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116th Congress   }                                 {     Rept. 116-327
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                 {            Part 2
_______________________________________________________________________

                                     

                                                                       

                      MEDICARE VISION ACT OF 2019

                               ----------                              

                              R E P O R T

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE

                                   on

                                H.R. 4665

                             together with

                             MINORITY VIEWS






              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]






January 24, 2020.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed
              
              
              
              
              
              
              
              





116th Congress   }                                 {     Rept. 116-327
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                 {            Part 2
_______________________________________________________________________

                                     

                                                                       

                      MEDICARE VISION ACT OF 2019

                               __________

                              R E P O R T

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE

                                   on

                                H.R. 4665

                             together with

                             MINORITY VIEWS






              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]







January 24, 2020.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed 
                               _____

                      U.S. GOVERNMENT PUBLISHING OFFICE
                      
39-471                     WASHINGTON : 2020 
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
                            C O N T E N T S

                               __________
                                                                   Page
   I. Purpose and Summary.............................................  1
  II. Background and Need for the Legislation.........................  2
 III. Committee Hearings..............................................  2
  IV. Committee Consideration.........................................  3
   V. Committee Votes.................................................  3
  VI. Oversight Findings..............................................  3
 VII. New Budget Authority, Entitlement Authority, and Tax Expenditures 3
VIII. Federal Mandates Statement......................................  3
  IX. Statement of General Performance Goals and Objectives...........  3
   X. Duplication of Federal Programs.................................  4
  XI. Committee Cost Estimate.........................................  4
 XII. Earmarks, Limited Tax Benefits, and Limited Tariff Benefits.....  4
XIII. Advisory Committee Statement....................................  4
 XIV. Applicability to Legislative Branch.............................  4
  XV. Section-by-Section Analysis of the Legislation..................  4
 XVI. Changes in Existing Law Made by the Bill, as Reported...........  5
XVII. Minority Views................................................  332















116th Congress   }                                 {     Rept. 116-327
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                 {            Part 2
======================================================================



 
                      MEDICARE VISION ACT OF 2019

                                _______
                                

January 24, 2020.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Pallone, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 4665]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 4665) to amend title XVIII of the Social 
Security Act to provide coverage for certain vision items and 
services under part B of the Medicare program, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                         I. Purpose and Summary

    H.R. 4665, the ``Medicare Vision Act of 2019'', was 
introduced on October 11, 2019, by Rep. Kim Schrier (D-WA), and 
referred to the Committee on Energy and Commerce and also to 
the Committee on Ways and Means.
    The goal of H.R. 4665 is to expand access to vision 
services for Medicare beneficiaries. Beginning January 1, 2022, 
the bill will require that Medicare provide coverage for vision 
services. The term vision services means routine eye 
examinations, including procedures performed during the course 
of such examination to determine the refractive state of the 
eyes, and contact lens fitting services. Beneficiaries would 
pay 20 percent cost sharing for vision services. Additionally, 
coverage would be limited to only one routine eye examination 
and one contact lens fitting service during a two-year period. 
The bill also provides coverage for either one pair of 
eyeglasses (including lenses and frames) during a two-year 
period or a two-year supply of contact lenses. Payment for such 
eyeglasses and contact lenses will be subject to competitive 
acquisition except in such cases where the items are furnished 
by a physician or other practitioner (as defined by the 
Secretary) to the physician's or practitioner's own patients as 
part of their professional service. Finally, the bill provides 
funding to support the implementation of the Act.

                II. Background and Need for Legislation

    H.R. 4665 aims to improve the Medicare program for 
beneficiaries by expanding coverage of vision services, 
eyeglasses, and contact lenses. Currently, Medicare excludes 
coverage for routine eye care services. Instead, Medicare 
provides limited coverage for vision services related to 
certain chronic conditions.\1\ For example, Medicare will cover 
an eye exam for individuals with diabetes or individuals at 
high risk for glaucoma.\2\ Medicare also covers cataract 
removal surgery and a pair of eyeglasses or contact lenses 
after such surgery.
---------------------------------------------------------------------------
    \1\Centers for Medicare and Medicaid Services, Medicare Vision 
Services (April 2018) (www.cms.gov/Outreach-and-Education/Medicare-
Learning-Network-MLN/MLNProducts/downloads/
VisionServices_FactSheet_ICN907165.pdf).
    \2\Medicare Rights Center, Medicare and vision care 
(www.medicareinteractive.org/get-answers/medicare-covered-services/
limited-medicare-coverage-vision-and-dental/medicare-and-vision-care).
---------------------------------------------------------------------------
    Less than half of the low-income Medicare beneficiaries who 
report having trouble seeing had an eye exam in the previous 
year.\3\ Furthermore, Medicare beneficiaries who had received 
vision services in the previous year spent on average $715 
annually, 60 percent of which was paid out-of-pocket.\4\ 
Untreated vision loss has been linked to increased risk of 
falls and injuries, social isolation, and depression, and can 
increase the negative health effects of other chronic 
illnesses.\5\
---------------------------------------------------------------------------
    \3\Amber Willink, Cathy Schoen, and Karen Davis, How Medicare Could 
Provide Dental, Vision, and Hearing Care for Beneficiaries, The 
Commonwealth Fund (www.commonwealthfund.org/publications/issue-briefs/
2018/jan/how-medicare-could-provide-dental-vision-and-hearing-care).
    \4\Id.
    \5\National Academies of Science, Engineering, and Medicine, Making 
Eye Health a Population Health Imperative: Vision for Tomorrow (2016) 
(www.nap.edu/read/23471/chapter/1).
---------------------------------------------------------------------------

                        III. Committee Hearings

    For the purposes of section 103(i) of H. Res. 6 of the 
116th Congress, the following hearing was used to develop or 
consider H.R. 4665:
    On September 25, 2019, the Subcommittee on Health held a 
legislative hearing entitled, ``Making Prescription Drugs More 
Affordable: Legislation to Negotiate a Better Deal for 
Americans.'' The hearing focused on H.R. 3 and other bills to 
improve the Medicare program. The Subcommittee received 
testimony from the following witnesses:
           Robert Fowler, Professor Emeritus, Baldwin 
        Wallace University;
           Gerard Anderson, Professor, Johns Hopkins 
        Bloomberg School of Public Health; and
           Benedic Ippolito, Research Fellow in 
        Economic Policy Studies, American Enterprise Institute.

                      IV. Committee Consideration

    H.R. 4665, the ``Medicare Vision Act of 2019'', was 
introduced on October 11, 2019, by Rep. Schrier (D-WA), and was 
referred to the Committee on Energy and Commerce, and in 
addition to the Committee on Ways and Means. The bill was 
referred to the Subcommittee on Health on October 14, 2019. A 
legislative hearing was held prior to the introduction of H.R. 
4665.
    On November 17, 2019, the full Committee on Energy and 
Commerce discharged the Subcommittee on Health from further 
consideration of H.R. 4665, and called up the bill for 
consideration and markup. No amendments were offered to the 
bill. Whereupon, the full Committee agreed to a motion by Mr. 
Pallone, Chairman of the committee, to order H.R. 4665 reported 
favorably to the House, without amendment, by a voice vote, a 
quorum being present.

                           V. Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list each record vote 
on the motion to report legislation and amendments thereto. The 
Committee advises that there were no record votes taken on H.R. 
4665, including the motion by Mr. Pallone to order H.R. 4665 
favorably reported to the House, without amendment.

                         VI. Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII and clause 2(b)(1) 
of rule X of the Rules of the House of Representatives, the 
oversight findings and recommendations of the Committee are 
reflected in the descriptive portion of the report.

 VII. New Budget Authority, Entitlement Authority, and Tax Expenditures

    Pursuant to 3(c)(2) of rule XIII of the Rules of the House 
of Representatives, the Committee adopts as its own the 
estimate of new budget authority, entitlement authority, or tax 
expenditures or revenues contained in the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974.
    The Committee has requested but not received from the 
Director of the Congressional Budget Office a statement as to 
whether this bill contains any new budget authority, spending 
authority, credit authority, or an increase or decrease in 
revenues or tax expenditures.

                    VIII. Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

       IX. Statement of General Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII, the general 
performance goal or objective of this legislation is to amend 
title XVIII of the Social Security Act to provide coverage for 
certain vision items and services under part B of the Medicare 
program.

                   X. Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII, no provision of 
H.R. 4665 is known to be duplicative of another Federal 
program, including any program that was included in a report to 
Congress pursuant to section 21 of Public Law 111-139 or the 
most recent Catalog of Federal Domestic Assistance.

                      XI. Committee Cost Estimate

    Pursuant to clause 3(d)(1) of rule XIII, the Committee 
adopts as its own the cost estimate prepared by the Director of 
the Congressional Budget Office pursuant to section 402 of the 
Congressional Budget Act of 1974.

    XII. Earmarks, Limited Tax Benefits, and Limited Tariff Benefits

    Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the 
Committee finds that H.R. 4665 contains no earmarks, limited 
tax benefits, or limited tariff benefits.

                   XIII. Advisory Committee Statement

    No advisory committee within the meaning of section 5(b) of 
the Federal Advisory Committee Act was created by this 
legislation.

                XIV. Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

           XV. Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 1 designates that the short title may be cited as 
the ``Medicare Vision Act of 2019''.

Sec. 2. Providing coverage for vision care under the medicare program

    Section 2 provides coverage for vision services under 
Medicare part B beginning January 1, 2022. The term vision 
services is defined as routine eye examinations, including 
procedures performed during the course of such examination to 
determine the refractive state of the eyes, and contact lens 
fitting services furnished by or under the direct supervision 
of an optometrist or ophthalmologist who is legally authorized 
to furnish such examinations, procedures, or fitting services.
    This section requires that beneficiaries pay 20 percent in 
cost sharing for vision services. Additionally, coverage would 
be limited to only one routine eye examination and one contact 
lens fitting service during a two-year period.
    This section exempts the costs added to the physician fee 
schedule by this new benefit from budget neutrality 
requirements for two years.
    This section also provides coverage for either one pair of 
eyeglasses (including lenses and frames) during a two-year 
period or a two-year supply of contact lenses. Payment for the 
frames of such eyeglasses shall not be more than $100 for 2022 
(increased by the percentage change in the Consumer Price Index 
for All Urban Consumers (CPI-U) each year thereafter). Payment 
for such eyeglasses and contact lenses will be subject to 
competitive acquisition except in such cases where the items 
are furnished by a physician or other practitioner (as defined 
by the Secretary) to the physician's or practitioner's own 
patients as part of their professional service.

Sec. 3. Implementation funding

    Section 3 provides for the transfer of fund from the 
Federal Supplementary Medical Insurance Trust Fund to the 
Centers for Medicare & Medicaid Services Program Management 
Account for the period of 2020 through 2024 as necessary for 
the purposes of implementing section 2.

       XVI. Changes in Existing Law Made by the Bill, as Reported


         Changes in Existing Law Made by the Bill, as Reported

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

                          SOCIAL SECURITY ACT




           *       *       *       *       *       *       *
TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED

