 30 
        percent of such amount otherwise allowable; and
          (II) for cost reporting periods beginning during 
        fiscal year 2013 or a subsequent fiscal year, by 35 
        percent of such amount otherwise allowable.
          (ii) are described in such section--
          (I) for cost reporting periods beginning on or after 
        October 1, 2005, but before fiscal year 2013, shall not 
        be reduced;
          (II) for cost reporting periods beginning during 
        fiscal year 2013, shall be reduced by 12 percent of 
        such amount otherwise allowable;
          (III) for cost reporting periods beginning during 
        fiscal year 2014, shall be reduced by 24 percent of 
        such amount otherwise allowable; and
          (IV) for cost reporting periods beginning during a 
        subsequent fiscal year, shall be reduced by 35 percent 
        of such amount otherwise allowable.
  (W)(i) In determining such reasonable costs for providers 
described in clause (ii), the amount of bad debts otherwise 
treated as allowable costs which are attributable to 
deductibles and coinsurance amounts under this title shall be 
reduced--
          (I) for cost reporting periods beginning during 
        fiscal year 2013, by 12 percent of such amount 
        otherwise allowable;
          (II) for cost reporting periods beginning during 
        fiscal year 2014, by 24 percent of such amount 
        otherwise allowable; and
          (III) for cost reporting periods beginning during a 
        subsequent fiscal year, by 35 percent of such amount 
        otherwise allowable.
  (ii) A provider described in this clause is a provider of 
services not described in subparagraph (T) or (V), a supplier, 
or any other type of entity that receives payment for bad debts 
under the authority under subparagraph (A).
  (2)(A) If the bed and board furnished as part of inpatient 
hospital services (including inpatient tuberculosis hospital 
services and inpatient psychiatric hospital services) or post-
hospital extended care services is in accommodations more 
expensive than semi-private accommodations, the amount taken 
into account for purposes of payment under this title with 
respect to such services may not exceed the amount that would 
be taken into account with respect to such services if 
furnished in such semi-private accommodations unless the more 
expensive accommodations were required for medical reasons.
  (B) Where a provider of services which has an agreement in 
effect under this title furnishes to an individual items or 
services which are in excess of or more expensive than the 
items or services with respect to which payment may be made 
under part A or part B, as the case may be, the Secretary shall 
take into account for purposes of payment to such provider of 
services only the items or services with respect to which such 
payment may be made.
  (3) If the bed and board furnished as part of inpatient 
hospital services (including inpatient tuberculosis hospital 
services and inpatient psychiatric hospital services) or post-
hospital extended care services is in accommodations other 
than, but not more expensive than, semi-private accommodations 
and the use of such other accommodations rather than semi-
private accommodations was neither at the request of the 
patient nor for a reason which the Secretary determines is 
consistent with the purposes of this title, the amount of the 
payment with respect to such bed and board under part A shall 
be the amount otherwise payable under this title for such bed 
and board furnished in semi-private accommodations minus the 
difference between the charge customarily made by the hospital 
or skilled nursing facility for bed and board in semi-private 
accommodations and the charge customarily made by it for bed 
and board in the accommodations furnished.
  (4) If a provider of services furnishes items or services to 
an individual which are in excess of or more expensive than the 
items or services determined to be necessary in the efficient 
delivery of needed health services and charges are imposed for 
such more expensive items or services under the authority 
granted in section 1866(a)(2)(B)(ii), the amount of payment 
with respect to such items or services otherwise due such 
provider in any fiscal period shall be reduced to the extent 
that such payment plus such charges exceed the cost actually 
incurred for such items or services in the fiscal period in 
which such charges are imposed.
  (5)(A) Where physical therapy services, occupational therapy 
services, speech therapy services, or other therapy services or 
services of other health-related personnel (other than 
physicians) are furnished under an arrangement with a provider 
of services or other organization, specified in the first 
sentence of subsection (p) (including through the operation of 
subsection (g)) the amount included in any payment to such 
provider or other organization under this title as the 
reasonable cost of such services (as furnished under such 
arrangements) shall not exceed an amount equal to the salary 
which would reasonably have been paid for such services 
(together with any additional costs that would have been 
incurred by the provider or other organization) to the person 
performing them if they had been performed in an employment 
relationship with such provider or other organization (rather 
than under such arrangement) plus the cost of such other 
expenses (including a reasonable allowance for traveltime and 
other reasonable types of expense related to any differences in 
acceptable methods of organization for the provision of such 
therapy) incurred by such person, as the Secretary may in 
regulations determine to be appropriate.
  (B) Notwithstanding the provisions of subparagraph (A), if a 
provider of services or other organization specified in the 
first sentence of section 1861(p) requires the services of a 
therapist on a limited part-time basis, or only to perform 
intermittent services, the Secretary may make payment on the 
basis of a reasonable rate per unit of service, even though 
such rate is greater per unit of time than salary related 
amounts, where he finds that such greater payment is, in the 
aggregate, less than the amount that would have been paid if 
such organization had employed a therapist on a full- or part-
time salary basis.
  (6) For purposes of this subsection, the term ``semi-private 
accommodations'' means two-bed, three-bed, or four-bed 
accommodations.
  (7)(A) For limitation on Federal participation for capital 
expenditures which are out of conformity with a comprehensive 
plan of a State or areawide planning agency, see section 1122.
  (B) For further limitations on reasonable cost and 
determination of payment amounts for operating costs of 
inpatient hospital services and waivers for certain States, see 
section 1886.
  (C) For provisions restricting payment for provider-based 
physicians' services and for payments under certain percentage 
arrangements, see section 1887.
  (D) For further limitations on reasonable cost and 
determination of payment amounts for routine service costs of 
skilled nursing facilities, see subsections (a) through (c) of 
section 1888.
  (8) Items unrelated to patient care.--Reasonable costs do not 
include costs for the following--
          (i) entertainment, including tickets to sporting and 
        other entertainment events;
          (ii) gifts or donations;
          (iii) personal use of motor vehicles;
          (iv) costs for fines and penalties resulting from 
        violations of Federal, State, or local laws; and
          (v) education expenses for spouses or other 
        dependents of providers of services, their employees or 
        contractors.

                   Arrangements for Certain Services

  (w)(1) The term ``arrangements'' is limited to arrangements 
under which receipt of payment by the hospital, critical access 
hospital, skilled nursing facility, home health agency, or 
hospice program (whether in its own right or as agent), with 
respect to services for which an individual is entitled to have 
payment made under this title, discharges the liability of such 
individual or any other person to pay for the services.
  (2) Utilization review activities conducted, in accordance 
with the requirements of the program established under part B 
of title XI of the Social Security Act with respect to services 
furnished by a hospital or critical access hospital to patients 
insured under part A of this title or entitled to have payment 
made for such services under part B of this title or under a 
State plan approved under title XIX, by a quality improvement 
organization designated for the area in which such hospital or 
critical access hospital is located shall be deemed to have 
been conducted pursuant to arrangements between such hospital 
or critical access hospital and such organization under which 
such hospital or critical access hospital is obligated to pay 
to such organization, as a condition of receiving payment for 
hospital or critical access hospital services so furnished 
under this part or under such a State plan, such amount as is 
reasonably incurred and requested (as determined under 
regulations of the Secretary) by such organization in 
conducting such review activities with respect to services 
furnished by such hospital or critical access hospital to such 
patients.

                        State and United States

  (x) The terms ``State'' and ``United States'' have the 
meaning given to them by subsections (h) and (i), respectively, 
of section 210.

     Extended Care in Religious Nonmedical Health Care Institutions

  (y)(1) The term ``skilled nursing facility'' also includes a 
religious nonmedical health care institution (as defined in 
subsection (ss)(1)), but only (except for purposes of 
subsection (a)(2)) with respect to items and services 
ordinarily furnished by such an institution to inpatients, and 
payment may be made with respect to services provided by or in 
such an institution only to such extent and under such 
conditions, limitations, and requirements (in addition to or in 
lieu of the conditions, limitations, and requirements otherwise 
applicable) as may be provided in regulations consistent with 
section 1821.
  (2) Notwithstanding any other provision of this title, 
payment under part A may not be made for services furnished an 
individual in a skilled nursing facility to which paragraph (1) 
applies unless such individual elects, in accordance with 
regulations, for a spell of illness to have such services 
treated as post-hospital extended care services for purposes of 
such part; and payment under part A may not be made for post-
hospital extended care services--
          (A) furnished an individual during such spell of 
        illness in a skilled nursing facility to which 
        paragraph (1) applies after--
                  (i) such services have been furnished to him 
                in such a facility for 30 days during such 
                spell, or
                  (ii) such services have been furnished to him 
                during such spell in a skilled nursing facility 
                to which such paragraph does not apply; or
          (B) furnished an individual during such spell of 
        illness in a skilled nursing facility to which 
        paragraph (1) does not apply after such services have 
        been furnished to him during such spell in a skilled 
        nursing facility to which such paragraph applies.
  (3) The amount payable under part A for post-hospital 
extended care services furnished an individual during any spell 
of illness in a skilled nursing facility to which paragraph (1) 
applies shall be reduced by a coinsurance amount equal to one-
eighth of the inpatient hospital deductible for each day before 
the 31st day on which he is furnished such services in such a 
facility during such spell (and the reduction under this 
paragraph shall be in lieu of any reduction under section 
1813(a)(3)).
  (4) For purposes of subsection (i), the determination of 
whether services furnished by or in an institution described in 
paragraph (1) constitute post-hospital extended care services 
shall be made in accordance with and subject to such 
conditions, limitations, and requirements as may be provided in 
regulations.