           *       *       *       *       *       *       *



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

           *       *       *       *       *       *       *



                          PAYMENT OF BENEFITS

  Sec.  1833. (a) Except as provided in section 1876, and 
subject to the succeeding provisions of this section, there 
shall be paid from the Federal Supplementary Medical Insurance 
Trust Fund, in the case of each individual who is covered under 
the insurance program established by this part and incurs 
expenses for services with respect to which benefits are 
payable under this part, amounts equal to--(1) in the case of 
services described in section 1832(a)(1)--80 percent of the 
reasonable charges for the services; except that (A) an 
organization which provides medical and other health services 
(or arranges for their availability) on a prepayment basis (and 
either is sponsored by a union or employer, or does not 
provide, or arrange for the provision of, any inpatient 
hospital services) may elect to be paid 80 percent of the 
reasonable cost of services for which payment may be made under 
this part on behalf of individuals enrolled in such 
organization in lieu of 80 percent of the reasonable charges 
for such services if the organization undertakes to charge such 
individuals no more than 20 percent of such reasonable cost 
plus any amounts payable by them as a result of subsection (b), 
(B) with respect to items and services described in section 
1861(s)(10)(A), the amounts paid shall be 100 percent of the 
reasonable charges for such items and services, (C) with 
respect to expenses incurred for those physicians' services for 
which payment may be made under this part that are described in 
section 1862(a)(4), the amounts paid shall be subject to such 
limitations as may be prescribed by regulations, (D) with 
respect to clinical diagnostic laboratory tests for which 
payment is made under this part (i)(I) on the basis of a fee 
schedule under subsection (h)(1) (for tests furnished before 
January 1, 2017) or section 1834(d)(1), the amount paid shall 
be equal to 80 percent (or 100 percent, in the case of such 
tests for which payment is made on an assignment-related basis) 
of the lesser of the amount determined under such fee schedule, 
the limitation amount for that test determined under subsection 
(h)(4)(B), or the amount of the charges billed for the tests, 
or (II) undersection 1834A (for tests furnished on or after 
January1, 2017), the amount paid shall be equal to 80 
percent(or 100 percent, in the case of such tests for 
whichpayment is made on an assignment-related basis) ofthe 
lesser of the amount determined under such sectionor the amount 
of the charges billed for the tests, or (ii) for tests 
furnished before January 1, 2017,on the basis of a negotiated 
rate established under subsection (h)(6), the amount paid shall 
be equal to 100 percent of such negotiated rate,,(E) with 
respect to services furnished to individuals who have been 
determined to have end stage renal disease, the amounts paid 
shall be determined subject to the provisions of section 
1881,(F) with respect to clinical social worker services under 
section 1861(s)(2)(N), the amounts paid shall be 80 percent of 
the lesser of (i) the actual charge for the services or (ii) 75 
percent of the amount determined for payment of a psychologist 
under clause (L),
                  (G) with respect to facility services 
                furnished in connection with a surgical 
                procedure specified pursuant to subsection 
                (i)(1)(A) and furnished to an individual in an 
                ambulatory surgical center described in such 
                subsection, for services furnished beginning 
                with the implementation date of a revised 
                payment system for such services in such 
                facilities specified in subsection (i)(2)(D), 
                the amounts paid shall be 80 percent of the 
                lesser of the actual charge for the services or 
                the amount determined by the Secretary under 
                such revised payment system,
          (H) with respect to services of a certified 
        registered nurse anesthetist under section 1861(s)(11), 
        the amounts paid shall be 80 percent of the least of 
        the actual charge, the prevailing charge that would be 
        recognized (or, for services furnished on or after 
        January 1, 1992, the fee schedule amount provided under 
        section 1848) if the services had been performed by an 
        anesthesiologist, or the fee schedule for such services 
        established by the Secretary in accordance with 
        subsection (l), (I) with respect to covered items 
        (described in section 1834(a)(13)), the amounts paid 
        shall be the amounts described in section 1834(a)(1), 
        and(J) with respect to expenses incurred for 
        radiologist services (as defined in section 
        1834(b)(6)), subject to section 1848, the amounts paid 
        shall be 80 percent of the lesser of the actual charge 
        for the services or the amount provided under the fee 
        schedule established under section 1834(b), (K) with 
        respect to certified nurse-midwife services under 
        section 1861(s)(2)(L), the amounts paid shall be 80 
        percent of the lesser of the actual charge for the 
        services or the amount determined by a fee schedule 
        established by the Secretary for the purposes of this 
        subparagraph (but in no event shall such fee schedule 
        exceed 65 percent of the prevailing charge that would 
        be allowed for the same service performed by a 
        physician, or, for services furnished on or after 
        January 1, 1992, 65 percent (or 100 percent for 
        services furnished on or after January 1, 2011) of the 
        fee schedule amount provided under section 1848 for the 
        same service performed by a physician), (L) with 
        respect to qualified psychologist services under 
        section 1861(s)(2)(M), the amounts paid shall be 80 
        percent of the lesser of the actual charge for the 
        services or the amount determined by a fee schedule 
        established by the Secretary for the purposes of this 
        subparagraph, (M) with respect to prosthetic devices 
        and orthotics and prosthetics (as defined in section 
        1834(h)(4)), the amounts paid shall be the amounts 
        described in section 1834(h)(1), (N) with respect to 
        expenses incurred for physicians' services (as defined 
        in section 1848(j)(3)) other than personalized 
        prevention plan services (as defined in section 
        1861(hhh)(1)), the amounts paid shall be 80 percent of 
        the payment basis determined under section 1848(a)(1), 
        (O) with respect to services described in section 
        1861(s)(2)(K) (relating to services furnished by 
        physician assistants, nurse practitioners, or clinic 
        nurse specialists), the amounts paid shall be equal to 
        80 percent of (i) the lesser of the actual charge or 85 
        percent of the fee schedule amount provided under 
        section 1848, or (ii) in the case of services as an 
        assistant at surgery, the lesser of the actual charge 
        or 85 percent of the amount that would otherwise be 
        recognized if performed by a physician who is serving 
        as an assistant at surgery, (P) with respect to 
        surgical dressings, the amounts paid shall be the 
        amounts determined under section 1834(i), (Q) with 
        respect to items or services for which fee schedules 
        are established pursuant to section 1842(s), the 
        amounts paid shall be 80 percent of the lesser of the 
        actual charge or the fee schedule established in such 
        section, (R) with respect to ambulance services, (i) 
        the amounts paid shall be 80 percent of the lesser of 
        the actual charge for the services or the amount 
        determined by a fee schedule established by the 
        Secretary under section 1834(l) and (ii) with respect 
        to ambulance services described in section 1834(l)(8), 
        the amounts paid shall be the amounts determined under 
        section 1834(g) for outpatient critical access hospital 
        services, (S) with respect to drugs and biologicals 
        (including intravenous immune globulin (as defined in 
        section 1861(zz))) not paid on a cost or prospective 
        payment basis as otherwise provided in this part (other 
        than items and services described in subparagraph (B)), 
        the amounts paid shall be 80 percent of the lesser of 
        the actual charge or the payment amount established in 
        section 1842(o) (or, if applicable, under section 1847, 
        1847A, or 1847B), (T) with respect to medical nutrition 
        therapy services (as defined in section 1861(vv)), the 
        amount paid shall be 80 percent (or 100 percent if such 
        services are recommended with a grade of A or B by the 
        United States Preventive Services Task Force for any 
        indication or population and are appropriate for the 
        individual) of the lesser of the actual charge for the 
        services or 85 percent of the amount determined under 
        the fee schedule established under section 1848(b) for 
        the same services if furnished by a physician, (U) with 
        respect to facility fees described in section 
        1834(m)(2)(B), the amounts paid shall be 80 percent of 
        the lesser of the actual charge or the amounts 
        specified in such section, (V) notwithstanding 
        subparagraphs (I) (relating to durable medical 
        equipment), (M) (relating to prosthetic devices and 
        orthotics and prosthetics), and (Q) (relating to 
        1842(s) items), with respect to competitively priced 
        items and services (described in section 1847(a)(2)) 
        that are furnished in a competitive area, the amounts 
        paid shall be the amounts described in section 
        1847(b)(5), (W) with respect to additional preventive 
        services (as defined in section 1861(ddd)(1)), the 
        amount paid shall be (i) in the case of such services 
        which are clinical diagnostic laboratory tests, the 
        amount determined under subparagraph (D) (if such 
        subparagraph were applied, by substituting ``100 
        percent'' for ``80 percent''), and (ii) in the case of 
        all other such services, 100 percent of the lesser of 
        the actual charge for the service or the amount 
        determined under a fee schedule established by the 
        Secretary for purposes of this subparagraph, (X) with 
        respect to personalized prevention plan services (as 
        defined in section 1861(hhh)(1)), the amount paid shall 
        be 100 percent of the lesser of the actual charge for 
        the services or the amount determined under the payment 
        basis determined under section 1848, (Y) with respect 
        to preventive services described in subparagraphs (A) 
        and (B) of section 1861(ddd)(3) that are appropriate 
        for the individual and, in the case of such services 
        described in subparagraph (A), are recommended with a 
        grade of A or B by the United States Preventive 
        Services Task Force for any indication or population, 
        the amount paid shall be 100 percent of (i) except as 
        provided in clause (ii), the lesser of the actual 
        charge for the services or the amount determined under 
        the fee schedule that applies to such services under 
        this part, and (ii) in the case of such services that 
        are covered OPD services (as defined in subsection 
        (t)(1)(B)), the amount determined under subsection (t), 
        (Z) with respect to Federally qualified health center 
        services for which payment is made under section 
        1834(o), the amounts paid shall be 80 percent of the 
        lesser of the actual charge or the amount determined 
        under such section, (AA) with respect to an applicable 
        disposable device (as defined in paragraph (2) of 
        section 1834(s)) furnished to an individual pursuant to 
        paragraph (1) of such section, the amount paid shall be 
        equal to 80 percent of the lesser of the actual charge 
        or the amount determined under paragraph (3) of such 
        section, (BB) with respect to home infusion therapy, 
        the amount paid shall be an amount equal to 80 percent 
        of the lesser of the actual charge for the services or 
        the amount determined under section 1834(u), [and] (CC) 
        with respect to opioid use disorder treatment services 
        furnished during an episode of care, the amount paid 
        shall be equal to the amount payable under section 
        1834(w) less any copayment required as specified by the 
        Secretary, and (DD) with respect to vision services (as 
        defined in section 1861(kkk)), the amount paid shall be 
        equal to 80 percent of the lesser of the actual charge 
        or the amount determined under the payment basis 
        determined under section 1848;
          (2) in the case of services described in section 
        1832(a)(2) (except those services described in 
        subparagraphs (C), (D), (E), (F), (G), (H), and (I) of 
        such section and unless otherwise specified in section 
        1881)--
                  (A) with respect to home health services 
                (other than a covered osteoporosis drug) (as 
                defined in section 1861(kk)), the amount 
                determined under the prospective payment system 
                under section 1895;
                  (B) with respect to other items and services 
                (except those described in subparagraph (C), 
                (D), or (E) of this paragraph and except as may 
                be provided in section 1886 or section 
                1888(e)(9))--
                          (i) furnished before January 1, 1999, 
                        the lesser of--
                                  (I) the reasonable cost of 
                                such services, as determined 
                                under section 1861(v), or
                                  (II) the customary charges 
                                with respect to such 
                                services,--less the amount a 
                                provider may charge as 
                                described in clause (ii) of 
                                section 1866(a)(2)(A), but in 
                                no case may the payment for 
                                such other services exceed 80 
                                percent of such reasonable 
                                cost, or
                          (ii) if such services are furnished 
                        before January 1, 1999, by a public 
                        provider of services, or by another 
                        provider which demonstrates to the 
                        satisfaction of the Secretary that a 
                        significant portion of its patients are 
                        low-income (and requests that payment 
                        be made under this clause), free of 
                        charge or at nominal charges to the 
                        public, 80 percent of the amount 
                        determined in accordance with section 
                        1814(b)(2), or
                          (iii) if such services are furnished 
                        on or after January 1, 1999, the amount 
                        determined under subsection (t), or
                          (iv) if (and for so long as) the 
                        conditions described in section 
                        1814(b)(3) are met, the amounts 
                        determined under the reimbursement 
                        system described in such section;
                  (C) with respect to services described in the 
                second sentence of section 1861(p), 80 percent 
                of the reasonable charges for such services;
                  (D) with respect to clinical diagnostic 
                laboratory tests for which payment is made 
                under this part (i)(I)on the basis of a fee 
                schedule determined under subsection(h)(1) (for 
                tests furnished before January 1, 2017) or 
                section 1834(d)(1), the amount paid shall be 
                equal to 80 percent (or 100 percent, in the 
                case of such tests for which payment is made on 
                an assignment-related basis or to a provider 
                having an agreement under section 1866) of the 
                lesser of the amount determined under such fee 
                schedule, the limitation amount for that test 
                determined under subsection (h)(4)(B), or the 
                amount of the charges billed for the tests, or 
                (II) under section 1834A (for tests furnished 
                on or after January 1, 2017), the amount paid 
                shall be equal to 80 percent (or 100 percent, 
                in the case of such tests for which payment is 
                made on an assignment-related basis or to a 
                provider having an agreement under section 
                1866) of the lesser of the amount determined 
                under such section or the amount of the charges 
                billed for the tests, or (ii) for tests 
                furnished before January 1, 2017, on the basis 
                of a negotiated rate established under 
                subsection (h)(6), the amount paid shall be 
                equal to 100 percent of such negotiated rate 
                for such tests;
                  (E) with respect to--
                          (i) outpatient hospital radiology 
                        services (including diagnostic and 
                        therapeutic radiology, nuclear medicine 
                        and CAT scan procedures, magnetic 
                        resonance imaging, and ultrasound and 
                        other imaging services, but excluding 
                        screening mammography and, for services 
                        furnished on or after January 1, 2005, 
                        diagnostic mammography), and
                          (ii) effective for procedures 
                        performed on or after October 1, 1989, 
                        diagnostic procedures (as defined by 
                        the Secretary) described in section 
                        1861(s)(3) (other than diagnostic x-ray 
                        tests and diagnostic laboratory tests),
                the amount determined under subsection (n) or, 
                for services or procedures performed on or 
                after January 1, 1999, subsection (t);
                  (F) with respect to a covered osteoporosis 
                drug (as defined in section 1861(kk)) furnished 
                by a home health agency, 80 percent of the 
                reasonable cost of such service, as determined 
                under section 1861(v);
                  (G) with respect to items and services 
                described in section 1861(s)(10)(A), the lesser 
                of--
                          (i) the reasonable cost of such 
                        services, as determined under section 
                        1861(v), or
                          (ii) the customary charges with 
                        respect to such services; and
                  (H) with respect to personalized prevention 
                plan services (as defined in section 
                1861(hhh)(1)) furnished by an outpatient 
                department of a hospital, the amount determined 
                under paragraph (1)(X),
                or, if such services are furnished by a public 
                provider of services, or by another provider 
                which demonstrates to the satisfaction of the 
                Secretary that a significant portion of its 
                patients are low-income (and requests that 
                payment be made under this provision), free of 
                charge or at nominal charges to the public, the 
                amount determined in accordance with section 
                1814(b)(2);
          (3) in the case of services described in section 
        1832(a)(2)(D)--
                  (A) except as provided in subparagraph (B), 
                the costs which are reasonable and related to 
                the cost of furnishing such services or which 
                are based on such other tests of reasonableness 
                as the Secretary may prescribe in regulations, 
                including those authorized under section 
                1861(v)(1)(A), less the amount a provider may 
                charge as described in clause (ii) of section 
                1866(a)(2)(A), but in no case may the payment 
                for such services (other than for items and 
                services described in section 1861(s)(10)(A)) 
                exceed 80 percent of such costs; or
                  (B) with respect to the services described in 
                clause (ii) of section 1832(a)(2)(D) that are 
                furnished to an individual enrolled with a MA 
                plan under part C pursuant to a written 
                agreement described in section 1853(a)(4), the 
                amount (if any) by which--
                          (i) the amount of payment that would 
                        have otherwise been provided (I) under 
                        subparagraph (A) (calculated as if 
                        ``100 percent'' were substituted for 
                        ``80 percent'' in such subparagraph) 
                        for such services if the individual had 
                        not been so enrolled, or (II) in the 
                        case of such services furnished on or 
                        after the implementation date of the 
                        prospective payment system under 
                        section 1834(o), under such section 
                        (calculated as if ``100 percent'' were 
                        substituted for ``80 percent'' in such 
                        section) for such services if the 
                        individual had not been so enrolled; 
                        exceeds
                          (ii) the amount of the payments 
                        received under such written agreement 
                        for such services (not including any 
                        financial incentives provided for in 
                        such agreement such as risk pool 
                        payments, bonuses, or withholds),
                less the amount the federally qualified health 
                center may charge as described in section 
                1857(e)(3)(B);
          (4) in the case of facility services described in 
        section 1832(a)(2)(F), and outpatient hospital facility 
        services furnished in connection with surgical 
        procedures specified by the Secretary pursuant to 
        section 1833(i)(1)(A), the applicable amount as 
        determined under paragraph (2) or (3) of subsection (i) 
        or subsection (t);
          (5) in the case of covered items (described in 
        section 1834(a)(13)) the amounts described in section 
        1834(a)(1);
          (6) in the case of outpatient critical access 
        hospital services, the amounts described in section 
        1834(g);
          (7) in the case of prosthetic devices and orthotics 
        and prosthetics (as described in section 1834(h)(4)), 
        the amounts described in section 1834(h);
          (8) in the case of--
                  (A) outpatient physical therapy services, 
                outpatient speech-language pathology services, 
                and outpatient occupational therapy services 
                furnished--
                          (i) by a rehabilitation agency, 
                        public health agency, clinic, 
                        comprehensive outpatient rehabilitation 
                        facility, or skilled nursing facility,
                          (ii) by a home health agency to an 
                        individual who is not homebound, or
                          (iii) by another entity under an 
                        arrangement with an entity described in 
                        clause (i) or (ii); and
                  (B) outpatient physical therapy services, 
                outpatient speech-language pathology services, 
                and outpatient occupational therapy services 
                furnished--
                          (i) by a hospital to an outpatient or 
                        to a hospital inpatient who is entitled 
                        to benefits under part A but has 
                        exhausted benefits for inpatient 
                        hospital services during a spell of 
                        illness or is not so entitled to 
                        benefits under part A, or
                          (ii) by another entity under an 
                        arrangement with a hospital described 
                        in clause (i),
        the amounts described in section 1834(k); and
          (9) in the case of services described in section 
        1832(a)(2)(E) that are not described in paragraph (8), 
        the amounts described in section 1834(k).
         Paragraph (3)(A) shall not apply to Federally 
        qualified health center services furnished on or after 
        the implementation date of the prospective payment 
        system under section 1834(0).
  (b) Before applying subsection (a) with respect to expenses 
incurred by an individual during any calendar year, the total 
amount of the expenses incurred by such individual during such 
year (which would, except for this subsection, constitute 
incurred expenses from which benefits payable under subsection 
(a) are determinable) shall be reduced by a deductible of $75 
for calendar years before 1991, $100 for 1991 through 2004, 
$110 for 2005, and for a subsequent year the amount of such 
deductible for the previous year increased by the annual 
percentage increase in the monthly actuarial rate under section 
1839(a)(1) ending with such subsequent year (rounded to the 
nearest $1); except that (1) such total amount shall not 
include expenses incurred for preventive services described in 
subparagraph (A) of section 1861(ddd)(3) that are recommended 
with a grade of A or B by the United States Preventive Services 
Task Force for any indication or population and are appropriate 
for the individual., (2) such deductible shall not apply with 
respect to home health services (other than a covered 
osteoporosis drug (as defined in section 1861(kk))), (3) such 
deductible shall not apply with respect to clinical diagnostic 
laboratory tests for which payment is made under this part (A) 
under subsection (a)(1)(D)(i) or (a)(2)(D)(i) on an assignment-
related basis, or to a provider having an agreement under 
section 1866, or (B) for tests furnished before January 1, 
2017,on the basis of a negotiated rate determined under 
subsection (h)(6), (4) such deductible shall not apply to 
Federally qualified health center services, (5) such deductible 
shall not apply with respect to screening mammography (as 
described in section 1861(jj)), (6) such deductible shall not 
apply with respect to screening pap smear and screening pelvic 
exam (as described in section 1861(nn)), (7) such deductible 
shall not apply with respect to ultrasound screening for 
abdominal aortic aneurysm (as defined in section 1861(bbb)), 
(8) such deductible shall not apply with respect to colorectal 
cancer screening tests (as described in section 1861(pp)(1)), 
(9) such deductible shall not apply with respect to an initial 
preventive physical examination (as defined in section 
1861(ww)), and (10) such deductible shall not apply with 
respect to personalized prevention plan services (as defined in 
section 1861(hhh)(1)). The total amount of the expenses 
incurred by an individual as determined under the preceding 
sentence shall, after the reduction specified in such sentence, 
be further reduced by an amount equal to the expenses incurred 
for the first three pints of whole blood (or equivalent 
quantities of packed red blood cells, as defined under 
regulations) furnished to the individual during the calendar 
year, except that such deductible for such blood shall in 
accordance with regulations be appropriately reduced to the 
extent that there has been a replacement of such blood (or 
equivalent quantities of packed red blood cells, as so 
defined); and for such purposes blood (or equivalent quantities 
of packed red blood cells, as so defined) furnished such 
individual shall be deemed replaced when the institution or 
other person furnishing such blood (or such equivalent 
quantities of packed red blood cells, as so defined) is given 
one pint of blood for each pint of blood (or equivalent 
quantities of packed red blood cells, as so defined) furnished 
such individual with respect to which a deduction is made under 
this sentence. The deductible under the previous sentence for 
blood or blood cells furnished an individual in a year shall be 
reduced to the extent that a deductible has been imposed under 
section 1813(a)(2) to blood or blood cells furnished the 
individual in the year. Paragraph (1) of the first sentence of 
this subsection shall apply with respect to a colorectal cancer 
screening test regardless of the code that is billed for the 
establishment of a diagnosis as a result of the test, or for 
the removal of tissue or other matter or other procedure that 
is furnished in connection with, as a result of, and in the 
same clinical encounter as the screening test.
  (c)(1) Notwithstanding any other provision of this part, with 
respect to expenses incurred in a calendar year in connection 
with the treatment of mental, psychoneurotic, and personality 
disorders of an individual who is not an inpatient of a 
hospital at the time such expenses are incurred, there shall be 
considered as incurred expenses for purposes of subsections (a) 
and (b)--
          (A) for expenses incurred in years prior to 2010, 
        only 62\1/2\ percent of such expenses;
          (B) for expenses incurred in 2010 or 2011, only 68\3/
        4\ percent of such expenses;
          (C) for expenses incurred in 2012, only 75 percent of 
        such expenses;
          (D) for expenses incurred in 2013, only 81\1/4\ 
        percent of such expenses; and
          (E) for expenses incurred in 2014 or any subsequent 
        calendar year, 100 percent of such expenses.
  (2) For purposes of subparagraphs (A) through (D) of 
paragraph (1), the term ``treatment'' does not include brief 
office visits (as defined by the Secretary) for the sole 
purpose of monitoring or changing drug prescriptions used in 
the treatment of such disorders or partial hospitalization 
services that are not directly provided by a physician
  (d) No payment may be made under this part with respect to 
any services furnished an individual to the extent that such 
individual is entitled (or would be entitled except for section 
1813) to have payment made with respect to such services under 
part A.
  (e) No payment shall be made to any provider of services or 
other person under this part unless there has been furnished 
such information as may be necessary in order to determine the 
amounts due such provider or other person under this part for 
the period with respect to which the amounts are being paid or 
for any prior period.
  (f) In establishing limits under subsection (a) on payment 
for rural health clinic services provided by rural health 
clinics (other than such clinics in hospitals with less than 50 
beds), the Secretary shall establish such limit, for services 
provided--
          (1) in 1988, after March 31, at $46 per visit, and
          (2) in a subsequent year, at the limit established 
        under this subsection for the previous year increased 
        by the percentage increase in the MEI (as defined in 
        section 1842(i)(3)) applicable to primary care services 
        (as defined in section 1842(i)(4)) furnished as of the 
        first day of that year.
  (g)(1)(A) Subject to paragraphs (4) and (5), in the case of 
physical therapy services of the type described in section 
1861(p) and speech-language pathology services of the type 
described in such section through the application of section 
1861(ll)(2), but (except as provided in paragraph (6)) not 
described in subsection (a)(8)(B), and physical therapy 
services and speech-language pathology services of such type 
which are furnished by a physician or as incident to 
physicians' services, with respect to expenses incurred in any 
calendar year, no more than the amount specified in paragraph 
(2) for the year shall be considered as incurred expenses for 
purposes of subsections (a) and (b). The preceding sentence 
shall not apply to expenses incurred with respect to services 
furnished after December 31, 2017.
  (B) With respect to services furnished during 2018 or a 
subsequent year, in the case of physical therapy services of 
the type described in section 1861(p), speech-language 
pathology services of the type described in such section 
through the application of section 1861(ll)(2), and physical 
therapy services and speech-language pathology services of such 
type which are furnished by a physician or as incident to 
physicians' services, with respect to expenses incurred in any 
calendar year, any amount that is more than the amount 
specified in paragraph (2) for the year shall not be considered 
as incurred expenses for purposes of subsections (a) and (b) 
unless the applicable requirements of paragraph (7) are met.
  (2) The amount specified in this paragraph--
          (A) for 1999, 2000, and 2001, is $1,500, and
          (B) for a subsequent year is the amount specified in 
        this paragraph for the preceding year increased by the 
        percentage increase in the MEI (as defined in section 
        1842(i)(3)) for such subsequent year;
except that if an increase under subparagraph (B) for a year is 
not a multiple of $10, it shall be rounded to the nearest 
multiple of $10.
  (3)(A) Subject to paragraphs (4) and (5), in the case of 
occupational therapy services (of the type that are described 
in section 1861(p) (but (except as provided in paragraph (6)) 
not described in subsection (a)(8)(B)) through the operation of 
section 1861(g) and of such type which are furnished by a 
physician or as incident to physicians' services), with respect 
to expenses incurred in any calendar year, no more than the 
amount specified in paragraph (2) for the year shall be 
considered as incurred expenses for purposes of subsections (a) 
and (b). The preceding sentence shall not apply to expenses 
incurred with respect to services furnished after December 31, 
2017.
  (B) With respect to services furnished during 2018 or a 
subsequent year, in the case of occupational therapy services 
(of the type that are described in section 1861(p) through the 
operation of section 1861(g) and of such type which are 
furnished by a physician or as incident to physicians' 
services), with respect to expenses incurred in any calendar 
year, any amount that is more than the amount specified in 
paragraph (2) for the year shall not be considered as incurred 
expenses for purposes of subsections (a) and (b) unless the 
applicable requirements of paragraph (7) are met.
  (4) This subsection shall not apply to expenses incurred with 
respect to services furnished during 2000, 2001, 2002, 2004, 
and 2005.
  (5)(A) With respect to expenses incurred during the period 
beginning on January 1, 2006, and ending on December 31, 2017, 
for services, the Secretary shall implement a process under 
which an individual enrolled under this part may, upon request 
of the individual or a person on behalf of the individual, 
obtain an exception from the uniform dollar limitation 
specified in paragraph (2), for services described in 
paragraphs (1) and (3) if the provision of such services is 
determined to be medically necessary and if the requirement of 
subparagraph (B) is met. Under such process, if the Secretary 
does not make a decision on such a request for an exception 
within 10 business days of the date of the Secretary's receipt 
of the request made in accordance with such requirement, the 
Secretary shall be deemed to have found the services to be 
medically necessary.
  (B) In the case of outpatient therapy services for which an 
exception is requested under the first sentence of subparagraph 
(A), the claim for such services shall contain an appropriate 
modifier (such as the KX modifier used as of the date of the 
enactment of this subparagraph) indicating that such services 
are medically necessary as justified by appropriate 
documentation in the medical record involved.
  (C)(i) In applying this paragraph with respect to a request 
for an exception with respect to expenses that would be 
incurred for outpatient therapy services (including services 
described in subsection (a)(8)(B)) that would exceed the 
threshold described in clause (ii) for a year, the request for 
such an exception, for services furnished on or after October 
1, 2012, shall be subject to a manual medical review process 
that, subject to subparagraph (E), is similar to the manual 
medical review process used for certain exceptions under this 
paragraph in 2006.
  (ii) The threshold under this clause for a year is $3,700. 
Such threshold shall be applied separately--
          (I) for physical therapy services and speech-language 
        pathology services; and
          (II) for occupational therapy services.
  (E)(i) In place of the manual medical review process under 
subparagraph (C)(i), the Secretary shall implement a process 
for medical review under this subparagraph under which the 
Secretary shall identify and conduct medical review for 
services described in subparagraph (C)(i) furnished by a 
provider of services or supplier (in this subparagraph referred 
to as a ``therapy provider'') using such factors as the 
Secretary determines to be appropriate.
  (ii) Such factors may include the following:
          (I) The therapy provider has had a high claims denial 
        percentage for therapy services under this part or is 
        less compliant with applicable requirements under this 
        title.
          (II) The therapy provider has a pattern of billing 
        for therapy services under this part that is aberrant 
        compared to peers or otherwise has questionable billing 
        practices for such services, such as billing medically 
        unlikely units of services in a day.
          (III) The therapy provider is newly enrolled under 
        this title or has not previously furnished therapy 
        services under this part.
          (IV) The services are furnished to treat a type of 
        medical condition.
          (V) The therapy provider is part of group that 
        includes another therapy provider identified using the 
        factors determined under this subparagraph.
  (iii) For purposes of carrying out this subparagraph, 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 fiscal years 2015 and 2016, to 
remain available until expended. Such funds may not be used by 
a contractor under section 1893(h) for medical reviews under 
this subparagraph.
  (iv) The targeted review process under this subparagraph 
shall not apply to services for which expenses are incurred 
beyond the period for which the exceptions process under 
subparagraph (A) is implemented, except as such process is 
applied under paragraph (7)(B).
  (6)(A) In applying paragraphs (1) and (3) to services 
furnished during the period beginning not later than October 1, 
2012, and ending on December 31, 2017, the exclusion of 
services described in subsection (a)(8)(B) from the uniform 
dollar limitation specified in paragraph (2) shall not apply to 
such services furnished during 2012 through 2017.
  (B)(i) With respect to outpatient therapy services furnished 
beginning on or after January 1, 2013, and before January 1, 
2014, for which payment is made under section 1834(g), the 
Secretary shall count toward the uniform dollar limitations 
described in paragraphs (1) and (3) and the threshold described 
in paragraph (5)(C) the amount that would be payable under this 
part if such services were paid under section 1834(k)(1)(B) 
instead of being paid under section 1834(g).
  (ii) Nothing in clause (i) shall be construed as changing the 
method of payment for outpatient therapy services under section 
1834(g).
  (7) For purposes of paragraphs (1)(B) and (3)(B), with 
respect to services described in such paragraphs, the 
requirements described in this paragraph are as follows:
          (A) Inclusion of appropriate modifier.--The claim for 
        such services contains an appropriate modifier (such as 
        the KX modifier described in paragraph (5)(B)) 
        indicating that such services are medically necessary 
        as justified by appropriate documentation in the 
        medical record involved.
          (B) Targeted medical review for certain services 
        above threshold.--
                  (i) In general.--In the case where expenses 
                that would be incurred for such services would 
                exceed the threshold described in clause (ii) 
                for the year, such services shall be subject to 
                the process for medical review implemented 
                under paragraph (5)(E).
                  (ii) Threshold.--The threshold under this 
                clause for--
                          (I) a year before 2028, is $3,000;
                          (II) 2028, is the amount specified in 
                        subclause (I) increased by the 
                        percentage increase in the MEI (as 
                        defined in section 1842(i)(3)) for 
                        2028; and
                          (III) a subsequent year, is the 
                        amount specified in 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;
                except that if an increase under subclause (II) 
                or (III) for a year is not a multiple of $10, 
                it shall be rounded to the nearest multiple of 
                $10.
                  (iii) Application.--The threshold under 
                clause (ii) shall be applied separately--
                          (I) for physical therapy services and 
                        speech-language pathology services; and
                          (II) for occupational therapy 
                        services.
                  (iv) Funding.--For purposes of carrying out 
                this subparagraph, the Secretary shall provide 
                for the transfer, from the Federal 
                Supplementary Medical Insurance Trust Fund 
                under section 1841 to the Centers for Medicare 
                & Medicaid Services Program Management Account, 
                of $5,000,000 for each fiscal year beginning 
                with fiscal year 2018, to remain available 
                until expended. Such funds may not be used by a 
                contractor under section 1893(h) for medical 
                reviews under this subparagraph.
  (8) With respect to services furnished on or after January 1, 
2013, where payment may not be made as a result of application 
of paragraphs (1) and (3), section 1879 shall apply in the same 
manner as such section applies to a denial that is made by 
reason of section 1862(a)(1).
  (h)(1)(A) Subject to section 1834(d)(1), the Secretary shall 
establish fee schedules for clinical diagnostic laboratory 
tests (including prostate cancer screening tests under section 
1861(oo) consisting of prostate-specific antigen blood tests) 
for which payment is made under this part, other than such 
tests performed by a provider of services for an inpatient of 
such provider.
  (B) In the case of clinical diagnostic laboratory tests 
performed by a physician or by a laboratory (other than tests 
performed by a qualified hospital laboratory (as defined in 
subparagraph (D)) for outpatients of such hospital), the fee 
schedules established under subparagraph (A) shall be 
established on a regional, statewide, or carrier service area 
basis (as the Secretary may determine to be appropriate) for 
tests furnished on or after July 1, 1984.
  (C) In the case of clinical diagnostic laboratory tests 
performed by a qualified hospital laboratory (as defined in 
subparagraph (D)) for outpatients of such hospital, the fee 
schedules established under subparagraph (A) shall be 
established on a regional, statewide, or carrier service area 
basis (as the Secretary may determine to be appropriate) for 
tests furnished on or after July 1, 1984.
  (D) In this subsection, the term ``qualified hospital 
laboratory'' means a hospital laboratory, in a sole community 
hospital (as defined in section 1886(d)(5)(D)(iii)), which 
provides some clinical diagnostic laboratory tests 24 hours a 
day in order to serve a hospital emergency room which is 
available to provide services 24 hours a day and 7 days a week.
  (2)(A)(i) Except as provided in clause (v), subparagraph (B), 
and paragraph (4), the Secretary shall set the fee schedules at 
60 percent (or, in the case of a test performed by a qualified 
hospital laboratory (as defined in paragraph (1)(D)) for 
outpatients of such hospital, 62 percent) of the prevailing 
charge level determined pursuant to the third and fourth 
sentences of section 1842(b)(3) for similar clinical diagnostic 
laboratory tests for the applicable region, State, or area for 
the 12-month period beginning July 1, 1984, adjusted annually 
(to become effective on January 1 of each year) by, subject to 
clause (iv), a percentage increase or decrease equal to the 
percentage increase or decrease in the Consumer Price Index for 
All Urban Consumers (United States city average) minus, for 
each of the years 2009 and 2010, 0.5 percentage points, and, 
for tests furnished before the dateof enactment of section 
1834A, subject to such other adjustments as the Secretary 
determines are justified by technological changes.
  (ii) Notwithstanding clause (i)--
          (I) any change in the fee schedules which would have 
        become effective under this subsection for tests 
        furnished on or after January 1, 1988, shall not be 
        effective for tests furnished during the 3-month period 
        beginning on January 1, 1988,
          (II) the Secretary shall not adjust the fee schedules 
        under clause (i) to take into account any increase in 
        the consumer price index for 1988,
          (III) the annual adjustment in the fee schedules 
        determined under clause (i) for each of the years 1991, 
        1992, and 1993 shall be 2 percent, and
          (IV) the annual adjustment in the fee schedules 
        determined under clause (i) for each of the years 1994 
        and 1995, 1998 through 2002, and 2004 through 2008 
        shall be 0 percent.
  (iii) In establishing fee schedules under clause (i) with 
respect to automated tests and tests (other than cytopathology 
tests) which before July 1, 1984, the Secretary made subject to 
a limit based on lowest charge levels under the sixth sentence 
of section 1842(b)(3) performed after March 31, 1988, the 
Secretary shall reduce by 8.3 percent the fee schedules 
otherwise established for 1988, and such reduced fee schedules 
shall serve as the base for 1989 and subsequent years.
  (iv) After determining the adjustment to the fee schedules 
under clause (i), the Secretary shall reduce such adjustment--
          (I) for 2011 and each subsequent year, by the 
        productivity adjustment described in section 
        1886(b)(3)(B)(xi)(II); and
          (II) for each of 2011 through 2015, by 1.75 
        percentage points.
Subclause (I) shall not apply in a year where the adjustment to 
the fee schedules determined under clause (i) is 0.0 or a 
percentage decrease for a year. The application of the 
productivity adjustment under subclause (I) shall not result in 
an adjustment to the fee schedules under clause (i) being less 
than 0.0 for a year. The application of subclause (II) may 
result in an adjustment to the fee schedules under clause (i) 
being less than 0.0 for a year, and may result in payment rates 
for a year being less than such payment rates for the preceding 
year.
  (v) The Secretary shall reduce by 2 percent the fee schedules 
otherwise determined under clause (i) for 2013, and such 
reduced fee schedules shall serve as the base for 2014 and 
subsequent years.
  (B) The Secretary may make further adjustments or exceptions 
to the fee schedules to assure adequate reimbursement of (i) 
emergency laboratory tests needed for the provision of bona 
fide emergency services, and (ii) certain low volume high-cost 
tests where highly sophisticated equipment or extremely skilled 
personnel are necessary to assure quality.
  (3) In addition to the amounts provided under the fee 
schedules (for tests furnished before January 1, 2017)or under 
section 1834A (for tests furnished on or afterJanuary 1, 2017), 
subject to subsection (b)(5) of such section, the Secretary 
shall provide for and establish (A) a nominal fee to cover the 
appropriate costs in collecting the sample on which a clinical 
diagnostic laboratory test was performed and for which payment 
is made under this part, except that not more than one such fee 
may be provided under this paragraph with respect to samples 
collected in the same encounter, and (B) a fee to cover the 
transportation and personnel expenses for trained personnel to 
travel to the location of an individual to collect the sample, 
except that such a fee may be provided only with respect to an 
individual who is homebound or an inpatient in an inpatient 
facility (other than a hospital). In establishing a fee to 
cover the transportation and personnel expenses for trained 
personnel to travel to the location of an individual to collect 
a sample, the Secretary shall provide a method for computing 
the fee based on the number of miles traveled and the personnel 
costs associated with the collection of each individual sample, 
but the Secretary shall only be required to apply such method 
in the case of tests furnished during the period beginning on 
April 1, 1989, and ending on December 31, 1990, by a laboratory 
that establishes to the satisfaction of the Secretary (based on 
data for the 12-month period ending June 30, 1988) that (i) the 
laboratory is dependent upon payments under this title for at 
least 80 percent of its collected revenues for clinical 
diagnostic laboratory tests, (ii) at least 85 percent of its 
gross revenues for such tests are attributable to tests 
performed with respect to individuals who are homebound or who 
are residents in a nursing facility, and (iii) the laboratory 
provided such tests for residents in nursing facilities 
representing at least 20 percent of the number of such 
facilities in the State in which the laboratory is located.
  (4)(A) In establishing any fee schedule under this 
subsection, the Secretary may provide for an adjustment to take 
into account, with respect to the portion of the expenses of 
clinical diagnostic laboratory tests attributable to wages, the 
relative difference between a region's or local area's wage 
rates and the wage rate presumed in the data on which the 
schedule is based.
  (B) For purposes of subsections (a)(1)(D)(i) and 
(a)(2)(D)(i), the limitation amount for a clinical diagnostic 
laboratory test performed--
          (i) on or after July 1, 1986, and before April 1, 
        1988, is equal to 115 percent of the median of all the 
        fee schedules established for that test for that 
        laboratory setting under paragraph (1),
          (ii) after March 31, 1988, and before January 1, 
        1990, is equal to the median of all the fee schedules 
        established for that test for that laboratory setting 
        under paragraph (1),
          (iii) after December 31, 1989, and before January 1, 
        1991, is equal to 93 percent of the median of all the 
        fee schedules established for that test for that 
        laboratory setting under paragraph (1),
          (iv) after December 31, 1990, and before January 1, 
        1994, is equal to 88 percent of such median,
          (v) after December 31, 1993, and before January 1, 
        1995, is equal to 84 percent of such median,
          (vi) after December 31, 1994, and before January 1, 
        1996, is equal to 80 percent of such median,
          (vii) after December 31, 1995, and before January 1, 
        1998, is equal to 76 percent of such median, and
          (viii) after December 31, 1997, is equal to 74 
        percent of such median (or 100 percent of such median 
        in the case of a clinical diagnostic laboratory test 
        performed on or after January 1, 2001, that the 
        Secretary determines is a new test for which no 
        limitation amount has previously been established under 
        this subparagraph).
  (5)(A) In the case of a bill or request for payment for a 
clinical diagnostic laboratory test for which payment may 
otherwise be made under this part on an assignment-related 
basis or under a provider agreement under section 1866, payment 
may be made only to the person or entity which performed or 
supervised the performance of such test; except that--
          (i) if a physician performed or supervised the 
        performance of such test, payment may be made to 
        another physician with whom he shares his practice,
          (ii) in the case of a test performed at the request 
        of a laboratory by another laboratory, payment may be 
        made to the referring laboratory but only if--
                  (I) the referring laboratory is located in, 
                or is part of, a rural hospital,
                  (II) the referring laboratory is wholly owned 
                by the entity performing such test, the 
                referring laboratory wholly owns the entity 
                performing such test, or both the referring 
                laboratory and the entity performing such test 
                are wholly-owned by a third entity, or
                  (III) not more than 30 percent of the 
                clinical diagnostic laboratory tests for which 
                such referring laboratory (but not including a 
                laboratory described in subclause (II)), 
                receives requests for testing during the year 
                in which the test is performed are performed by 
                another laboratory, and
          (iii) in the case of a clinical diagnostic laboratory 
        test provided under an arrangement (as defined in 
        section 1861(w)(1)) made by a hospital, critical access 
        hospital, or skilled nursing facility, payment shall be 
        made to the hospital or skilled nursing facility.
  (B) In the case of such a bill or request for payment for a 
clinical diagnostic laboratory test for which payment may 
otherwise be made under this part, and which is not described 
in subparagraph (A), payment may be made to the beneficiary 
only on the basis of the itemized bill of the person or entity 
which performed or supervised the performance of the test.
  (C) Payment for a clinical diagnostic laboratory test, 
including a test performed in a physician's office but 
excluding a test performed by a rural health clinic may only be 
made on an assignment-related basis or to a provider of 
services with an agreement in effect under section 1866.
  (D) A person may not bill for a clinical diagnostic 
laboratory test, including a test performed in a physician's 
office but excluding a test performed by a rural health clinic, 
other than on an assignment-related basis. If a person 
knowingly and willfully and on a repeated basis bills for a 
clinical diagnostic laboratory test in violation of the 
previous sentence, the Secretary may apply sanctions against 
the person in the same manner as the Secretary may apply 
sanctions against a physician in accordance with paragraph (2) 
of section 1842(j) in the same manner such paragraphs apply 
with respect to a physician. Paragraph (4) of such section 
shall apply in this subparagraph in the same manner as such 
paragraph applies to such section.
  (6) For tests furnished before January 1, 2017, inthe case of 
any diagnostic laboratory test payment for which is not made on 
the basis of a fee schedule under paragraph (1), the Secretary 
may establish a payment rate which is acceptable to the person 
or entity performing the test and which would be considered the 
full charge for such tests. Such negotiated rate shall be 
limited to an amount not in excess of the total payment that 
would have been made for the services in the absence of such 
rate.
  (7) Notwithstanding paragraphs (1) and (4)and section 1834A, 
the Secretary shall establish a national minimum payment amount 
under this part for a diagnostic or screening pap smear 
laboratory test (including all cervical cancer screening 
technologies that have been approved by the Food and Drug 
Administration as a primary screening method for detection of 
cervical cancer) equal to $14.60 for tests furnished in 2000. 
For such tests furnished in subsequent years, such national 
minimum payment amount shall be adjusted annually as provided 
in paragraph (2).
  (8)(A) The Secretary shall establish by regulation procedures 
for determining the basis for, and amount of, payment under 
this subsection for any clinical diagnostic laboratory test 
with respect to which a new or substantially revised HCPCS code 
is assigned on or after January 1, 2005 (in this paragraph 
referred to as ``new tests'').
  (B) Determinations under subparagraph (A) shall be made only 
after the Secretary--
          (i) makes available to the public (through an 
        Internet website and other appropriate mechanisms) a 
        list that includes any such test for which 
        establishment of a payment amount under this subsection 
        is being considered for a year;
          (ii) on the same day such list is made available, 
        causes to have published in the Federal Register notice 
        of a meeting to receive comments and recommendations 
        (and data on which recommendations are based) from the 
        public on the appropriate basis under this subsection 
        for establishing payment amounts for the tests on such 
        list;
          (iii) not less than 30 days after publication of such 
        notice convenes a meeting, that includes 
        representatives of officials of the Centers for 
        Medicare & Medicaid Services involved in determining 
        payment amounts, to receive such comments and 
        recommendations (and data on which the recommendations 
        are based);
          (iv) taking into account the comments and 
        recommendations (and accompanying data) received at 
        such meeting, develops and makes available to the 
        public (through an Internet website and other 
        appropriate mechanisms) a list of proposed 
        determinations with respect to the appropriate basis 
        for establishing a payment amount under this subsection 
        for each such code, together with an explanation of the 
        reasons for each such determination, the data on which 
        the determinations are based, and a request for public 
        written comments on the proposed determination; and
          (v) taking into account the comments received during 
        the public comment period, develops and makes available 
        to the public (through an Internet website and other 
        appropriate mechanisms) a list of final determinations 
        of the payment amounts for such tests under this 
        subsection, together with the rationale for each such 
        determination, the data on which the determinations are 
        based, and responses to comments and suggestions 
        received from the public.
  (C) Under the procedures established pursuant to subparagraph 
(A), the Secretary shall--
          (i) set forth the criteria for making determinations 
        under subparagraph (A); and
          (ii) make available to the public the data (other 
        than proprietary data) considered in making such 
        determinations.
  (D) The Secretary may convene such further public meetings to 
receive public comments on payment amounts for new tests under 
this subsection as the Secretary deems appropriate.
  (E) For purposes of this paragraph:
          (i) The term ``HCPCS'' refers to the Health Care 
        Procedure Coding System.
          (ii) A code shall be considered to be ``substantially 
        revised'' if there is a substantive change to the 
        definition of the test or procedure to which the code 
        applies (such as a new analyte or a new methodology for 
        measuring an existing analyte-specific test).
  (9) Notwithstanding any other provision in this part, in the 
case of any diagnostic laboratory test for HbA1c that is 
labeled by the Food and Drug Administration for home use and is 
furnished on or after April 1, 2008, the payment rate for such 
test shall be the payment rate established under this part for 
a glycated hemoglobin test (identified as of October 1, 2007, 
by HCPCS code 83036 (and any succeeding codes)).
  (i)(1) The Secretary shall, in consultation with appropriate 
medical organizations--
          (A) specify those surgical procedures which are 
        appropriately (when considered in terms of the proper 
        utilization of hospital inpatient facilities) performed 
        on an inpatient basis in a hospital but which also can 
        be performed safely on an ambulatory basis in an 
        ambulatory surgical center (meeting the standards 
        specified under section 1832(a)(2)(F)(i)), critical 
        access hospital, or hospital outpatient department, and
          (B) specify those surgical procedures which are 
        appropriately (when considered in terms of the proper 
        utilization of hospital inpatient facilities) performed 
        on an inpatient basis in a hospital but which also can 
        be performed safely on an ambulatory basis in a 
        physician's office.
The lists of procedures established under subparagraphs (A) and 
(B) shall be reviewed and updated not less often than every 2 
years, in consultation with appropriate trade and professional 
organizations.
  (2)(A) For services furnished prior to the implementation of 
the system described in subparagraph (D), subject to 
subparagraph (E), the amount of payment to be made for facility 
services furnished in connection with a surgical procedure 
specified pursuant to paragraph (1)(A) and furnished to an 
individual in an ambulatory surgical center described in such 
paragraph shall be equal to 80 percent of a standard overhead 
amount established by the Secretary (with respect to each such 
procedure) on the basis of the Secretary's estimate of a fair 
fee which--
          (i) takes into account the costs incurred by such 
        centers, or classes of centers, generally in providing 
        services furnished in connection with the performance 
        of such procedure, as determined in accordance with a 
        survey (based upon a representative sample of 
        procedures and facilities) of the actual audited costs 
        incurred by such centers in providing such services,
          (ii) takes such costs into account in such a manner 
        as will assure that the performance of the procedure in 
        such a center will result in substantially less amounts 
        paid under this title than would have been paid if the 
        procedure had been performed on an inpatient basis in a 
        hospital, and
          (iii) in the case of insertion of an intraocular lens 
        during or subsequent to cataract surgery includes 
        payment which is reasonable and related to the cost of 
        acquiring the class of lens involved.
Each amount so established shall be reviewed and updated not 
later than July 1, 1987, and annually thereafter to take 
account of varying conditions in different areas.
  (B) The amount of payment to be made under this part for 
facility services furnished, in connection with a surgical 
procedure specified pursuant to paragraph (1)(B), in a 
physician's office shall be equal to 80 percent of a standard 
overhead amount established by the Secretary (with respect to 
each such procedure) on the basis of the Secretary's estimate 
of a fair fee which--
          (i) takes into account additional costs, not usually 
        included in the professional fee, incurred by 
        physicians in securing, maintaining, and staffing the 
        facilities and ancillary services appropriate for the 
        performance of such procedure in the physician's 
        office, and
          (ii) takes such items into account in such a manner 
        which will assure that the performance of such 
        procedure in the physician's office will result in 
        substantially less amounts paid under this title than 
        would have been paid if the services had been furnished 
        on an inpatient basis in a hospital.
Each amount so established shall be reviewed and updated not 
later than July 1, 1987, and annually thereafter to take 
account of varying conditions in different areas.
  (C)(i) Notwithstanding the second sentence of each of 
subparagraphs (A) and (B), except as otherwise specified in 
clauses (ii), (iii), and (iv), if the Secretary has not updated 
amounts established under such subparagraphs or under 
subparagraph (D), with respect to facility services furnished 
during a fiscal year (beginning with fiscal year 1986 or a 
calendar year (beginning with 2006)), such amounts shall be 
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 year involved.
  (ii) In each of the fiscal years 1998 through 2002, the 
increase under this subparagraph shall be reduced (but not 
below zero) by 2.0 percentage points.
  (iii) In fiscal year 2004, beginning with April 1, 2004, the 
increase under this subparagraph shall be the Consumer Price 
Index for all urban consumers (U.S. city average) as estimated 
by the Secretary for the 12-month period ending with March 31, 
2003, minus 3.0 percentage points.
  (iv) In fiscal year 2005, the last quarter of calendar year 
2005, and each of calendar years 2006 through 2009, the 
increase under this subparagraph shall be 0 percent.
  (D)(i) Taking into account the recommendations in the report 
under section 626(d) of Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003, the Secretary shall 
implement a revised payment system for payment of surgical 
services furnished in ambulatory surgical centers.
  (ii) In the year the system described in clause (i) is 
implemented, such system shall be designed to result in the 
same aggregate amount of expenditures for such services as 
would be made if this subparagraph did not apply, as estimated 
by the Secretary and taking into account reduced expenditures 
that would apply if subparagraph (E) were to continue to apply, 
as estimated by the Secretary.
  (iii) The Secretary shall implement the system described in 
clause (i) for periods in a manner so that it is first 
effective beginning on or after January 1, 2006, and not later 
than January 1, 2008.
  (iv) The Secretary may implement such system in a manner so 
as to provide for a reduction in any annual update for failure 
to report on quality measures in accordance with paragraph (7).
          (v) In implementing the system described in clause 
        (i) for 2011 and each subsequent year, any annual 
        update under such system for the year, after 
        application of clause (iv), shall be reduced by the 
        productivity adjustment described in section 
        1886(b)(3)(B)(xi)(II). The application of the preceding 
        sentence may result in such update being less than 0.0 
        for a year, and may result in payment rates under the 
        system described in clause (i) for a year being less 
        than such payment rates for the preceding year.
  (vi) There shall be no administrative or judicial review 
under section 1869, 1878, or otherwise, of the classification 
system, the relative weights, payment amounts, and the 
geographic adjustment factor, if any, under this subparagraph.
  (E) With respect to surgical procedures furnished on or after 
January 1, 2007, and before the effective date of the 
implementation of a revised payment system under subparagraph 
(D), if--
          (i) the standard overhead amount under subparagraph 
        (A) for a facility service for such procedure, without 
        the application of any geographic adjustment, exceeds
          (ii) the Medicare OPD fee schedule amount established 
        under the prospective payment system for hospital 
        outpatient department services under paragraph (3)(D) 
        of section 1833(t) for such service for such year, 
        determined without regard to geographic adjustment 
        under paragraph (2)(D) of such section,
the Secretary shall substitute under subparagraph (A) the 
amount described in clause (ii) for the standard overhead 
amount for such service referred to in clause (i).
  (3)(A) The aggregate amount of the payments to be made under 
this part for outpatient hospital facility services or critical 
access hospital services furnished before January 1, 1999, in 
connection with surgical procedures specified under paragraph 
(1)(A) shall be equal to the lesser of--
          (i) the amount determined with respect to such 
        services under subsection (a)(2)(B); or
          (ii) the blend amount (described in subparagraph 
        (B)).
  (B)(i) The blend amount for a cost reporting period is the 
sum of--
          (I) the cost proportion (as defined in clause 
        (ii)(I)) of the amount described in subparagraph 
        (A)(i), and
          (II) the ASC proportion (as defined in clause 
        (ii)(II)) of the standard overhead amount payable with 
        respect to the same surgical procedure as if it were 
        provided in an ambulatory surgical center in the same 
        area, as determined under paragraph (2)(A), less the 
        amount a provider may charge as described in clause 
        (ii) of section 1866(a)(2)(A).
  (ii) Subject to paragraph (4), in this paragraph:
          (I) The term ``cost proportion'' means 75 percent for 
        cost reporting periods beginning in fiscal year 1988, 
        50 percent for portions of cost reporting periods 
        beginning on or after October 1, 1988, and ending on or 
        before December 31, 1990, and 42 percent for portions 
        of cost reporting periods beginning on or after January 
        1, 1991.
          (II) The term ``ASC proportion'' means 25 percent for 
        cost reporting periods beginning in fiscal year 1988, 
        50 percent for portions of cost reporting periods 
        beginning on or after October 1, 1988, and ending on or 
        before December 31, 1990, and 58 percent for portions 
        of cost reporting periods beginning on or after January 
        1, 1991.
  (4)(A) In the case of a hospital that--
          (i) makes application to the Secretary and 
        demonstrates that it specializes in eye services or eye 
        and ear services (as determined by the Secretary),
          (ii) receives more than 30 percent of its total 
        revenues from outpatient services, and
          (iii) on October 1, 1987--
                  (I) was an eye specialty hospital or an eye 
                and ear specialty hospital, or
                  (II) was operated as an eye or eye and ear 
                unit (as defined in subparagraph (B)) of a 
                general acute care hospital which, on the date 
                of the application described in clause (i), 
                operates less than 20 percent of the beds that 
                the hospital operated on October 1, 1987, and 
                has sold or otherwise disposed of a substantial 
                portion of the hospital's other acute care 
                operations,
the cost proportion and ASC proportion in effect under 
subclauses (I) and (II) of paragraph (3)(B)(ii) for cost 
reporting periods beginning in fiscal year 1988 shall remain in 
effect for cost reporting periods beginning on or after October 
1, 1988, and before January 1, 1995.
  (B) For purposes of this subparagraph (A)(iii)(II), the term 
``eye or eye and ear unit'' means a physically separate or 
distinct unit containing separate surgical suites devoted 
solely to eye or eye and ear services.
  (5)(A) The Secretary is authorized to provide by regulations 
that in the case of a surgical procedure, specified by the 
Secretary pursuant to paragraph (1)(A), performed in an 
ambulatory surgical center described in such paragraph, there 
shall be paid (in lieu of any amounts otherwise payable under 
this part) with respect to the facility services furnished by 
such center and with respect to all related services (including 
physicians' services, laboratory, X-ray, and diagnostic 
services) a single all-inclusive fee established pursuant to 
subparagraph (B), if all parties furnishing all such services 
agree to accept such fee (to be divided among the parties 
involved in such manner as they shall have previously agreed 
upon) as full payment for the services furnished.
  (B) In implementing this paragraph, the Secretary shall 
establish with respect to each surgical procedure specified 
pursuant to paragraph (1)(A) the amount of the all-inclusive 
fee for such procedure, taking into account such factors as may 
be appropriate. The amount so established with respect to any 
surgical procedure shall be reviewed periodically and may be 
adjusted by the Secretary, when appropriate, to take account of 
varying conditions in different areas.
  (6) Any person, including a facility having an agreement 
under section 1832(a)(2)(F)(i), who knowingly and willfully 
presents, or causes to be presented, a bill or request for 
payment, for an intraocular lens inserted during or subsequent 
to cataract surgery for which payment may be made under 
paragraph (2)(A)(iii), is subject to a civil money penalty of 
not to exceed $2,000. The provisions of section 1128A (other 
than subsections (a) and (b)) shall apply to a civil money 
penalty under the previous sentence in the same manner as such 
provisions apply to a penalty or proceeding under section 
1128A(a).
  (7)(A) For purposes of paragraph (2)(D)(iv), the Secretary 
may provide, in the case of an ambulatory surgical center that 
does not submit, to the Secretary in accordance with this 
paragraph, data required to be submitted on measures selected 
under this paragraph with respect to a year, any annual 
increase provided under the system established under paragraph 
(2)(D) for such year shall be reduced by 2.0 percentage points. 
A reduction under this subparagraph shall apply only with 
respect to the year involved and the Secretary shall not take 
into account such reduction in computing any annual increase 
factor for a subsequent year.
  (B) Except as the Secretary may otherwise provide, the 
provisions of subparagraphs (B), (C), (D), and (E) of paragraph 
(17) of section 1833(t) shall apply with respect to services of 
ambulatory surgical centers under this paragraph in a similar 
manner to the manner in which they apply under such paragraph 
and, for purposes of this subparagraph, any reference to a 
hospital, outpatient setting, or outpatient hospital services 
is deemed a reference to an ambulatory surgical center, the 
setting of such a center, or services of such a center, 
respectively.
  (8) The Secretary shall conduct a similar type of review as 
required under paragraph (22) of section 1833(t)), including 
the second sentence of subparagraph (C) of such paragraph, to 
payment for services under this subsection, and make such 
revisions under this paragraph, in an appropriate manner (as 
determined by the Secretary).
  (j) Whenever a final determination is made that the amount of 
payment made under this part either to a provider of services 
or to another person pursuant to an assignment under section 
1842(b)(3)(B)(ii) was in excess of or less than the amount of 
payment that is due, and payment of such excess or deficit is 
not made (or effected by offset) within 30 days of the date of 
the determination, interest shall accrue on the balance of such 
excess or deficit not paid or offset (to the extent that the 
balance is owed by or owing to the provider) at a rate 
determined in accordance with the regulations of the Secretary 
of the Treasury applicable to charges for late payments.
  (k) With respect to services described in section 
1861(s)(10)(B), the Secretary may provide, instead of the 
amount of payment otherwise provided under this part, for 
payment of such an amount or amounts as reasonably reflects the 
general cost of efficiently providing such services.
  (l)(1)(A) The Secretary shall establish a fee schedule for 
services of certified registered nurse anesthetists under 
section 1861(s)(11).
  (B) In establishing the fee schedule under this paragraph the 
Secretary may utilize a system of time units, a system of base 
and time units, or any appropriate methodology.
  (C) The provisions of this subsection shall not apply to 
certain services furnished in certain hospitals in rural areas 
under the provisions of section 9320(k) of the Omnibus Budget 
Reconciliation Act of 1986, as amended by section 6132 of the 
Omnibus Budget Reconciliation Act of 1989.
  (2) Except as provided in paragraph (3), the fee schedule 
established under paragraph (1) shall be initially based on 
audited data from cost reporting periods ending in fiscal year 
1985 and such other data as the Secretary determines necessary.
  (3)(A) In establishing the initial fee schedule for those 
services, the Secretary shall adjust the fee schedule to the 
extent necessary to ensure that the estimated total amount 
which will be paid under this title for those services plus 
applicable coinsurance in 1989 will equal the estimated total 
amount which would be paid under this title for those services 
in 1989 if the services were included as inpatient hospital 
services and payment for such services was made under part A in 
the same manner as payment was made in fiscal year 1987, 
adjusted to take into account changes in prices and technology 
relating to the administration of anesthesia.
  (B) The Secretary shall also reduce the prevailing charge of 
physicians for medical direction of a certified registered 
nurse anesthetist, or the fee schedule for services of 
certified registered nurse anesthetists, or both, to the extent 
necessary to ensure that the estimated total amount which will 
be paid under this title plus applicable coinsurance for such 
medical direction and such services in 1989 and 1990 will not 
exceed the estimated total amount which would have been paid 
plus applicable coinsurance but for the enactment of the 
amendments made by section 9320 of the Omnibus Budget 
Reconciliation Act of 1986. A reduced prevailing charge under 
this subparagraph shall become the prevailing charge but for 
subsequent years for purposes of applying the economic index 
under the fourth sentence of section 1842(b)(3).
  (4)(A) Except as provided in subparagraphs (C) and (D), in 
determining the amount paid under the fee schedule under this 
subsection for services furnished on or after January 1, 1991, 
by a certified registered nurse anesthetist who is not 
medically directed--
          (i) the conversion factor shall be--
                  (I) for services furnished in 1991, $15.50,
                  (II) for services furnished in 1992, $15.75,
                  (III) for services furnished in 1993, $16.00,
                  (IV) for services furnished in 1994, $16.25,
                  (V) for services furnished in 1995, $16.50,
                  (VI) for services furnished in 1996, $16.75, 
                and
                  (VII) for services furnished in calendar 
                years after 1996, the previous year's 
                conversion factor increased by the update 
                determined under section 1848(d) for physician 
                anesthesia services for that year;
          (ii) the payment areas to be used shall be the fee 
        schedule areas used under section 1848 (or, in the case 
        of services furnished during 1991, the localities used 
        under section 1842(b)) for purposes of computing 
        payments for physicians' services that are anesthesia 
        services;
          (iii) the geographic adjustment factors to be applied 
        to the conversion factor under clause (i) for services 
        in a fee schedule area or locality is--
                  (I) in the case of services furnished in 
                1991, the geographic work index value and the 
                geographic practice cost index value specified 
                in section 1842(q)(1)(B) for physicians' 
                services that are anesthesia services furnished 
                in the area or locality, and
                  (II) in the case of services furnished after 
                1991, the geographic work index value, the 
                geographic practice cost index value, and the 
                geographic malpractice index value used for 
                determining payments for physicians' services 
                that are anesthesia services under section 
                1848,
        with 70 percent of the conversion factor treated as 
        attributable to work and 30 percent as attributable to 
        overhead for services furnished in 1991 (and the 
        portions attributable to work, practice expenses, and 
        malpractice expenses in 1992 and thereafter being the 
        same as is applied under section 1848).
  (B)(i) Except as provided in clause (ii) and subparagraph 
(D), in determining the amount paid under the fee schedule 
under this subsection for services furnished on or after 
January 1, 1991, and before January 1, 1994, by a certified 
registered nurse anesthetist who is medically directed, the 
Secretary shall apply the same methodology specified in 
subparagraph (A).
  (ii) The conversion factor used under clause (i) shall be--
          (I) for services furnished in 1991, $10.50,
          (II) for services furnished in 1992, $10.75, and
          (III) for services furnished in 1993, $11.00.
  (iii) In the case of services of a certified registered nurse 
anesthetist who is medically directed or medically supervised 
by a physician which are furnished on or after January 1, 1994, 
the fee schedule amount shall be one-half of the amount 
described in section 1848(a)(5)(B) with respect to the 
physician.
  (C) Notwithstanding subclauses (I) through (V) of 
subparagraph (A)(i)--
          (i) in the case of a 1990 conversion factor that is 
        greater than $16.50, the conversion factor for a 
        calendar year after 1990 and before 1996 shall be the 
        1990 conversion factor reduced by the product of the 
        last digit of the calendar year and one-fifth of the 
        amount by which the 1990 conversion factor exceeds 
        $16.50; and
          (ii) in the case of a 1990 conversion factor that is 
        greater than $15.49 but less than $16.51, the 
        conversion factor for a calendar year after 1990 and 
        before 1996 shall be the greater of--
                  (I) the 1990 conversion factor, or
                  (II) the conversion factor specified in 
                subparagraph (A)(i) for the year involved.
  (D) Notwithstanding subparagraph (C), in no case may the 
conversion factor used to determine payment for services in a 
fee schedule area or locality under this subsection, as 
adjusted by the adjustment factors specified in subparagraphs 
(A)(iii), exceed the conversion factor used to determine the 
amount paid for physicians' services that are anesthesia 
services in the area or locality.
  (5)(A) Payment for the services of a certified registered 
nurse anesthetist (for which payment may otherwise be made 
under this part) may be made on the basis of a claim or request 
for payment presented by the certified registered nurse 
anesthetist furnishing such services, or by a hospital, 
critical access hospital, physician, group practice, or 
ambulatory surgical center with which the certified registered 
nurse anesthetist furnishing such services has an employment or 
contractual relationship that provides for payment to be made 
under this part for such services to such hospital, critical 
access hospital, physician, group practice, or ambulatory 
surgical center.
  (B) No hospital or critical access hospital that presents a 
claim or request for payment for services of a certified nurse 
anesthetist under this part may treat any uncollected 
coinsurance amount imposed under this part with respect to such 
services as a bad debt of such hospital or critical access 
hospital for purposes of this title.
  (6) If an adjustment under paragraph (3)(B) results in a 
reduction in the reasonable charge for a physicians' service 
and a nonparticipating physician furnishes the service to an 
individual entitled to benefits under this part after the 
effective date of the reduction, the physician's actual charge 
is subject to a limit under section 1842(j)(1)(D).
  (m)(1) In the case of physicians' services furnished in a 
year to an individual, who is covered under the insurance 
program established by this part and who incurs expenses for 
such services, in an area that is designated (under section 
332(a)(1)(A) of the Public Health Service Act) as a health 
professional shortage area as identified by the Secretary prior 
to the beginning of such year, in addition to the amount 
otherwise paid under this part, there also shall be paid to the 
physician (or to an employer or facility in the cases described 
in clause (A) of section 1842(b)(6)) (on a monthly or quarterly 
basis) from the Federal Supplementary Medical Insurance Trust 
Fund an amount equal to 10 percent of the payment amount for 
the service under this part.
  (2) For each health professional shortage area identified in 
paragraph (1) that consists of an entire county, the Secretary 
shall provide for the additional payment under paragraph (1) 
without any requirement on the physician to identify the health 
professional shortage area involved. The Secretary may 
implement the previous sentence using the method specified in 
subsection (u)(4)(C).
  (3) The Secretary shall post on the Internet website of the 
Centers for Medicare & Medicaid Services a list of the health 
professional shortage areas identified in paragraph (1) that 
consist of a partial county to facilitate the additional 
payment under paragraph (1) in such areas.
  (4) There shall be no administrative or judicial review under 
section 1869, section 1878, or otherwise, respecting--
          (A) the identification of a county or area;
          (B) the assignment of a specialty of any physician 
        under this paragraph;
          (C) the assignment of a physician to a county under 
        this subsection; or
          (D) the assignment of a postal ZIP Code to a county 
        or other area under this subsection.
  (n)(1)(A) The aggregate amount of the payments to be made for 
all or part of a cost reporting period for services described 
in subsection (a)(2)(E)(i) furnished under this part on or 
after October 1, 1988, and before January 1, 1999, and for 
services described in subsection (a)(2)(E)(ii) furnished under 
this part on or after October 1, 1989, and before January 1, 
1999, shall be equal to the lesser of--
          (i) the amount determined with respect to such 
        services under subsection (a)(2)(B), or
          (ii) the blend amount for radiology services and 
        diagnostic procedures determined in accordance with 
        subparagraph (B).
  (B)(i) The blend amount for radiology services and diagnostic 
procedures for a cost reporting period is the sum of--
          (I) the cost proportion (as defined in clause (ii)) 
        of the amount described in subparagraph (A)(i); and
          (II) the charge proportion (as defined in clause 
        (ii)(II)) of 62 percent (for services described in 
        subsection (a)(2)(E)(i)), or (for procedures described 
        in subsection (a)(2)(E)(ii)), 42 percent or such other 
        percent established by the Secretary (or carriers 
        acting pursuant to guidelines issued by the Secretary) 
        based on prevailing charges established with actual 
        charge data, of the prevailing charge or (for services 
        described in subsection (a)(2)(E)(i) furnished on or 
        after January 1, 1989) the fee schedule amount 
        established for participating physicians for the same 
        services as if they were furnished in a physician's 
        office in the same locality as determined under section 
        1842(b), less the amount a provider may charge as 
        described in clause (ii) of section 1866(a)(2)(A).
  (ii) In this subparagraph:
          (I) The term ``cost proportion'' means 50 percent, 
        except that such term means 65 percent in the case of 
        outpatient radiology services for portions of cost 
        reporting periods which occur in fiscal year 1989 and 
        in the case of diagnostic procedures described in 
        subsection (a)(2)(E)(ii) for portions of cost reporting 
        periods which occur in fiscal year 1990, and such term 
        means 42 percent in the case of outpatient radiology 
        services for portions of cost reporting periods 
        beginning on or after January 1, 1991.
          (II) The term ``charge proportion'' means 100 percent 
        minus the cost proportion.
  (o)(1) In the case of shoes described in section 
1861(s)(12)--
          (A) no payment may be made under this part, with 
        respect to any individual for any year, for the 
        furnishing of--
                  (i) more than one pair of custom molded shoes 
                (including inserts provided with such shoes) 
                and 2 additional pairs of inserts for such 
                shoes, or
                  (ii) more than one pair of extra-depth shoes 
                (not including inserts provided with such 
                shoes) and 3 pairs of inserts for such shoes, 
                and
          (B) with respect to expenses incurred in any calendar 
        year, no more than the amount of payment applicable 
        under paragraph (2) shall be considered as incurred 
        expenses for purposes of subsections (a) and (b).
Payment for shoes (or inserts) under this part shall be 
considered to include payment for any expenses for the fitting 
of such shoes (or inserts).
  (2)(A) Except as provided by the Secretary under 
subparagraphs (B) and (C), the amount of payment under this 
paragraph for custom molded shoes, extra-depth shoes, and 
inserts shall be the amount determined for such items by the 
Secretary under section 1834(h).
  (B) The Secretary may establish payment amounts for shoes and 
inserts that are lower than the amount established under 
section 1834(h) if the Secretary finds that shoes and inserts 
of an appropriate quality are readily available at or below the 
amount established under such section.
  (C) In accordance with procedures established by the 
Secretary, an individual entitled to benefits with respect to 
shoes described in section 1861(s)(12) may substitute 
modification of such shoes instead of obtaining one (or more, 
as specified by the Secretary) pair of inserts (other than the 
original pair of inserts with respect to such shoes). In such 
case, the Secretary shall substitute, for the payment amount 
established under section 1834(h), a payment amount that the 
Secretary estimates will assure that there is no net increase 
in expenditures under this subsection as a result of this 
subparagraph.
  (3) In this title, the term ``shoes'' includes, except for 
purposes of subparagraphs (A)(ii) and (B) of paragraph (2), 
inserts for extra-depth shoes.
  (q)(1) Each request for payment, or bill submitted, for an 
item or service furnished by an entity for which payment may be 
made under this part and for which the entity knows or has 
reason to believe there has been a referral by a referring 
physician (within the meaning of section 1877) shall include 
the name and unique physician identification number for the 
referring physician.
  (2)(A) In the case of a request for payment for an item or 
service furnished by an entity under this part on an 
assignment-related basis and for which information is required 
to be provided under paragraph (1) but not included, payment 
may be denied under this part.
  (B) In the case of a request for payment for an item or 
service furnished by an entity under this part not submitted on 
an assignment-related basis and for which information is 
required to be provided under paragraph (1) but not included--
          (i) if the entity knowingly and willfully fails to 
        provide such information promptly upon request of the 
        Secretary or a carrier, the entity may be subject to a 
        civil money penalty in an amount not to exceed $2,000, 
        and
          (ii) if the entity knowingly, willfully, and in 
        repeated cases fails, after being notified by the 
        Secretary of the obligations and requirements of this 
        subsection to provide the information required under 
        paragraph (1), the entity may be subject to exclusion 
        from participation in the programs under this Act for a 
        period not to exceed 5 years, in accordance with the 
        procedures of subsections (c), (f), and (g) of section 
        1128.
The provisions of section 1128A (other than subsections (a) and 
(b)) shall apply to civil money penalties under clause (i) in 
the same manner as they apply to a penalty or proceeding under 
section 1128A(a).
  (r)(1) With respect to services described in section 
1861(s)(2)(K)(ii) (relating to nurse practitioner or clinical 
nurse specialist services), payment may be made on the basis of 
a claim or request for payment presented by the nurse 
practitioner or clinical nurse specialist furnishing such 
services, or by a hospital, critical access hospital, skilled 
nursing facility or nursing facility (as defined in section 
1919(a)), physician, group practice, or ambulatory surgical 
center with which the nurse practitioner or clinical nurse 
specialist has an employment or contractual relationship that 
provides for payment to be made under this part for such 
services to such hospital, physician, group practice, or 
ambulatory surgical center.
  (2) No hospital or critical access hospital that presents a 
claim or request for payment under this part for services 
described in section 1861(s)(2)(K)(ii) may treat any 
uncollected coinsurance amount imposed under this part with 
respect to such services as a bad debt of such hospital for 
purposes of this title.
  (s) The Secretary may not provide for payment under 
subsection (a)(1)(A) with respect to an organization unless the 
organization provides assurances satisfactory to the Secretary 
that the organization meets the requirement of section 1866(f) 
(relating to maintaining written policies and procedures 
respecting advance directives).
  (t) Prospective Payment System for Hospital Outpatient 
Department Services.--
          (1) Amount of payment.--
                  (A) In general.--With respect to covered OPD 
                services (as defined in subparagraph (B)) 
                furnished during a year beginning with 1999, 
                the amount of payment under this part shall be 
                determined under a prospective payment system 
                established by the Secretary in accordance with 
                this subsection.
                  (B) Definition of covered opd services.--For 
                purposes of this subsection, the term ``covered 
                OPD services''--
                          (i) means hospital outpatient 
                        services designated by the Secretary;
                          (ii) subject to clause (iv), includes 
                        inpatient hospital services designated 
                        by the Secretary that are covered under 
                        this part and furnished to a hospital 
                        inpatient who (I) is entitled to 
                        benefits under part A but has exhausted 
                        benefits for inpatient hospital 
                        services during a spell of illness, or 
                        (II) is not so entitled;
                          (iii) includes implantable items 
                        described in paragraph (3), (6), or (8) 
                        of section 1861(s);
                          (iv) does not include any therapy 
                        services described in subsection (a)(8) 
                        or ambulance services, for which 
                        payment is made under a fee schedule 
                        described in section 1834(k) or section 
                        1834(l) and does not include screening 
                        mammography (as defined in section 
                        1861(jj)), diagnostic mammography, or 
                        personalized prevention plan services 
                        (as defined in section 1861(hhh)(1)); 
                        and
                          (v) does not include applicable items 
                        and services (as defined in 
                        subparagraph (A) of paragraph (21)) 
                        that are furnished on or after January 
                        1, 2017, by an off-campus outpatient 
                        department of a provider (as defined in 
                        subparagraph (B) of such paragraph).
          (2) System requirements.--Under the payment system--
                  (A) the Secretary shall develop a 
                classification system for covered OPD services;
                  (B) the Secretary may establish groups of 
                covered OPD services, within the classification 
                system described in subparagraph (A), so that 
                services classified within each group are 
                comparable clinically and with respect to the 
                use of resources and so that an implantable 
                item is classified to the group that includes 
                the service to which the item relates;
                  (C) the Secretary shall, using data on claims 
                from 1996 and using data from the most recent 
                available cost reports, establish relative 
                payment weights for covered OPD services (and 
                any groups of such services described in 
                subparagraph (B)) based on median (or, at the 
                election of the Secretary, mean) hospital costs 
                and shall determine projections of the 
                frequency of utilization of each such service 
                (or group of services) in 1999;
                  (D) subject to paragraph (19), the Secretary 
                shall determine a wage adjustment factor to 
                adjust the portion of payment and coinsurance 
                attributable to labor-related costs for 
                relative differences in labor and labor-related 
                costs across geographic regions in a budget 
                neutral manner;
                  (E) the Secretary shall establish, in a 
                budget neutral manner, outlier adjustments 
                under paragraph (5) and transitional pass-
                through payments under paragraph (6) and other 
                adjustments as determined to be necessary to 
                ensure equitable payments, such as adjustments 
                for certain classes of hospitals;
                  (F) the Secretary shall develop a method for 
                controlling unnecessary increases in the volume 
                of covered OPD services;
                  (G) the Secretary shall create additional 
                groups of covered OPD services that classify 
                separately those procedures that utilize 
                contrast agents from those that do not; and
                  (H) with respect to devices of brachytherapy 
                consisting of a seed or seeds (or radioactive 
                source), the Secretary shall create additional 
                groups of covered OPD services that classify 
                such devices separately from the other services 
                (or group of services) paid for under this 
                subsection in a manner reflecting the number, 
                isotope, and radioactive intensity of such 
                devices furnished, including separate groups 
                for palladium-103 and iodine-125 devices and 
                for stranded and non-stranded devices furnished 
                on or after July 1, 2007.
        For purposes of subparagraph (B), items and services 
        within a group shall not be treated as ``comparable 
        with respect to the use of resources'' if the highest 
        median cost (or mean cost, if elected by the Secretary 
        under subparagraph (C)) for an item or service within 
        the group is more than 2 times greater than the lowest 
        median cost (or mean cost, if so elected) for an item 
        or service within the group; except that the Secretary 
        may make exceptions in unusual cases, such as low 
        volume items and services, but may not make such an 
        exception in the case of a drug or biological that has 
        been designated as an orphan drug under section 526 of 
        the Federal Food, Drug and Cosmetic Act.
          (3) Calculation of base amounts.--
                  (A) Aggregate amounts that would be payable 
                if deductibles were disregarded.--The Secretary 
                shall estimate the sum of--
                          (i) the total amounts that would be 
                        payable from the Trust Fund under this 
                        part for covered OPD services in 1999, 
                        determined without regard to this 
                        subsection, as though the deductible 
                        under section 1833(b) did not apply, 
                        and
                          (ii) the total amounts of copayments 
                        estimated to be paid under this 
                        subsection by beneficiaries to 
                        hospitals for covered OPD services in 
                        1999, as though the deductible under 
                        section 1833(b) did not apply.
                  (B) Unadjusted copayment amount.--
                          (i) In general.--For purposes of this 
                        subsection, subject to clause (ii), the 