                         Institutional Planning

  (z) An overall plan and budget of a hospital, skilled nursing 
facility, comprehensive outpatient rehabilitation facility, or 
home health agency shall be considered sufficient if it--
          (1) provides for an annual operating budget which 
        includes all anticipated income and expenses related to 
        items which would, under generally accepted accounting 
        principles, be considered income and expense items 
        (except that nothing in this paragraph shall require 
        that there be prepared, in connection with any budget, 
        an item-by-item identification of the components of 
        each type of anticipated expenditure or income);
          (2)(A) provides for a capital expenditures plan for 
        at least a 3-year period (including the year to which 
        the operating budget described in paragraph (1) is 
        applicable) which includes and identifies in detail the 
        anticipated sources of financing for, and the 
        objectives of, each anticipated expenditure in excess 
        of $600,000 (or such lesser amount as may be 
        established by the State under section 1122(g)(1) in 
        which the hospital is located) related to the 
        acquisition of land, the improvement of land, 
        buildings, and equipment, and the replacement, 
        modernization, and expansion of the buildings and 
        equipment which would, under generally accepted 
        accounting principles, be considered capital items;
          (B) provides that such plan is submitted to the 
        agency designated under section 1122(b), or if no such 
        agency is designated, to the appropriate health 
        planning agency in the State (but this subparagraph 
        shall not apply in the case of a facility exempt from 
        review under section 1122 by reason of section 
        1122(j));
          (3) provides for review and updating at least 
        annually; and
          (4) is prepared, under the direction of the governing 
        body of the institution or agency, by a committee 
        consisting of representatives of the governing body, 
        the administrative staff, and the medical staff (if 
        any) of the institution or agency.

  Rural Health Clinic Services and Federally Qualified Health Center 
                                Services

  (aa)(1) The term ``rural health clinic services'' means --
          (A) physicians' services and such services and 
        supplies as are covered under section 1861(s)(2)(A) if 
        furnished as an incident to a physician's professional 
        service and items and services described in section 
        1861(s)(10),
          (B) such services furnished by a physician assistant 
        or a nurse practitioner (as defined in paragraph (5)), 
        by a clinical psychologist (as defined by the 
        Secretary) or by a clinical social worker (as defined 
        in subsection (hh)(1)), and such services and supplies 
        furnished as an incident to his service as would 
        otherwise be covered if furnished by a physician or as 
        an incident to a physician's service, and
          (C) in the case of a rural health clinic located in 
        an area in which there exists a shortage of home health 
        agencies, part-time or intermittent nursing care and 
        related medical supplies (other than drugs and 
        biologicals) furnished by a registered professional 
        nurse or licensed practical nurse to a homebound 
        individual under a written plan of treatment (i) 
        established and periodically reviewed by a physician 
        described in paragraph (2)(B), or (ii) established by a 
        nurse practitioner or physician assistant and 
        periodically reviewed and approved by a physician 
        described in paragraph (2)(B),
when furnished to an individual as an outpatient of a rural 
health clinic.
  (2) The term ``rural health clinic'' means a facility which 
--
          (A) is primarily engaged in furnishing to outpatients 
        services described in subparagraphs (A) and (B) of 
        paragraph (1);
          (B) in the case of a facility which is not a 
        physician-directed clinic, has an arrangement 
        (consistent with the provisions of State and local law 
        relative to the practice, performance, and delivery of 
        health services) with one or more physicians (as 
        defined in subsection (r)(1)) under which provision is 
        made for the periodic review by such physicians of 
        covered services furnished by physician assistants and 
        nurse practitioners, the supervision and guidance by 
        such physicians of physician assistants and nurse 
        practitioners, the preparation by such physicians of 
        such medical orders for care and treatment of clinic 
        patients as may be necessary, and the availability of 
        such physicians for such referral of and consultation 
        for patients as is necessary and for advice and 
        assistance in the management of medical emergencies; 
        and, in the case of a physician-directed clinic, has 
        one or more of its staff physicians perform the 
        activities accomplished through such an arrangement;
          (C) maintains clinical records on all patients;
          (D) has arrangements with one or more hospitals, 
        having agreements in effect under section 1866, for the 
        referral and admission of patients requiring inpatient 
        services or such diagnostic or other specialized 
        services as are not available at the clinic;
          (E) has written policies, which are developed with 
        the advice of (and with provision for review of such 
        policies from time to time by) a group of professional 
        personnel, including one or more physicians and one or 
        more physician assistants or nurse practitioners, to 
        govern those services described in paragraph (1) which 
        it furnishes;
          (F) has a physician, physician assistant, or nurse 
        practitioner responsible for the execution of policies 
        described in subparagraph (E) and relating to the 
        provision of the clinic's services;
          (G) directly provides routine diagnostic services, 
        including clinical laboratory services, as prescribed 
        in regulations by the Secretary, and has prompt access 
        to additional diagnostic services from facilities 
        meeting requirements under this title;
          (H) in compliance with State and Federal law, has 
        available for administering to patients of the clinic 
        at least such drugs and biologicals as are determined 
        by the Secretary to be necessary for the treatment of 
        emergency cases (as defined in regulations) and has 
        appropriate procedures or arrangements for storing, 
        administering, and dispensing any drugs and 
        biologicals;
          (I) has a quality assessment and performance 
        improvement program, and appropriate procedures for 
        review of utilization of clinic services, as the 
        Secretary may specify;
          (J) has a nurse practitioner, a physician assistant, 
        or a certified nurse-midwife (as defined in subsection 
        (gg)) available to furnish patient care services not 
        less than 50 percent of the time the clinic operates; 
        and
          (K) meets such other requirements as the Secretary 
        may find necessary in the interest of the health and 
        safety of the individuals who are furnished services by 
        the clinic.
For the purposes of this title, such term includes only a 
facility which (i) is located in an area that is not an 
urbanized area (as defined by the Bureau of the Census) and in 
which there are insufficient numbers of needed health care 
practitioners (as determined by the Secretary), and that, 
within the previous 4-year period, has been designated by the 
chief executive officer of the State and certified by the 
Secretary as an area with a shortage of personal health 
services or designated by the Secretary either (I) as an area 
with a shortage of personal health services under section 
330(b)(3) or 1302(7) of the Public Health Service Act, (II) as 
a health professional shortage area described in section 
332(a)(1)(A) of that Act because of its shortage of primary 
medical care manpower, (III) as a high impact area described in 
section 329(a)(5) of that Act, of (IV) as an area which 
includes a population group which the Secretary determines has 
a health manpower shortage under section 332(a)(1)(B) of that 
Act, (ii) has filed an agreement with the Secretary by which it 
agrees not to charge any individual or other person for items 
or services for which such individual is entitled to have 
payment made under this title, except for the amount of any 
deductible or coinsurance amount imposed with respect to such 
items or services (not in excess of the amount customarily 
charged for such items and services by such clinic), pursuant 
to subsections (a) and (b) of section 1833, (iii) employs a 
physician assistant or nurse practitioner, and (iv) is not a 
rehabilitation agency or a facility which is primarily for the 
care and treatment of mental diseases. A facility that is in 
operation and qualifies as a rural health clinic under this 
title or title XIX and that subsequently fails to satisfy the 
requirement of clause (i) shall be considered, for purposes of 
this title and title XIX, as still satisfying the requirement 
of such clause if it is determined, in accordance with criteria 
established by the Secretary in regulations, to be essential to 
the delivery of primary care services that would otherwise be 
unavailable in the geographic area served by the clinic. If a 
State agency has determined under section 1864(a) that a 
facility is a rural health clinic and the facility has applied 
to the Secretary for approval as such a clinic, the Secretary 
shall notify the facility of the Secretary's approval or 
disapproval not later than 60 days after the date of the State 
agency determination or the application (whichever is later).
  (3) The term ``Federally qualified health center services'' 
means--
          (A) services of the type described in subparagraphs 
        (A) through (C) of paragraph (1) and preventive 
        services (as defined in section 1861(ddd)(3)); and
          (B) preventive primary health services that a center 
        is required to provide under section 330 of the Public 
        Health Service Act,
when furnished to an individual as an outpatient of a Federally 
qualified health center by the center or by a health care 
professional under contract with the center and, for this 
purpose, any reference to a rural health clinic or a physician 
described in paragraph (2)(B) is deemed a reference to a 
Federally qualified health center or a physician at the center, 
respectively.
  (4) The term ``Federally qualified health center'' means an 
entity which--
          (A)(i) is receiving a grant under section 330 of the 
        Public Health Service Act, or
          (ii)(I) is receiving funding from such a grant under 
        a contract with the recipient of such a grant, and (II) 
        meets the requirements to receive a grant under section 
        330 of such Act;
          (B) based on the recommendation of the Health 
        Resources and Services Administration within the Public 
        Health Service, is determined by the Secretary to meet 
        the requirements for receiving such a grant;
          (C) was treated by the Secretary, for purposes of 
        part B, as a comprehensive Federally funded health 
        center as of January 1, 1990; or
          (D) is an outpatient health program or facility 
        operated by a tribe or tribal organization under the 
        Indian Self-Determination Act or by an urban Indian 
        organization receiving funds under title V of the 
        Indian Health Care Improvement Act.
  (5)(A) The term ``physician assistant'' and the term ``nurse 
practitioner'' mean, for purposes of this title, a physician 
assistant or nurse practitioner who performs such services as 
such individual is legally authorized to perform (in the State 
in which the individual performs such services) in accordance 
with State law (or the State regulatory mechanism provided by 
State law), and who meets such training, education, and 
experience requirements (or any combination thereof) as the 
Secretary may prescribe in regulations.
  (B) The term ``clinical nurse specialist'' means, for 
purposes of this title, an individual who--
          (i) is a registered nurse and is licensed to practice 
        nursing in the State in which the clinical nurse 
        specialist services are performed; and
          (ii) holds a master's degree in a defined clinical 
        area of nursing from an accredited educational 
        institution.
  (6) The term ``collaboration'' means a process in which a 
nurse practitioner works with a physician to deliver health 
care services within the scope of the practitioner's 
professional expertise, with medical direction and appropriate 
supervision as provided for in jointly developed guidelines or 
other mechanisms as defined by the law of the State in which 
the services are performed.
  (7)(A) The Secretary shall waive for a 1-year period the 
requirements of paragraph (2) that a rural health clinic employ 
a physician assistant, nurse practitioner or certified nurse 
midwife or that such clinic require such providers to furnish 
services at least 50 percent of the time that the clinic 
operates for any facility that requests such waiver if the 
facility demonstrates that the facility has been unable, 
despite reasonable efforts, to hire a physician assistant, 
nurse practitioner, or certified nurse-midwife in the previous 
90-day period.
  (B) The Secretary may not grant such a waiver under 
subparagraph (A) to a facility if the request for the waiver is 
made less than 6 months after the date of the expiration of any 
previous such waiver for the facility, or if the facility has 
not yet been determined to meet the requirements (including 
subparagraph (J) of the first sentence of paragraph (2)) of a 
rural health clinic.
  (C) A waiver which is requested under this paragraph shall be 
deemed granted unless such request is denied by the Secretary 
within 60 days after the date such request is received.

          Services of a Certified Registered Nurse Anesthetist

  (bb)(1) The term ``services of a certified registered nurse 
anesthetist'' means anesthesia services and related care 
furnished by a certified registered nurse anesthetist (as 
defined in paragraph (2)) which the nurse anesthetist is 
legally authorized to perform as such by the State in which the 
services are furnished.
  (2) The term ``certified registered nurse anesthetist'' means 
a certified registered nurse anesthetist licensed by the State 
who meets such education, training, and other requirements 
relating to anesthesia services and related care as the 
Secretary may prescribe. In prescribing such requirements the 
Secretary may use the same requirements as those established by 
a national organization for the certification of nurse 
anesthetists. Such term also includes, as prescribed by the 
Secretary, an anesthesiologist assistant.

       Comprehensive Outpatient Rehabilitation Facility Services

  (cc)(1) The term ``comprehensive outpatient rehabilitation 
facility services'' means the following items and services 
furnished by a physician or other qualified professional 
personnel (as defined in regulations by the Secretary) to an 
individual who is an outpatient of a comprehensive outpatient 
rehabilitation facility under a plan (for furnishing such items 
and services to such individual) established and periodically 
reviewed by a physician--
          (A) physicians' services;
          (B) physical therapy, occupational therapy, speech-
        language pathology services, and respiratory therapy;
          (C) prosthetic and orthotic devices, including 
        testing, fitting, or training in the use of prosthetic 
        and orthotic devices;
          (D) social and psychological services;
          (E) nursing care provided by or under the supervision 
        of a registered professional nurse;
          (F) drugs and biologicals which cannot, as determined 
        in accordance with regulations, be self-administered;
          (G) supplies and durable medical equipment; and
          (H) such other items and services as are medically 
        necessary for the rehabilitation of the patient and are 
        ordinarily furnished by comprehensive outpatient 
        rehabilitation facilities,
excluding, however, any item or service if it would not be 
included under subsection (b) if furnished to an inpatient of a 
hospital. In the case of physical therapy, occupational 
therapy, and speech pathology services, there shall be no 
requirement that the item or service be furnished at any single 
fixed location if the item or service is furnished pursuant to 
such plan and payments are not otherwise made for the item or 
service under this title.
  (2) The term ``comprehensive outpatient rehabilitation 
facility'' means a facility which--
          (A) is primarily engaged in providing (by or under 
        the supervision of physicians) diagnostic, therapeutic, 
        and restorative services to outpatients for the 
        rehabilitation of injured, disabled, or sick persons;
          (B) provides at least the following comprehensive 
        outpatient rehabilitation services: (i) physicians' 
        services (rendered by physicians, as defined in section 
        1861(r)(1), who are available at the facility on a 
        full- or part-time basis); (ii) physical therapy; and 
        (iii) social or psychological services;
          (C) maintains clinical records on all patients;
          (D) has policies established by a group of 
        professional personnel (associated with the facility), 
        including one or more physicians defined in subsection 
        (r)(1) to govern the comprehensive outpatient 
        rehabilitation services it furnishes, and provides for 
        the carrying out of such policies by a full- or part-
        time physician referred to in subparagraph (B)(i);
          (E) has a requirement that every patient must be 
        under the care of a physician;
          (F) in the case of a facility in any State in which 
        State or applicable local law provides for the 
        licensing of facilities of this nature (i) is licensed 
        pursuant to such law, or (ii) is approved by the agency 
        of such State or locality, responsible for licensing 
        facilities of this nature, as meeting the standards 
        established for such licensing;
          (G) has in effect a utilization review plan in 
        accordance with regulations prescribed by the 
        Secretary;
          (H) has in effect an overall plan and budget that 
        meets the requirements of subsection (z);
          (I) provides the Secretary on a continuing basis with 
        a surety bond in a form specified by the Secretary and 
        in an amount that is not less than $50,000; and
          (J) meets such other conditions of participation as 
        the Secretary may find necessary in the interest of the 
        health and safety of individuals who are furnished 
        services by such facility, including conditions 
        concerning qualifications of personnel in these 
        facilities.
The Secretary may waive the requirement of a surety bond under 
subparagraph (I) in the case of a facility that provides a 
comparable surety bond under State law.

                     Hospice Care; Hospice Program

  (dd)(1) The term ``hospice care'' means the following items 
and services provided to a terminally ill individual by, or by 
others under arrangements made by, a hospice program under a 
written plan (for providing such care to such individual) 
established and periodically reviewed by the individual's 
attending physician and by the medical director (and by the 
interdisciplinary group described in paragraph (2)(B)) of the 
program--
          (A) nursing care provided by or under the supervision 
        of a registered professional nurse,
          (B) physical or occupational therapy, or speech-
        language pathology services,
          (C) medical social services under the direction of a 
        physician,
          (D)(i) services of a home health aide who has 
        successfully completed a training program approved by 
        the Secretary and (ii) homemaker services,
          (E) medical supplies (including drugs and 
        biologicals) and the use of medical appliances, while 
        under such a plan,
          (F) physicians' services,
          (G) short-term inpatient care (including both respite 
        care and procedures necessary for pain control and 
        acute and chronic symptom management) in an inpatient 
        facility meeting such conditions as the Secretary 
        determines to be appropriate to provide such care, but 
        such respite care may be provided only on an 
        intermittent, nonroutine, and occasional basis and may 
        not be provided consecutively over longer than five 
        days,
          (H) counseling (including dietary counseling) with 
        respect to care of the terminally ill individual and 
        adjustment to his death, and
          (I) any other item or service which is specified in 
        the plan and for which payment may otherwise be made 
        under this title.
The care and services described in subparagraphs (A) and (D) 
may be provided on a 24-hour, continuous basis only during 
periods of crisis (meeting criteria established by the 
Secretary) and only as necessary to maintain the terminally ill 
individual at home.
  (2) The term ``hospice program'' means a public agency or 
private organization (or a subdivision thereof) which--
          (A)(i) is primarily engaged in providing the care and 
        services described in paragraph (1) and makes such 
        services available (as needed) on a 24-hour basis and 
        which also provides bereavement counseling for the 
        immediate family of terminally ill individuals and 
        services described in section 1812(a)(5),
          (ii) provides for such care and services in 
        individuals' homes, on an outpatient basis, and on a 
        short-term inpatient basis, directly or under 
        arrangements made by the agency or organization, except 
        that--
                  (I) the agency or organization must routinely 
                provide directly substantially all of each of 
                the services described in subparagraphs (A), 
                (C), and (H) of paragraph (1), except as 
                otherwise provided in paragraph (5), and
                  (II) in the case of other services described 
                in paragraph (1) which are not provided 
                directly by the agency or organization, the 
                agency or organization must maintain 
                professional management responsibility for all 
                such services furnished to an individual, 
                regardless of the location or facility in which 
                such services are furnished; and
          (iii) provides assurances satisfactory to the 
        Secretary that the aggregate number of days of 
        inpatient care described in paragraph (1)(G) provided 
        in any 12-month period to individuals who have an 
        election in effect under section 1812(d) with respect 
        to that agency or organization does not exceed 20 
        percent of the aggregate number of days during that 
        period on which such elections for such individuals are 
        in effect;
          (B) has an interdisciplinary group of personnel 
        which--
                  (i) includes at least--
                          (I) one physician (as defined in 
                        subsection (r)(1)),
                          (II) one registered professional 
                        nurse, and
                          (III) one social worker,
        employed by or, in the case of a physician described in 
        subclause (I), under contract with the agency or 
        organization, and also includes at least one pastoral 
        or other counselor,
                  (ii) provides (or supervises the provision 
                of) the care and services described in 
                paragraph (1), and
                  (iii) establishes the policies governing the 
                provision of such care and services;
          (C) maintains central clinical records on all 
        patients;
          (D) does not discontinue the hospice care it provides 
        with respect to a patient because of the inability of 
        the patient to pay for such care;
          (E)(i) utilizes volunteers in its provision of care 
        and services in accordance with standards set by the 
        Secretary, which standards shall ensure a continuing 
        level of effort to utilize such volunteers, and (ii) 
        maintains records on the use of these volunteers and 
        the cost savings and expansion of care and services 
        achieved through the use of these volunteers;
          (F) in the case of an agency or organization in any 
        State in which State or applicable local law provides 
        for the licensing of agencies or organizations of this 
        nature, is licensed pursuant to such law; and
          (G) 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 such agency or organization.
  (3)(A) An individual is considered to be ``terminally ill'' 
if the individual has a medical prognosis that the individual's 
life expectancy is 6 months or less.
  (B) The term ``attending physician'' means, with respect to 
an individual, the physician (as defined in subsection (r)(1)) 
or nurse practitioner (as defined in subsection (aa)(5)), who 
may be employed by a hospice program, whom the individual 
identifies as having the most significant role in the 
determination and delivery of medical care to the individual at 
the time the individual makes an election to receive hospice 
care.
  (4)(A) An entity which is certified as a provider of services 
other than a hospice program shall be considered, for purposes 
of certification as a hospice program, to have met any 
requirements under paragraph (2) which are also the same 
requirements for certification as such other type of provider. 
The Secretary shall coordinate surveys for determining 
certification under this title so as to provide, to the extent 
feasible, for simultaneous surveys of an entity which seeks to 
be certified as a hospice program and as a provider of services 
of another type.
  (B) Any entity which is certified as a hospice program and as 
a provider of another type shall have separate provider 
agreements under section 1866 and shall file separate cost 
reports with respect to costs incurred in providing hospice 
care and in providing other services and items under this 
title.
  (C) Any entity that is certified as a hospice program shall 
be subject to a standard survey by an appropriate State or 
local survey agency, or an approved accreditation agency, as 
determined by the Secretary, not less frequently than once 
every 36 months beginning 6 months after the date of the 
enactment of this subparagraph and ending September 30, 2025.
  (5)(A) The Secretary may waive the requirements of paragraph 
(2)(A)(ii)(I) for an agency or organization with respect to all 
or part of the nursing care described in paragraph (1)(A) if 
such agency or organization--
          (i) is located in an area which is not an urbanized 
        area (as defined by the Bureau of the Census);
          (ii) was in operation on or before January 1, 1983; 
        and
          (iii) has demonstrated a good faith effort (as 
        determined by the Secretary) to hire a sufficient 
        number of nurses to provide such nursing care directly.
  (B) Any waiver, which is in such form and containing such 
information as the Secretary may require and which is requested 
by an agency or organization under subparagraph (A) or (C), 
shall be deemed to be granted unless such request is denied by 
the Secretary within 60 days after the date such request is 
received by the Secretary. The granting of a waiver under 
subparagraph (A) or (C) shall not preclude the granting of any 
subsequent waiver request should such a waiver again become 
necessary.
  (C) The Secretary may waive the requirements of paragraph 
(2)(A)(i) and (2)(A)(ii) for an agency or organization with 
respect to the services described in paragraph (1)(B) and, with 
respect to dietary counseling, paragraph (1)(H), if such agency 
or organization--
          (i) is located in an area which is not an urbanized 
        area (as defined by the Bureau of Census), and
          (ii) demonstrates to the satisfaction of the 
        Secretary that the agency or organization has been 
        unable, despite diligent efforts, to recruit 
        appropriate personnel.
  (D) In extraordinary, exigent, or other non-routine 
circumstances, such as unanticipated periods of high patient 
loads, staffing shortages due to illness or other events, or 
temporary travel of a patient outside a hospice program's 
service area, a hospice program may enter into arrangements 
with another hospice program for the provision by that other 
program of services described in paragraph (2)(A)(ii)(I). The 
provisions of paragraph (2)(A)(ii)(II) shall apply with respect 
to the services provided under such arrangements.
  (E) A hospice program may provide services described in 
paragraph (1)(A) other than directly by the program if the 
services are highly specialized services of a registered 
professional nurse and are provided non-routinely and so 
infrequently so that the provision of such services directly 
would be impracticable and prohibitively expensive.