                        ``unadjusted copayment amount'' 
                        applicable to a covered OPD service (or 
                        group of such services) is 20 percent 
                        of the national median of the charges 
                        for the service (or services within the 
                        group) furnished during 1996, updated 
                        to 1999 using the Secretary's estimate 
                        of charge growth during the period.
                          (ii) Adjusted to be 20 percent when 
                        fully phased in.--If the pre-deductible 
                        payment percentage for a covered OPD 
                        service (or group of such services) 
                        furnished in a year would be equal to 
                        or exceed 80 percent, then the 
                        unadjusted copayment amount shall be 20 
                        percent of amount determined under 
                        subparagraph (D).
                          (iii) Rules for new services.--The 
                        Secretary shall establish rules for 
                        establishment of an unadjusted 
                        copayment amount for a covered OPD 
                        service not furnished during 1996, 
                        based upon its classification within a 
                        group of such services.
                  (C) Calculation of conversion factors.--
                          (i) For 1999.--
                                  (I) In general.--The 
                                Secretary shall establish a 
                                1999 conversion factor for 
                                determining the medicare OPD 
                                fee schedule amounts for each 
                                covered OPD service (or group 
                                of such services) furnished in 
                                1999. Such conversion factor 
                                shall be established on the 
                                basis of the weights and 
                                frequencies described in 
                                paragraph (2)(C) and in such a 
                                manner that the sum for all 
                                services and groups of the 
                                products (described in 
                                subclause (II) for each such 
                                service or group) equals the 
                                total projected amount 
                                described in subparagraph (A).
                                  (II) Product described.--The 
                                Secretary shall determine for 
                                each service or group the 
                                product of the medicare OPD fee 
                                schedule amounts (taking into 
                                account appropriate adjustments 
                                described in paragraphs (2)(D) 
                                and (2)(E)) and the estimated 
                                frequencies for such service or 
                                group.
                          (ii) Subsequent years.--Subject to 
                        paragraph (8)(B), the Secretary shall 
                        establish a conversion factor for 
                        covered OPD services furnished in 
                        subsequent years in an amount equal to 
                        the conversion factor established under 
                        this subparagraph and applicable to 
                        such services furnished in the previous 
                        year increased by the OPD fee schedule 
                        increase factor specified under clause 
                        (iv) for the year involved.
                          (iii) Adjustment for service mix 
                        changes.--Insofar as the Secretary 
                        determines that the adjustments for 
                        service mix under paragraph (2) for a 
                        previous year (or estimates that such 
                        adjustments for a future year) did (or 
                        are likely to) result in a change in 
                        aggregate payments under this 
                        subsection during the year that are a 
                        result of changes in the coding or 
                        classification of covered OPD services 
                        that do not reflect real changes in 
                        service mix, the Secretary may adjust 
                        the conversion factor computed under 
                        this subparagraph for subsequent years 
                        so as to eliminate the effect of such 
                        coding or classification changes.
                          (iv) OPD fee schedule increase 
                        factor.--For purposes of this 
                        subparagraph, subject to paragraph (17) 
                        and subparagraph (F) of this paragraph, 
                        the ``OPD fee schedule increase 
                        factor'' for services furnished in a 
                        year is equal to the market basket 
                        percentage increase applicable under 
                        section 1886(b)(3)(B)(iii) to hospital 
                        discharges occurring during the fiscal 
                        year ending in such year, reduced by 1 
                        percentage point for such factor for 
                        services furnished in each of 2000 and 
                        2002. In applying the previous sentence 
                        for years beginning with 2000, the 
                        Secretary may substitute for the market 
                        basket percentage increase an annual 
                        percentage increase that is computed 
                        and applied with respect to covered OPD 
                        services furnished in a year in the 
                        same manner as the market basket 
                        percentage increase is determined and 
                        applied to inpatient hospital services 
                        for discharges occurring in a fiscal 
                        year.
                  (D) Calculation of medicare opd fee schedule 
                amounts.--The Secretary shall compute a 
                medicare OPD fee schedule amount for each 
                covered OPD service (or group of such services) 
                furnished in a year, in an amount equal to the 
                product of--
                          (i) the conversion factor computed 
                        under subparagraph (C) for the year, 
                        and
                          (ii) the relative payment weight 
                        (determined under paragraph (2)(C)) for 
                        the service or group.
                  (E) Pre-deductible payment percentage.--The 
                pre-deductible payment percentage for a covered 
                OPD service (or group of such services) 
                furnished in a year is equal to the ratio of--
                          (i) the medicare OPD fee schedule 
                        amount established under subparagraph 
                        (D) for the year, minus the unadjusted 
                        copayment amount determined under 
                        subparagraph (B) for the service or 
                        group, to
                          (ii) the medicare OPD fee schedule 
                        amount determined under subparagraph 
                        (D) for the year for such service or 
                        group.
                  (F) Productivity and other adjustment.--After 
                determining the OPD fee schedule increase 
                factor under subparagraph (C)(iv), the 
                Secretary shall reduce such increase factor--
                          (i) for 2012 and subsequent years, by 
                        the productivity adjustment described 
                        in section 1886(b)(3)(B)(xi)(II); and
                          (ii) for each of 2010 through 2019, 
                        by the adjustment described in 
                        subparagraph (G).
                The application of this subparagraph may result 
                in the increase factor under subparagraph 
                (C)(iv) being less than 0.0 for a year, and may 
                result in payment rates under the payment 
                system under this subsection for a year being 
                less than such payment rates for the preceding 
                year.
                  (G) Other adjustment.--For purposes of 
                subparagraph (F)(ii), the adjustment described 
                in this subparagraph is--
                          (i) for each of 2010 and 2011, 0.25 
                        percentage point;
                          (ii) for each of 2012 and 2013, 0.1 
                        percentage point;
                          (iii) for 2014, 0.3 percentage point;
                          (iv) for each of 2015 and 2016, 0.2 
                        percentage point; and
                          (v) for each of 2017, 2018, and 2019, 
                        0.75 percentage point.
          (4) Medicare payment amount.--The amount of payment 
        made from the Trust Fund under this part for a covered 
        OPD service (and such services classified within a 
        group) furnished in a year is determined, subject to 
        paragraph (7), as follows:
                  (A) Fee schedule adjustments.--The medicare 
                OPD fee schedule amount (computed under 
                paragraph (3)(D)) for the service or group and 
                year is adjusted for relative differences in 
                the cost of labor and other factors determined 
                by the Secretary, as computed under paragraphs 
                (2)(D) and (2)(E).
                  (B) Subtract applicable deductible.--Reduce 
                the adjusted amount determined under 
                subparagraph (A) by the amount of the 
                deductible under section 1833(b), to the extent 
                applicable.
                  (C) Apply payment proportion to remainder.--
                The amount of payment is the amount so 
                determined under subparagraph (B) multiplied by 
                the pre-deductible payment percentage (as 
                determined under paragraph (3)(E)) for the 
                service or group and year involved, plus the 
                amount of any reduction in the copayment amount 
                attributable to paragraph (8)(C).
          (5) Outlier adjustment.--
                  (A) In general.--Subject to subparagraph (D), 
                the Secretary shall provide for an additional 
                payment for each covered OPD service (or group 
                of services) for which a hospital's charges, 
                adjusted to cost, exceed--
                          (i) a fixed multiple of the sum of--
                                  (I) the applicable medicare 
                                OPD fee schedule amount 
                                determined under paragraph 
                                (3)(D), as adjusted under 
                                paragraph (4)(A) (other than 
                                for adjustments under this 
                                paragraph or paragraph (6)); 
                                and
                                  (II) any transitional pass-
                                through payment under paragraph 
                                (6); and
                          (ii) at the option of the Secretary, 
                        such fixed dollar amount as the 
                        Secretary may establish.
                  (B) Amount of adjustment.--The amount of the 
                additional payment under subparagraph (A) shall 
                be determined by the Secretary and shall 
                approximate the marginal cost of care beyond 
                the applicable cutoff point under such 
                subparagraph.
                  (C) Limit on aggregate outlier adjustments.--
                          (i) In general.--The total of the 
                        additional payments made under this 
                        paragraph for covered OPD services 
                        furnished in a year (as estimated by 
                        the Secretary before the beginning of 
                        the year) may not exceed the applicable 
                        percentage (specified in clause (ii)) 
                        of the total program payments estimated 
                        to be made under this subsection for 
                        all covered OPD services furnished in 
                        that year. If this paragraph is first 
                        applied to less than a full year, the 
                        previous sentence shall apply only to 
                        the portion of such year.
                          (ii) Applicable percentage.--For 
                        purposes of clause (i), the term 
                        ``applicable percentage'' means a 
                        percentage specified by the Secretary 
                        up to (but not to exceed)--
                                  (I) for a year (or portion of 
                                a year) before 2004, 2.5 
                                percent; and
                                  (II) for 2004 and thereafter, 
                                3.0 percent.
                  (D) Transitional authority.--In applying 
                subparagraph (A) for covered OPD services 
                furnished before January 1, 2002, the Secretary 
                may--
                          (i) apply such subparagraph to a bill 
                        for such services related to an 
                        outpatient encounter (rather than for a 
                        specific service or group of services) 
                        using OPD fee schedule amounts and 
                        transitional pass-through payments 
                        covered under the bill; and
                          (ii) use an appropriate cost-to-
                        charge ratio for the hospital involved 
                        (as determined by the Secretary), 
                        rather than for specific departments 
                        within the hospital.
                  (E) Exclusion of separate drug and biological 
                apcs from outlier payments.--No additional 
                payment shall be made under subparagraph (A) in 
                the case of ambulatory payment classification 
                groups established separately for drugs or 
                biologicals.
          (6) Transitional pass-through for additional costs of 
        innovative medical devices, drugs, and biologicals.--
                  (A) In general.--The Secretary shall provide 
                for an additional payment under this paragraph 
                for any of the following that are provided as 
                part of a covered OPD service (or group of 
                services):
                          (i) Current orphan drugs.--A drug or 
                        biological that is used for a rare 
                        disease or condition with respect to 
                        which the drug or biological has been 
                        designated as an orphan drug under 
                        section 526 of the Federal Food, Drug 
                        and Cosmetic Act if payment for the 
                        drug or biological as an outpatient 
                        hospital service under this part was 
                        being made on the first date that the 
                        system under this subsection is 
                        implemented.
                          (ii) Current cancer therapy drugs and 
                        biologicals and brachytherapy.--A drug 
                        or biological that is used in cancer 
                        therapy, including (but not limited to) 
                        a chemotherapeutic agent, an 
                        antiemetic, a hematopoietic growth 
                        factor, a colony stimulating factor, a 
                        biological response modifier, a 
                        bisphosphonate, and a device of 
                        brachytherapy or temperature monitored 
                        cryoablation, if payment for such drug, 
                        biological, or device as an outpatient 
                        hospital service under this part was 
                        being made on such first date.
                          (iii) Current radiopharmaceutical 
                        drugs and biological products.--A 
                        radiopharmaceutical drug or biological 
                        product used in diagnostic, monitoring, 
                        and therapeutic nuclear medicine 
                        procedures if payment for the drug or 
                        biological as an outpatient hospital 
                        service under this part was being made 
                        on such first date.
                          (iv) New medical devices, drugs, and 
                        biologicals.--A medical device, drug, 
                        or biological not described in clause 
                        (i), (ii), or (iii) if--
                                  (I) payment for the device, 
                                drug, or biological as an 
                                outpatient hospital service 
                                under this part was not being 
                                made as of December 31, 1996; 
                                and
                                  (II) the cost of the drug or 
                                biological or the average cost 
                                of the category of devices is 
                                not insignificant in relation 
                                to the OPD fee schedule amount 
                                (as calculated under paragraph 
                                (3)(D)) payable for the service 
                                (or group of services) 
                                involved.
                  (B) Use of categories in determining 
                eligibility of a device for pass-through 
                payments.--The following provisions apply for 
                purposes of determining whether a medical 
                device qualifies for additional payments under 
                clause (ii) or (iv) of subparagraph (A):
                          (i) Establishment of initial 
                        categories.--
                                  (I) In general.--The 
                                Secretary shall initially 
                                establish under this clause 
                                categories of medical devices 
                                based on type of device by 
                                April 1, 2001. Such categories 
                                shall be established in a 
                                manner such that each medical 
                                device that meets the 
                                requirements of clause (ii) or 
                                (iv) of subparagraph (A) as of 
                                January 1, 2001, is included in 
                                such a category and no such 
                                device is included in more than 
                                one category. For purposes of 
                                the preceding sentence, whether 
                                a medical device meets such 
                                requirements as of such date 
                                shall be determined on the 
                                basis of the program memoranda 
                                issued before such date.
                                  (II) Authorization of 
                                implementation other than 
                                through regulations.--The 
                                categories may be established 
                                under this clause by program 
                                memorandum or otherwise, after 
                                consultation with groups 
                                representing hospitals, 
                                manufacturers of medical 
                                devices, and other affected 
                                parties.
                          (ii) Establishing criteria for 
                        additional categories.--
                                  (I) In general.--The 
                                Secretary shall establish 
                                criteria that will be used for 
                                creation of additional 
                                categories (other than those 
                                established under clause (i)) 
                                through rulemaking (which may 
                                include use of an interim final 
                                rule with comment period).
                                  (II) Standard.--Such 
                                categories shall be established 
                                under this clause in a manner 
                                such that no medical device is 
                                described by more than one 
                                category. Such criteria shall 
                                include a test of whether the 
                                average cost of devices that 
                                would be included in a category 
                                and are in use at the time the 
                                category is established is not 
                                insignificant, as described in 
                                subparagraph (A)(iv)(II).
                                  (III) Deadline.--Criteria 
                                shall first be established 
                                under this clause by July 1, 
                                2001. The Secretary may 
                                establish in compelling 
                                circumstances categories under 
                                this clause before the date 
                                such criteria are established.
                                  (IV) Adding categories.--The 
                                Secretary shall promptly 
                                establish a new category of 
                                medical devices under this 
                                clause for any medical device 
                                that meets the requirements of 
                                subparagraph (A)(iv) and for 
                                which none of the categories in 
                                effect (or that were previously 
                                in effect) is appropriate.
                          (iii) Period for which category is in 
                        effect.--A category of medical devices 
                        established under clause (i) or (ii) 
                        shall be in effect for a period of at 
                        least 2 years, but not more than 3 
                        years, that begins--
                                  (I) in the case of a category 
                                established under clause (i), 
                                on the first date on which 
                                payment was made under this 
                                paragraph for any device 
                                described by such category 
                                (including payments made during 
                                the period before April 1, 
                                2001); and
                                  (II) in the case of any other 
                                category, on the first date on 
                                which payment is made under 
                                this paragraph for any medical 
                                device that is described by 
                                such category.
                          (iv) Requirements treated as met.--A 
                        medical device shall be treated as 
                        meeting the requirements of 
                        subparagraph (A)(iv), regardless of 
                        whether the device meets the 
                        requirement of subclause (I) of such 
                        subparagraph, if--
                                  (I) the device is described 
                                by a category established and 
                                in effect under clause (i); or
                                  (II) the device is described 
                                by a category established and 
                                in effect under clause (ii) and 
                                an application under section 
                                515 of the Federal Food, Drug, 
                                and Cosmetic Act has been 
                                approved with respect to the 
                                device, or the device has been 
                                cleared for market under 
                                section 510(k) of such Act, or 
                                the device is exempt from the 
                                requirements of section 510(k) 
                                of such Act pursuant to 
                                subsection (l) or (m) of 
                                section 510 of such Act or 
                                section 520(g) of such Act.
                        Nothing in this clause shall be 
                        construed as requiring an application 
                        or prior approval (other than that 
                        described in subclause (II)) in order 
                        for a covered device described by a 
                        category to qualify for payment under 
                        this paragraph.
                  (C) Limited period of payment.--
                          (i) Drugs and biologicals.--Subject 
                        to subparagraph (G), the payment under 
                        this paragraph with respect to a drug 
                        or biological shall only apply during a 
                        period of at least 2 years, but not 
                        more than 3 years, that begins--
                                  (I) on the first date this 
                                subsection is implemented in 
                                the case of a drug or 
                                biological described in clause 
                                (i), (ii), or (iii) of 
                                subparagraph (A) and in the 
                                case of a drug or biological 
                                described in subparagraph 
                                (A)(iv) and for which payment 
                                under this part is made as an 
                                outpatient hospital service 
                                before such first date; or
                                  (II) in the case of a drug or 
                                biological described in 
                                subparagraph (A)(iv) not 
                                described in subclause (I), on 
                                the first date on which payment 
                                is made under this part for the 
                                drug or biological as an 
                                outpatient hospital service.
                          (ii) Medical devices.--Payment shall 
                        be made under this paragraph with 
                        respect to a medical device only if 
                        such device--
                                  (I) is described by a 
                                category of medical devices 
                                established and in effect under 
                                subparagraph (B); and
                                  (II) is provided as part of a 
                                service (or group of services) 
                                paid for under this subsection 
                                and provided during the period 
                                for which such category is in 
                                effect under such subparagraph.
                  (D) Amount of additional payment.--Subject to 
                subparagraph (E)(iii), the amount of the 
                payment under this paragraph with respect to a 
                device, drug, or biological provided as part of 
                a covered OPD service is--
                          (i) subject to subparagraph (H), in 
                        the case of a drug or biological, the 
                        amount by which the amount determined 
                        under section 1842(o) (or if the drug 
                        or biological is covered under a 
                        competitive acquisition contract under 
                        section 1847B, an amount determined by 
                        the Secretary equal to the average 
                        price for the drug or biological for 
                        all competitive acquisition areas and 
                        year established under such section as 
                        calculated and adjusted by the 
                        Secretary for purposes of this 
                        paragraph) for the drug or biological 
                        exceeds the portion of the otherwise 
                        applicable medicare OPD fee schedule 
                        that the Secretary determines is 
                        associated with the drug or biological; 
                        or
                          (ii) in the case of a medical device, 
                        the amount by which the hospital's 
                        charges for the device, adjusted to 
                        cost, exceeds the portion of the 
                        otherwise applicable medicare OPD fee 
                        schedule that the Secretary determines 
                        is associated with the device.
                  (E) Limit on aggregate annual adjustment.--
                          (i) In general.--The total of the 
                        additional payments made under this 
                        paragraph for covered OPD services 
                        furnished in a year (as estimated by 
                        the Secretary before the beginning of 
                        the year) may not exceed the applicable 
                        percentage (specified in clause (ii)) 
                        of the total program payments estimated 
                        to be made under this subsection for 
                        all covered OPD services furnished in 
                        that year. If this paragraph is first 
                        applied to less than a full year, the 
                        previous sentence shall apply only to 
                        the portion of such year. This clause 
                        shall not apply for 2018.
                          (ii) Applicable percentage.--For 
                        purposes of clause (i), the term 
                        ``applicable percentage'' means--
                                  (I) for a year (or portion of 
                                a year) before 2004, 2.5 
                                percent; and
                                  (II) for 2004 and thereafter, 
                                a percentage specified by the 
                                Secretary up to (but not to 
                                exceed) 2.0 percent.
                          (iii) Uniform prospective reduction 
                        if aggregate limit projected to be 
                        exceeded.--If the Secretary estimates 
                        before the beginning of a year that the 
                        amount of the additional payments under 
                        this paragraph for the year (or portion 
                        thereof) as determined under clause (i) 
                        without regard to this clause will 
                        exceed the limit established under such 
                        clause, the Secretary shall reduce pro 
                        rata the amount of each of the 
                        additional payments under this 
                        paragraph for that year (or portion 
                        thereof) in order to ensure that the 
                        aggregate additional payments under 
                        this paragraph (as so estimated) do not 
                        exceed such limit.
                  (F) Limitation of application of functional 
                equivalence standard.--
                          (i) In general.--The Secretary may 
                        not publish regulations that apply a 
                        functional equivalence standard to a 
                        drug or biological under this 
                        paragraph.
                          (ii) Application.--Clause (i) shall 
                        apply to the application of a 
                        functional equivalence standard to a 
                        drug or biological on or after the date 
                        of enactment of the Medicare 
                        Prescription Drug, Improvement, and 
                        Modernization Act of 2003 unless--
                                  (I) such application was 
                                being made to such drug or 
                                biological prior to such date 
                                of enactment; and
                                  (II) the Secretary applies 
                                such standard to such drug or 
                                biological only for the purpose 
                                of determining eligibility of 
                                such drug or biological for 
                                additional payments under this 
                                paragraph and not for the 
                                purpose of any other payments 
                                under this title.
                          (iii) Rule of construction.--Nothing 
                        in this subparagraph shall be construed 
                        to effect the Secretary's authority to 
                        deem a particular drug to be identical 
                        to another drug if the 2 products are 
                        pharmaceutically equivalent and 
                        bioequivalent, as determined by the 
                        Commissioner of Food and Drugs.
                  (G) Pass-through extension for certain drugs 
                and biologicals.--In the case of a drug or 
                biological whose period of pass-through status 
                under this paragraph ended on December 31, 
                2017, and for which payment under this 
                subsection was packaged into a payment for a 
                covered OPD service (or group of services) 
                furnished beginning January 1, 2018, such pass-
                through status shall be extended for a 2-year 
                period beginning on October 1, 2018.
                  (H) Temporary payment rule for certain drugs 
                and biologicals.--In the case of a drug or 
                biological whose period of pass-through status 
                under this paragraph ended on December 31, 
                2017, and for which payment under this 
                subsection was packaged into a payment for a 
                covered OPD service (or group of services) 
                furnished beginning January 1, 2018, the 
                payment amount for such drug or biological 
                under this subsection that is furnished during 
                the period beginning on October 1, 2018, and 
                ending on March 31, 2019, shall be the greater 
                of--
                          (i) the payment amount that would 
                        otherwise apply under subparagraph 
                        (D)(i) for such drug or biological 
                        during such period; or
                          (ii) the payment amount that applied 
                        under such subparagraph (D)(i) for such 
                        drug or biological on December 31, 
                        2017.
                  (I) Special payment adjustment rules for last 
                quarter of 2018.--In the case of a drug or 
                biological whose period of pass-through status 
                under this paragraph ended on December 31, 
                2017, and for which payment under this 
                subsection was packaged into a payment amount 
                for a covered OPD service (or group of 
                services) beginning January 1, 2018, the 
                following rules shall apply with respect to 
                payment amounts under this subsection for 
                covered a OPD service (or group of services) 
                furnished during the period beginning on 
                October 1, 2018, and ending on December 31, 
                2018:
                          (i) The Secretary shall remove the 
                        packaged costs of such drug or 
                        biological (as determined by the 
                        Secretary) from the payment amount 
                        under this subsection for the covered 
                        OPD service (or group of services) with 
                        which it is packaged.
                          (ii) The Secretary shall not make any 
                        adjustments to payment amounts under 
                        this subsection for a covered OPD 
                        service (or group of services) for 
                        which no costs were removed under 
                        clause (i).
          (7) Transitional adjustment to limit decline in 
        payment.--
                  (A) Before 2002.--Subject to subparagraph 
                (D), for covered OPD services furnished before 
                January 1, 2002, for which the PPS amount (as 
                defined in subparagraph (E)) is--
                          (i) at least 90 percent, but less 
                        than 100 percent, of the pre-BBA amount 
                        (as defined in subparagraph (F)), the 
                        amount of payment under this subsection 
                        shall be increased by 80 percent of the 
                        amount of such difference;
                          (ii) at least 80 percent, but less 
                        than 90 percent, of the pre-BBA amount, 
                        the amount of payment under this 
                        subsection shall be increased by the 
                        amount by which (I) the product of 0.71 
                        and the pre-BBA amount, exceeds (II) 
                        the product of 0.70 and the PPS amount;
                          (iii) at least 70 percent, but less 
                        than 80 percent, of the pre-BBA amount, 
                        the amount of payment under this 
                        subsection shall be increased by the 
                        amount by which (I) the product of 0.63 
                        and the pre-BBA amount, exceeds (II) 
                        the product of 0.60 and the PPS amount; 
                        or
                          (iv) less than 70 percent of the pre-
                        BBA amount, the amount of payment under 
                        this subsection shall be increased by 
                        21 percent of the pre-BBA amount.
                  (B) 2002.--Subject to subparagraph (D), for 
                covered OPD services furnished during 2002, for 
                which the PPS amount is--
                          (i) at least 90 percent, but less 
                        than 100 percent, of the pre-BBA 
                        amount, the amount of payment under 
                        this subsection shall be increased by 
                        70 percent of the amount of such 
                        difference;
                          (ii) at least 80 percent, but less 
                        than 90 percent, of the pre-BBA amount, 
                        the amount of payment under this 
                        subsection shall be increased by the 
                        amount by which (I) the product of 0.61 
                        and the pre-BBA amount, exceeds (II) 
                        the product of 0.60 and the PPS amount; 
                        or
                          (iii) less than 80 percent of the 
                        pre-BBA amount, the amount of payment 
                        under this subsection shall be 
                        increased by 13 percent of the pre-BBA 
                        amount.
                  (C) 2003.--Subject to subparagraph (D), for 
                covered OPD services furnished during 2003, for 
                which the PPS amount is--
                          (i) at least 90 percent, but less 
                        than 100 percent, of the pre-BBA 
                        amount, the amount of payment under 
                        this subsection shall be increased by 
                        60 percent of the amount of such 
                        difference; or
                          (ii) less than 90 percent of the pre-
                        BBA amount, the amount of payment under 
                        this subsection shall be increased by 6 
                        percent of the pre-BBA amount.
                  (D) Hold harmless provisions.--
                          (i) Temporary treatment for certain 
                        rural hospitals.--(I) In the case of a 
                        hospital located in a rural area and 
                        that has not more than 100 beds or a 
                        sole community hospital (as defined in 
                        section 1886(d)(5)(D)(iii)) located in 
                        a rural area, for covered OPD services 
                        furnished before January 1, 2006, for 
                        which the PPS amount is less than the 
                        pre-BBA amount, the amount of payment 
                        under this subsection shall be 
                        increased by the amount of such 
                        difference.
                          (II) In the case of a hospital 
                        located in a rural area and that has 
                        not more than 100 beds and that is not 
                        a sole community hospital (as defined 
                        in section 1886(d)(5)(D)(iii)), for 
                        covered OPD services furnished on or 
                        after January 1, 2006, and before 
                        January 1, 2013, for which the PPS 
                        amount is less than the pre-BBA amount, 
                        the amount of payment under this 
                        subsection shall be increased by the 
                        applicable percentage of the amount of 
                        such difference. For purposes of the 
                        preceding sentence, the applicable 
                        percentage shall be 95 percent with 
                        respect to covered OPD services 
                        furnished in 2006, 90 percent with 
                        respect to such services furnished in 
                        2007, and 85 percent with respect to 
                        such services furnished in 2008, 2009, 
                        2010, 2011, or 2012.
                          (III) In the case of a sole community 
                        hospital (as defined in section 
                        1886(d)(5)(D)(iii)) that has not more 
                        than 100 beds, for covered OPD services 
                        furnished on or after January 1, 2009, 
                        and before January 1, 2013, for which 
                        the PPS amount is less than the pre-BBA 
                        amount, the amount of payment under 
                        this subsection shall be increased by 
                        85 percent of the amount of such 
                        difference. In the case of covered OPD 
                        services furnished on or after January 
                        1, 2010, and before March 1, 2012, the 
                        preceding sentence shall be applied 
                        without regard to the 100-bed 
                        limitation.
                          (ii) Permanent treatment for cancer 
                        hospitals and children's hospitals.--In 
                        the case of a hospital described in 
                        clause (iii) or (v) of section 
                        1886(d)(1)(B), for covered OPD services 
                        for which the PPS amount is less than 
                        the pre-BBA amount, the amount of 
                        payment under this subsection shall be 
                        increased by the amount of such 
                        difference.
                  (E) PPS amount defined.--In this paragraph, 
                the term ``PPS amount'' means, with respect to 
                covered OPD services, the amount payable under 
                this title for such services (determined 
                without regard to this paragraph), including 
                amounts payable as copayment under paragraph 
                (8), coinsurance under section 
                1866(a)(2)(A)(ii), and the deductible under 
                section 1833(b).
                  (F) Pre-BBA amount defined.--
                          (i) In general.--In this paragraph, 
                        the ``pre-BBA amount'' means, with 
                        respect to covered OPD services 
                        furnished by a hospital in a year, an 
                        amount equal to the product of the 
                        reasonable cost of the hospital for 
                        such services for the portions of the 
                        hospital's cost reporting period (or 
                        periods) occurring in the year and the 
                        base OPD payment-to-cost ratio for the 
                        hospital (as defined in clause (ii)).
                          (ii) Base payment-to-cost-ratio 
                        defined.--For purposes of this 
                        subparagraph, the ``base payment-to-
                        cost ratio'' for a hospital means the 
                        ratio of--
                                  (I) the hospital's 
                                reimbursement under this part 
                                for covered OPD services 
                                furnished during the cost 
                                reporting period ending in 1996 
                                (or in the case of a hospital 
                                that did not submit a cost 
                                report for such period, during 
                                the first subsequent cost 
                                reporting period ending before 
                                2001 for which the hospital 
                                submitted a cost report), 
                                including any reimbursement for 
                                such services through cost-
                                sharing described in 
                                subparagraph (E), to
                                  (II) the reasonable cost of 
                                such services for such period.
                        The Secretary shall determine such 
                        ratios as if the amendments made by 
                        section 4521 of the Balanced Budget Act 
                        of 1997 were in effect in 1996.
                  (G) Interim payments.--The Secretary shall 
                make payments under this paragraph to hospitals 
                on an interim basis, subject to retrospective 
                adjustments based on settled cost reports.
                  (H) No effect on copayments.--Nothing in this 
                paragraph shall be construed to affect the 
                unadjusted copayment amount described in 
                paragraph (3)(B) or the copayment amount under 
                paragraph (8).
                  (I) Application without regard to budget 
                neutrality.--The additional payments made under 
                this paragraph--
                          (i) shall not be considered an 
                        adjustment under paragraph (2)(E); and
                          (ii) shall not be implemented in a 
                        budget neutral manner.
          (8) Copayment amount.--
                  (A) In general.--Except as provided in 
                subparagraphs (B) and (C), the copayment amount 
                under this subsection is the amount by which 
                the amount described in paragraph (4)(B) 
                exceeds the amount of payment determined under 
                paragraph (4)(C).
                  (B) Election to offer reduced copayment 
                amount.--The Secretary shall establish a 
                procedure under which a hospital, before the 
                beginning of a year (beginning with 1999), may 
                elect to reduce the copayment amount otherwise 
                established under subparagraph (A) for some or 
                all covered OPD services to an amount that is 
                not less than 20 percent of the medicare OPD 
                fee schedule amount (computed under paragraph 
                (3)(D)) for the service involved. Under such 
                procedures, such reduced copayment amount may 
                not be further reduced or increased during the 
                year involved and the hospital may disseminate 
                information on the reduction of copayment 
                amount effected under this subparagraph.
                  (C) Limitation on copayment amount.--
                          (i) To inpatient hospital deductible 
                        amount.--In no case shall the copayment 
                        amount for a procedure performed in a 
                        year exceed the amount of the inpatient 
                        hospital deductible established under 
                        section 1813(b) for that year.