                       Discharge Planning Process

  (ee)(1) A discharge planning process of a hospital shall be 
considered sufficient if it is applicable to services furnished 
by the hospital to individuals entitled to benefits under this 
title and if it meets the guidelines and standards established 
by the Secretary under paragraph (2).
  (2) The Secretary shall develop guidelines and standards for 
the discharge planning process in order to ensure a timely and 
smooth transition to the most appropriate type of and setting 
for post-hospital or rehabilitative care. The guidelines and 
standards shall include the following:
          (A) The hospital must identify, at an early stage of 
        hospitalization, those patients who are likely to 
        suffer adverse health consequences upon discharge in 
        the absence of adequate discharge planning.
          (B) Hospitals must provide a discharge planning 
        evaluation for patients identified under subparagraph 
        (A) and for other patients upon the request of the 
        patient, patient's representative, or patient's 
        physician.
          (C) Any discharge planning evaluation must be made on 
        a timely basis to ensure that appropriate arrangements 
        for post-hospital care will be made before discharge 
        and to avoid unnecessary delays in discharge.
          (D) A discharge planning evaluation must include an 
        evaluation of a patient's likely need for appropriate 
        post-hospital services, including hospice care and 
        post-hospital extended care services, and the 
        availability of those services, including the 
        availability of home health services through 
        individuals and entities that participate in the 
        program under this title and that serve the area in 
        which the patient resides and that request to be listed 
        by the hospital as available and, in the case of 
        individuals who are likely to need post-hospital 
        extended care services, the availability of such 
        services through facilities that participate in the 
        program under this title and that serve the area in 
        which the patient resides.
          (E) The discharge planning evaluation must be 
        included in the patient's medical record for use in 
        establishing an appropriate discharge plan and the 
        results of the evaluation must be discussed with the 
        patient (or the patient's representative).
          (F) Upon the request of a patient's physician, the 
        hospital must arrange for the development and initial 
        implementation of a discharge plan for the patient.
          (G) Any discharge planning evaluation or discharge 
        plan required under this paragraph must be developed 
        by, or under the supervision of, a registered 
        professional nurse, social worker, or other 
        appropriately qualified personnel.
          (H) Consistent with section 1802, the discharge plan 
        shall--
                  (i) not specify or otherwise limit the 
                qualified provider which may provide post-
                hospital home health services, and
                  (ii) identify (in a form and manner specified 
                by the Secretary) any entity to whom the 
                individual is referred in which the hospital 
                has a disclosable financial interest (as 
                specified by the Secretary consistent with 
                section 1866(a)(1)(S)) or which has such an 
                interest in the hospital.
  (3) With respect to a discharge plan for an individual who is 
enrolled with a Medicare+Choice organization under a 
Medicare+Choice plan and is furnished inpatient hospital 
services by a hospital under a contract with the organization--
          (A) the discharge planning evaluation under paragraph 
        (2)(D) is not required to include information on the 
        availability of home health services through 
        individuals and entities which do not have a contract 
        with the organization; and
          (B) notwithstanding subparagraph (H)(i), the plan may 
        specify or limit the provider (or providers) of post-
        hospital home health services or other post-hospital 
        services under the plan.

                    Partial Hospitalization Services

  (ff)(1) The term ``partial hospitalization services'' means 
the items and services described in paragraph (2) prescribed by 
a physician and provided under a program described in paragraph 
(3) under the supervision of a physician pursuant to an 
individualized, written plan of treatment established and 
periodically reviewed by a physician (in consultation with 
appropriate staff participating in such program), which plan 
sets forth the physician's diagnosis, the type, amount, 
frequency, and duration of the items and services provided 
under the plan, and the goals for treatment under the plan.
  (2) The items and services described in this paragraph are--
          (A) individual and group therapy with physicians or 
        psychologists (or other mental health professionals to 
        the extent authorized under State law),
          (B) occupational therapy requiring the skills of a 
        qualified occupational therapist,
          (C) services of social workers, trained psychiatric 
        nurses, and other staff trained to work with 
        psychiatric patients,
          (D) drugs and biologicals furnished for therapeutic 
        purposes (which cannot, as determined in accordance 
        with regulations, be self-administered),
          (E) individualized activity therapies that are not 
        primarily recreational or diversionary,
          (F) family counseling (the primary purpose of which 
        is treatment of the individual's condition),
          (G) patient training and education (to the extent 
        that training and educational activities are closely 
        and clearly related to individual's care and 
        treatment),
          (H) diagnostic services, and
          (I) such other items and services as the Secretary 
        may provide (but in no event to include meals and 
        transportation);
that are reasonable and necessary for the diagnosis or active 
treatment of the individual's condition, reasonably expected to 
improve or maintain the individual's condition and functional 
level and to prevent relapse or hospitalization, and furnished 
pursuant to such guidelines relating to frequency and duration 
of services as the Secretary shall by regulation establish 
(taking into account accepted norms of medical practice and the 
reasonable expectation of patient improvement).
  (3)(A) A program described in this paragraph is a program 
which is furnished by a hospital to its outpatients or by a 
community mental health center (as defined in subparagraph 
(B)), and which is a distinct and organized intensive 
ambulatory treatment service offering less than 24-hour-daily 
care other than in an individual's home or in an inpatient or 
residential setting.
  (B) For purposes of subparagraph (A), the term ``community 
mental health center'' means an entity that--
          (i)(I) provides the mental health services described 
        in section 1913(c)(1) of the Public Health Service Act; 
        or
          (II) in the case of an entity operating in a State 
        that by law precludes the entity from providing itself 
        the service described in subparagraph (E) of such 
        section, provides for such service by contract with an 
        approved organization or entity (as determined by the 
        Secretary);
          (ii) meets applicable licensing or certification 
        requirements for community mental health centers in the 
        State in which it is located;
          (iii) provides at least 40 percent of its services to 
        individuals who are not eligible for benefits under 
        this title; and
          (iv) meets such additional conditions as the 
        Secretary shall specify to ensure (I) the health and 
        safety of individuals being furnished such services, 
        (II) the effective and efficient furnishing of such 
        services, and (III) the compliance of such entity with 
        the criteria described in section 1931(c)(1) of the 
        Public Health Service Act.

                    Certified Nurse-Midwife Services

  (gg)(1) The term ``certified nurse-midwife services'' means 
such services furnished by a certified nurse-midwife (as 
defined in paragraph (2)) and such services and supplies 
furnished as an incident to the nurse-midwife's service which 
the certified nurse-midwife is legally authorized to perform 
under State law (or the State regulatory mechanism provided by 
State law) as would otherwise be covered if furnished by a 
physician or as an incident to a physicians' service.
  (2) The term ``certified nurse-midwife'' means a registered 
nurse who has successfully completed a program of study and 
clinical experience meeting guidelines prescribed by the 
Secretary, or has been certified by an organization recognized 
by the Secretary.

        Clinical Social Worker; Clinical Social Worker Services

  (hh)(1) The term ``clinical social worker'' means an 
individual who--
          (A) possesses a master's or doctor's degree in social 
        work;
          (B) after obtaining such degree has performed at 
        least 2 years of supervised clinical social work; and
          (C)(i) is licensed or certified as a clinical social 
        worker by the State in which the services are 
        performed, or
          (ii) in the case of an individual in a State which 
        does not provide for licensure or certification--
                  (I) has completed at least 2 years or 3,000 
                hours of post-master's degree supervised 
                clinical social work practice under the 
                supervision of a master's level social worker 
                in an appropriate setting (as determined by the 
                Secretary), and
                  (II) meets such other criteria as the 
                Secretary establishes.
  (2) The term ``clinical social worker services'' means 
services performed by a clinical social worker (as defined in 
paragraph (1)) for the diagnosis and treatment of mental 
illnesses (other than services furnished to an inpatient of a 
hospital 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) which the clinical 
social worker is legally authorized to perform under State law 
(or the State regulatory mechanism provided by State law) of 
the State in which such services are performed as would 
otherwise be covered if furnished by a physician or as an 
incident to a physician's professional service.

                    Qualified Psychologist Services

  (ii) The term ``qualified psychologist services'' means such 
services and such services and supplies furnished as an 
incident to his service furnished by a clinical psychologist 
(as defined by the Secretary) which the psychologist is legally 
authorized to perform under State law (or the State regulatory 
mechanism provided by State law) as would otherwise be covered 
if furnished by a physician or as an incident to a physician's 
service.

                         Screening Mammography

  (jj) The term ``screening mammography'' means a radiologic 
procedure provided to a woman for the purpose of early 
detection of breast cancer and includes a physician's 
interpretation of the results of the procedure.

                       Covered Osteoporosis Drug

  (kk) The term ``covered osteoporosis drug'' means an 
injectable drug approved for the treatment of post-menopausal 
osteoporosis provided to an individual by a home health agency 
if, in accordance with regulations promulgated by the 
Secretary--
          (1) the individual's attending physician certifies 
        that the individual has suffered a bone fracture 
        related to post-menopausal osteoporosis and that the 
        individual is unable to learn the skills needed to 
        self-administer such drug or is otherwise physically or 
        mentally incapable of self-administering such drug; and
          (2) the individual is confined to the individual's 
        home (except when receiving items and services referred 
        to in subsection (m)(7)).

         Speech-Language Pathology Services; Audiology Services

  (ll)(1) The term ``speech-language pathology services'' means 
such speech, language, and related function assessment and 
rehabilitation services furnished by a qualified speech-
language pathologist as the speech-language pathologist is 
legally authorized to perform under State law (or the State 
regulatory mechanism provided by State law) as would otherwise 
be covered if furnished by a physician.
  (2) The term ``outpatient speech-language pathology 
services'' has the meaning given the term ``outpatient physical 
therapy services'' in subsection (p), except that in applying 
such subsection--
          (A) ``speech-language pathology'' shall be 
        substituted for ``physical therapy'' each place it 
        appears; and
          (B) ``speech-language pathologist'' shall be 
        substituted for ``physical therapist'' each place it 
        appears.
  (3) The term ``audiology services'' means such hearing and 
balance assessment services furnished by a qualified 
audiologist as the audiologist is legally authorized to perform 
under State law (or the State regulatory mechanism provided by 
State law), as would otherwise be covered if furnished by a 
physician.
  (4) In this subsection:
          (A) The term ``qualified speech-language 
        pathologist'' means an individual with a master's or 
        doctoral degree in speech-language pathology who--
                  (i) is licensed as a speech-language 
                pathologist by the State in which the 
                individual furnishes such services, or
                  (ii) in the case of an individual who 
                furnishes services in a State which does not 
                license speech-language pathologists, has 
                successfully completed 350 clock hours of 
                supervised clinical practicum (or is in the 
                process of accumulating such supervised 
                clinical experience), performed not less than 9 
                months of supervised full-time speech-language 
                pathology services after obtaining a master's 
                or doctoral degree in speech-language pathology 
                or a related field, and successfully completed 
                a national examination in speech-language 
                pathology approved by the Secretary.
          (B) The term ``qualified audiologist'' means an 
        individual with a master's or doctoral degree in 
        audiology who--
                  (i) is licensed as an audiologist by the 
                State in which the individual furnishes such 
                services, or
                  (ii) in the case of an individual who 
                furnishes services in a State which does not 
                license audiologists, has successfully 
                completed 350 clock hours of supervised 
                clinical practicum (or is in the process of 
                accumulating such supervised clinical 
                experience), performed not less than 9 months 
                of supervised full-time audiology services 
                after obtaining a master's or doctoral degree 
                in audiology or a related field, and 
                successfully completed a national examination 
                in audiology approved by the Secretary.

      Critical Access Hospital; Critical Access Hospital Services

  (mm)(1) The term ``critical access hospital'' means a 
facility certified by the Secretary as a critical access 
hospital under section 1820(e).
  (2) The term ``inpatient critical access hospital services'' 
means items and services, furnished to an inpatient of a 
critical access hospital by such facility, that would be 
inpatient hospital services if furnished to an inpatient of a 
hospital by a hospital.
  (3) The term ``outpatient critical access hospital services'' 
means medical and other health services furnished by a critical 
access hospital on an outpatient basis.

               Screening Pap Smear; Screening Pelvic Exam

  (nn)(1) The term ``screening pap smear'' means a diagnostic 
laboratory test consisting of a routine exfoliative cytology 
test (Papanicolaou test) provided to a woman for the purpose of 
early detection of cervical or vaginal cancer and includes a 
physician's interpretation of the results of the test, if the 
individual involved has not had such a test during the 
preceding 2 years, or during the preceding year in the case of 
a woman described in paragraph (3).
  (2) The term ``screening pelvic exam'' means a pelvic 
examination provided to a woman if the woman involved has not 
had such an examination during the preceding 2 years, or during 
the preceding year in the case of a woman described in 
paragraph (3), and includes a clinical breast examination.
  (3) A woman described in this paragraph is a woman who--
          (A) is of childbearing age and has had a test 
        described in this subsection during any of the 
        preceding 3 years that indicated the presence of 
        cervical or vaginal cancer or other abnormality; or
          (B) is at high risk of developing cervical or vaginal 
        cancer (as determined pursuant to factors identified by 
        the Secretary).

                    Prostate Cancer Screening Tests

  (oo)(1) The term ``prostate cancer screening test'' means a 
test that consists of any (or all) of the procedures described 
in paragraph (2) provided for the purpose of early detection of 
prostate cancer to a man over 50 years of age who has not had 
such a test during the preceding year.
  (2) The procedures described in this paragraph are as 
follows:
          (A) A digital rectal examination.
          (B) A prostate-specific antigen blood test.
          (C) For years beginning after 2002, such other 
        procedures as the Secretary finds appropriate for the 
        purpose of early detection of prostate cancer, taking 
        into account changes in technology and standards of 
        medical practice, availability, effectiveness, costs, 
        and such other factors as the Secretary considers 
        appropriate.

                   Colorectal Cancer Screening Tests

  (pp)(1) The term ``colorectal cancer screening test'' means 
any of the following procedures furnished to an individual for 
the purpose of early detection of colorectal cancer:
          (A) Screening fecal-occult blood test.
          (B) Screening flexible sigmoidoscopy.
          (C) Screening colonoscopy.
          (D) Such other tests or procedures, and modifications 
        to tests and procedures under this subsection, with 
        such frequency and payment limits, as the Secretary 
        determines appropriate, in consultation with 
        appropriate organizations.
  (2) An ``individual at high risk for colorectal cancer'' is 
an individual who, because of family history, prior experience 
of cancer or precursor neoplastic polyps, a history of chronic 
digestive disease condition (including inflammatory bowel 
disease, Crohn's Disease, or ulcerative colitis), the presence 
of any appropriate recognized gene markers for colorectal 
cancer, or other predisposing factors, faces a high risk for 
colorectal cancer.

         Diabetes Outpatient Self-Management Training Services

  (qq)(1) The term ``diabetes outpatient self-management 
training services'' means educational and training services 
furnished (at such times as the Secretary determines 
appropriate) to an individual with diabetes by a certified 
provider (as described in paragraph (2)(A)) in an outpatient 
setting by an individual or entity who meets the quality 
standards described in paragraph (2)(B), but only if the 
physician who is managing the individual's diabetic condition 
certifies that such services are needed under a comprehensive 
plan of care related to the individual's diabetic condition to 
ensure therapy compliance or to provide the individual with 
necessary skills and knowledge (including skills related to the 
self-administration of injectable drugs) to participate in the 
management of the individual's condition.
  (2) In paragraph (1)--
          (A) a ``certified provider'' is a physician, or other 
        individual or entity designated by the Secretary, that, 
        in addition to providing diabetes outpatient self-
        management training services, provides other items or 
        services for which payment may be made under this 
        title; and
          (B) a physician, or such other individual or entity, 
        meets the quality standards described in this paragraph 
        if the physician, or individual or entity, meets 
        quality standards established by the Secretary, except 
        that the physician or other individual or entity shall 
        be deemed to have met such standards if the physician 
        or other individual or entity meets applicable 
        standards originally established by the National 
        Diabetes Advisory Board and subsequently revised by 
        organizations who participated in the establishment of 
        standards by such Board, or is recognized by an 
        organization that represents individuals (including 
        individuals under this title) with diabetes as meeting 
        standards for furnishing the services.

                         Bone Mass Measurement

  (rr)(1) The term ``bone mass measurement'' means a radiologic 
or radioisotopic procedure or other procedure approved by the 
Food and Drug Administration performed on a qualified 
individual (as defined in paragraph (2)) for the purpose of 
identifying bone mass or detecting bone loss or determining 
bone quality, and includes a physician's interpretation of the 
results of the procedure.
  (2) For purposes of this subsection, the term ``qualified 
individual'' means an individual who is (in accordance with 
regulations prescribed by the Secretary)--
          (A) an estrogen-deficient woman at clinical risk for 
        osteoporosis;
          (B) an individual with vertebral abnormalities;
          (C) an individual receiving long-term glucocorticoid 
        steroid therapy;
          (D) an individual with primary hyperparathyroidism; 
        or
          (E) an individual being monitored to assess the 
        response to or efficacy of an approved osteoporosis 
        drug therapy.
  (3) The Secretary shall establish such standards regarding 
the frequency with which a qualified individual shall be 
eligible to be provided benefits for bone mass measurement 
under this title.