                          (ii) To specified percentage.--The 
                        Secretary shall reduce the national 
                        unadjusted copayment amount for a 
                        covered OPD service (or group of such 
                        services) furnished in a year in a 
                        manner so that the effective copayment 
                        rate (determined on a national 
                        unadjusted basis) for that service in 
                        the year does not exceed the following 
                        percentage:
                                  (I) For procedures performed 
                                in 2001, on or after April 1, 
                                2001, 57 percent.
                                  (II) For procedures performed 
                                in 2002 or 2003, 55 percent.
                                  (III) For procedures 
                                performed in 2004, 50 percent.
                                  (IV) For procedures performed 
                                in 2005, 45 percent.
                                  (V) For procedures performed 
                                in 2006 and thereafter, 40 
                                percent.
                  (D) No impact on deductibles.--Nothing in 
                this paragraph shall be construed as affecting 
                a hospital's authority to waive the charging of 
                a deductible under section 1833(b).
                  (E) Computation ignoring outlier and pass-
                through adjustments.--The copayment amount 
                shall be computed under subparagraph (A) as if 
                the adjustments under paragraphs (5) and (6) 
                (and any adjustment made under paragraph (2)(E) 
                in relation to such adjustments) had not 
                occurred.
          (9) Periodic review and adjustments components of 
        prospective payment system.--
                  (A) Periodic review.--The Secretary shall 
                review not less often than annually and revise 
                the groups, the relative payment weights, and 
                the wage and other adjustments described in 
                paragraph (2) to take into account changes in 
                medical practice, changes in technology, the 
                addition of new services, new cost data, and 
                other relevant information and factors. The 
                Secretary shall consult with an expert outside 
                advisory panel composed of an appropriate 
                selection of representatives of providers to 
                review (and advise the Secretary concerning) 
                the clinical integrity of the groups and 
                weights. Such panel may use data collected or 
                developed by entities and organizations (other 
                than the Department of Health and Human 
                Services) in conducting such review.
                  (B) Budget neutrality adjustment.--If the 
                Secretary makes adjustments under subparagraph 
                (A), then the adjustments for a year may not 
                cause the estimated amount of expenditures 
                under this part for the year to increase or 
                decrease from the estimated amount of 
                expenditures under this part that would have 
                been made if the adjustments had not been made. 
                In determining adjustments under the preceding 
                sentence for 2004 and 2005, the Secretary shall 
                not take into account under this subparagraph 
                or paragraph (2)(E) any expenditures that would 
                not have been made but for the application of 
                paragraph (14).
                  (C) Update factor.--If the Secretary 
                determines under methodologies described in 
                paragraph (2)(F) that the volume of services 
                paid for under this subsection increased beyond 
                amounts established through those 
                methodologies, the Secretary may appropriately 
                adjust the update to the conversion factor 
                otherwise applicable in a subsequent year.
          (10) Special rule for ambulance services.--The 
        Secretary shall pay for hospital outpatient services 
        that are ambulance services on the basis described in 
        section 1861(v)(1)(U), or, if applicable, the fee 
        schedule established under section 1834(l).
          (11) Special rules for certain hospitals.--In the 
        case of hospitals described in clause (iii) or (v) of 
        section 1886(d)(1)(B)--
                  (A) the system under this subsection shall 
                not apply to covered OPD services furnished 
                before January 1, 2000; and
                  (B) the Secretary may establish a separate 
                conversion factor for such services in a manner 
                that specifically takes into account the unique 
                costs incurred by such hospitals by virtue of 
                their patient population and service intensity.
          (12) Limitation on review.--There shall be no 
        administrative or judicial review under section 1869, 
        1878, or otherwise of--
                  (A) the development of the classification 
                system under paragraph (2), including the 
                establishment of groups and relative payment 
                weights for covered OPD services, of wage 
                adjustment factors, other adjustments, and 
                methods described in paragraph (2)(F);
                  (B) the calculation of base amounts under 
                paragraph (3);
                  (C) periodic adjustments made under paragraph 
                (6);
                  (D) the establishment of a separate 
                conversion factor under paragraph (8)(B); and
                  (E) the determination of the fixed multiple, 
                or a fixed dollar cutoff amount, the marginal 
                cost of care, or applicable percentage under 
                paragraph (5) or the determination of 
                insignificance of cost, the duration of the 
                additional payments, the determination and 
                deletion of initial and new categories 
                (consistent with subparagraphs (B) and (C) of 
                paragraph (6)), the portion of the medicare OPD 
                fee schedule amount associated with particular 
                devices, drugs, or biologicals, and the 
                application of any pro rata reduction under 
                paragraph (6).
          (13) Authorization of adjustment for rural 
        hospitals.--
                  (A) Study.--The Secretary shall conduct a 
                study to determine if, under the system under 
                this subsection, costs incurred by hospitals 
                located in rural areas by ambulatory payment 
                classification groups (APCs) exceed those costs 
                incurred by hospitals located in urban areas.
                  (B) Authorization of adjustment.--Insofar as 
                the Secretary determines under subparagraph (A) 
                that costs incurred by hospitals located in 
                rural areas exceed those costs incurred by 
                hospitals located in urban areas, the Secretary 
                shall provide for an appropriate adjustment 
                under paragraph (2)(E) to reflect those higher 
                costs by January 1, 2006.
          (14) Drug apc payment rates.--
                  (A) In general.--The amount of payment under 
                this subsection for a specified covered 
                outpatient drug (defined in subparagraph (B)) 
                that is furnished as part of a covered OPD 
                service (or group of services)--
                          (i) in 2004, in the case of--
                                  (I) a sole source drug shall 
                                in no case be less than 88 
                                percent, or exceed 95 percent, 
                                of the reference average 
                                wholesale price for the drug;
                                  (II) an innovator multiple 
                                source drug shall in no case 
                                exceed 68 percent of the 
                                reference average wholesale 
                                price for the drug; or
                                  (III) a noninnovator multiple 
                                source drug shall in no case 
                                exceed 46 percent of the 
                                reference average wholesale 
                                price for the drug;
                          (ii) in 2005, in the case of--
                                  (I) a sole source drug shall 
                                in no case be less than 83 
                                percent, or exceed 95 percent, 
                                of the reference average 
                                wholesale price for the drug;
                                  (II) an innovator multiple 
                                source drug shall in no case 
                                exceed 68 percent of the 
                                reference average wholesale 
                                price for the drug; or
                                  (III) a noninnovator multiple 
                                source drug shall in no case 
                                exceed 46 percent of the 
                                reference average wholesale 
                                price for the drug; or
                          (iii) in a subsequent year, shall be 
                        equal, subject to subparagraph (E)--
                                  (I) to the average 
                                acquisition cost for the drug 
                                for that year (which, at the 
                                option of the Secretary, may 
                                vary by hospital group (as 
                                defined by the Secretary based 
                                on volume of covered OPD 
                                services or other relevant 
                                characteristics)), as 
                                determined by the Secretary 
                                taking into account the 
                                hospital acquisition cost 
                                survey data under subparagraph 
                                (D); or
                                  (II) if hospital acquisition 
                                cost data are not available, 
                                the average price for the drug 
                                in the year established under 
                                section 1842(o), section 1847A, 
                                or section 1847B, as the case 
                                may be, as calculated and 
                                adjusted by the Secretary as 
                                necessary for purposes of this 
                                paragraph.
                  (B) Specified covered outpatient drug 
                defined.--
                          (i) In general.--In this paragraph, 
                        the term ``specified covered outpatient 
                        drug'' means, subject to clause (ii), a 
                        covered outpatient drug (as defined in 
                        section 1927(k)(2)) for which a 
                        separate ambulatory payment 
                        classification group (APC) has been 
                        established and that is--
                                  (I) a radiopharmaceutical; or
                                  (II) a drug or biological for 
                                which payment was made under 
                                paragraph (6) (relating to 
                                pass-through payments) on or 
                                before December 31, 2002.
                          (ii) Exception.--Such term does not 
                        include--
                                  (I) a drug or biological for 
                                which payment is first made on 
                                or after January 1, 2003, under 
                                paragraph (6);
                                  (II) a drug or biological for 
                                which a temporary HCPCS code 
                                has not been assigned; or
                                  (III) during 2004 and 2005, 
                                an orphan drug (as designated 
                                by the Secretary).
                  (C) Payment for designated orphan drugs 
                during 2004 and 2005.--The amount of payment 
                under this subsection for an orphan drug 
                designated by the Secretary under subparagraph 
                (B)(ii)(III) that is furnished as part of a 
                covered OPD service (or group of services) 
                during 2004 and 2005 shall equal such amount as 
                the Secretary may specify.
                  (D) Acquisition cost survey for hospital 
                outpatient drugs.--
                          (i) Annual gao surveys in 2004 and 
                        2005.--
                                  (I) In general.--The 
                                Comptroller General of the 
                                United States shall conduct a 
                                survey in each of 2004 and 2005 
                                to determine the hospital 
                                acquisition cost for each 
                                specified covered outpatient 
                                drug. Not later than April 1, 
                                2005, the Comptroller General 
                                shall furnish data from such 
                                surveys to the Secretary for 
                                use in setting the payment 
                                rates under subparagraph (A) 
                                for 2006.
                                  (II) Recommendations.--Upon 
                                the completion of such surveys, 
                                the Comptroller General shall 
                                recommend to the Secretary the 
                                frequency and methodology of 
                                subsequent surveys to be 
                                conducted by the Secretary 
                                under clause (ii).
                          (ii) Subsequent secretarial 
                        surveys.--The Secretary, taking into 
                        account such recommendations, shall 
                        conduct periodic subsequent surveys to 
                        determine the hospital acquisition cost 
                        for each specified covered outpatient 
                        drug for use in setting the payment 
                        rates under subparagraph (A).
                          (iii) Survey requirements.--The 
                        surveys conducted under clauses (i) and 
                        (ii) shall have a large sample of 
                        hospitals that is sufficient to 
                        generate a statistically significant 
                        estimate of the average hospital 
                        acquisition cost for each specified 
                        covered outpatient drug. With respect 
                        to the surveys conducted under clause 
                        (i), the Comptroller General shall 
                        report to Congress on the justification 
                        for the size of the sample used in 
                        order to assure the validity of such 
                        estimates.
                          (iv) Differentiation in cost.--In 
                        conducting surveys under clause (i), 
                        the Comptroller General shall determine 
                        and report to Congress if there is (and 
                        the extent of any) variation in 
                        hospital acquisition costs for drugs 
                        among hospitals based on the volume of 
                        covered OPD services performed by such 
                        hospitals or other relevant 
                        characteristics of such hospitals (as 
                        defined by the Comptroller General).
                          (v) Comment on proposed rates.--Not 
                        later than 30 days after the date the 
                        Secretary promulgated proposed rules 
                        setting forth the payment rates under 
                        subparagraph (A) for 2006, the 
                        Comptroller General shall evaluate such 
                        proposed rates and submit to Congress a 
                        report regarding the appropriateness of 
                        such rates based on the surveys the 
                        Comptroller General has conducted under 
                        clause (i).
                  (E) Adjustment in payment rates for overhead 
                costs.--
                          (i) Medpac report on drug apc 
                        design.--The Medicare Payment Advisory 
                        Commission shall submit to the 
                        Secretary, not later than July 1, 2005, 
                        a report on adjustment of payment for 
                        ambulatory payment classifications for 
                        specified covered outpatient drugs to 
                        take into account overhead and related 
                        expenses, such as pharmacy services and 
                        handling costs. Such report shall 
                        include--
                                  (I) a description and 
                                analysis of the data available 
                                with regard to such expenses;
                                  (II) a recommendation as to 
                                whether such a payment 
                                adjustment should be made; and
                                  (III) if such adjustment 
                                should be made, a 
                                recommendation regarding the 
                                methodology for making such an 
                                adjustment.
                          (ii) Adjustment authorized.--The 
                        Secretary may adjust the weights for 
                        ambulatory payment classifications for 
                        specified covered outpatient drugs to 
                        take into account the recommendations 
                        contained in the report submitted under 
                        clause (i).
                  (F) Classes of drugs.--For purposes of this 
                paragraph:
                          (i) Sole source drugs.--The term 
                        ``sole source drug'' means--
                                  (I) a biological product (as 
                                defined under section 
                                1861(t)(1)); or
                                  (II) a single source drug (as 
                                defined in section 
                                1927(k)(7)(A)(iv)).
                          (ii) Innovator multiple source 
                        drugs.--The term ``innovator multiple 
                        source drug'' has the meaning given 
                        such term in section 1927(k)(7)(A)(ii).
                          (iii) Noninnovator multiple source 
                        drugs.--The term ``noninnovator 
                        multiple source drug'' has the meaning 
                        given such term in section 
                        1927(k)(7)(A)(iii).
                  (G) Reference average wholesale price.--The 
                term ``reference average wholesale price'' 
                means, with respect to a specified covered 
                outpatient drug, the average wholesale price 
                for the drug as determined under section 
                1842(o) as of May 1, 2003.
                  (H) Inapplicability of expenditures in 
                determining conversion, weighting, and other 
                adjustment factors.--Additional expenditures 
                resulting from this paragraph shall not be 
                taken into account in establishing the 
                conversion, weighting, and other adjustment 
                factors for 2004 and 2005 under paragraph (9), 
                but shall be taken into account for subsequent 
                years.
          (15) Payment for new drugs and biologicals until 
        hcpcs code assigned.--With respect to payment under 
        this part for an outpatient drug or biological that is 
        covered under this part and is furnished as part of 
        covered OPD services for which a HCPCS code has not 
        been assigned, the amount provided for payment for such 
        drug or biological under this part shall be equal to 95 
        percent of the average wholesale price for the drug or 
        biological.
          (16) Miscellaneous provisions.--
                  (A) Application of reclassification of 
                certain hospitals.--If a hospital is being 
                treated as being located in a rural area under 
                section 1886(d)(8)(E), that hospital shall be 
                treated under this subsection as being located 
                in that rural area.
                  (B) Threshold for establishment of separate 
                apcs for drugs.--The Secretary shall reduce the 
                threshold for the establishment of separate 
                ambulatory payment classification groups (APCs) 
                with respect to drugs or biologicals to $50 per 
                administration for drugs and biologicals 
                furnished in 2005 and 2006.
                  (C) Payment for devices of brachytherapy and 
                therapeutic radiopharmaceuticals at charges 
                adjusted to cost.--Notwithstanding the 
                preceding provisions of this subsection, for a 
                device of brachytherapy consisting of a seed or 
                seeds (or radioactive source) furnished on or 
                after January 1, 2004, and before January 1, 
                2010, and for therapeutic radiopharmaceuticals 
                furnished on or after January 1, 2008, and 
                before January 1, 2010, the payment basis for 
                the device or therapeutic radiopharmaceutical 
                under this subsection shall be equal to the 
                hospital's charges for each device or 
                therapeutic radiopharmaceutical furnished, 
                adjusted to cost. Charges for such devices or 
                therapeutic radiopharmaceuticals shall not be 
                included in determining any outlier payment 
                under this subsection.
                  (D) Special payment rule.--
                          (i) In general.--In the case of 
                        covered OPD services furnished on or 
                        after April 1, 2013, in a hospital 
                        described in clause (ii), if--
                                  (I) the payment rate that 
                                would otherwise apply under 
                                this subsection for 
                                stereotactic radiosurgery, 
                                complete course of treatment of 
                                cranial lesion(s) consisting of 
                                1 session that is multi-source 
                                Cobalt 60 based (identified as 
                                of January 1, 2013, by HCPCS 
                                code 77371 (and any succeeding 
                                code) and reimbursed as of such 
                                date under APC 0127 (and any 
                                succeeding classification 
                                group)); exceeds
                                  (II) the payment rate that 
                                would otherwise apply under 
                                this subsection for linear 
                                accelerator based stereotactic 
                                radiosurgery, complete course 
                                of therapy in one session 
                                (identified as of January 1, 
                                2013, by HCPCS code G0173 (and 
                                any succeeding code) and 
                                reimbursed as of such date 
                                under APC 0067 (and any 
                                succeeding classification 
                                group)),
                        the payment rate for the service 
                        described in subclause (I) shall be 
                        reduced to an amount equal to the 
                        payment rate for the service described 
                        in subclause (II).
                          (ii) Hospital described.--A hospital 
                        described in this clause is a hospital 
                        that is not--
                                  (I) located in a rural area 
                                (as defined in section 
                                1886(d)(2)(D));
                                  (II) classified as a rural 
                                referral center under section 
                                1886(d)(5)(C); or
                                  (III) a sole community 
                                hospital (as defined in section 
                                1886(d)(5)(D)(iii)).
                          (iii) Not budget neutral.--In making 
                        any budget neutrality adjustments under 
                        this subsection for 2013 (with respect 
                        to covered OPD services furnished on or 
                        after April 1, 2013, and before January 
                        1, 2014) or a subsequent year, the 
                        Secretary shall not take into account 
                        the reduced expenditures that result 
                        from the application of this 
                        subparagraph.
                  (E) Application of appropriate use criteria 
                for certain imaging services.--For provisions 
                relating to the application of appropriate use 
                criteria for certain imaging services, see 
                section 1834(q).
                  (F) Payment incentive for the transition from 
                traditional x-ray imaging to digital 
                radiography.--Notwithstanding the previous 
                provisions of this subsection:
                          (i) Limitation on payment for film x-
                        ray imaging services.--In the case of 
                        an imaging service that is an X-ray 
                        taken using film and that is furnished 
                        during 2017 or a subsequent year, the 
                        payment amount for such service 
                        (including the X-ray component of a 
                        packaged service) that would otherwise 
                        be determined under this section 
                        (without application of this paragraph 
                        and before application of any other 
                        adjustment under this subsection) for 
                        such year shall be reduced by 20 
                        percent.
                          (ii) Phased-in limitation on payment 
                        for computed radiography imaging 
                        services.--In the case of an imaging 
                        service that is an X-ray taken using 
                        computed radiography technology (as 
                        defined in section 1848(b)(9)(C))--
                                  (I) in the case of such a 
                                service furnished during 2018, 
                                2019, 2020, 2021, or 2022, the 
                                payment amount for such service 
                                (including the X-ray component 
                                of a packaged service) that 
                                would otherwise be determined 
                                under this section (without 
                                application of this paragraph 
                                and before application of any 
                                other adjustment under this 
                                subsection) for such year shall 
                                be reduced by 7 percent; and
                                  (II) in the case of such a 
                                service furnished during 2023 
                                or a subsequent year, the 
                                payment amount for such service 
                                (including the X-ray component 
                                of a packaged service) that 
                                would otherwise be determined 
                                under this section (without 
                                application of this paragraph 
                                and before application of any 
                                other adjustment under this 
                                subsection) for such year shall 
                                be reduced by 10 percent.
                          (iii) Application without regard to 
                        budget neutrality.--The reductions made 
                        under this subparagraph--
                                  (I) shall not be considered 
                                an adjustment under paragraph 
                                (2)(E); and
                                  (II) shall not be implemented 
                                in a budget neutral manner.
                          (iv) Implementation.--In order to 
                        implement this subparagraph, the 
                        Secretary shall adopt appropriate 
                        mechanisms which may include use of 
                        modifiers.
          (17) Quality reporting.--
                  (A) Reduction in update for failure to 
                report.--
                          (i) In general.--For purposes of 
                        paragraph (3)(C)(iv) for 2009 and each 
                        subsequent year, in the case of a 
                        subsection (d) hospital (as defined in 
                        section 1886(d)(1)(B)) that does not 
                        submit, to the Secretary in accordance 
                        with this paragraph, data required to 
                        be submitted on measures selected under 
                        this paragraph with respect to such a 
                        year, the OPD fee schedule increase 
                        factor under paragraph (3)(C)(iv) for 
                        such year shall be reduced by 2.0 
                        percentage points.
                          (ii) Non-cumulative application.--A 
                        reduction under this subparagraph shall 
                        apply only with respect to the year 
                        involved and the Secretary shall not 
                        take into account such reduction in 
                        computing the OPD fee schedule increase 
                        factor for a subsequent year.
                  (B) Form and manner of submission.--Each 
                subsection (d) hospital shall submit data on 
                measures selected under this paragraph to the 
                Secretary in a form and manner, and at a time, 
                specified by the Secretary for purposes of this 
                paragraph.
                  (C) Development of outpatient measures.--
                          (i) In general.--The Secretary shall 
                        develop measures that the Secretary 
                        determines to be appropriate for the 
                        measurement of the quality of care 
                        (including medication errors) furnished 
                        by hospitals in outpatient settings and 
                        that reflect consensus among affected 
                        parties and, to the extent feasible and 
                        practicable, shall include measures set 
                        forth by one or more national consensus 
                        building entities.
                          (ii) Construction.--Nothing in this 
                        paragraph shall be construed as 
                        preventing the Secretary from selecting 
                        measures that are the same as (or a 
                        subset of) the measures for which data 
                        are required to be submitted under 
                        section 1886(b)(3)(B)(viii).
                  (D) Replacement of measures.--For purposes of 
                this paragraph, the Secretary may replace any 
                measures or indicators in appropriate cases, 
                such as where all hospitals are effectively in 
                compliance or the measures or indicators have 
                been subsequently shown not to represent the 
                best clinical practice.
                  (E) Availability of data.--The Secretary 
                shall establish procedures for making data 
                submitted under this paragraph available to the 
                public. Such procedures shall ensure that a 
                hospital has the opportunity to review the data 
                that are to be made public with respect to the 
                hospital prior to such data being made public. 
                The Secretary shall report quality measures of 
                process, structure, outcome, patients' 
                perspectives on care, efficiency, and costs of 
                care that relate to services furnished in 
                outpatient settings in hospitals on the 
                Internet website of the Centers for Medicare & 
                Medicaid Services.
          (18) Authorization of adjustment for cancer 
        hospitals.--
                  (A) Study.--The Secretary shall conduct a 
                study to determine if, under the system under 
                this subsection, costs incurred by hospitals 
                described in section 1886(d)(1)(B)(v) with 
                respect to ambulatory payment classification 
                groups exceed those costs incurred by other 
                hospitals furnishing services under this 
                subsection (as determined appropriate by the 
                Secretary). In conducting the study under this 
                subparagraph, the Secretary shall take into 
                consideration the cost of drugs and biologicals 
                incurred by such hospitals.
                  (B) Authorization of adjustment.--Insofar as 
                the Secretary determines under subparagraph (A) 
                that costs incurred by hospitals described in 
                section 1886(d)(1)(B)(v) exceed those costs 
                incurred by other hospitals furnishing services 
                under this subsection, the Secretary shall, 
                subject to subparagraph (C), provide for an 
                appropriate adjustment under paragraph (2)(E) 
                to reflect those higher costs effective for 
                services furnished on or after January 1, 2011.
                  (C) Target pcr adjustment.--In applying 
                section 419.43(i) of title 42 of the Code of 
                Federal Regulations to implement the 
                appropriate adjustment under this paragraph for 
                services furnished on or after January 1, 2018, 
                the Secretary shall use a target PCR that is 
                1.0 percentage points less than the target PCR 
                that would otherwise apply. In addition to the 
                percentage point reduction under the previous 
                sentence, the Secretary may consider making an 
                additional percentage point reduction to such 
                target PCR that takes into account payment 
                rates for applicable items and services 
                described in paragraph (21)(C) other than for 
                services furnished by hospitals described in 
                section 1886(d)(1)(B)(v). In making any budget 
                neutrality adjustments under this subsection 
                for 2018 or a subsequent year, the Secretary 
                shall not take into account the reduced 
                expenditures that result from the application 
                of this subparagraph.
          (19) Floor on area wage adjustment factor for 
        hospital outpatient department services in frontier 
        states.--
                  (A) In general.--Subject to subparagraph (B), 
                with respect to covered OPD services furnished 
                on or after January 1, 2011, the area wage 
                adjustment factor applicable under the payment 
                system established under this subsection to any 
                hospital outpatient department which is located 
                in a frontier State (as defined in section 
                1886(d)(3)(E)(iii)(II)) may not be less than 
                1.00. The preceding sentence shall not be 
                applied in a budget neutral manner.
                  (B) Limitation.--This paragraph shall not 
                apply to any hospital outpatient department 
                located in a State that receives a non-labor 
                related share adjustment under section 
                1886(d)(5)(H).
          (20) Not budget neutral application of reduced 
        expenditures resulting from quality incentives for 
        computed tomography.--The Secretary shall not take into 
        account the reduced expenditures that result from the 
        application of section 1834(p) in making any budget 
        neutrality adjustments this subsection.
          (21) Services furnished by an off-campus outpatient 
        department of a provider.--
                  (A) Applicable items and services.--For 
                purposes of paragraph (1)(B)(v) and this 
                paragraph, the term ``applicable items and 
                services'' means items and services other than 
                items and services furnished by a dedicated 
                emergency department (as defined in section 
                489.24(b) of title 42 of the Code of Federal 
                Regulations).
                  (B) Off-campus outpatient department of a 
                provider.--
                          (i) In general.--For purposes of 
                        paragraph (1)(B)(v) and this paragraph, 
                        subject to the subsequent provisions of 
                        this subparagraph, the term ``off-
                        campus outpatient department of a 
                        provider'' means a department of a 
                        provider (as defined in section 
                        413.65(a)(2) of title 42 of the Code of 
                        Federal Regulations, as in effect as of 
                        the date of the enactment of this 
                        paragraph) that is not located--
                                  (I) on the campus (as defined 
                                in such section 413.65(a)(2)) 
                                of such provider; or
                                  (II) within the distance 
                                (described in such definition 
                                of campus) from a remote 
                                location of a hospital facility 
                                (as defined in such section 
                                413.65(a)(2)).
                          (ii) Exception.--For purposes of 
                        paragraph (1)(B)(v) and this paragraph, 
                        the term ``off-campus outpatient 
                        department of a provider'' shall not 
                        include a department of a provider (as 
                        so defined) that was billing under this 
                        subsection with respect to covered OPD 
                        services furnished prior to the date of 
                        the enactment of this paragraph.
                          (iii) Deemed treatment for 2017.--For 
                        purposes of applying clause (ii) with 
                        respect to applicable items and 
                        services furnished during 2017, a 
                        department of a provider (as so 
                        defined) not described in such clause 
                        is deemed to be billing under this 
                        subsection with respect to covered OPD 
                        services furnished prior to November 2, 
                        2015, if the Secretary received from 
                        the provider prior to December 2, 2015, 
                        an attestation (pursuant to section 
                        413.65(b)(3) of title 42 of the Code of 
                        Federal Regulations) that such 
                        department was a department of a 
                        provider (as so defined).
                          (iv) Alternative exception beginning 
                        with 2018.--For purposes of paragraph 
                        (1)(B)(v) and this paragraph with 
                        respect to applicable items and 
                        services furnished during 2018 or a 
                        subsequent year, the term ``off-campus 
                        outpatient department of a provider'' 
                        also shall not include a department of 
                        a provider (as so defined) that is not 
                        described in clause (ii) if--
                                  (I) the Secretary receives 
                                from the provider an 
                                attestation (pursuant to such 
                                section 413.65(b)(3)) not later 
                                than December 31, 2016 (or, if 
                                later, 60 days after the date 
                                of the enactment of this 
                                clause), that such department 
                                met the requirements of a 
                                department of a provider 
                                specified in section 413.65 of 
                                title 42 of the Code of Federal 
                                Regulations;
                                  (II) the provider includes 
                                such department as part of the 
                                provider on its enrollment form 
                                in accordance with the 
                                enrollment process under 
                                section 1866(j); and
                                  (III) the department met the 
                                mid-build requirement of clause 
                                (v) and the Secretary receives, 
                                not later than 60 days after 
                                the date of the enactment of 
                                this clause, from the chief 
                                executive officer or chief 
                                operating officer of the 
                                provider a written 
                                certification that the 
                                department met such 
                                requirement.
                          (v) Mid-build requirement 
                        described.--The mid-build requirement 
                        of this clause is, with respect to a 
                        department of a provider, that before 
                        November 2, 2015, the provider had a 
                        binding written agreement with an 
                        outside unrelated party for the actual 
                        construction of such department.
                          (vi) Exclusion for certain cancer 
                        hospitals.--For purposes of paragraph 
                        (1)(B)(v) and this paragraph with 
                        respect to applicable items and 
                        services furnished during 2017 or a 
                        subsequent year, the term ``off-campus 
                        outpatient department of a provider'' 
                        also shall not include a department of 
                        a provider (as so defined) that is not 
                        described in clause (ii) if the 
                        provider is a hospital described in 
                        section 1886(d)(1)(B)(v) and--
                                  (I) in the case of a 
                                department that met the 
                                requirements of section 413.65 
                                of title 42 of the Code of 
                                Federal Regulations after 
                                November 1, 2015, and before 
                                the date of the enactment of 
                                this clause, the Secretary 
                                receives from the provider an 
                                attestation that such 
                                department met such 
                                requirements not later than 60 
                                days after such date of 
                                enactment; or
                                  (II) in the case of a 
                                department that meets such 
                                requirements after such date of 
                                enactment, the Secretary 
                                receives from the provider an 
                                attestation that such 
                                department meets such 
                                requirements not later than 60 
                                days after the date such 
                                requirements are first met with 
                                respect to such department.
                          (vii) Audit.--Not later than December 
                        31, 2018, the Secretary shall audit the 
                        compliance with requirements of clause 
                        (iv) with respect to each department of 
                        a provider to which such clause 
                        applies. Not later than 2 years after 
                        the date the Secretary receives an 
                        attestation under clause (vi) relating 
                        to compliance of a department of a 
                        provider with requirements referred to 
                        in such clause, the Secretary shall 
                        audit the compliance with such 
                        requirements with respect to the 
                        department. If the Secretary finds as a 
                        result of an audit under this clause 
                        that the applicable requirements were 
                        not met with respect to such 
                        department, the department shall not be 
                        excluded from the term ``off-campus 
                        outpatient department of a provider'' 
                        under such clause.
                          (viii) Implementation.--For purposes 
                        of implementing clauses (iii) through 
                        (vii):
                                  (I) Notwithstanding any other 
                                provision of law, the Secretary 
                                may implement such clauses by 
                                program instruction or 
                                otherwise.
                                  (II) Subchapter I of chapter 
                                35 of title 44, United States 
                                Code, shall not apply.
                                  (III) For purposes of 
                                carrying out this subparagraph 
                                with respect to clauses (iii) 
                                and (iv) (and clause (vii) 
                                insofar as it relates to clause 
                                (iv)), $10,000,000 shall be 
                                available from the Federal 
                                Supplementary Medical Insurance 
                                Trust Fund under section 1841, 
                                to remain available until 
                                December 31, 2018. For purposes 
                                of carrying out this 
                                subparagraph with respect to 
                                clause (vi) (and clause (vii) 
                                insofar as it relates to such 
                                clause), $2,000,000 shall be 
                                available from the Federal 
                                Supplementary Medical Insurance 
                                Trust Fund under section 1841, 
                                to remain available until 
                                expended.
                  (C) Availability of payment under other 
                payment systems.--Payments for applicable items 
                and services furnished by an off-campus 
                outpatient department of a provider that are 
                described in paragraph (1)(B)(v) shall be made 
                under the applicable payment system under this 
                part (other than under this subsection) if the 
                requirements for such payment are otherwise 
                met.
                  (D) Information needed for implementation.--
                Each hospital shall provide to the Secretary 
                such information as the Secretary determines 
                appropriate to implement this paragraph and 
                paragraph (1)(B)(v) (which may include 
                reporting of information on a hospital claim 
                using a code or modifier and reporting 
                information about off-campus outpatient 
                departments of a provider on the enrollment 
                form described in section 1866(j)).
                  (E) Limitations.--There shall be no 