              Religious Nonmedical Health Care Institution

  (ss)(1) The term ``religious nonmedical health care 
institution'' means an institution that--
                  (A) is described in subsection (c)(3) of 
                section 501 of the Internal Revenue Code of 
                1986 and is exempt from taxes under subsection 
                (a) of such section;
                  (B) is lawfully operated under all applicable 
                Federal, State, and local laws and regulations;
                  (C) provides only nonmedical nursing items 
                and services exclusively to patients who choose 
                to rely solely upon a religious method of 
                healing and for whom the acceptance of medical 
                health services would be inconsistent with 
                their religious beliefs;
                  (D) provides such nonmedical items and 
                services exclusively through nonmedical nursing 
                personnel who are experienced in caring for the 
                physical needs of such patients;
                  (E) provides such nonmedical items and 
                services to inpatients on a 24-hour basis;
                  (F) on the basis of its religious beliefs, 
                does not provide through its personnel or 
                otherwise medical items and services (including 
                any medical screening, examination, diagnosis, 
                prognosis, treatment, or the administration of 
                drugs) for its patients;
                  (G)(i) is not owned by, under common 
                ownership with, or has an ownership interest 
                in, a provider of medical treatment or 
                services;
                  (ii) is not affiliated with--
                          (I) a provider of medical treatment 
                        or services, or
                          (II) an individual who has an 
                        ownership interest in a provider of 
                        medical treatment or services;
                  (H) has in effect a utilization review plan 
                which--
                          (i) provides for the review of 
                        admissions to the institution, of the 
                        duration of stays therein, of cases of 
                        continuous extended duration, and of 
                        the items and services furnished by the 
                        institution,
                          (ii) requires that such reviews be 
                        made by an appropriate committee of the 
                        institution that includes the 
                        individuals responsible for overall 
                        administration and for supervision of 
                        nursing personnel at the institution,
                          (iii) provides that records be 
                        maintained of the meetings, decisions, 
                        and actions of such committee, and
                          (iv) meets such other requirements as 
                        the Secretary finds necessary to 
                        establish an effective utilization 
                        review plan;
                  (I) provides the Secretary with such 
                information as the Secretary may require to 
                implement section 1821, including information 
                relating to quality of care and coverage 
                determinations; and
                  (J) meets such other requirements as the 
                Secretary finds necessary in the interest of 
                the health and safety of individuals who are 
                furnished services in the institution.
  (2) To the extent that the Secretary finds that the 
accreditation of an institution by a State, regional, or 
national agency or association provides reasonable assurances 
that any or all of the requirements of paragraph (1) are met or 
exceeded, the Secretary may treat such institution as meeting 
the condition or conditions with respect to which the Secretary 
made such finding.
  (3)(A)(i) In administering this subsection and section 1821, 
the Secretary shall not require any patient of a religious 
nonmedical health care institution to undergo medical 
screening, examination, diagnosis, prognosis, or treatment or 
to accept any other medical health care service, if such 
patient (or legal representative of the patient) objects 
thereto on religious grounds.
  (ii) Clause (i) shall not be construed as preventing the 
Secretary from requiring under section 1821(a)(2) the provision 
of sufficient information regarding an individual's condition 
as a condition for receipt of benefits under part A for 
services provided in such an institution.
  (B)(i) In administering this subsection and section 1821, the 
Secretary shall not subject a religious nonmedical health care 
institution or its personnel to any medical supervision, 
regulation, or control, insofar as such supervision, 
regulation, or control would be contrary to the religious 
beliefs observed by the institution or such personnel.
  (ii) Clause (i) shall not be construed as preventing the 
Secretary from reviewing items and services billed by the 
institution to the extent the Secretary determines such review 
to be necessary to determine whether such items and services 
were not covered under part A, are excessive, or are 
fraudulent.
  (4)(A) For purposes of paragraph (1)(G)(i), an ownership 
interest of less than 5 percent shall not be taken into 
account.
  (B) For purposes of paragraph (1)(G)(ii), none of the 
following shall be considered to create an affiliation:
          (i) An individual serving as an uncompensated 
        director, trustee, officer, or other member of the 
        governing body of a religious nonmedical health care 
        institution.
          (ii) An individual who is a director, trustee, 
        officer, employee, or staff member of a religious 
        nonmedical health care institution having a family 
        relationship with an individual who is affiliated with 
        (or has an ownership interest in) a provider of medical 
        treatment or services.
          (iii) An individual or entity furnishing goods or 
        services as a vendor to both providers of medical 
        treatment or services and religious nonmedical health 
        care institutions.

 Post-Institutional Home Health Services; Home Health Spell of Illness

  (tt)(1) The term ``post-institutional home health services'' 
means home health services furnished to an individual--
          (A) after discharge from a hospital or critical 
        access hospital in which the individual was an 
        inpatient for not less than 3 consecutive days before 
        such discharge if such home health services were 
        initiated within 14 days after the date of such 
        discharge; or
          (B) after discharge from a skilled nursing facility 
        in which the individual was provided post-hospital 
        extended care services if such home health services 
        were initiated within 14 days after the date of such 
        discharge.
  (2) The term ``home health spell of illness'' with respect to 
any individual means a period of consecutive days--
          (A) beginning with the first day (not included in a 
        previous home health spell of illness) (i) on which 
        such individual is furnished post-institutional home 
        health services, and (ii) which occurs in a month for 
        which the individual is entitled to benefits under part 
        A, and
          (B) ending with the close of the first period of 60 
        consecutive days thereafter on each of which the 
        individual is neither an inpatient of a hospital or 
        critical access hospital nor an inpatient of a facility 
        described in section 1819(a)(1) or subsection (y)(1) 
        nor provided home health services.

                         Screening for Glaucoma

  (uu) The term ``screening for glaucoma'' means a dilated eye 
examination with an intraocular pressure measurement, and a 
direct ophthalmoscopy or a slit-lamp biomicroscopic examination 
for the early detection of glaucoma which is furnished by or 
under the direct supervision of an optometrist or 
ophthalmologist who is legally authorized to furnish such 
services under State law (or the State regulatory mechanism 
provided by State law) of the State in which the services are 
furnished, as would otherwise be covered if furnished by a 
physician or as an incident to a physician's professional 
service, if the individual involved has not had such an 
examination in the preceding year.

 Medical Nutrition Therapy Services; Registered Dietitian or Nutrition 
                              Professional

  (vv)(1) The term ``medical nutrition therapy services'' means 
nutritional diagnostic, therapy, and counseling services for 
the purpose of disease management which are furnished by a 
registered dietitian or nutrition professional (as defined in 
paragraph (2)) pursuant to a referral by a physician (as 
defined in subsection (r)(1)).
  (2) Subject to paragraph (3), the term ``registered dietitian 
or nutrition professional'' means an individual who--
          (A) holds a baccalaureate or higher degree granted by 
        a regionally accredited college or university in the 
        United States (or an equivalent foreign degree) with 
        completion of the academic requirements of a program in 
        nutrition or dietetics, as accredited by an appropriate 
        national accreditation organization recognized by the 
        Secretary for this purpose;
          (B) has completed at least 900 hours of supervised 
        dietetics practice under the supervision of a 
        registered dietitian or nutrition professional; and
          (C)(i) is licensed or certified as a dietitian or 
        nutrition professional by the State in which the 
        services are performed; or
          (ii) in the case of an individual in a State that 
        does not provide for such licensure or certification, 
        meets such other criteria as the Secretary establishes.
  (3) Subparagraphs (A) and (B) of paragraph (2) shall not 
apply in the case of an individual who, as of the date of the 
enactment of this subsection, is licensed or certified as a 
dietitian or nutrition professional by the State in which 
medical nutrition therapy services are performed.

                Initial Preventive Physical Examination

  (ww)(1) The term ``initial preventive physical examination'' 
means physicians' services consisting of a physical examination 
(including measurement of height, weight body mass index,, and 
blood pressure) with the goal of health promotion and disease 
detection and includes education, counseling, and referral with 
respect to screening and other preventive services described in 
paragraph (2) and end-of-life planning (as defined in paragraph 
(3)) upon the agreement with the individual, but does not 
include clinical laboratory tests.
  (2) The screening and other preventive services described in 
this paragraph include the following:
          (A) Pneumococcal, influenza, and hepatitis B vaccine 
        and administration under subsection (s)(10).
          (B) Screening mammography as defined in subsection 
        (jj).
          (C) Screening pap smear and screening pelvic exam as 
        defined in subsection (nn).
          (D) Prostate cancer screening tests as defined in 
        subsection (oo).
          (E) Colorectal cancer screening tests as defined in 
        subsection (pp).
          (F) Diabetes outpatient self-management training 
        services as defined in subsection (qq)(1).
          (G) Bone mass measurement as defined in subsection 
        (rr).
          (H) Screening for glaucoma as defined in subsection 
        (uu).
          (I) Medical nutrition therapy services as defined in 
        subsection (vv).
          (J) Cardiovascular screening blood tests as defined 
        in subsection (xx)(1).
          (K) Diabetes screening tests as defined in subsection 
        (yy).
          (L) Ultrasound screening for abdominal aortic 
        aneurysm as defined in section 1861(bbb).
          (M) An electrocardiogram.
          (N) Additional preventive services (as defined in 
        subsection (ddd)(1)).
  (3) For purposes of paragraph (1), the term ``end-of-life 
planning'' means verbal or written information regarding--
          (A) an individual's ability to prepare an advance 
        directive in the case that an injury or illness causes 
        the individual to be unable to make health care 
        decisions; and
          (B) whether or not the physician is willing to follow 
        the individual's wishes as expressed in an advance 
        directive.

                  Cardiovascular Screening Blood Test

  (xx)(1) The term ``cardiovascular screening blood test'' 
means a blood test for the early detection of cardiovascular 
disease (or abnormalities associated with an elevated risk of 
cardiovascular disease) that tests for the following:
          (A) Cholesterol levels and other lipid or 
        triglyceride levels.
          (B) Such other indications associated with the 
        presence of, or an elevated risk for, cardiovascular 
        disease as the Secretary may approve for all 
        individuals (or for some individuals determined by the 
        Secretary to be at risk for cardiovascular disease), 
        including indications measured by noninvasive testing.
The Secretary may not approve an indication under subparagraph 
(B) for any individual unless a blood test for such is 
recommended by the United States Preventive Services Task 
Force.
  (2) The Secretary shall establish standards, in consultation 
with appropriate organizations, regarding the frequency for 
each type of cardiovascular screening blood tests, except that 
such frequency may not be more often than once every 2 years.

                        Diabetes Screening Tests

  (yy)(1) The term ``diabetes screening tests'' means testing 
furnished to an individual at risk for diabetes (as defined in 
paragraph (2)) for the purpose of early detection of diabetes, 
including--
          (A) a fasting plasma glucose test; and
          (B) such other tests, and modifications to tests, as 
        the Secretary determines appropriate, in consultation 
        with appropriate organizations.
  (2) For purposes of paragraph (1), the term ``individual at 
risk for diabetes'' means an individual who has any of the 
following risk factors for diabetes:
          (A) Hypertension.
          (B) Dyslipidemia.
          (C) Obesity, defined as a body mass index greater 
        than or equal to 30 kg/m2.
          (D) Previous identification of an elevated impaired 
        fasting glucose.
          (E) Previous identification of impaired glucose 
        tolerance.
          (F) A risk factor consisting of at least 2 of the 
        following characteristics:
                  (i) Overweight, defined as a body mass index 
                greater than 25, but less than 30, kg/
                m2.
                  (ii) A family history of diabetes.
                  (iii) A history of gestational diabetes 
                mellitus or delivery of a baby weighing greater 
                than 9 pounds.
                  (iv) 65 years of age or older.
  (3) The Secretary shall establish standards, in consultation 
with appropriate organizations, regarding the frequency of 
diabetes screening tests, except that such frequency may not be 
more often than twice within the 12-month period following the 
date of the most recent diabetes screening test of that 
individual.

                      Intravenous Immune Globulin

  (zz) The term ``intravenous immune globulin'' means an 
approved pooled plasma derivative for the treatment in the 
patient's home of a patient with a diagnosed primary immune 
deficiency disease, but not including items or services related 
to the administration of the derivative, if a physician 
determines administration of the derivative in the patient's 
home is medically appropriate.

     Extended Care in Religious Nonmedical Health Care Institutions

  (aaa)(1) The term ``home health agency'' also includes a 
religious nonmedical health care institution (as defined in 
subsection (ss)(1)), but only with respect to items and 
services ordinarily furnished by such an institution to 
individuals in their homes, and that are comparable to items 
and services furnished to individuals by a home health agency 
that is not religious nonmedical health care institution.
  (2)(A) Subject to subparagraphs (B), payment may be made with 
respect to services provided by such an institution only to 
such extent and under such conditions, limitations, and 
requirements (in addition to or in lieu of the conditions, 
limitations, and requirements otherwise applicable) as may be 
provided in regulations consistent with section 1821.
  (B) Notwithstanding any other provision of this title, 
payment may not be made under subparagraph (A)--
          (i) in a year insofar as such payments exceed 
        $700,000; and
          (ii) after December 31, 2006.

           Ultrasound Screening for Abdominal Aortic Aneurysm

  (bbb) The term ``ultrasound screening for abdominal aortic 
aneurysm'' means--
          (1) a procedure using sound waves (or such other 
        procedures using alternative technologies, of 
        commensurate accuracy and cost, that the Secretary may 
        specify) provided for the early detection of abdominal 
        aortic aneurysm; and
          (2) includes a physician's interpretation of the 
        results of the procedure.

                        Long-Term Care Hospital

  (ccc) The term ``long-term care hospital'' means a hospital 
which--
          (1) is primarily engaged in providing inpatient 
        services, by or under the supervision of a physician, 
        to Medicare beneficiaries whose medically complex 
        conditions require a long hospital stay and programs of 
        care provided by a long-term care hospital;
          (2) has an average inpatient length of stay (as 
        determined by the Secretary) of greater than 25 days, 
        or meets the requirements of clause (II) of section 
        1886(d)(1)(B)(iv);
          (3) satisfies the requirements of subsection (e); and
          (4) meets the following facility criteria:
                  (A) the institution has a patient review 
                process, documented in the patient medical 
                record, that screens patients prior to 
                admission for appropriateness of admission to a 
                long-term care hospital, validates within 48 
                hours of admission that patients meet admission 
                criteria for long-term care hospitals, 
                regularly evaluates patients throughout their 
                stay for continuation of care in a long-term 
                care hospital, and assesses the available 
                discharge options when patients no longer meet 
                such continued stay criteria;
                  (B) the institution has active physician 
                involvement with patients during their 
                treatment through an organized medical staff, 
                physician-directed treatment with physician on-
                site availability on a daily basis to review 
                patient progress, and consulting physicians on 
                call and capable of being at the patient's side 
                within a moderate period of time, as determined 
                by the Secretary; and
                  (C) the institution has interdisciplinary 
                team treatment for patients, requiring 
                interdisciplinary teams of health care 
                professionals, including physicians, to prepare 
                and carry out an individualized treatment plan 
                for each patient.

          Additional Preventive Services; Preventive Services

  (ddd)(1) The term ``additional preventive services'' means 
services not described in subparagraph (A) or (C) of paragraph 
(3) that identify medical conditions or risk factors and that 
the Secretary determines are--
          (A) reasonable and necessary for the prevention or 
        early detection of an illness or disability;
          (B) recommended with a grade of A or B by the United 
        States Preventive Services Task Force; and
          (C) appropriate for individuals entitled to benefits 
        under part A or enrolled under part B.
  (2) In making determinations under paragraph (1) regarding 
the coverage of a new service, the Secretary shall use the 
process for making national coverage determinations (as defined 
in section 1869(f)(1)(B)) under this title. As part of the use 
of such process, the Secretary may conduct an assessment of the 
relation between predicted outcomes and the expenditures for 
such service and may take into account the results of such 
assessment in making such determination.
  (3) The term ``preventive services'' means the following:
          (A) The screening and preventive services described 
        in subsection (ww)(2) (other than the service described 
        in subparagraph (M) of such subsection).
          (B) An initial preventive physical examination (as 
        defined in subsection (ww)).
          (C) Personalized prevention plan services (as defined 
        in subsection (hhh)(1)).

   Cardiac Rehabilitation Program; Intensive Cardiac Rehabilitation 
                                Program

  (eee)(1) The term ``cardiac rehabilitation program'' means a 
physician-supervised program (as described in paragraph (2)) 
that furnishes the items and services described in paragraph 
(3).
  (2) A program described in this paragraph is a program under 
which--
          (A) items and services under the program are 
        delivered--
                  (i) in a physician's office;
                  (ii) in a hospital on an outpatient basis; or
                  (iii) in other settings determined 
                appropriate by the Secretary.
          (B) a physician is immediately available and 
        accessible for medical consultation and medical 
        emergencies at all times items and services are being 
        furnished under the program, except that, in the case 
        of items and services furnished under such a program in 
        a hospital, such availability shall be presumed; and
          (C) individualized treatment is furnished under a 
        written plan established, reviewed, and signed by a 
        physician every 30 days that describes--
                  (i) the individual's diagnosis;
                  (ii) the type, amount, frequency, and 
                duration of the items and services furnished 
                under the plan; and
                  (iii) the goals set for the individual under 
                the plan.
  (3) The items and services described in this paragraph are--
          (A) physician-prescribed exercise;
          (B) cardiac risk factor modification, including 
        education, counseling, and behavioral intervention (to 
        the extent such education, counseling, and behavioral 
        intervention is closely related to the individual's 
        care and treatment and is tailored to the individual's 
        needs);
          (C) psychosocial assessment;
          (D) outcomes assessment; and
          (E) such other items and services as the Secretary 
        may determine, but only if such items and services 
        are--
                  (i) reasonable and necessary for the 
                diagnosis or active treatment of the 
                individual's condition;
                  (ii) reasonably expected to improve or 
                maintain the individual's condition and 
                functional level; and
                  (iii) furnished under such guidelines 
                relating to the frequency and duration of such 
                items and services as the Secretary shall 
                establish, taking into account accepted norms 
                of medical practice and the reasonable 
                expectation of improvement of the individual.
  (4)(A) The term ``intensive cardiac rehabilitation program'' 
means a physician-supervised program (as described in paragraph 
(2)) that furnishes the items and services described in 
paragraph (3) and has shown, in peer-reviewed published 
research, that it accomplished--
          (i) one or more of the following:
                  (I) positively affected the progression of 
                coronary heart disease; or
                  (II) reduced the need for coronary bypass 
                surgery; or
                  (III) reduced the need for percutaneous 
                coronary interventions; and
          (ii) a statistically significant reduction in 5 or 
        more of the following measures from their level before 
        receipt of cardiac rehabilitation services to their 
        level after receipt of such services:
                  (I) low density lipoprotein;
                  (II) triglycerides;
                  (III) body mass index;
                  (IV) systolic blood pressure;
                  (V) diastolic blood pressure; or
                  (VI) the need for cholesterol, blood 
                pressure, and diabetes medications.
  (B) To be eligible for an intensive cardiac rehabilitation 
program, an individual must have--
          (i) had an acute myocardial infarction within the 
        preceding 12 months;
          (ii) had coronary bypass surgery;
          (iii) stable angina pectoris;
          (iv) had heart valve repair or replacement;
          (v) had percutaneous transluminal coronary 
        angioplasty (PTCA) or coronary stenting; or
          (vi) had a heart or heart-lung transplant.
  (C) An intensive cardiac rehabilitation program may be 
provided in a series of 72 one-hour sessions (as defined in 
section 1848(b)(5)), up to 6 sessions per day, over a period of 
up to 18 weeks.
  (5) The Secretary shall establish standards to ensure that a 
physician with expertise in the management of individuals with 
cardiac pathophysiology who is licensed to practice medicine in 
the State in which a cardiac rehabilitation program (or the 
intensive cardiac rehabilitation program, as the case may be) 
is offered--
          (A) is responsible for such program; and
          (B) in consultation with appropriate staff, is 
        involved substantially in directing the progress of 
        individual in the program.