                administrative or judicial review under section 
                1869, section 1878, or otherwise of the 
                following:
                          (i) The determination of the 
                        applicable items and services under 
                        subparagraph (A) and applicable payment 
                        systems under subparagraph (C).
                          (ii) The determination of whether a 
                        department of a provider meets the term 
                        described in subparagraph (B).
                          (iii) Any information that hospitals 
                        are required to report pursuant to 
                        subparagraph (D).
                          (iv) The determination of an audit 
                        under subparagraph (B)(vii).
          (22) Review and revisions of payments for non-opioid 
        alternative treatments.--
                  (A) In general.--With respect to payments 
                made under this subsection for covered OPD 
                services (or groups of services), including 
                covered OPD services assigned to a 
                comprehensive ambulatory payment 
                classification, the Secretary--
                          (i) shall, as soon as practicable, 
                        conduct a review (part of which may 
                        include a request for information) of 
                        payments for opioids and evidence-based 
                        non-opioid alternatives for pain 
                        management (including drugs and 
                        devices, nerve blocks, surgical 
                        injections, and neuromodulation) with a 
                        goal of ensuring that there are not 
                        financial incentives to use opioids 
                        instead of non-opioid alternatives;
                          (ii) may, as the Secretary determines 
                        appropriate, conduct subsequent reviews 
                        of such payments; and
                          (iii) shall consider the extent to 
                        which revisions under this subsection 
                        to such payments (such as the creation 
                        of additional groups of covered OPD 
                        services to classify separately those 
                        procedures that utilize opioids and 
                        non-opioid alternatives for pain 
                        management) would reduce payment 
                        incentives to use opioids instead of 
                        non-opioid alternatives for pain 
                        management.
                  (B) Priority.--In conducting the review under 
                clause (i) of subparagraph (A) and considering 
                revisions under clause (iii) of such 
                subparagraph, the Secretary shall focus on 
                covered OPD services (or groups of services) 
                assigned to a comprehensive ambulatory payment 
                classification, ambulatory payment 
                classifications that primarily include surgical 
                services, and other services determined by the 
                Secretary which generally involve treatment for 
                pain management.
                  (C) Revisions.--If the Secretary identifies 
                revisions to payments pursuant to subparagraph 
                (A)(iii), the Secretary shall, as determined 
                appropriate, begin making such revisions for 
                services furnished on or after January 1, 2020. 
                Revisions under the previous sentence shall be 
                treated as adjustments for purposes of 
                application of paragraph (9)(B).
                  (D) Rules of construction.--Nothing in this 
                paragraph shall be construed to preclude the 
                Secretary--
                          (i) from conducting a demonstration 
                        before making the revisions described 
                        in subparagraph (C); or
                          (ii) prior to implementation of this 
                        paragraph, from changing payments under 
                        this subsection for covered OPD 
                        services (or groups of services) which 
                        include opioids or non-opioid 
                        alternatives for pain management.
  (u) Incentive Payments for Physician Scarcity Areas.--
          (1) In general.--In the case of physicians' services 
        furnished on or after January 1, 2005, and before July 
        1, 2008--
                  (A) by a primary care physician in a primary 
                care scarcity county (identified under 
                paragraph (4)); or
                  (B) by a physician who is not a primary care 
                physician in a specialist care scarcity county 
                (as so identified),
        in addition to the amount of payment that would 
        otherwise be made for such services under this part, 
        there also shall be paid an amount equal to 5 percent 
        of the payment amount for the service under this part.
          (2) Determination of ratios of physicians to medicare 
        beneficiaries in area.--Based upon available data, the 
        Secretary shall establish for each county or equivalent 
        area in the United States, the following:
                  (A) Number of physicians practicing in the 
                area.--The number of physicians who furnish 
                physicians' services in the active practice of 
                medicine or osteopathy in that county or area, 
                other than physicians whose practice is 
                exclusively for the Federal Government, 
                physicians who are retired, or physicians who 
                only provide administrative services. Of such 
                number, the number of such physicians who are--
                          (i) primary care physicians; or
                          (ii) physicians who are not primary 
                        care physicians.
                  (B) Number of medicare beneficiaries residing 
                in the area.--The number of individuals who are 
                residing in the county and are entitled to 
                benefits under part A or enrolled under this 
                part, or both (in this subsection referred to 
                as ``individuals'').
                  (C) Determination of ratios.--
                          (i) Primary care ratio.--The ratio 
                        (in this paragraph referred to as the 
                        ``primary care ratio'') of the number 
                        of primary care physicians (determined 
                        under subparagraph (A)(i)), to the 
                        number of individuals determined under 
                        subparagraph (B).
                          (ii) Specialist care ratio.--The 
                        ratio (in this paragraph referred to as 
                        the ``specialist care ratio'') of the 
                        number of other physicians (determined 
                        under subparagraph (A)(ii)), to the 
                        number of individuals determined under 
                        subparagraph (B).
          (3) Ranking of counties.--The Secretary shall rank 
        each such county or area based separately on its 
        primary care ratio and its specialist care ratio.
          (4) Identification of counties.--
                  (A) In general.--The Secretary shall 
                identify--
                          (i) those counties and areas (in this 
                        paragraph referred to as ``primary care 
                        scarcity counties'') with the lowest 
                        primary care ratios that represent, if 
                        each such county or area were weighted 
                        by the number of individuals determined 
                        under paragraph (2)(B), an aggregate 
                        total of 20 percent of the total of the 
                        individuals determined under such 
                        paragraph; and
                          (ii) those counties and areas (in 
                        this subsection referred to as 
                        ``specialist care scarcity counties'') 
                        with the lowest specialist care ratios 
                        that represent, if each such county or 
                        area were weighted by the number of 
                        individuals determined under paragraph 
                        (2)(B), an aggregate total of 20 
                        percent of the total of the individuals 
                        determined under such paragraph.
                  (B) Periodic revisions.--The Secretary shall 
                periodically revise the counties or areas 
                identified in subparagraph (A) (but not less 
                often than once every three years) unless the 
                Secretary determines that there is no new data 
                available on the number of physicians 
                practicing in the county or area or the number 
                of individuals residing in the county or area, 
                as identified in paragraph (2).
                  (C) Identification of counties where service 
                is furnished.--For purposes of paying the 
                additional amount specified in paragraph (1), 
                if the Secretary uses the 5-digit postal ZIP 
                Code where the service is furnished, the 
                dominant county of the postal ZIP Code (as 
                determined by the United States Postal Service, 
                or otherwise) shall be used to determine 
                whether the postal ZIP Code is in a scarcity 
                county identified in subparagraph (A) or 
                revised in subparagraph (B).
                  (D) Special rule.--With respect to 
                physicians' services furnished on or after 
                January 1, 2008, and before July 1, 2008, for 
                purposes of this subsection, the Secretary 
                shall use the primary care scarcity counties 
                and the specialty care scarcity counties (as 
                identified under the preceding provisions of 
                this paragraph) that the Secretary was using 
                under this subsection with respect to 
                physicians' services furnished on December 31, 
                2007.
                  (E) Judicial review.--There shall be no 
                administrative or judicial review under section 
                1869, 1878, or otherwise, respecting--
                          116.(i) the identification of a 
                        county or area;
                          (ii) the assignment of a specialty of 
                        any physician under this paragraph;
                          (iii) the assignment of a physician 
                        to a county under paragraph (2); or
                          (iv) the assignment of a postal ZIP 
                        Code to a county or other area under 
                        this subsection.
          (5) Rural census tracts.--To the extent 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 an 
        equivalent area for purposes of qualifying as a primary 
        care scarcity county or specialist care scarcity county 
        under this subsection.
          (6) Physician Defined.--For purposes of this 
        paragraph, the term ``physician'' means a physician 
        described in section 1861(r)(1) and the term ``primary 
        care physician'' means a physician who is identified in 
        the available data as a general practitioner, family 
        practice practitioner, general internist, or 
        obstetrician or gynecologist.
          (7) Publication of list of counties; posting on 
        website.--With respect to a year for which a county or 
        area is identified or revised under paragraph (4), the 
        Secretary shall identify such counties or areas as part 
        of the proposed and final rule to implement the 
        physician fee schedule under section 1848 for the 
        applicable year. The Secretary shall post the list of 
        counties identified or revised under paragraph (4) on 
        the Internet website of the Centers for Medicare & 
        Medicaid Services.
  (v) Increase of FQHC Payment Limits.--In the case of services 
furnished by Federally qualified health centers (as defined in 
section 1861(aa)(4)), the Secretary shall establish payment 
limits with respect to such services under this part for 
services furnished--
          (1) in 2010, at the limits otherwise established 
        under this part for such year increased by $5; and
          (2) in a subsequent year, at the limits established 
        under this subsection for the previous year increased 
        by the percentage increase in the MEI (as defined in 
        section 1842(i)(3)) for such subsequent year.
  (w) Methods of Payment.--The Secretary may develop 
alternative methods of payment for items and services provided 
under clinical trials and comparative effectiveness studies 
sponsored or supported by an agency of the Department of Health 
and Human Services, as determined by the Secretary, to those 
that would otherwise apply under this section, to the extent 
such alternative methods are necessary to preserve the 
scientific validity of such trials or studies, such as in the 
case where masking the identity of interventions from patients 
and investigators is necessary to comply with the particular 
trial or study design.
  (x) Incentive Payments for Primary Care Services.--
          (1) In general.--In the case of primary care services 
        furnished on or after January 1, 2011, and before 
        January 1, 2016, by a primary care practitioner, in 
        addition to the amount of payment that would otherwise 
        be made for such services under this part, there also 
        shall be paid (on a monthly or quarterly basis) an 
        amount equal to 10 percent of the payment amount for 
        the service under this part.
          (2) Definitions.--In this subsection:
                  (A) Primary care practitioner.--The term 
                ``primary care practitioner'' means an 
                individual--
                          (i) who--
                                  (I) is a physician (as 
                                described in section 
                                1861(r)(1)) who has a primary 
                                specialty designation of family 
                                medicine, internal medicine, 
                                geriatric medicine, or 
                                pediatric medicine; or
                                  (II) is a nurse practitioner, 
                                clinical nurse specialist, or 
                                physician assistant (as those 
                                terms are defined in section 
                                1861(aa)(5)); and
                          (ii) for whom primary care services 
                        accounted for at least 60 percent of 
                        the allowed charges under this part for 
                        such physician or practitioner in a 
                        prior period as determined appropriate 
                        by the Secretary.
                  (B) Primary care services.--The term 
                ``primary care services'' means services 
                identified, as of January 1, 2009, by the 
                following HCPCS codes (and as subsequently 
                modified by the Secretary):
                          (i) 99201 through 99215.
                          (ii) 99304 through 99340.
                          (iii) 99341 through 99350.
          (3) Coordination with other payments.--The amount of 
        the additional payment for a service under this 
        subsection and subsection (m) shall be determined 
        without regard to any additional payment for the 
        service under subsection (m) and this subsection, 
        respectively. The amount of the additional payment for 
        a service under this subsection and subsection (z) 
        shall be determined without regard to any additional 
        payment for the service under subsection (z) and this 
        subsection, respectively.
          (4) Limitation on review.--There shall be no 
        administrative or judicial review under section 1869, 
        1878, or otherwise, respecting the identification of 
        primary care practitioners under this subsection.
  (y) Incentive Payments for Major Surgical Procedures 
Furnished in Health Professional Shortage Areas.--
          (1) In general.--In the case of major surgical 
        procedures furnished on or after January 1, 2011, and 
        before January 1, 2016, by a general surgeon in an area 
        that is designated (under section 332(a)(1)(A) of the 
        Public Health Service Act) as a health professional 
        shortage area as identified by the Secretary prior to 
        the beginning of the year involved, in addition to the 
        amount of payment that would otherwise be made for such 
        services under this part, there also shall be paid (on 
        a monthly or quarterly basis) an amount equal to 10 
        percent of the payment amount for the service under 
        this part.
          (2) Definitions.--In this subsection:
                  (A) General surgeon.--In this subsection, the 
                term ``general surgeon'' means a physician (as 
                described in section 1861(r)(1)) who has 
                designated CMS specialty code 02-General 
                Surgery as their primary specialty code in the 
                physician's enrollment under section 1866(j).
                  (B) Major surgical procedures.--The term 
                ``major surgical procedures'' means physicians' 
                services which are surgical procedures for 
                which a 10-day or 90-day global period is used 
                for payment under the fee schedule under 
                section 1848(b).
          (3) Coordination with other payments.--The amount of 
        the additional payment for a service under this 
        subsection and subsection (m) shall be determined 
        without regard to any additional payment for the 
        service under subsection (m) and this subsection, 
        respectively. The amount of the additional payment for 
        a service under this subsection and subsection (z) 
        shall be determined without regard to any additional 
        payment for the service under subsection (z) and this 
        subsection, respectively.
          (4) Application.--The provisions of paragraph (2) and 
        (4) of subsection (m) shall apply to the determination 
        of additional payments under this subsection in the 
        same manner as such provisions apply to the 
        determination of additional payments under subsection 
        (m).
  (z) Incentive Payments for Participation in Eligible 
Alternative Payment Models.--
          (1) Payment incentive.--
                  (A) In general.--In the case of covered 
                professional services furnished by an eligible 
                professional during a year that is in the 
                period beginning with 2019 and ending with 2024 
                and for which the professional is a qualifying 
                APM participant with respect to such year, in 
                addition to the amount of payment that would 
                otherwise be made for such covered professional 
                services under this part for such year, there 
                also shall be paid to such professional an 
                amount equal to 5 percent of the estimated 
                aggregate payment amounts for such covered 
                professional services under this part for the 
                preceding year. For purposes of the previous 
                sentence, the payment amount for the preceding 
                year may be an estimation for the full 
                preceding year based on a period of such 
                preceding year that is less than the full year. 
                The Secretary shall establish policies to 
                implement this subparagraph in cases in which 
                payment for covered professional services 
                furnished by a qualifying APM participant in an 
                alternative payment model--
                          (i) is made to an eligible 
                        alternative payment entity rather than 
                        directly to the qualifying APM 
                        participant; or
                          (ii) is made on a basis other than a 
                        fee-for-service basis (such as payment 
                        on a capitated basis).
                  (B) Form of payment.--Payments under this 
                subsection shall be made in a lump sum, on an 
                annual basis, as soon as practicable.
                  (C) Treatment of payment incentive.--Payments 
                under this subsection shall not be taken into 
                account for purposes of determining actual 
                expenditures under an alternative payment model 
                and for purposes of determining or rebasing any 
                benchmarks used under the alternative payment 
                model.
                  (D) Coordination.--The amount of the 
                additional payment under this subsection or 
                subsection (m) shall be determined without 
                regard to any additional payment under 
                subsection (m) and this subsection, 
                respectively. The amount of the additional 
                payment under this subsection or subsection (x) 
                shall be determined without regard to any 
                additional payment under subsection (x) and 
                this subsection, respectively. The amount of 
                the additional payment under this subsection or 
                subsection (y) shall be determined without 
                regard to any additional payment under 
                subsection (y) and this subsection, 
                respectively.
          (2) Qualifying apm participant.--For purposes of this 
        subsection, the term ``qualifying APM participant'' 
        means the following:
                  (A) 2019 and 2020.--With respect to 2019 and 
                2020, an eligible professional for whom the 
                Secretary determines that at least 25 percent 
                of payments under this part for covered 
                professional services furnished by such 
                professional during the most recent period for 
                which data are available (which may be less 
                than a year) were attributable to such services 
                furnished under this part through an eligible 
                alternative payment entity.
                  (B) 2021 and 2022.--With respect to 2021 and 
                2022, an eligible professional described in 
                either of the following clauses:
                          (i) Medicare payment threshold 
                        option.--An eligible professional for 
                        whom the Secretary determines that at 
                        least 50 percent of payments under this 
                        part for covered professional services 
                        furnished by such professional during 
                        the most recent period for which data 
                        are available (which may be less than a 
                        year) were attributable to such 
                        services furnished under this part 
                        through an eligible alternative payment 
                        entity.
                          (ii) Combination all-payer and 
                        medicare payment threshold option.--An 
                        eligible professional--
                                  (I) for whom the Secretary 
                                determines, with respect to 
                                items and services furnished by 
                                such professional during the 
                                most recent period for which 
                                data are available (which may 
                                be less than a year), that at 
                                least 50 percent of the sum 
                                of--
                                          (aa) payments 
                                        described in clause 
                                        (i); and
                                          (bb) all other 
                                        payments, regardless of 
                                        payer (other than 
                                        payments made by the 
                                        Secretary of Defense or 
                                        the Secretary of 
                                        Veterans Affairs and 
                                        other than payments 
                                        made under title XIX in 
                                        a State in which no 
                                        medical home or 
                                        alternative payment 
                                        model is available 
                                        under the State program 
                                        under that title),
                                meet the requirement described 
                                in clause (iii)(I) with respect 
                                to payments described in item 
                                (aa) and meet the requirement 
                                described in clause (iii)(II) 
                                with respect to payments 
                                described in item (bb);
                                  (II) for whom the Secretary 
                                determines at least 25 percent 
                                of payments under this part for 
                                covered professional services 
                                furnished by such professional 
                                during the most recent period 
                                for which data are available 
                                (which may be less than a year) 
                                were attributable to such 
                                services furnished under this 
                                part through an eligible 
                                alternative payment entity; and
                                  (III) who provides to the 
                                Secretary such information as 
                                is necessary for the Secretary 
                                to make a determination under 
                                subclause (I), with respect to 
                                such professional.
                          (iii) Requirement.--For purposes of 
                        clause (ii)(I)--
                                  (I) the requirement described 
                                in this subclause, with respect 
                                to payments described in item 
                                (aa) of such clause, is that 
                                such payments are made to an 
                                eligible alternative payment 
                                entity; and
                                  (II) the requirement 
                                described in this subclause, 
                                with respect to payments 
                                described in item (bb) of such 
                                clause, is that such payments 
                                are made under arrangements in 
                                which--
                                          (aa) quality measures 
                                        comparable to measures 
                                        under the performance 
                                        category described in 
                                        section 
                                        1848(q)(2)(B)(i) apply;
                                          (bb) certified EHR 
                                        technology is used; and
                                          (cc) the eligible 
                                        professional 
                                        participates in an 
                                        entity that--
                                                  (AA) bears 
                                                more than 
                                                nominal 
                                                financial risk 
                                                if actual 
                                                aggregate 
                                                expenditures 
                                                exceeds 
                                                expected 
                                                aggregate 
                                                expenditures; 
                                                or
                                                  (BB) with 
                                                respect to 
                                                beneficiaries 
                                                under title 
                                                XIX, is a 
                                                medical home 
                                                that meets 
                                                criteria 
                                                comparable to 
                                                medical homes 
                                                expanded under 
                                                section 
                                                1115A(c).
                  (C) Beginning in 2023.--With respect to 2023 
                and each subsequent year, an eligible 
                professional described in either of the 
                following clauses:
                          (i) Medicare payment threshold 
                        option.--An eligible professional for 
                        whom the Secretary determines that at 
                        least 75 percent of payments under this 
                        part for covered professional services 
                        furnished by such professional during 
                        the most recent period for which data 
                        are available (which may be less than a 
                        year) were attributable to such 
                        services furnished under this part 
                        through an eligible alternative payment 
                        entity.
                          (ii) Combination all-payer and 
                        medicare payment threshold option.--An 
                        eligible professional--
                                  (I) for whom the Secretary 
                                determines, with respect to 
                                items and services furnished by 
                                such professional during the 
                                most recent period for which 
                                data are available (which may 
                                be less than a year), that at 
                                least 75 percent of the sum 
                                of--
                                          (aa) payments 
                                        described in clause 
                                        (i); and
                                          (bb) all other 
                                        payments, regardless of 
                                        payer (other than 
                                        payments made by the 
                                        Secretary of Defense or 
                                        the Secretary of 
                                        Veterans Affairs and 
                                        other than payments 
                                        made under title XIX in 
                                        a State in which no 
                                        medical home or 
                                        alternative payment 
                                        model is available 
                                        under the State program 
                                        under that title),
                                meet the requirement described 
                                in clause (iii)(I) with respect 
                                to payments described in item 
                                (aa) and meet the requirement 
                                described in clause (iii)(II) 
                                with respect to payments 
                                described in item (bb);
                                  (II) for whom the Secretary 
                                determines at least 25 percent 
                                of payments under this part for 
                                covered professional services 
                                furnished by such professional 
                                during the most recent period 
                                for which data are available 
                                (which may be less than a year) 
                                were attributable to such 
                                services furnished under this 
                                part through an eligible 
                                alternative payment entity; and
                                  (III) who provides to the 
                                Secretary such information as 
                                is necessary for the Secretary 
                                to make a determination under 
                                subclause (I), with respect to 
                                such professional.
                          (iii) Requirement.--For purposes of 
                        clause (ii)(I)--
                                  (I) the requirement described 
                                in this subclause, with respect 
                                to payments described in item 
                                (aa) of such clause, is that 
                                such payments are made to an 
                                eligible alternative payment 
                                entity; and
                                  (II) the requirement 
                                described in this subclause, 
                                with respect to payments 
                                described in item (bb) of such 
                                clause, is that such payments 
                                are made under arrangements in 
                                which--
                                          (aa) quality measures 
                                        comparable to measures 
                                        under the performance 
                                        category described in 
                                        section 
                                        1848(q)(2)(B)(i) apply;
                                          (bb) certified EHR 
                                        technology is used; and
                                          (cc) the eligible 
                                        professional 
                                        participates in an 
                                        entity that--
                                                  (AA) bears 
                                                more than 
                                                nominal 
                                                financial risk 
                                                if actual 
                                                aggregate 
                                                expenditures 
                                                exceeds 
                                                expected 
                                                aggregate 
                                                expenditures; 
                                                or
                                                  (BB) with 
                                                respect to 
                                                beneficiaries 
                                                under title 
                                                XIX, is a 
                                                medical home 
                                                that meets 
                                                criteria 
                                                comparable to 
                                                medical homes 
                                                expanded under 
                                                section 
                                                1115A(c).
                  (D) Use of patient approach.--The Secretary 
                may base the determination of whether an 
                eligible professional is a qualifying APM 
                participant under this subsection and the 
                determination of whether an eligible 
                professional is a partial qualifying APM 
                participant under section 1848(q)(1)(C)(iii) by 
                using counts of patients in lieu of using 
                payments and using the same or similar 
                percentage criteria (as specified in this 
                subsection and such section, respectively), as 
                the Secretary determines appropriate.
          (3) Additional definitions.--In this subsection:
                  (A) Covered professional services.--The term 
                ``covered professional services'' has the 
                meaning given that term in section 
                1848(k)(3)(A).
                  (B) Eligible professional.--The term 
                ``eligible professional'' has the meaning given 
                that term in section 1848(k)(3)(B) and includes 
                a group that includes such professionals.
                  (C) Alternative payment model (apm).--The 
                term ``alternative payment model'' means, other 
                than for purposes of subparagraphs 
                (B)(ii)(I)(bb) and (C)(ii)(I)(bb) of paragraph 
                (2), any of the following:
                          (i) A model under section 1115A 
                        (other than a health care innovation 
                        award).
                          (ii) The shared savings program under 
                        section 1899.
                          (iii) A demonstration under section 
                        1866C.
                          (iv) A demonstration required by 
                        Federal law.
                  (D) Eligible alternative payment entity.--The 
                term ``eligible alternative payment entity'' 
                means, with respect to a year, an entity that--
                          (i) participates in an alternative 
                        payment model that--
                                  (I) requires participants in 
                                such model to use certified EHR 
                                technology (as defined in 
                                subsection (o)(4)); and
                                  (II) provides for payment for 
                                covered professional services 
                                based on quality measures 
                                comparable to measures under 
                                the performance category 
                                described in section 
                                1848(q)(2)(B)(i); and
                          (ii)(I) bears financial risk for 
                        monetary losses under such alternative 
                        payment model that are in excess of a 
                        nominal amount; or
                          (II) is a medical home expanded under 
                        section 1115A(c).
          (4) Limitation.--There shall be no administrative or 
        judicial review under section 1869, 1878, or otherwise, 
        of the following:
                  (A) The determination that an eligible 
                professional is a qualifying APM participant 
                under paragraph (2) and the determination that 
                an entity is an eligible alternative payment 
                entity under paragraph (3)(D).
                  (B) The determination of the amount of the 5 
                percent payment incentive under paragraph 
                (1)(A), including any estimation as part of 
                such determination.
  (aa) Medical Review of Spinal Subluxation Services.--
          (1) In general.--The Secretary shall implement a 
        process for the medical review (as described in 
        paragraph (2)) of treatment by a chiropractor described 
        in section 1861(r)(5) by means of manual manipulation 
        of the spine to correct a subluxation (as described in 
        such section) of an individual who is enrolled under 
        this part and apply such process to such services 
        furnished on or after January 1, 2017, focusing on 
        services such as--
                  (A) services furnished by a such a 
                chiropractor whose pattern of billing is 
                aberrant compared to peers; and
                  (B) services furnished by such a chiropractor 
                who, in a prior period, has a services denial 
                percentage in the 85th percentile or greater, 
                taking into consideration the extent that 
                service denials are overturned on appeal.
          (2) Medical review.--
                  (A) Prior authorization medical review.--
                          (i) In general.--Subject to clause 
                        (ii), the Secretary shall use prior 
                        authorization medical review for 
                        services described in paragraph (1) 
                        that are furnished to an individual by 
                        a chiropractor described in section 
                        1861(r)(5) that are part of an episode 
                        of treatment that includes more than 12 
                        services. For purposes of the preceding 
                        sentence, an episode of treatment shall 
                        be determined by the underlying cause 
                        that justifies the need for services, 
                        such as a diagnosis code.
                          (ii) Ending application of prior 
                        authorization medical review.--The 
                        Secretary shall end the application of 
                        prior authorization medical review 
                        under clause (i) to services described 
                        in paragraph (1) by such a chiropractor 
                        if the Secretary determines that the 
                        chiropractor has a low denial rate 
                        under such prior authorization medical 
                        review. The Secretary may subsequently 
                        reapply prior authorization medical 
                        review to such chiropractor if the 
                        Secretary determines it to be 
                        appropriate and the chiropractor has, 
                        in the time period subsequent to the 
                        determination by the Secretary of a low 
                        denial rate with respect to the 
                        chiropractor, furnished such services 
                        described in paragraph (1).
                          (iii) Early request for prior 
                        authorization review permitted.--
                        Nothing in this subsection shall be 
                        construed to prevent such a 
                        chiropractor from requesting prior 
                        authorization for services described in 
                        paragraph (1) that are to be furnished 
                        to an individual before the 
                        chiropractor furnishes the twelfth such 
                        service to such individual for an 
                        episode of treatment.
                  (B) Type of review.--The Secretary may use 
                pre-payment review or post-payment review of 
                services described in section 1861(r)(5) that 
                are not subject to prior authorization medical 
                review under subparagraph (A).
                  (C) Relationship to law enforcement 
                activities.--The Secretary may determine that 
                medical review under this subsection does not 
                apply in the case where potential fraud may be 
                involved.
          (3) No payment without prior authorization.--With 
        respect to a service described in paragraph (1) for 
        which prior authorization medical review under this 
        subsection applies, the following shall apply:
                  (A) Prior authorization determination.--The 
                Secretary shall make a determination, prior to 
                the service being furnished, of whether the 
                service would or would not meet the applicable 
                requirements of section 1862(a)(1)(A).
                  (B) Denial of payment.--Subject to paragraph 
                (5), no payment may be made under this part for 
                the service unless the Secretary determines 
                pursuant to subparagraph (A) that the service 
                would meet the applicable requirements of such 
                section 1862(a)(1)(A).
          (4) Submission of information.--A chiropractor 
        described in section 1861(r)(5) may submit the 
        information necessary for medical review by fax, by 
        mail, or by electronic means. The Secretary shall make 
        available the electronic means described in the 
        preceding sentence as soon as practicable.
          (5) Timeliness.--If the Secretary does not make a 
        prior authorization determination under paragraph 
        (3)(A) within 14 business days of the date of the 
        receipt of medical documentation needed to make such 
        determination, paragraph (3)(B) shall not apply.
          (6) Application of limitation on beneficiary 
        liability.--Where payment may not be made as a result 
        of the application of paragraph (2)(B), section 1879 
        shall apply in the same manner as such section applies 
        to a denial that is made by reason of section 
        1862(a)(1).
          (7) Review by contractors.--The medical review 
        described in paragraph (2) may be conducted by medicare 
        administrative contractors pursuant to section 
        1874A(a)(4)(G) or by any other contractor determined 
        appropriate by the Secretary that is not a recovery 
        audit contractor.
          (8) Multiple services.--The Secretary shall, where 
        practicable, apply the medical review under this 
        subsection in a manner so as to allow an individual 
        described in paragraph (1) to obtain, at a single time 
        rather than on a service-by-service basis, an 
        authorization in accordance with paragraph (3)(A) for 
        multiple services.
          (9) Construction.--With respect to a service 
        described in paragraph (1) that has been affirmed by 
        medical review under this subsection, nothing in this 
        subsection shall be construed to preclude the 
        subsequent denial of a claim for such service that does 
        not meet other applicable requirements under this Act.
          (10) Implementation.--
                  (A) Authority.--The Secretary may implement 
                the provisions of this subsection by interim 
                final rule with comment period.
                  (B) Administration.--Chapter 35 of title 44, 
                United States Code, shall not apply to medical 
                review under this subsection.
  (bb) Additional Payments for Certain Rural Health Clinics 
With Physicians or Practitioners Receiving DATA 2000 Waivers.--
          (1) In general.--In the case of a rural health clinic 
        with respect to which, beginning on or after January 1, 
        2019, rural health clinic services (as defined in 
        section 1861(aa)(1)) are furnished for the treatment of 
        opioid use disorder by a physician or practitioner who 
        meets the requirements described in paragraph (3), the 
        Secretary shall, subject to availability of funds under 
        paragraph (4), make a payment (at such time and in such 
        manner as specified by the Secretary) to such rural 
        health clinic after receiving and approving an 
        application described in paragraph (2). Such payment 
        shall be in an amount determined by the Secretary, 
        based on an estimate of the average costs of training 
        for purposes of receiving a waiver described in 
        paragraph (3)(B). Such payment may be made only one 
        time with respect to each such physician or 
        practitioner.
          (2) Application.--In order to receive a payment 
        described in paragraph (1), a rural health clinic shall 
        submit to the Secretary an application for such a 
        payment at such time, in such manner, and containing 
        such information as specified by the Secretary. A rural 
        health clinic may apply for such a payment for each 
        physician or practitioner described in paragraph (1) 
        furnishing services described in such paragraph at such 
        clinic.
          (3) Requirements.--For purposes of paragraph (1), the 
        requirements described in this paragraph, with respect 
        to a physician or practitioner, are the following:
                  (A) The physician or practitioner is employed 
                by or working under contract with a rural 
                health clinic described in paragraph (1) that 
                submits an application under paragraph (2).
                  (B) The physician or practitioner first 
                receives a waiver under section 303(g) of the 
                Controlled Substances Act on or after January 
                1, 2019.
          (4) Funding.--For purposes of making payments under 
        this subsection, there are appropriated, out of amounts 
        in the Treasury not otherwise appropriated, $2,000,000, 
        which shall remain available until expended.

        SPECIAL PAYMENT RULES FOR PARTICULAR ITEMS AND SERVICES

  Sec. 1834. (a) Payment for Durable Medical Equipment.--
          (1) General rule for payment.--
                  (A) In general.--With respect to a covered 
                item (as defined in paragraph (13)) for which 
                payment is determined under this subsection, 
                payment shall be made in the frequency 
                specified in paragraphs (2) through (7) and in 
                an amount equal to 80 percent of the payment 
                basis described in subparagraph (B).
                  (B) Payment basis.--Subject to subparagraph 
                (F)(i), the payment basis described in this 
                subparagraph is the lesser of--
                          (i) the actual charge for the item, 
                        or
                          (ii) the payment amount recognized 
                        under paragraphs (2) through (7) of 
                        this subsection for the item;
                except that clause (i) shall not apply if the 
                covered item is furnished by a public home 
                health agency (or by another home health agency 
                which demonstrates to the satisfaction of the 
                Secretary that a significant portion of its 
                patients are low income) free of charge or at 
                nominal charges to the public.
                  (C) Exclusive payment rule.--Subject to 
                subparagraph (F)(ii), this subsection shall 
                constitute the exclusive provision of this 
                title for payment for covered items under this 
                part or under part A to a home health agency.
                  (D) Reduction in fee schedules for certain 
                items.--With respect to a seat-lift chair or 
                transcutaneous electrical nerve stimulator 
                furnished on or after April 1, 1990, the 
                Secretary shall reduce the payment amount 
                applied under subparagraph (B)(ii) for such an 
                item by 15 percent, and, in the case of a 
                transcutaneous electrical nerve stimulator 
                furnished on or after January 1, 1991, the 
                Secretary shall further reduce such payment 
                amount (as previously reduced) by 45 percent.
                  (E) Clinical conditions for coverage.--
                          (i) In general.--The Secretary shall 
                        establish standards for clinical 
                        conditions for payment for covered 
                        items under this subsection.
                          (ii) Requirements.--The standards 
                        established under clause (i) shall 
                        include the specification of types or 
                        classes of covered items that require, 
                        as a condition of payment under this 
                        subsection, a face-to-face examination 
                        of the individual by a physician (as 
                        defined in section 1861(r)), a 
                        physician assistant, nurse 
                        practitioner, or a clinical nurse 
                        specialist (as those terms are defined 
                        in section 1861(aa)(5)) and a 
                        prescription for the item.
                          (iii) Priority of establishment of 
                        standards.--In establishing the 
                        standards under this subparagraph, the 
                        Secretary shall first establish 
                        standards for those covered items for 
                        which the Secretary determines there 
                        has been a proliferation of use, 
                        consistent findings of charges for 
                        covered items that are not delivered, 
                        or consistent findings of falsification 
                        of documentation to provide for payment 
                        of such covered items under this part.
                          (iv) Standards for power 
                        wheelchairs.--Effective on the date of 
                        the enactment of this subparagraph, in 
                        the case of a covered item consisting 
                        of a motorized or power wheelchair for 
                        an individual, payment may not be made 
                        for such covered item unless a 
                        physician (as defined in section 
                        1861(r)(1)), a physician assistant, 
                        nurse practitioner, or a clinical nurse 
                        specialist (as those terms are defined 
                        in section 1861(aa)(5)) has conducted a 
                        face-to-face examination of the 
                        individual and written a prescription 
                        for the item.
                          (v) Limitation on payment for covered 
                        items.--Payment may not be made for a 
                        covered item under this subsection 
                        unless the item meets any standards 
                        established under this subparagraph for 
                        clinical condition of coverage.
                  (F) Application of competitive acquisition; 
                limitation of inherent reasonableness 
                authority.--In the case of covered items 
                furnished on or after January 1, 2011, subject 
                to subparagraphs (G) and (H), that are included 
                in a competitive acquisition program in a 
                competitive acquisition area under section 
                1847(a)--
                          (i) the payment basis under this 
                        subsection for such items and services 
                        furnished in such area shall be the 
                        payment basis determined under such 
                        competitive acquisition program;
                          (ii) the Secretary may (and, in the 
                        case of covered items furnished on or 
                        after January 1, 2016, subject to 
                        clause (iii), shall) use information on 
                        the payment determined under such 
                        competitive acquisition programs to 
                        adjust the payment amount otherwise 
                        recognized under subparagraph (B)(ii) 
                        for an area that is not a competitive 
                        acquisition area under section 1847 and 
                        in the case of such adjustment, 
                        paragraph (10)(B) shall not be applied; 
                        and
                          (iii) in the case of covered items 
                        furnished on or after January 1, 2016, 
                        the Secretary shall continue to make 
                        such adjustments described in clause 
                        (ii) as, under such competitive 
                        acquisition programs, additional 
                        covered items are phased in or 
                        information is updated as contracts 
                        under section 1847 are recompeted in 
                        accordance with section 1847(b)(3)(B).
                  (G) Use of information on competitive bid 
                rates.--The Secretary shall specify by 
                regulation the methodology to be used in 
                applying the provisions of subparagraph (F)(ii) 
                and subsection (h)(1)(H)(ii). In promulgating 
                such regulation, the Secretary shall consider 
                the costs of items and services in areas in 
                which such provisions would be applied compared 
                to the payment rates for such items and 
                services in competitive acquisition areas.In 
                the case of items and services furnished on or 
                after January 1, 2019, in making any 
                adjustments under clause (ii) or (iii) of 
                subparagraph (F), under subsection 
                (h)(1)(H)(ii), or under section 1842(s)(3)(B), 
                the Secretary shall--
                          (i) solicit and take into account 
                        stakeholder input; and
                          (ii) take into account the highest 
                        amount bid by a winning supplier in a 
                        competitive acquisition area and a 
                        comparison of each of the following 
                        with respect to non-competitive 
                        acquisition areas and competitive 
                        acquisition areas:
                                  (I) The average travel 
                                distance and cost associated 
                                with furnishing items and 
                                services in the area.
                                  (II) The average volume of 
                                items and services furnished by 
                                suppliers in the area.
                                  (III) The number of suppliers 
                                in the area.
                  (H) Diabetic supplies.--
                          (i) In general.--On or after the date 
                        described in clause (ii), the payment 
                        amount under this part for diabetic 
                        supplies, including testing strips, 
                        that are non-mail order items (as 
                        defined by the Secretary) shall be 
                        equal to the single payment amounts 
                        established under the national mail 
                        order competition for diabetic supplies 
                        under section 1847.
                          (ii) Date described.--The date 
                        described in this clause is the date of 
                        the implementation of the single 
                        payment amounts under the national mail 
                        order competition for diabetic supplies 
                        under section 1847.
                  (I) Treatment of vacuum erection systems.--
                Effective for items and services furnished on 
                and after July 1, 2015, vacuum erection systems 
                described as prosthetic devices described in 
                section 1861(s)(8) shall be treated in the same 
                manner as erectile dysfunction drugs are 
                treated for purposes of section 1860D-
                2(e)(2)(A).
          (2) Payment for inexpensive and other routinely 
        purchased durable medical equipment.--
                  (A) In general.--Payment for an item of 
                durable medical equipment (as defined in 
                paragraph (13))--
                          (i) the purchase price of which does 
                        not exceed $150,
                          (ii) which the Secretary determines 
                        is acquired at least 75 percent of the 
                        time by purchase,
                          (iii) which is an accessory used in 
                        conjunction with a nebulizer, 
                        aspirator, or a ventilator excluded 
                        under paragraph (3)(A), or
                          (iv) in the case of devices furnished 
                        on or after October 1, 2015, which 
                        serves as a speech generating device or 
                        which is an accessory that is needed 
                        for the individual to effectively 
                        utilize such a device,
                shall be made on a rental basis or in a lump-
                sum amount for the purchase of the item. The 
                payment amount recognized for purchase or 
                rental of such equipment is the amount 
                specified in subparagraph (B) for purchase or 
                rental, except that the total amount of 
                payments with respect to an item may not exceed 
                the payment amount specified in subparagraph 
                (B) with respect to the purchase of the item.
                  (B) Payment amount.--For purposes of 
                subparagraph (A), the amount specified in this 
                subparagraph, with respect to the purchase or 
                rental of an item furnished in a carrier 
                service area--
                          (i) in 1989 and in 1990 is the 
                        average reasonable charge in the area 
                        for the purchase or rental, 
                        respectively, of the item for the 12-
                        month period ending on June 30, 1987, 
                        increased by the percentage increase in 
                        the consumer price index for all urban 
                        consumers (U.S. city average) for the 
                        6-month period ending with December 
                        1987;
                          (ii) in 1991 is the sum of (I) 67 
                        percent of the local payment amount for 
                        the item or device computed under 
                        subparagraph (C)(i)(I) for 1991, and 
                        (II) 33 percent of the national limited 
                        payment amount for the item or device 
                        computed under subparagraph (C)(ii) for 
                        1991;
                          (iii) in 1992 is the sum of (I) 33 
                        percent of the local payment amount for 
                        the item or device computed under 
                        subparagraph (C)(i)(II) for 1992, and 
                        (II) 67 percent of the national limited 
                        payment amount for the item or device 
                        computed under subparagraph (C)(ii) for 
                        1992; and
                          (iv) in 1993 and each subsequent year 
                        is the national limited payment amount 
                        for the item or device computed under 
                        subparagraph (C)(ii) for that year 
                        (reduced by 10 percent, in the case of 
                        a blood glucose testing strip furnished 
                        after 1997 for an individual with 
                        diabetes).
                  (C) Computation of local payment amount and 
                national limited payment amount.--For purposes 
                of subparagraph (B)--
                          (i) the local payment amount for an 
                        item or device for a year is equal to--
                                  (I) for 1991, the amount 
                                specified in subparagraph 
                                (B)(i) for 1990 increased by 
                                the covered item update for 
                                1991, and
                                  (II) for 1992, 1993, and 1994 
                                the amount determined under 
                                this clause for the preceding 
                                year increased by the covered 
                                item update for the year; and
                          (ii) the national limited payment 
                        amount for an item or device for a year 
                        is equal to--
                                  (I) for 1991, the local 
                                payment amount determined under 
                                clause (i) for such item or 
                                device for that year, except 
                                that the national limited 
                                payment amount may not exceed 
                                100 percent of the weighted 
                                average of all local payment 
                                amounts determined under such 
                                clause for such item for that 
                                year and may not be less than 
                                85 percent of the weighted 
                                average of all local payment 
                                amounts determined under such 
                                clause for such item,
                                  (II) for 1992 and 1993, the 
                                amount determined under this 
                                clause for the preceding year 
                                increased by the covered item 
                                update for such subsequent 
                                year,
                                  (III) for 1994, the local 
                                payment amount determined under 
                                clause (i) for such item or 
                                device for that year, except 
                                that the national limited 
                                payment amount may not exceed 
                                100 percent of the median of 
                                all local payment amounts 
                                determined under such clause 
                                for such item for that year and 
                                may not be less than 85 percent 
                                of the median of all local 
                                payment amounts determined 
                                under such clause for such item 
                                or device for that year, and
                                  (IV) for each subsequent 
                                year, the amount determined 
                                under this clause for the 
                                preceding year increased by the 
                                covered item update for such 
                                subsequent year.
          (3) Payment for items requiring frequent and 
        substantial servicing.--
                  (A) In general.--Payment for a covered item 
                (such as IPPB machines and ventilators, 
                excluding ventilators that are either 
                continuous airway pressure devices or 
                intermittent assist devices with continuous 
                airway pressure devices) for which there must 
                be frequent and substantial servicing in order 
                to avoid risk to the patient's health shall be 
                made on a monthly basis for the rental of the 
                item and the amount recognized is the amount 
                specified in subparagraph (B).
                  (B) Payment amount.--For purposes of 
                subparagraph (A), the amount specified in this 
                subparagraph, with respect to an item or device 
                furnished in a carrier service area--
                          (i) in 1989 and in 1990 is the 
                        average reasonable charge in the area 
                        for the rental of the item or device 
                        for the 12-month period ending with 
                        June 1987, increased by the percentage 
                        increase in the consumer price index 
                        for all urban consumers (U.S. city 
                        average) for the 6-month period ending 
                        with December 1987;
                          (ii) in 1991 is the sum of (I) 67 
                        percent of the local payment amount for 
                        the item or device computed under 
                        subparagraph (C)(i)(I) for 1991, and 
                        (II) 33 percent of the national limited 
                        payment amount for the item or device 
                        computed under subparagraph (C)(ii) for 
                        1991;
                          (iii) in 1992 is the sum of (I) 33 
                        percent of the local payment amount for 
                        the item or device computed under 
                        subparagraph (C)(i)(II) for 1992, and 
                        (II) 67 percent of the national limited 
                        payment amount for the item or device 
                        computed under subparagraph (C)(ii) for 
                        1992; and
                          (iv) in 1993 and each subsequent year 
                        is the national limited payment amount 
                        for the item or device computed under 
                        subparagraph (C)(ii) for that year.
                  (C) Computation of local payment amount and 
                national limited payment amount.--For purposes 
                of subparagraph (B)--
                          (i) the local payment amount for an 
                        item or device for a year is equal to--
                                  (I) for 1991, the amount 
                                specified in subparagraph 
                                (B)(i) for 1990 increased by 
                                the covered item update for 
                                1991, and
                                  (II) for 1992, 1993, and 1994 
                                the amount determined under 
                                this clause for the preceding 
                                year increased by the covered 
                                item update for the year; and
                          (ii) the national limited payment 
                        amount for an item or device for a year 
                        is equal to--
                                  (I) for 1991, the local 
                                payment amount determined under 
                                clause (i) for such item or 
                                device for that year, except 
                                that the national limited 
                                payment amount may not exceed 
                                100 percent of the weighted 
                                average of all local payment 
                                amounts determined under such 
                                clause for such item for that 
                                year and may not be less than 
                                85 percent of the weighted 
                                average of all local payment 
                                amounts determined under such 
                                clause for such item,
                                  (II) for 1992 and 1993, the 
                                amount determined under this 
                                clause for the preceding year 
                                increased by the covered item 
                                update for such subsequent 
                                year,
                                  (III) for 1994, the local 
                                payment amount determined under 
                                clause (i) for such item or 
                                device for that year, except 
                                that the national limited 
                                payment amount may not exceed 
                                100 percent of the median of 
                                all local payment amounts 
                                determined under such clause 
                                for such item for that year and 
                                may not be less than 85 percent 
                                of the median of all local 
                                payment amounts determined 
                                under such clause for such item 
                                or device for that year, and
                                  (IV) for each subsequent 
                                year, the amount determined 
                                under this clause for the 
                                preceding year increased by the 
                                covered item update for such 
                                subsequent year.
          (4) Payment for certain customized items.--Payment 
        with respect to a covered item that is uniquely 
        constructed or substantially modified to meet the 
        specific needs of an individual patient, and for that 
        reason cannot be grouped with similar items for 
        purposes of payment under this title, shall be made in 
        a lump-sum amount (A) for the purchase of the item in a 
        payment amount based upon the carrier's individual 
        consideration for that item, and (B) for the reasonable 
        and necessary maintenance and servicing for parts and 
        labor not covered by the supplier's or manufacturer's 
        warranty, when necessary during the period of medical 
        need, and the amount recognized for such maintenance 
        and servicing shall be paid on a lump-sum, as needed 
        basis based upon the carrier's individual consideration 
        for that item. In the case of a wheelchair furnished on 
        or after January 1, 1992, the wheelchair shall be 
        treated as a customized item for purposes of this 
        paragraph if the wheelchair has been measured, fitted, 
        or adapted in consideration of the patient's body size, 
        disability, period of need, or intended use, and has 
        been assembled by a supplier or ordered from a 
        manufacturer who makes available customized features, 
        modifications, or components for wheelchairs that are 
        intended for an individual patient's use in accordance 
        with instructions from the patient's physician.
          (5) Payment for oxygen and oxygen equipment.--
                  (A) In general.--Payment for oxygen and 
                oxygen equipment shall be made on a monthly 
                basis in the monthly payment amount recognized 
                under paragraph (9) for oxygen and oxygen 
                equipment (other than portable oxygen 
                equipment), subject to subparagraphs (B), (C), 
                (E), and (F).
                  (B) Add-on for portable oxygen equipment.--
                When portable oxygen equipment is used, but 
                subject to subparagraph (D), the payment amount 
                recognized under subparagraph (A) shall be 
                increased by the monthly payment amount 
                recognized under paragraph (9) for portable 
                oxygen equipment.
                  (C) Volume adjustment.--When the attending 
                physician prescribes an oxygen flow rate--
                          (i) exceeding 4 liters per minute, 
                        the payment amount recognized under 
                        subparagraph (A), subject to 
                        subparagraph (D), shall be increased by 
                        50 percent, or
                          (ii) of less than 1 liter per minute, 
                        the payment amount recognized under 
                        subparagraph (A) shall be decreased by 
                        50 percent.
                  (D) Limit on adjustment.--When portable 
                oxygen equipment is used and the attending 
                physician prescribes an oxygen flow rate 
                exceeding 4 liters per minute, there shall only 
                be an increase under either subparagraph (B) or 
                (C), whichever increase is larger, and not 
                under both such subparagraphs.
                  (E) Recertification for patients receiving 
                home oxygen therapy.--In the case of a patient 
                receiving home oxygen therapy services who, at 
                the time such services are initiated, has an 
                initial arterial blood gas value at or above a 
                partial pressure of 56 or an arterial oxygen 
                saturation at or above 89 percent (or such 
                other values, pressures, or criteria as the 
                Secretary may specify) no payment may be made 
                under this part for such services after the 
                expiration of the 90-day period that begins on 
                the date the patient first receives such 
                services unless the patient's attending 
                physician certifies that, on the basis of a 
                follow-up test of the patient's arterial blood 
                gas value or arterial oxygen saturation 
                conducted during the final 30 days of such 90-
                day period, there is a medical need for the 
                patient to continue to receive such services.
                  (F) Rental Cap.--
                          (i) In general.--Payment for oxygen 
                        equipment (including portable oxygen 
                        equipment) under this paragraph may not 
                        extend over a period of continuous use 
                        (as determined by the Secretary) of 
                        longer than 36 months.
                          (ii) Payments and rules after rental 
                        cap.--After the 36th continuous month 
                        during which payment is made for the 
                        equipment under this paragraph--
                                  (I) the supplier furnishing 
                                such equipment under this 
                                subsection shall continue to 
                                furnish the equipment during 
                                any period of medical need for 
                                the remainder of the reasonable 
                                useful lifetime of the 
                                equipment, as determined by the 
                                Secretary;
                                  (II) payments for oxygen 
                                shall continue to be made in 
                                the amount recognized for 
                                oxygen under paragraph (9) for 
                                the period of medical need; and
                                  (III) maintenance and 
                                servicing payments shall, if 
                                the Secretary determines such 
                                payments are reasonable and 
                                necessary, be made (for parts 
                                and labor not covered by the 
                                supplier's or manufacturer's 
                                warranty, as determined by the 
                                Secretary to be appropriate for 
                                the equipment), and such 
                                payments shall be in an amount 
                                determined to be appropriate by 
                                the Secretary.
          (6) Payment for other covered items (other than 
        durable medical equipment).--Payment for other covered 
        items (other than durable medical equipment and other 
        covered items described in paragraph (3), (4), or (5)) 
        shall be made in a lump-sum amount for the purchase of 
        the item in the amount of the purchase price recognized 
        under paragraph (8).
          (7) Payment for other items of durable medical 
        equipment.--
                  (A) Payment.--In the case of an item of 
                durable medical equipment not described in 
                paragraphs (2) through (6), the following rules 
                shall apply:
                          (i) Rental.--
                                  (I) In general.--Except as 
                                provided in clause (iii), 
                                payment for the item shall be 
                                made on a monthly basis for the 
                                rental of the item during the 
                                period of medical need (but 
                                payments under this clause may 
                                not extend over a period of 
                                continuous use (as determined 
                                by the Secretary) of longer 
                                than 13 months).
                                  (II) Payment amount.--Subject 
                                to subclause (III) and 
                                subparagraph (B), the amount 
                                recognized for the item, for 
                                each of the first 3 months of 
                                such period, is 10 percent of 
                                the purchase price recognized 
                                under paragraph (8) with 
                                respect to the item, and, for 
                                each of the remaining months of 
                                such period, is 7.5 percent of 
                                such purchase price.
                                  (III) Special rule for power-
                                driven wheelchairs.--For 
                                purposes of payment for power-
                                driven wheelchairs, subclause 
                                (II) shall be applied by 
                                substituting ``15 percent'' and 
                                ``6 percent'' for ``10 
                                percent'' and ``7.5 percent'', 
                                respectively.
                          (ii) Ownership after rental.--On the 
                        first day that begins after the 13th 
                        continuous month during which payment 
                        is made for the rental of an item under 
                        clause (i), the supplier of the item 
                        shall transfer title to the item to the 
                        individual.
                          (iii) Purchase agreement option for 
                        complex, rehabilitative power-driven 
                        wheelchairs.--In the case of a complex, 
                        rehabilitative power-driven wheelchair, 
                        at the time the supplier furnishes the 
                        item, the supplier shall offer the 
                        individual the option to purchase the 
                        item, and payment for such item shall 
                        be made on a lump-sum basis if the 
                        individual exercises such option.
                          (iv) Maintenance and servicing.--
                        After the supplier transfers title to 
                        the item under clause (ii) or in the 
                        case of a power-driven wheelchair for 
                        which a purchase agreement has been 
                        entered into under clause (iii), 
                        maintenance and servicing payments 
                        shall, if the Secretary determines such 
                        payments are reasonable and necessary, 
                        be made (for parts and labor not 
                        covered by the supplier's or 
                        manufacturer's warranty, as determined 
                        by the Secretary to be appropriate for 
                        the particular type of durable medical 
                        equipment), and such payments shall be 
                        in an amount determined to be 
                        appropriate by the Secretary.
                  (B) Range for rental amounts.--
                          (i) For 1989.--For items furnished 
                        during 1989, the payment amount 
                        recognized under subparagraph (A)(i) 
                        shall not be more than 115 percent, and 
                        shall not be less than 85 percent, of 
                        the prevailing charge established for 
                        rental of the item in January 1987, 
                        increased by the percentage increase in 
                        the consumer price index for all urban 
                        consumers (U.S. city average) for the 
                        6-month period ending with December 
                        1987.
                          (ii) For 1990.--For items furnished 
                        during 1990, clause (i) shall apply in 
                        the same manner as it applies to items 
                        furnished during 1989.
                  (C) Replacement of items.--
                          (i) Establishment of reasonable 
                        useful lifetime.--In accordance with 
                        clause (iii), the Secretary shall 
                        determine and establish a reasonable 
                        useful lifetime for items of durable 
                        medical equipment for which payment may 
                        be made under this paragraph.
                          (ii) Payment for replacement items.--
                        If the reasonable lifetime of such an 
                        item, as so established, has been 
                        reached during a continuous period of 
                        medical need, or the carrier determines 
                        that the item is lost or irreparably 
                        damaged, the patient may elect to have 
                        payment for an item serving as a 
                        replacement for such item made--
                                  (I) on a monthly basis for 
                                the rental of the replacement 
                                item in accordance with 
                                subparagraph (A); or
                                  (II) in the case of an item 
                                for which a purchase agreement 
                                has been entered into under 
                                subparagraph (A)(iii), in a 
                                lump-sum amount for the 
                                purchase of the item.
                          (iii) Length of reasonable useful 
                        lifetime.--The reasonable useful 
                        lifetime of an item of durable medical 
                        equipment under this subparagraph shall 
                        be equal to 5 years, except that, if 
                        the Secretary determines that, on the 
                        basis of prior experience in making 
                        payments for such an item under this 
                        title, a reasonable useful lifetime of 
                        5 years is not appropriate with respect 
                        to a particular item, the Secretary 
                        shall establish an alternative 
                        reasonable lifetime for such item.
          (8) Purchase price recognized for miscellaneous 
        devices and items.--For purposes of paragraphs (6) and 
        (7), the amount that is recognized under this paragraph 
        as the purchase price for a covered item is the amount 
        described in subparagraph (C) of this paragraph, 
        determined as follows:
                  (A) Computation of local purchase price.--
                Each carrier under section 1842 shall compute a 
                base local purchase price for the item as 
                follows:
                          (i) The carrier shall compute a base 
                        local purchase price, for each item 
                        described--
                                  (I) in paragraph (6) equal to 
                                the average reasonable charge 
                                in the locality for the 
                                purchase of the item for the 
                                12-month period ending with 
                                June 1987, or
                                  (II) in paragraph (7) equal 
                                to the average of the purchase 
                                prices on the claims submitted 
                                on an assignment-related basis 
                                for the unused item supplied 
                                during the 6-month period 
                                ending with December 1986.
                          (ii) The carrier shall compute a 
                        local purchase price, with respect to 
                        the furnishing of each particular 
                        item--
                                  (I) in 1989 and 1990, equal 
                                to the base local purchase 
                                price computed under clause (i) 
                                increased by the percentage 
                                increase in the consumer price 
                                index for all urban consumers 
                                (U.S. city average) for the 6-
                                month period ending with 
                                December 1987,
                                  (II) in 1991, equal to the 
                                local purchase price computed 
                                under this clause for the 
                                previous year, increased by the 
                                covered item update for 1991, 
                                and decreased by the percentage 
                                by which the average of the 
                                reasonable charges for claims 
                                paid for all items described in 
                                paragraph (7) is lower than the 
                                average of the purchase prices 
                                submitted for such items during 
                                the final 9 months of 1988; or
                                  (III) in 1992, 1993, and 1994 
                                equal to the local purchase 
                                price computed under this 
                                clause for the previous year 
                                increased by the covered item 
                                update for the year.
                  (B) Computation of national limited purchase 
                price.--With respect to the furnishing of a 
                particular item in a year, the Secretary shall 
                compute a national limited purchase price--
                          (i) for 1991, equal to the local 
                        purchase price computed under 
                        subparagraph (A)(ii) for the item for 
                        the year, except that such national 
                        limited purchase price may not exceed 
                        100 percent of the weighted average of 
                        all local purchase prices for the item 
                        computed under such subparagraph for 
                        the year, and may not be less than 85 
                        percent of the weighted average of all 
                        local purchase prices for the item 
                        computed under such subparagraph for 
                        the year;
                          (ii) for 1992 and 1993, the amount 
                        determined under this subparagraph for 
                        the preceding year increased by the 
                        covered item update for such subsequent 
                        year;
                          (iii) for 1994, the local purchase 
                        price computed under subparagraph 
                        (A)(ii) for the item for the year, 
                        except that such national limited 
                        purchase price may not exceed 100 
                        percent of the median of all local 
                        purchase prices computed for the item 
                        under such subparagraph for the year 
                        and may not be less than 85 percent of 
                        the median of all local purchase prices 
                        computed under such subparagraph for 
                        the item for the year; and
                          (iv) for each subsequent year, equal 
                        to the amount determined under this 
                        subparagraph for the preceding year 
                        increased by the covered item update 
                        for such subsequent year.
                  (C) Purchase price recognized.--For purposes 
                of paragraphs (6) and (7), the amount that is 
                recognized under this paragraph as the purchase 
                price for each item furnished--
                          (i) in 1989 or 1990, is 100 percent 
                        of the local purchase price computed 
                        under subparagraph (A)(ii)(I);
                          (ii) in 1991, is the sum of (I) 67 
                        percent of the local purchase price 
                        computed under subparagraph (A)(ii)(II) 
                        for 1991, and (II) 33 percent of the 
                        national limited purchase price 
                        computed under subparagraph (B) for 
                        1991;
                          (iii) in 1992, is the sum of (I) 33 
                        percent of the local purchase price 
                        computed under subparagraph 
                        (A)(ii)(III) for 1992, and (II) 67 
                        percent of the national limited 
                        purchase price computed under 
                        subparagraph (B) for 1992; and
                          (iv) in 1993 or a subsequent year, is 
                        the national limited purchase price 
                        computed under subparagraph (B) for 
                        that year.
          (9) Monthly payment amount recognized with respect to 
        oxygen and oxygen equipment.--For purposes of paragraph 
        (5), the amount that is recognized under this paragraph 
        for payment for oxygen and oxygen equipment is the 
        monthly payment amount described in subparagraph (C) of 
        this paragraph. Such amount shall be computed 
        separately (i) for all items of oxygen and oxygen 
        equipment (other than portable oxygen equipment) and 
        (ii) for portable oxygen equipment (each such group 
        referred to in this paragraph as an ``item'').
                  (A) Computation of local monthly payment 
                rate.--Each carrier under this section shall 
                compute a base local payment rate for each item 
                as follows:
                          (i) The carrier shall compute a base 
                        local average monthly payment rate per 
                        beneficiary as an amount equal to (I) 
                        the total reasonable charges for the 
                        item during the 12-month period ending 
                        with December 1986, divided by (II) the 
                        total number of months for all 
                        beneficiaries receiving the item in the 
                        area during the 12-month period for 
                        which the carrier made payment for the 
                        item under this title.
                          (ii) The carrier shall compute a 
                        local average monthly payment rate for 
                        the item applicable--
                                  (I) to 1989 and 1990, equal 
                                to 95 percent of the base local 
                                average monthly payment rate 
                                computed under clause (i) for 
                                the item increased by the 
                                percentage increase in the 
                                consumer price index for all 
                                urban consumers (U.S. city 
                                average) for the 6-month period 
                                ending with December 1987, or
                                  (II) to 1991, 1992, 1993, and 
                                1994 equal to the local average 
                                monthly payment rate computed 
                                under this clause for the item 
                                for the previous year increased 
                                by the covered item increase 
                                for the year.
                  (B) Computation of national limited monthly 
                payment rate.--With respect to the furnishing 
                of an item in a year, the Secretary shall 
                compute a national limited monthly payment rate 
                equal to--
                          (i) for 1991, the local monthly 
                        payment rate computed under 
                        subparagraph (A)(ii)(II) for the item 
                        for the year, except that such national 
                        limited monthly payment rate may not 
                        exceed 100 percent of the weighted 
                        average of all local monthly payment 
                        rates computed for the item under such 
                        subparagraph for the year, and may not 
                        be less than 85 percent of the weighted 
                        average of all local monthly payment 
                        rates computed for the item under such 
                        subparagraph for the year;
                          (ii) for 1992 and 1993, the amount 
                        determined under this subparagraph for 
                        the preceding year increased by the 
                        covered item update for such subsequent 
                        year;
                          (iii) for 1994, the local monthly 
                        payment rate computed under 
                        subparagraph (A)(ii) for the item for 
                        the year, except that such national 
                        limited monthly payment rate may not 
                        exceed 100 percent of the median of all 
                        local monthly payment rates computed 
                        for the item under such subparagraph 
                        for the year and may not be less than 
                        85 percent of the median of all local 
                        monthly payment rates computed for the 
                        item under such subparagraph for the 
                        year;
                          (iv) for 1995, 1996, and 1997, equal 
                        to the amount determined under this 
                        subparagraph for the preceding year 
                        increased by the covered item update 
                        for such subsequent year;
                          (v) for 1998, 75 percent of the 
                        amount determined under this 
                        subparagraph for 1997; and
                          (vi) for 1999 and each subsequent 
                        year, 70 percent of the amount 
                        determined under this subparagraph for 
                        1997.
                  (C) Monthly payment amount recognized.--For 
                purposes of paragraph (5), the amount that is 
                recognized under this paragraph as the base 
                monthly payment amount for each item 
                furnished--
                          (i) in 1989 and in 1990, is 100 
                        percent of the local average monthly 
                        payment rate computed under 
                        subparagraph (A)(ii) for the item;
                          (ii) in 1991, is the sum of (I) 67 
                        percent of the local average monthly 
                        payment rate computed under 
                        subparagraph (A)(ii)(II) for the item 
                        for 1991, and (II) 33 percent of the 
                        national limited monthly payment rate 
                        computed under subparagraph (B)(i) for 
                        the item for 1991;
                          (iii) in 1992, is the sum of (I) 33 
                        percent of the local average monthly 
                        payment rate computed under 
                        subparagraph (A)(ii)(II) for the item 
                        for 1992, and (II) 67 percent of the 
                        national limited monthly payment rate 
                        computed under subparagraph (B)(ii) for 
                        the item for 1992; and
                          (iv) in a subsequent year, is the 
                        national limited monthly payment rate 
                        computed under subparagraph (B) for the 
                        item for that year.
          (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, eyeglasses, and contact lenses; 
                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, and of 
                eyeglasses and contact lenses described in 
                paragraph (2)(D) of such section, 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 or such 
                        eyeglasses and contact lenses furnished 
                        in such area shall be the payment basis 
                        determined under such competitive 
                        acquisition program; and
                          (ii) subject to subsection (a)(1)(G), 
                        the Secretary may use information on 
                        the payment determined under such 
                        competitive acquisition programs to 
                        adjust the payment amount otherwise 
                        recognized under subparagraph (B)(ii) 
                        for an area that is not a competitive 
                        acquisition area under section 1847, 
                        and in the case of such adjustment, 
                        paragraphs (8) and (9) of section 
                        1842(b) shall not be applied.
          (2) Purchase price recognized.--For purposes of 
        paragraph (1), the amount that is recognized under this 
        paragraph as the purchase price for prosthetic devices, 
        orthotics, and prosthetics is the amount described in 
        subparagraph (C) of this paragraph, determined as 
        follows:
                  (A) Computation of local purchase price.--
                Each carrier under section 1842 shall compute a 
                base local purchase price for the item as 
                follows:
                          (i) The carrier shall compute a base 
                        local purchase price for each item 
                        equal to the average reasonable charge 
                        in the locality for the purchase of the 
                        item for the 12-month period ending 
                        with June 1987.
                          (ii) The carrier shall compute a 
                        local purchase price, with respect to 
                        the furnishing of each particular 
                        item--
                                  (I) in 1989 and 1990, equal 
                                to the base local purchase 
                                price computed under clause (i) 
                                increased by the percentage 
                                increase in the consumer price 
                                index for all urban consumers 
                                (United States city average) 
                                for the 6-month period ending 
                                with December 1987, or
                                  (II) in 1991, 1992 or 1993, 
                                equal to the local purchase 
                                price computed under this 
                                clause for the previous year 
                                increased by the applicable 
                                percentage increase for the 
                                year.
                  (B) Computation of regional purchase price.--
                With respect to the furnishing of a particular 
                item in each region (as defined by the 
                Secretary), the Secretary shall compute a 
                regional purchase price--
                          (i) for 1992, equal to the average 
                        (weighted by relative volume of all 
                        claims among carriers) of the local 
                        purchase prices for the carriers in the 
                        region computed under subparagraph 
                        (A)(ii)(II) for the year, and
                          (ii) for each subsequent year, equal 
                        to the regional purchase price computed 
                        under this subparagraph for the 
                        previous year increased by the 
                        applicable percentage increase for the 
                        year.
                  (C) Purchase price recognized.--For purposes 
                of paragraph (1) and subject to subparagraph 
                (D), the amount that is recognized under this 
                paragraph as the purchase price for each item 
                furnished--
                          (i) in 1989, 1990, or 1991, is 100 
                        percent of the local purchase price 
                        computed under subparagraph (A)(ii);
                          (ii) in 1992, is the sum of (I) 75 
                        percent of the local purchase price 
                        computed under subparagraph (A)(ii)(II) 
                        for 1992, and (II) 25 percent of the 
                        regional purchase price computed under 
                        subparagraph (B) for 1992;
                          (iii) in 1993, is the sum of (I) 50 
                        percent of the local purchase price 
                        computed under subparagraph (A)(ii)(II) 
                        for 1993, and (II) 50 percent of the 
                        regional purchase price computed under 
                        subparagraph (B) for 1993; and
                          (iv) in 1994 or a subsequent year, is 
                        the regional purchase price computed 
                        under subparagraph (B) for that year.
                  (D) Range on amount recognized.--The amount 
                that is recognized under subparagraph (C) as 
                the purchase price for an item furnished--
                          (i) in 1992, may not exceed 125 
                        percent, and may not be lower than 85 
                        percent, of the average of the purchase 
                        prices recognized under such 
                        subparagraph for all the carrier 
                        service areas in the United States in 
                        that year; and
                          (ii) in a subsequent year, may not 
                        exceed 120 percent, and may not be 
                        lower than 90 percent, of the average 
                        of the purchase prices recognized under 
                        such subparagraph for all the carrier 
                        service areas in the United States in 
                        that year.
          (3) Applicability of certain provisions relating to 
        durable medical equipment.--Paragraphs (12) and (17) 
        and subparagraphs (A) and (B) of paragraph (10) and 
        paragraph (11) of subsection (a) shall apply to 
        prosthetic devices, orthotics, and prosthetics in the 
        same manner as such provisions apply to covered items 
        under such subsection.
          (4) Definitions.--In this subsection--
                  (A) the term ``applicable percentage 
                increase'' means--
                          (i) for 1991, 0 percent;
                          (ii) for 1992 and 1993, the 
                        percentage increase in the consumer 
                        price index for all urban consumers 
                        (United States city average) for the 
                        12-month period ending with June of the 
                        previous year;
                          (iii) for 1994 and 1995, 0 percent;
                          (iv) for 1996 and 1997, the 
                        percentage increase in the consumer 
                        price index for all urban consumers 
                        (United States city average) for the 
                        12-month period ending with June of the 
                        previous year;
                          (v) for each of the years 1998 
                        through 2000, 1 percent;
                          (vi) for 2001, the percentage 
                        increase in the consumer price index 
                        for all urban consumers (U.S. city 
                        average) for the 12-month period ending 
                        with June 2000;
                          (vii) for 2002, 1 percent;
                          (viii) for 2003, the percentage 
                        increase in the consumer price index 
                        for all urban consumers (United States 
                        city average) for the 12-month period 
                        ending with June of the previous year;
                          (ix) for 2004, 2005, and 2006, 0 
                        percent;
                          (x) for for each of 2007 through 
                        2010, the percentage increase in the 
                        consumer price index for all urban 
                        consumers (United States city average) 
                        for the 12-month period ending with 
                        June of the previous year; and
                          (xi) for 2011 and each subsequent 
                        year--
                                  (I) the percentage increase 
                                in the consumer price index for 
                                all urban consumers (United 
                                States city average) for the 
                                12-month period ending with 
                                June of the previous year, 
                                reduced by--
                                  (II) the productivity 
                                adjustment described in section 
                                1886(b)(3)(B)(xi)(II).
                  (B) the term ``prosthetic devices'' has the 
                meaning given such term in section 1861(s)(8), 
                except that such term does not include 
                parenteral and enteral nutrition nutrients, 
                supplies, and equipment and does not include an 
                implantable item for which payment may be made 
                under section 1833(t); and
                  (C) the term ``orthotics and prosthetics'' 
                has the meaning given such term in section 
                1861(s)(9) (and includes shoes described in 
                section 1861(s)(12)), but does not include 
                intraocular lenses or medical supplies 
                (including catheters, catheter supplies, ostomy 
                bags, and supplies related to ostomy care) 
                furnished by a home health agency under section 
                1861(m)(5).
        The application of subparagraph (A)(xi)(II) may result 
        in the applicable percentage increase under 
        subparagraph (A) being less than 0.0 for a year, and 
        may result in payment rates under this subsection for a 
        year being less than such payment rates for the 
        preceding year.
          (5) Documentation created by orthotists and 
        prosthetists.--For purposes of determining the 
        reasonableness and medical necessity of orthotics and 
        prosthetics, documentation created by an orthotist or 
        prosthetist shall be considered part of the 
        individual's medical record to support documentation 
        created by eligible professionals described in section 
        1848(k)(3)(B).
          (6) Payment limitations for eyeglasses and contact 
        lenses.--With respect to eyeglasses and contact lenses 
        furnished to an individual on or after January 1, 2022, 
        payment may be made under this part only--
                  (A) during any 2-year period, for either 1 
                pair of eyeglasses (including lenses and 
                frames) or a 2-year supply that is provided in 
                not more than 180-day increments of contact 
                lenses;
                  (B) with respect to amounts attributable to 
                the frames of such a pair of eyeglasses and 
                amounts attributable to contact lenses 
                furnished during a year, in an amount not 
                greater than--
                          (i) for 2022, $100; and
                          (ii) for a subsequent year, the 
                        amount specified under this 
                        subparagraph for the previous year, 
                        increased by the percentage change in 
                        the Consumer Price Index for All Urban 
                        Consumers during such previous year;
                  (C) for types of eyeglass lenses, and for 
                types of contact lenses, as determined 
                appropriate by the Secretary; and
                  (D) if furnished pursuant to a written order 
                of a physician described in section 1861(kkk).
  (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, 2023, 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, 2023, 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, 2023); 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, 2023).
                  (B) Application of increased payments after 
                applicable period.--The increased payments 
                under subparagraph (A) shall not be taken into 
                account in calculating payments for services 
                furnished after the applicable period specified 
                in such subparagraph.
          (14) Providing appropriate coverage of rural air 
        ambulance services.--
                  (A) In general.--The regulations described in 
                section 1861(s)(7) shall provide, to the extent 
                that any ambulance services (whether ground or 
                air) may be covered under such section, that a 
                rural air ambulance service (as defined in 
                subparagraph (C)) is reimbursed under this 
                subsection at the air ambulance rate if the air 
                ambulance service--
                          (i) is reasonable and necessary based 
                        on the health condition of the 
                        individual being transported at or 
                        immediately prior to the time of the 
                        transport; and
                          (ii) complies with equipment and crew 
                        requirements established by the 
                        Secretary.
                  (B) Satisfaction of requirement of medically 
                necessary.--The requirement of subparagraph 
                (A)(i) is deemed to be met for a rural air 
                ambulance service if--
                          (i) subject to subparagraph (D), such 
                        service is requested by a physician or 
                        other qualified medical personnel (as 
                        specified by the Secretary) who 
                        certifies or reasonably determines that 
                        the individual's condition is such that 
                        the time needed to transport the 
                        individual by land or the instability 
                        of transportation by land poses a 
                        threat to the individual's survival or 
                        seriously endangers the individual's 
                        health; or
                          (ii) such service is furnished 
                        pursuant to a protocol that is 
                        established by a State or regional 
                        emergency medical service (EMS) agency 
                        and recognized or approved by the 
                        Secretary under which the use of an air 
                        ambulance is recommended, if such 
                        agency does not have an ownership 