                    Pulmonary Rehabilitation Program

  (fff)(1) The term ``pulmonary rehabilitation program'' means 
a physician-supervised program (as described in subsection 
(eee)(2) with respect to a program under this subsection) that 
furnishes the items and services described in paragraph (2).
  (2) The items and services described in this paragraph are--
          (A) physician-prescribed exercise;
          (B) education or training (to the extent the 
        education or training is closely and clearly related to 
        the individual's care and treatment and is tailored to 
        such individual's needs);
          (C) psychosocial assessment;
          (D) outcomes assessment; and
          (E) such other items and services as the Secretary 
        may determine, but only if such items and services 
        are--
                  (i) reasonable and necessary for the 
                diagnosis or active treatment of the 
                individual's condition;
                  (ii) reasonably expected to improve or 
                maintain the individual's condition and 
                functional level; and
                  (iii) furnished under such guidelines 
                relating to the frequency and duration of such 
                items and services as the Secretary shall 
                establish, taking into account accepted norms 
                of medical practice and the reasonable 
                expectation of improvement of the individual.
  (3) The Secretary shall establish standards to ensure that a 
physician with expertise in the management of individuals with 
respiratory pathophysiology who is licensed to practice 
medicine in the State in which a pulmonary rehabilitation 
program is offered--
          (A) is responsible for such program; and
          (B) in consultation with appropriate staff, is 
        involved substantially in directing the progress of 
        individual in the program.

                   Kidney Disease Education Services

  (ggg)(1) The term ``kidney disease education services'' means 
educational services that are--
          (A) furnished to an individual with stage IV chronic 
        kidney disease who, according to accepted clinical 
        guidelines identified by the Secretary, will require 
        dialysis or a kidney transplant;
          (B) furnished, upon the referral of the physician 
        managing the individual's kidney condition, by a 
        qualified person (as defined in paragraph (2)); and
          (C) designed--
                  (i) to provide comprehensive information 
                (consistent with the standards set under 
                paragraph (3)) regarding--
                          (I) the management of comorbidities, 
                        including for purposes of delaying the 
                        need for dialysis;
                          (II) the prevention of uremic 
                        complications; and
                          (III) each option for renal 
                        replacement therapy (including 
                        hemodialysis and peritoneal dialysis at 
                        home and in-center as well as vascular 
                        access options and transplantation);
                  (ii) to ensure that the individual has the 
                opportunity to actively participate in the 
                choice of therapy; and
                  (iii) to be tailored to meet the needs of the 
                individual involved.
  (2)(A) The term ``qualified person'' means--
          (i) a physician (as defined in section 1861(r)(1)) or 
        a physician assistant, nurse practitioner, or clinical 
        nurse specialist (as defined in section 1861(aa)(5)), 
        who furnishes services for which payment may be made 
        under the fee schedule established under section 1848; 
        and
          (ii) a provider of services located in a rural area 
        (as defined in section 1886(d)(2)(D)).
  (B) Such term does not include a provider of services (other 
than a provider of services described in subparagraph (A)(ii)) 
or a renal dialysis facility.
  (3) The Secretary shall set standards for the content of such 
information to be provided under paragraph (1)(C)(i) after 
consulting with physicians, other health professionals, health 
educators, professional organizations, accrediting 
organizations, kidney patient organizations, dialysis 
facilities, transplant centers, network organizations described 
in section 1881(c)(2), and other knowledgeable persons. To the 
extent possible the Secretary shall consult with persons or 
entities described in the previous sentence, other than a 
dialysis facility, that has not received industry funding from 
a drug or biological manufacturer or dialysis facility.
  (4) No individual shall be furnished more than 6 sessions of 
kidney disease education services under this title.

                         Annual Wellness Visit

  (hhh)(1) The term ``personalized prevention plan services'' 
means the creation of a plan for an individual--
          (A) that includes a health risk assessment (that 
        meets the guidelines established by the Secretary under 
        paragraph (4)(A)) of the individual that is completed 
        prior to or as part of the same visit with a health 
        professional described in paragraph (3); and
          (B) that--
                  (i) takes into account the results of the 
                health risk assessment; and
                  (ii) may contain the elements described in 
                paragraph (2).
  (2) Subject to paragraph (4)(H), the elements described in 
this paragraph are the following:
          (A) The establishment of, or an update to, the 
        individual's medical and family history.
          (B) A list of current providers and suppliers that 
        are regularly involved in providing medical care to the 
        individual (including a list of all prescribed 
        medications).
          (C) A measurement of height, weight, body mass index 
        (or waist circumference, if appropriate), blood 
        pressure, and other routine measurements.
          (D) Detection of any cognitive impairment.
          (E) The establishment of, or an update to, the 
        following:
                  (i) A screening schedule for the next 5 to 10 
                years, as appropriate, based on recommendations 
                of the United States Preventive Services Task 
                Force and the Advisory Committee on 
                Immunization Practices, and the individual's 
                health status, screening history, and age-
                appropriate preventive services covered under 
                this title.
                  (ii) A list of risk factors and conditions 
                for which primary, secondary, or tertiary 
                prevention interventions are recommended or are 
                underway, including any mental health 
                conditions or any such risk factors or 
                conditions that have been identified through an 
                initial preventive physical examination (as 
                described under subsection (ww)(1)), and a list 
                of treatment options and their associated risks 
                and benefits.
          (F) The furnishing of personalized health advice and 
        a referral, as appropriate, to health education or 
        preventive counseling services or programs aimed at 
        reducing identified risk factors and improving self-
        management, or community-based lifestyle interventions 
        to reduce health risks and promote self-management and 
        wellness, including weight loss, physical activity, 
        smoking cessation, fall prevention, and nutrition.
          (G) Any other element determined appropriate by the 
        Secretary.
  (3) A health professional described in this paragraph is--
          (A) a physician;
          (B) a practitioner described in clause (i) of section 
        1842(b)(18)(C); or
          (C) a medical professional (including a health 
        educator, registered dietitian, or nutrition 
        professional) or a team of medical professionals, as 
        determined appropriate by the Secretary, under the 
        supervision of a physician.
  (4)(A) For purposes of paragraph (1)(A), the Secretary, not 
later than 1 year after the date of enactment of this 
subsection, shall establish publicly available guidelines for 
health risk assessments. Such guidelines shall be developed in 
consultation with relevant groups and entities and shall 
provide that a health risk assessment--
          (i) identify chronic diseases, injury risks, 
        modifiable risk factors, and urgent health needs of the 
        individual; and
          (ii) may be furnished--
                  (I) through an interactive telephonic or web-
                based program that meets the standards 
                established under subparagraph (B);
                  (II) during an encounter with a health care 
                professional;
                  (III) through community-based prevention 
                programs; or
                  (IV) through any other means the Secretary 
                determines appropriate to maximize 
                accessibility and ease of use by beneficiaries, 
                while ensuring the privacy of such 
                beneficiaries.
  (B) Not later than 1 year after the date of enactment of this 
subsection, the Secretary shall establish standards for 
interactive telephonic or web-based programs used to furnish 
health risk assessments under subparagraph (A)(ii)(I). The 
Secretary may utilize any health risk assessment developed 
under section 4004(f) of the Patient Protection and Affordable 
Care Act as part of the requirement to develop a personalized 
prevention plan to comply with this subparagraph.
  (C)(i) Not later than 18 months after the date of enactment 
of this subsection, the Secretary shall develop and make 
available to the public a health risk assessment model. Such 
model shall meet the guidelines under subparagraph (A) and may 
be used to meet the requirement under paragraph (1)(A).
  (ii) Any health risk assessment that meets the guidelines 
under subparagraph (A) and is approved by the Secretary may be 
used to meet the requirement under paragraph (1)(A).
  (D) The Secretary may coordinate with community-based 
entities (including State Health Insurance Programs, Area 
Agencies on Aging, Aging and Disability Resource Centers, and 
the Administration on Aging) to--
          (i) ensure that health risk assessments are 
        accessible to beneficiaries; and
          (ii) provide appropriate support for the completion 
        of health risk assessments by beneficiaries.
  (E) The Secretary shall establish procedures to make 
beneficiaries and providers aware of the requirement that a 
beneficiary complete a health risk assessment prior to or at 
the same time as receiving personalized prevention plan 
services.
  (F) To the extent practicable, the Secretary shall encourage 
the use of, integration with, and coordination of health 
information technology (including use of technology that is 
compatible with electronic medical records and personal health 
records) and may experiment with the use of personalized 
technology to aid in the development of self-management skills 
and management of and adherence to provider recommendations in 
order to improve the health status of beneficiaries.
  (G) A beneficiary shall be eligible to receive only an 
initial preventive physical examination (as defined under 
subsection (ww)(1)) during the 12-month period after the date 
that the beneficiary's coverage begins under part B and shall 
be eligible to receive personalized prevention plan services 
under this subsection each year thereafter provided that the 
beneficiary has not received either an initial preventive 
physical examination or personalized prevention plan services 
within the preceding 12-month period.
  (H) The Secretary shall issue guidance that--
          (i) identifies elements under paragraph (2) that are 
        required to be provided to a beneficiary as part of 
        their first visit for personalized prevention plan 
        services; and
          (ii) establishes a yearly schedule for appropriate 
        provision of such elements thereafter.

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