                        interest in the entity furnishing such 
                        service.
                  (C) Rural air ambulance service defined.--For 
                purposes of this paragraph, the term ``rural 
                air ambulance service'' means fixed wing and 
                rotary wing air ambulance service in which the 
                point of pick up of the individual occurs in a 
                rural area (as defined in section 
                1886(d)(2)(D)) or in a rural census tract of a 
                metropolitan statistical area (as determined 
                under the most recent modification of the 
                Goldsmith Modification, originally published in 
                the Federal Register on February 27, 1992 (57 
                Fed. Reg. 6725)).
                  (D) Limitation.--
                          (i) In general.--Subparagraph (B)(i) 
                        shall not apply if there is a financial 
                        or employment relationship between the 
                        person requesting the rural air 
                        ambulance service and the entity 
                        furnishing the ambulance service, or an 
                        entity under common ownership with the 
                        entity furnishing the air ambulance 
                        service, or a financial relationship 
                        between an immediate family member of 
                        such requester and such an entity.
                          (ii) Exception.--Where a hospital and 
                        the entity furnishing rural air 
                        ambulance services are under common 
                        ownership, clause (i) shall not apply 
                        to remuneration (through employment or 
                        other relationship) by the hospital of 
                        the requester or immediate family 
                        member if the remuneration is for 
                        provider-based physician services 
                        furnished in a hospital (as described 
                        in section 1887) which are reimbursed 
                        under part A and the amount of the 
                        remuneration is unrelated directly or 
                        indirectly to the provision of rural 
                        air ambulance services.
          (15) Payment adjustment for non-emergency ambulance 
        transports for esrd beneficiaries.--The fee schedule 
        amount otherwise applicable under the preceding 
        provisions of this subsection shall be reduced by 10 
        percent for ambulance services furnished during the 
        period beginning on October 1, 2013, and ending on 
        September 30, 2018, and by 23 percent for such services 
        furnished on or after October 1, 2018, consisting of 
        non-emergency basic life support services involving 
        transport of an individual with end-stage renal disease 
        for renal dialysis services (as described in section 
        1881(b)(14)(B)) furnished other than on an emergency 
        basis by a provider of services or a renal dialysis 
        facility.
          (16) Prior authorization for repetitive scheduled 
        non-emergent ambulance transports.--
                  (A) In general.--Beginning January 1, 2017, 
                if the expansion to all States of the model of 
                prior authorization described in paragraph (2) 
                of section 515(a) of the Medicare Access and 
                CHIP Reauthorization Act of 2015 meets the 
                requirements described in paragraphs (1) 
                through (3) of section 1115A(c), then the 
                Secretary shall expand such model to all 
                States.
                  (B) Funding.--The Secretary shall use funds 
                made available under section 1893(h)(10) to 
                carry out this paragraph.
                  (C) Clarification regarding budget 
                neutrality.--Nothing in this paragraph may be 
                construed to limit or modify the application of 
                section 1115A(b)(3)(B) to models described in 
                such section, including with respect to the 
                model described in subparagraph (A) and 
                expanded beginning on January 1, 2017, under 
                such subparagraph.
          (17) Submission of cost and other information.--
                  (A) Development of data collection system.--
                The Secretary shall develop a data collection 
                system (which may include use of a cost survey) 
                to collect cost, revenue, utilization, and 
                other information determined appropriate by the 
                Secretary with respect to providers of services 
                (in this paragraph referred to as 
                ``providers'') and suppliers of ground 
                ambulance services. Such system shall be 
                designed to collect information--
                          (i) needed to evaluate the extent to 
                        which reported costs relate to payment 
                        rates under this subsection;
                          (ii) on the utilization of capital 
                        equipment and ambulance capacity, 
                        including information consistent with 
                        the type of information described in 
                        section 1121(a); and
                          (iii) on different types of ground 
                        ambulance services furnished in 
                        different geographic locations, 
                        including rural areas and low 
                        population density areas described in 
                        paragraph (12).
                  (B) Specification of data collection 
                system.--
                          (i) In general.--The Secretary 
                        shall--
                                  (I) not later than December 
                                31, 2019, specify the data 
                                collection system under 
                                subparagraph (A); and
                                  (II) identify the providers 
                                and suppliers of ground 
                                ambulance services that would 
                                be required to submit 
                                information under such data 
                                collection system, including 
                                the representative sample 
                                described in clause (ii).
                          (ii) Determination of representative 
                        sample.--
                                  (I) In general.--Not later 
                                than December 31, 2019, with 
                                respect to the data collection 
                                for the first year under such 
                                system, and for each subsequent 
                                year through 2024, the 
                                Secretary shall determine a 
                                representative sample to submit 
                                information under the data 
                                collection system.
                                  (II) Requirements.--The 
                                sample under subclause (I) 
                                shall be representative of the 
                                different types of providers 
                                and suppliers of ground 
                                ambulance services (such as 
                                those providers and suppliers 
                                that are part of an emergency 
                                service or part of a government 
                                organization) and the 
                                geographic locations in which 
                                ground ambulance services are 
                                furnished (such as urban, 
                                rural, and low population 
                                density areas).
                                  (III) Limitation.--The 
                                Secretary shall not include an 
                                individual provider or supplier 
                                of ground ambulance services in 
                                the sample under subclause (I) 
                                in 2 consecutive years, to the 
                                extent practicable.
                  (C) Reporting of cost information.--For each 
                year, a provider or supplier of ground 
                ambulance services identified by the Secretary 
                under subparagraph (B)(i)(II) as being required 
                to submit information under the data collection 
                system with respect to a period for the year 
                shall submit to the Secretary information 
                specified under the system. Such information 
                shall be submitted in a form and manner, and at 
                a time, specified by the Secretary for purposes 
                of this subparagraph.
                  (D) Payment reduction for failure to 
                report.--
                          (i) In general.--Beginning January 1, 
                        2022, subject to clause (ii), a 10 
                        percent reduction to payments under 
                        this subsection shall be made for the 
                        applicable period (as defined in clause 
                        (ii)) to a provider or supplier of 
                        ground ambulance services that--
                                  (I) is required to submit 
                                information under the data 
                                collection system with respect 
                                to a period under subparagraph 
                                (C); and
                                  (II) does not sufficiently 
                                submit such information, as 
                                determined by the Secretary.
                          (ii) Applicable period defined.--For 
                        purposes of clause (i), the term 
                        ``applicable period'' means, with 
                        respect to a provider or supplier of 
                        ground ambulance services, a year 
                        specified by the Secretary not more 
                        than 2 years after the end of the 
                        period with respect to which the 
                        Secretary has made a determination 
                        under clause (i)(II) that the provider 
                        or supplier of ground ambulance 
                        services failed to sufficiently submit 
                        information under the data collection 
                        system.
                          (iii) Hardship exemption.--The 
                        Secretary may exempt a provider or 
                        supplier from the payment reduction 
                        under clause (i) with respect to an 
                        applicable period in the event of 
                        significant hardship, such as a natural 
                        disaster, bankruptcy, or other similar 
                        situation that the Secretary determines 
                        interfered with the ability of the 
                        provider or supplier of ground 
                        ambulance services to submit such 
                        information in a timely manner for the 
                        specified period.
                          (iv) Informal review.--The Secretary 
                        shall establish a process under which a 
                        provider or supplier of ground 
                        ambulance services may seek an informal 
                        review of a determination that the 
                        provider or supplier is subject to the 
                        payment reduction under clause (i).
                  (E) Ongoing data collection.--
                          (i) Revision of data collection 
                        system.--The Secretary may, as the 
                        Secretary determines appropriate and, 
                        if available, taking into consideration 
                        the report (or reports) under 
                        subparagraph (F), revise the data 
                        collection system under subparagraph 
                        (A).
                          (ii) Subsequent data collection.--In 
                        order to continue to evaluate the 
                        extent to which reported costs relate 
                        to payment rates under this subsection 
                        and for other purposes the Secretary 
                        deems appropriate, the Secretary shall 
                        require providers and suppliers of 
                        ground ambulance services to submit 
                        information for years after 2024 as the 
                        Secretary determines appropriate, but 
                        in no case less often than once every 3 
                        years.
                  (F) Ground ambulance data collection system 
                study.--
                          (i) In general.--Not later than March 
                        15, 2023, and as determined necessary 
                        by the Medicare Payment Advisory 
                        Commission thereafter, such Commission 
                        shall assess, and submit to Congress a 
                        report on, information submitted by 
                        providers and suppliers of ground 
                        ambulance services through the data 
                        collection system under subparagraph 
                        (A), the adequacy of payments for 
                        ground ambulance services under this 
                        subsection, and geographic variations 
                        in the cost of furnishing such 
                        services.
                          (ii) Contents.--A report under clause 
                        (i) shall contain the following:
                                  (I) An analysis of 
                                information submitted through 
                                the data collection system.
                                  (II) An analysis of any 
                                burden on providers and 
                                suppliers of ground ambulance 
                                services associated with the 
                                data collection system.
                                  (III) A recommendation as to 
                                whether information should 
                                continue to be submitted 
                                through such data collection 
                                system or if such system should 
                                be revised under subparagraph 
                                (E)(i).
                                  (IV) Other information 
                                determined appropriate by the 
                                Commission.
                  (G) Public availability.--The Secretary shall 
                post information on the results of the data 
                collection under this paragraph on the Internet 
                website of the Centers for Medicare & Medicaid 
                Services, as determined appropriate by the 
                Secretary.
                  (H) Implementation.--The Secretary shall 
                implement this paragraph through notice and 
                comment rulemaking.
                  (I) Administration.--Chapter 35 of title 44, 
                United States Code, shall not apply to the 
                collection of information required under this 
                subsection.
                  (J) Limitations on review.--There shall be no 
                administrative or judicial review under section 
                1869, section 1878, or otherwise of the data 
                collection system or identification of 
                respondents under this paragraph.
                  (K) Funding for implementation.--For purposes 
                of carrying out subparagraph (A), the Secretary 
                shall provide for the transfer, from the 
                Federal Supplementary Medical Insurance Trust 
                Fund under section 1841, of $15,000,000 to the 
                Centers for Medicare & Medicaid Services 
                Program Management Account for fiscal year 
                2018. Amounts transferred under this 
                subparagraph shall remain available until 
                expended.
  (m) Payment for Telehealth Services.--
          (1) In general.--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.--
                          (i) In general.--Subject to clause 
                        (ii) and paragraph (6)(C), with respect 
                        to a telehealth service, subject to 
                        section 1833(a)(1)(U), there shall be 
                        paid to the originating site a facility 
                        fee equal to--
                                  (I) for the period beginning 
                                on October 1, 2001, and ending 
                                on December 31, 2001, and for 
                                2002, $20; and
                                  (II) for a subsequent year, 
                                the facility fee specified in 
                                subclause (I) or this subclause 
                                for the preceding year 
                                increased by the percentage 
                                increase in the MEI (as defined 
                                in section 1842(i)(3)) for such 
                                subsequent year.
                          (ii) No facility fee if originating 
                        site is the home.--No facility fee 
                        shall be paid under this subparagraph 
                        to an originating site described in 
                        paragraph (4)(C)(ii)(X).
                  (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.--Except as provided 
                        in paragraphs (5), (6), and (7), the 
                        term``originating site'' means only 
                        those sites described in clause (ii) at 
                        which the eligible telehealth 
                        individual is located at the time the 
                        service is furnished via a 
                        telecommunications system and only if 
                        such site is located--
                                  (I) in an area that is 
                                designated as a rural health 
                                professional shortage area 
                                under section 332(a)(1)(A) of 
                                the Public Health Service Act 
                                (42 U.S.C. 254e(a)(1)(A));
                                  (II) in a county that is not 
                                included in a Metropolitan 
                                Statistical Area; or
                                  (III) from an entity that 
                                participates in a Federal 
                                telemedicine demonstration 
                                project that has been approved 
                                by (or receives funding from) 
                                the Secretary of Health and 
                                Human Services as of December 
                                31, 2000.
                          (ii) Sites described.--The sites 
                        referred to in clause (i) are the 
                        following sites:
                                  (I) The office of a physician 
                                or practitioner.
                                  (II) A critical access 
                                hospital (as defined in section 
                                1861(mm)(1)).
                                  (III) A rural health clinic 
                                (as defined in section 
                                1861(aa)(2)).
                                  (IV) A Federally qualified 
                                health center (as defined in 
                                section 1861(aa)(4)).
                                  (V) A hospital (as defined in 
                                section 1861(e)).
                                  (VI) A hospital-based or 
                                critical access hospital-based 
                                renal dialysis center 
                                (including satellites).
                                  (VII) A skilled nursing 
                                facility (as defined in section 
                                1819(a)).
                                  (VIII) A community mental 
                                health center (as defined in 
                                section 1861(ff)(3)(B)).
                                  (IX) A renal dialysis 
                                facility, but only for purposes 
                                of section 1881(b)(3)(B).
                                  (X) The home of an 
                                individual, but only for 
                                purposes of section 
                                1881(b)(3)(B) or telehealth 
                                services described in paragraph 
                                (7).
                  (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).
          (5) Treatment of home dialysis monthly esrd-related 
        visit.--The geographic requirements described in 
        paragraph (4)(C)(i) shall not apply with respect to 
        telehealth services furnished on or after January 1, 
        2019, for purposes of section 1881(b)(3)(B), at an 
        originating site described in subclause (VI), (IX), or 
        (X) of paragraph (4)(C)(ii).
          (6) Treatment of stroke telehealth services.--
                  (A) Non-application of originating site 
                requirements.--The requirements described in 
                paragraph (4)(C) shall not apply with respect 
                to telehealth services furnished on or after 
                January 1, 2019, for purposes of diagnosis, 
                evaluation, or treatment of symptoms of an 
                acute stroke, as determined by the Secretary.
                  (B) Inclusion of certain sites.--With respect 
                to telehealth services described in 
                subparagraph (A), the term ``originating site'' 
                shall include any hospital (as defined in 
                section 1861(e)) or critical access hospital 
                (as defined in section 1861(mm)(1)), any mobile 
                stroke unit (as defined by the Secretary), or 
                any other site determined appropriate by the 
                Secretary, at which the eligible telehealth 
                individual is located at the time the service 
                is furnished via a telecommunications system.
                  (C) No originating site facility fee for new 
                sites.--No facility fee shall be paid under 
                paragraph (2)(B) to an originating site with 
                respect to a telehealth service described in 
                subparagraph (A) if the originating site does 
                not otherwise meet the requirements for an 
                originating site under paragraph (4)(C).
          (7) Treatment of substance use disorder services 
        furnished through telehealth.--The geographic 
        requirements described in paragraph (4)(C)(i) shall not 
        apply with respect to telehealth services furnished on 
        or after July 1, 2019, to an eligible telehealth 
        individual with a substance use disorder diagnosis for 
        purposes of treatment of such disorder or co-occurring 
        mental health disorder, as determined by the Secretary, 
        at an originating site described in paragraph 
        (4)(C)(ii) (other than an originating site described in 
        subclause (IX) of such paragraph).
  (n) Authority To Modify or Eliminate Coverage of Certain 
Preventive Services.--Notwithstanding any other provision of 
this title, effective beginning on January 1, 2010, if the 
Secretary determines appropriate, the Secretary may--
          (1) modify--
                  (A) the coverage of any preventive service 
                described in subparagraph (A) of section 
                1861(ddd)(3) to the extent that such 
                modification is consistent with the 
                recommendations of the United States Preventive 
                Services Task Force; and
                  (B) the services included in the initial 
                preventive physical examination described in 
                subparagraph (B) of such section; and
          (2) provide that no payment shall be made under this 
        title for a preventive service described in 
        subparagraph (A) of such section that has not received 
        a grade of A, B, C, or I by such Task Force.
  (o) Development and Implementation of Prospective Payment 
System.--
          (1) Development.--
                  (A) In general.--The Secretary shall develop 
                a prospective payment system for payment for 
                Federally qualified health center services 
                furnished by Federally qualified health centers 
                under this title. Such system shall include a 
                process for appropriately describing the 
                services furnished by Federally qualified 
                health centers and shall establish payment 
                rates for specific payment codes based on such 
                appropriate descriptions of services. Such 
                system shall be established to take into 
                account the type, intensity, and duration of 
                services furnished by Federally qualified 
                health centers. Such system may include 
                adjustments, including geographic adjustments, 
                determined appropriate by the Secretary.
                  (B) Collection of data and evaluation.--By 
                not later than January 1, 2011, the Secretary 
                shall require Federally qualified health 
                centers to submit to the Secretary such 
                information as the Secretary may require in 
                order to develop and implement the prospective 
                payment system under this subsection, including 
                the reporting of services using HCPCS codes.
          (2) Implementation.--
                  (A) In general.--Notwithstanding section 
                1833(a)(3)(A), the Secretary shall provide, for 
                cost reporting periods beginning on or after 
                October 1, 2014, for payments of prospective 
                payment rates for Federally qualified health 
                center services furnished by Federally 
                qualified health centers under this title in 
                accordance with the prospective payment system 
                developed by the Secretary under paragraph (1).
                  (B) Payments.--
                          (i) Initial payments.--The Secretary 
                        shall implement such prospective 
                        payment system so that the estimated 
                        aggregate amount of prospective payment 
                        rates (determined prior to the 
                        application of section 1833(a)(1)(Z)) 
                        under this title for Federally 
                        qualified health center services in the 
                        first year that such system is 
                        implemented is equal to 100 percent of 
                        the estimated amount of reasonable 
                        costs (determined without the 
                        application of a per visit payment 
                        limit or productivity screen and prior 
                        to the application of section 
                        1866(a)(2)(A)(ii)) that would have 
                        occurred for such services under this 
                        title in such year if the system had 
                        not been implemented.
                          (ii) Payments in subsequent years.--
                        Payment rates in years after the year 
                        of implementation of such system shall 
                        be the payment rates in the previous 
                        year increased--
                                  (I) in the first year after 
                                implementation of such system, 
                                by the percentage increase in 
                                the MEI (as defined in section 
                                1842(i)(3)) for the year 
                                involved; and
                                  (II) in subsequent years, by 
                                the percentage increase in a 
                                market basket of Federally 
                                qualified health center goods 
                                and services as promulgated 
                                through regulations, or if such 
                                an index is not available, by 
                                the percentage increase in the 
                                MEI (as defined in section 
                                1842(i)(3)) for the year 
                                involved.
                  (C) Preparation for pps implementation.--
                Notwithstanding any other provision of law, the 
                Secretary may establish and implement by 
                program instruction or otherwise the payment 
                codes to be used under the prospective payment 
                system under this section.
          (3) Additional payments for certain fqhcs with 
        physicians or other practitioners receiving data 2000 
        waivers.--
                  (A) In general.--In the case of a Federally 
                qualified health center with respect to which, 
                beginning on or after January 1, 2019, 
                Federally qualified health center services (as 
                defined in section 1861(aa)(3)) are furnished 
                for the treatment of opioid use disorder by a 
                physician or practitioner who meets the 
                requirements described in subparagraph (C), the 
                Secretary shall, subject to availability of 
                funds under subparagraph (D), make a payment 
                (at such time and in such manner as specified 
                by the Secretary) to such Federally qualified 
                health center after receiving and approving an 
                application submitted by such Federally 
                qualified health center under subparagraph (B). 
                Such a payment shall be in an amount determined 
                by the Secretary, based on an estimate of the 
                average costs of training for purposes of 
                receiving a waiver described in subparagraph 
                (C)(ii). Such a payment may be made only one 
                time with respect to each such physician or 
                practitioner.
                  (B) Application.--In order to receive a 
                payment described in subparagraph (A), a 
                Federally qualified health center shall submit 
                to the Secretary an application for such a 
                payment at such time, in such manner, and 
                containing such information as specified by the 
                Secretary. A Federally qualified health center 
                may apply for such a payment for each physician 
                or practitioner described in subparagraph (A) 
                furnishing services described in such 
                subparagraph at such center.
                  (C) Requirements.--For purposes of 
                subparagraph (A), the requirements described in 
                this subparagraph, with respect to a physician 
                or practitioner, are the following:
                          (i) The physician or practitioner is 
                        employed by or working under contract 
                        with a Federally qualified health 
                        center described in subparagraph (A) 
                        that submits an application under 
                        subparagraph (B).
                          (ii) The physician or practitioner 
                        first receives a waiver under section 
                        303(g) of the Controlled Substances Act 
                        on or after January 1, 2019.
                  (D) Funding.--For purposes of making payments 
                under this paragraph, there are appropriated, 
                out of amounts in the Treasury not otherwise 
                appropriated, $6,000,000, which shall remain 
                available until expended.
  (p) Quality Incentives To Promote Patient Safety and Public 
Health in Computed Tomography.--
          (1) Quality incentives.--In the case of an applicable 
        computed tomography service (as defined in paragraph 
        (2)) for which payment is made under an applicable 
        payment system (as defined in paragraph (3)) and that 
        is furnished on or after January 1, 2016, using 
        equipment that is not consistent with the CT equipment 
        standard (described in paragraph (4)), the payment 
        amount for such service shall be reduced by the 
        applicable percentage (as defined in paragraph (5)).
          (2) Applicable computed tomography services 
        defined.--In this subsection, the term ``applicable 
        computed tomography service'' means a service billed 
        using diagnostic radiological imaging codes for 
        computed tomography (identified as of January 1, 2014, 
        by HCPCS codes 70450-70498, 71250-71275, 72125-72133, 
        72191-72194, 73200-73206, 73700-73706, 74150-74178, 
        74261-74263, and 75571-75574 (and any succeeding 
        codes).
          (3) Applicable payment system defined.--In this 
        subsection, the term ``applicable payment system'' 
        means the following:
                  (A) The technical component and the technical 
                component of the global fee under the fee 
                schedule established under section 1848(b).
                  (B) The prospective payment system for 
                hospital outpatient department services under 
                section 1833(t).
          (4) Consistency with ct equipment standard.--In this 
        subsection, the term ``not consistent with the CT 
        equipment standard'' means, with respect to an 
        applicable computed tomography service, that the 
        service was furnished using equipment that does not 
        meet each of the attributes of the National Electrical 
        Manufacturers Association (NEMA) Standard XR-29-2013, 
        entitled ``Standard Attributes on CT Equipment Related 
        to Dose Optimization and Management''. Through 
        rulemaking, the Secretary may apply successor 
        standards.
          (5) Applicable percentage defined.--In this 
        subsection, the term ``applicable percentage'' means--
                  (A) for 2016, 5 percent; and
                  (B) for 2017 and subsequent years, 15 
                percent.
          (6) Implementation.--
                  (A) Information.--The Secretary shall require 
                that information be provided and attested to by 
                a supplier and a hospital outpatient department 
                that indicates whether an applicable computed 
                tomography service was furnished that was not 
                consistent with the CT equipment standard 
                (described in paragraph (4)). Such information 
                may be included on a claim and may be a 
                modifier. Such information shall be verified, 
                as appropriate, as part of the periodic 
                accreditation of suppliers under section 
                1834(e) and hospitals under section 1865(a).
                  (B) Administration.--Chapter 35 of title 44, 
                United States Code, shall not apply to 
                information described in subparagraph (A).
  (q) Recognizing Appropriate Use Criteria for Certain Imaging 
Services.--
          (1) Program established.--
                  (A) In general.--The Secretary shall 
                establish a program to promote the use of 
                appropriate use criteria (as defined in 
                subparagraph (B)) for applicable imaging 
                services (as defined in subparagraph (C)) 
                furnished in an applicable setting (as defined 
                in subparagraph (D)) by ordering professionals 
                and furnishing professionals (as defined in 
                subparagraphs (E) and (F), respectively).
                  (B) Appropriate use criteria defined.--In 
                this subsection, the term ``appropriate use 
                criteria'' means criteria, only developed or 
                endorsed by national professional medical 
                specialty societies or other provider-led 
                entities, to assist ordering professionals and 
                furnishing professionals in making the most 
                appropriate treatment decision for a specific 
                clinical condition for an individual. To the 
                extent feasible, such criteria shall be 
                evidence-based.
                  (C) Applicable imaging service defined.--In 
                this subsection, the term ``applicable imaging 
                service'' means an advanced diagnostic imaging 
                service (as defined in subsection (e)(1)(B)) 
                for which the Secretary determines--
                          (i) one or more applicable 
                        appropriate use criteria specified 
                        under paragraph (2) apply;
                          (ii) there are one or more qualified 
                        clinical decision support mechanisms 
                        listed under paragraph (3)(C); and
                          (iii) one or more of such mechanisms 
                        is available free of charge.
                  (D) Applicable setting defined.--In this 
                subsection, the term ``applicable setting'' 
                means a physician's office, a hospital 
                outpatient department (including an emergency 
                department), an ambulatory surgical center, and 
                any other provider-led outpatient setting 
                determined appropriate by the Secretary.
                  (E) Ordering professional defined.--In this 
                subsection, the term ``ordering professional'' 
                means a physician (as defined in section 
                1861(r)) or a practitioner described in section 
                1842(b)(18)(C) who orders an applicable imaging 
                service.
                  (F) Furnishing professional defined.--In this 
                subsection, the term ``furnishing 
                professional'' means a physician (as defined in 
                section 1861(r)) or a practitioner described in 
                section 1842(b)(18)(C) who furnishes an 
                applicable imaging service.
          (2) Establishment of applicable appropriate use 
        criteria.--
                  (A) In general.--Not later than November 15, 
                2015, the Secretary shall through rulemaking, 
                and in consultation with physicians, 
                practitioners, and other stakeholders, specify 
                applicable appropriate use criteria for 
                applicable imaging services only from among 
                appropriate use criteria developed or endorsed 
                by national professional medical specialty 
                societies or other provider-led entities.
                  (B) Considerations.--In specifying applicable 
                appropriate use criteria under subparagraph 
                (A), the Secretary shall take into account 
                whether the criteria--
                          (i) have stakeholder consensus;
                          (ii) are scientifically valid and 
                        evidence based; and
                          (iii) are based on studies that are 
                        published and reviewable by 
                        stakeholders.
                  (C) Revisions.--The Secretary shall review, 
                on an annual basis, the specified applicable 
                appropriate use criteria to determine if there 
                is a need to update or revise (as appropriate) 
                such specification of applicable appropriate 
                use criteria and make such updates or revisions 
                through rulemaking.
                  (D) Treatment of multiple applicable 
                appropriate use criteria.--In the case where 
                the Secretary determines that more than one 
                appropriate use criterion applies with respect 
                to an applicable imaging service, the Secretary 
                shall apply one or more applicable appropriate 
                use criteria under this paragraph for the 
                service.
          (3) Mechanisms for consultation with applicable 
        appropriate use criteria.--
                  (A) Identification of mechanisms to consult 
                with applicable appropriate use criteria.--
                          (i) In general.--The Secretary shall 
                        specify qualified clinical decision 
                        support mechanisms that could be used 
                        by ordering professionals to consult 
                        with applicable appropriate use 
                        criteria for applicable imaging 
                        services.
                          (ii) Consultation.--The Secretary 
                        shall consult with physicians, 
                        practitioners, health care technology 
                        experts, and other stakeholders in 
                        specifying mechanisms under this 
                        paragraph.
                          (iii) Inclusion of certain 
                        mechanisms.--Mechanisms specified under 
                        this paragraph may include any or all 
                        of the following that meet the 
                        requirements described in subparagraph 
                        (B)(ii):
                                  (I) Use of clinical decision 
                                support modules in certified 
                                EHR technology (as defined in 
                                section 1848(o)(4)).
                                  (II) Use of private sector 
                                clinical decision support 
                                mechanisms that are independent 
                                from certified EHR technology, 
                                which may include use of 
                                clinical decision support 
                                mechanisms available from 
                                medical specialty 
                                organizations.
                                  (III) Use of a clinical 
                                decision support mechanism 
                                established by the Secretary.
                  (B) Qualified clinical decision support 
                mechanisms.--
                          (i) In general.--For purposes of this 
                        subsection, a qualified clinical 
                        decision support mechanism is a 
                        mechanism that the Secretary determines 
                        meets the requirements described in 
                        clause (ii).
                          (ii) Requirements.--The requirements 
                        described in this clause are the 
                        following:
                                  (I) The mechanism makes 
                                available to the ordering 
                                professional applicable 
                                appropriate use criteria 
                                specified under paragraph (2) 
                                and the supporting 
                                documentation for the 
                                applicable imaging service 
                                ordered.
                                  (II) In the case where there 
                                is more than one applicable 
                                appropriate use criterion 
                                specified under such paragraph 
                                for an applicable imaging 
                                service, the mechanism 
                                indicates the criteria that it 
                                uses for the service.
                                  (III) The mechanism 
                                determines the extent to which 
                                an applicable imaging service 
                                ordered is consistent with the 
                                applicable appropriate use 
                                criteria so specified.
                                  (IV) The mechanism generates 
                                and provides to the ordering 
                                professional a certification or 
                                documentation that documents 
                                that the qualified clinical 
                                decision support mechanism was 
                                consulted by the ordering 
                                professional.
                                  (V) The mechanism is updated 
                                on a timely basis to reflect 
                                revisions to the specification 
                                of applicable appropriate use 
                                criteria under such paragraph.
                                  (VI) The mechanism meets 
                                privacy and security standards 
                                under applicable provisions of 
                                law.
                                  (VII) The mechanism performs 
                                such other functions as 
                                specified by the Secretary, 
                                which may include a requirement 
                                to provide aggregate feedback 
                                to the ordering professional.
                  (C) List of mechanisms for consultation with 
                applicable appropriate use criteria.--
                          (i) Initial list.--Not later than 
                        April 1, 2016, the Secretary shall 
                        publish a list of mechanisms specified 
                        under this paragraph.
                          (ii) Periodic updating of list.--The 
                        Secretary shall identify on an annual 
                        basis the list of qualified clinical 
                        decision support mechanisms specified 
                        under this paragraph.
          (4) Consultation with applicable appropriate use 
        criteria.--
                  (A) Consultation by ordering professional.--
                Beginning with January 1, 2017, subject to 
                subparagraph (C), with respect to an applicable 
                imaging service ordered by an ordering 
                professional that would be furnished in an 
                applicable setting and paid for under an 
                applicable payment system (as defined in 
                subparagraph (D)), an ordering professional 
                shall--
                          (i) consult with a qualified decision 
                        support mechanism listed under 
                        paragraph (3)(C); and
                          (ii) provide to the furnishing 
                        professional the information described 
                        in clauses (i) through (iii) of 
                        subparagraph (B).
                  (B) Reporting by furnishing professional.--
                Beginning with January 1, 2017, subject to 
                subparagraph (C), with respect to an applicable 
                imaging service furnished in an applicable 
                setting and paid for under an applicable 
                payment system (as defined in subparagraph 
                (D)), payment for such service may only be made 
                if the claim for the service includes the 
                following:
                          (i) Information about which qualified 
                        clinical decision support mechanism was 
                        consulted by the ordering professional 
                        for the service.
                          (ii) Information regarding--
                                  (I) whether the service 
                                ordered would adhere to the 
                                applicable appropriate use 
                                criteria specified under 
                                paragraph (2);
                                  (II) whether the service 
                                ordered would not adhere to 
                                such criteria; or
                                  (III) whether such criteria 
                                was not applicable to the 
                                service ordered.
                          (iii) The national provider 
                        identifier of the ordering professional 
                        (if different from the furnishing 
                        professional).
                  (C) Exceptions.--The provisions of 
                subparagraphs (A) and (B) and paragraph (6)(A) 
                shall not apply to the following:
                          (i) Emergency services.--An 
                        applicable imaging service ordered for 
                        an individual with an emergency medical 
                        condition (as defined in section 
                        1867(e)(1)).
                          (ii) Inpatient services.--An 
                        applicable imaging service ordered for 
                        an inpatient and for which payment is 
                        made under part A.
                          (iii) Significant hardship.--An 
                        applicable imaging service ordered by 
                        an ordering professional who the 
                        Secretary may, on a case-by-case basis, 
                        exempt from the application of such 
                        provisions if the Secretary determines, 
                        subject to annual renewal, that 
                        consultation with applicable 
                        appropriate use criteria would result 
                        in a significant hardship, such as in 
                        the case of a professional who 
                        practices in a rural area without 
                        sufficient Internet access.
                  (D) Applicable payment system defined.--In 
                this subsection, the term ``applicable payment 
                system'' means the following:
                          (i) The physician fee schedule 
                        established under section 1848(b).
                          (ii) The prospective payment system 
                        for hospital outpatient department 
                        services under section 1833(t).
                          (iii) The ambulatory surgical center 
                        payment systems under section 1833(i).
          (5) Identification of outlier ordering 
        professionals.--
                  (A) In general.--With respect to applicable 
                imaging services furnished beginning with 2017, 
                the Secretary shall determine, on an annual 
                basis, no more than five percent of the total 
                number of ordering professionals who are 
                outlier ordering professionals.
                  (B) Outlier ordering professionals.--The 
                determination of an outlier ordering 
                professional shall--
                          (i) be based on low adherence to 
                        applicable appropriate use criteria 
                        specified under paragraph (2), which 
                        may be based on comparison to other 
                        ordering professionals; and
                          (ii) include data for ordering 
                        professionals for whom prior 
                        authorization under paragraph (6)(A) 
                        applies.
                  (C) Use of two years of data.--The Secretary 
                shall use two years of data to identify outlier 
                ordering professionals under this paragraph.
                  (D) Process.--The Secretary shall establish a 
                process for determining when an outlier 
                ordering professional is no longer an outlier 
                ordering professional.
                  (E) Consultation with stakeholders.--The 
                Secretary shall consult with physicians, 
                practitioners and other stakeholders in 
                developing methods to identify outlier ordering 
                professionals under this paragraph.
          (6) Prior authorization for ordering professionals 
        who are outliers.--
                  (A) In general.--Beginning January 1, 2020, 
                subject to paragraph (4)(C), with respect to 
                services furnished during a year, the Secretary 
                shall, for a period determined appropriate by 
                the Secretary, apply prior authorization for 
                applicable imaging services that are ordered by 
                an outlier ordering professional identified 
                under paragraph (5).
                  (B) Appropriate use criteria in prior 
                authorization.--In applying prior authorization 
                under subparagraph (A), the Secretary shall 
                utilize only the applicable appropriate use 
                criteria specified under this subsection.
                  (C) Funding.--For purposes of carrying out 
                this paragraph, the Secretary shall provide for 
                the transfer, from the Federal Supplementary 
                Medical Insurance Trust Fund under section 
                1841, of $5,000,000 to the Centers for Medicare 
                & Medicaid Services Program Management Account 
                for each of fiscal years 2019 through 2021. 
                Amounts transferred under the preceding 
                sentence shall remain available until expended.
          (7) Construction.--Nothing in this subsection shall 
        be construed as granting the Secretary the authority to 
        develop or initiate the development of clinical 
        practice guidelines or appropriate use criteria.
  (r) Payment for Renal Dialysis Services for Individuals With 
Acute Kidney Injury.--
          (1) Payment rate.--In the case of renal dialysis 
        services (as defined in subparagraph (B) of section 
        1881(b)(14)) furnished under this part by a renal 
        dialysis facility or provider of services paid under 
        such section during a year (beginning with 2017) to an 
        individual with acute kidney injury (as defined in 
        paragraph (2)), the amount of payment under this part 
        for such services shall be the base rate for renal 
        dialysis services determined for such year under such 
        section, as adjusted by any applicable geographic 
        adjustment factor applied under subparagraph 
        (D)(iv)(II) of such section and may be adjusted by the 
        Secretary (on a budget neutral basis for payments under 
        this paragraph) by any other adjustment factor under 
        subparagraph (D) of such section.
          (2) Individual with acute kidney injury defined.--In 
        this subsection, the term ``individual with acute 
        kidney injury'' means an individual who has acute loss 
        of renal function and does not receive renal dialysis 
        services for which payment is made under section 
        1881(b)(14).
  (s) Payment for Applicable Disposable Devices.--
          (1) Separate payment.--The Secretary shall make a 
        payment (separate from the payments otherwise made 
        under section 1895) in the amount established under 
        paragraph (3) to a home health agency for an applicable 
        disposable device (as defined in paragraph (2)) when 
        furnished on or after January 1, 2017, to an individual 
        who receives home health services for which payment is 
        made under section 1895(b).
          (2) Applicable disposable device.--In this 
        subsection, the term applicable disposable device means 
        a disposable device that, as determined by the 
        Secretary, is--
                  (A) a disposable negative pressure wound 
                therapy device that is an integrated system 
                comprised of a non-manual vacuum pump, a 
                receptacle for collecting exudate, and 
                dressings for the purposes of wound therapy; 
                and
                  (B) a substitute for, and used in lieu of, a 
                negative pressure wound therapy durable medical 
                equipment item that is an integrated system of 
                a negative pressure vacuum pump, a separate 
                exudate collection canister, and dressings that 
                would otherwise be covered for individuals for 
                such wound therapy.
          (3) Payment amount.--The separate payment amount 
        established under this paragraph for an applicable 
        disposable device for a year shall be equal to the 
        amount of the payment that would be made under section 
        1833(t) (relating to payment for covered OPD services) 
        for the year for the Level I Healthcare Common 
        Procedure Coding System (HCPCS) code for which the 
        description for a professional service includes the 
        furnishing of such device.
  (t) Site-of-Service Price Transparency.--
          (1) In general.--In order to facilitate price 
        transparency with respect to items and services for 
        which payment may be made either to a hospital 
        outpatient department or to an ambulatory surgical 
        center under this title, the Secretary shall, for 2018 
        and each year thereafter, make available to the public 
        via a searchable Internet website, with respect to an 
        appropriate number of such items and services--
                  (A) the estimated payment amount for the item 
                or service under the outpatient department fee 
                schedule under subsection (t) of section 1833 
                and the ambulatory surgical center payment 
                system under subsection (i) of such section; 
                and
                  (B) the estimated amount of beneficiary 
                liability applicable to the item or service.
          (2) Calculation of estimated beneficiary liability.--
        For purposes of paragraph (1)(B), the estimated amount 
        of beneficiary liability, with respect to an item or 
        service, is the amount for such item or service for 
        which an individual who does not have coverage under a 
        Medicare supplemental policy certified under section 
        1882 or any other supplemental insurance coverage is 
        responsible.
          (3) Implementation.--In carrying out this subsection, 
        the Secretary--
                  (A) shall include in the notice described in 
                section 1804(a) a notification of the 
                availability of the estimated amounts made 
                available under paragraph (1); and
                  (B) may utilize mechanisms in existence on 
                the date of enactment of this subsection, such 
                as the portion of the Internet website of the 
                Centers for Medicare & Medicaid Services on 
                which information comparing physician 
                performance is posted (commonly referred to as 
                the Physician Compare Internet website), to 
                make available such estimated amounts under 
                such paragraph.
          (4) Funding.--For purposes of implementing this 
        subsection, the Secretary shall provide for the 
        transfer, from the Federal Supplementary Medical 
        Insurance Trust Fund under section 1841 to the Centers 
        for Medicare & Medicaid Services Program Management 
        Account, of $6,000,000 for fiscal year 2017, to remain 
        available until expended.
  (u) Payment and Related Requirements for Home Infusion 
Therapy.--
          (1) Payment.--
                  (A) Single payment.--
                          (i) In general.--Subject to clause 
                        (iii) and subparagraphs (B) and (C), 
                        the Secretary shall implement a payment 
                        system under which a single payment is 
                        made under this title to a qualified 
                        home infusion therapy supplier for 
                        items and services described in 
                        subparagraphs (A) and (B) of section 
                        1861(iii)(2)) furnished by a qualified 
                        home infusion therapy supplier (as 
                        defined in section 1861(iii)(3)(D)) in 
                        coordination with the furnishing of 
                        home infusion drugs (as defined in 
                        section 1861(iii)(3)(C)) under this 
                        part.
                          (ii) Unit of single payment.--A unit 
                        of single payment under the payment 
                        system implemented under this 
                        subparagraph is for each infusion drug 
                        administration calendar day in the 
                        individual's home. The Secretary shall, 
                        as appropriate, establish single 
                        payment amounts for types of infusion 
                        therapy, including to take into account 
                        variation in utilization of nursing 
                        services by therapy type.
                          (iii) Limitation.--The single payment 
                        amount determined under this 
                        subparagraph after application of 
                        subparagraph (B) and paragraph (3) 
                        shall not exceed the amount determined 
                        under the fee schedule under section 
                        1848 for infusion therapy services 
                        furnished in a calendar day if 
                        furnished in a physician office 
                        setting, except such single payment 
                        shall not reflect more than 5 hours of 
                        infusion for a particular therapy in a 
                        calendar day.
                  (B) Required adjustments.--The Secretary 
                shall adjust the single payment amount 
                determined under subparagraph (A) for home 
                infusion therapy services under section 
                1861(iii)(1) to reflect other factors such as--
                          (i) a geographic wage index and other 
                        costs that may vary by region; and
                          (ii) patient acuity and complexity of 
                        drug administration.
                  (C) Discretionary adjustments.--
                          (i) In general.--Subject to clause 
                        (ii), the Secretary may adjust the 
                        single payment amount determined under 
                        subparagraph (A) (after application of 
                        subparagraph (B)) to reflect outlier 
                        situations and other factors as the 
                        Secretary determines appropriate.
                          (ii) Requirement of budget 
                        neutrality.--Any adjustment under this 
                        subparagraph shall be made in a budget 
                        neutral manner.
          (2) Considerations.--In developing the payment system 
        under this subsection, the Secretary may consider the 
        costs of furnishing infusion therapy in the home, 
        consult with home infusion therapy suppliers, consider 
        payment amounts for similar items and services under 
        this part and part A, and consider payment amounts 
        established by Medicare Advantage plans under part C 
        and in the private insurance market for home infusion 
        therapy (including average per treatment day payment 
        amounts by type of home infusion therapy).
          (3) Annual updates.--
                  (A) In general.--Subject to subparagraph (B), 
                the Secretary shall update the single payment 
                amount under this subsection from year to year 
                beginning in 2022 by increasing the single 
                payment amount from the prior year by the 
                percentage increase in the Consumer Price Index 
                for all urban consumers (United States city 
                average) for the 12-month period ending with 
                June of the preceding year.
                  (B) Adjustment.--For each year, the Secretary 
                shall reduce the percentage increase described 
                in subparagraph (A) by the productivity 
                adjustment described in section 
                1886(b)(3)(B)(xi)(II). The application of the 
                preceding sentence may result in a percentage 
                being less than 0.0 for a year, and may result 
                in payment being less than such payment rates 
                for the preceding year.
          (4) Authority to apply prior authorization.--The 
        Secretary may, as determined appropriate by the 
        Secretary, apply prior authorization for home infusion 
        therapy services under section 1861(iii)(1).
          (5) Accreditation of qualified home infusion therapy 
        suppliers.--
                  (A) Factors for designation of accreditation 
                organizations.--The Secretary shall consider 
                the following factors in designating 
                accreditation organizations under subparagraph 
                (B) and in reviewing and modifying the list of 
                accreditation organizations designated pursuant 
                to subparagraph (C):
                          (i) The ability of the organization 
                        to conduct timely reviews of 
                        accreditation applications.
                          (ii) The ability of the organization 
                        to take into account the capacities of 
                        suppliers located in a rural area (as 
                        defined in section 1886(d)(2)(D)).
                          (iii) Whether the organization has 
                        established reasonable fees to be 
                        charged to suppliers applying for 
                        accreditation.
                          (iv) Such other factors as the 
                        Secretary determines appropriate.
                  (B) Designation.--Not later than January 1, 
                2021, the Secretary shall designate 
                organizations to accredit suppliers furnishing 
                home infusion therapy. The list of 
                accreditation organizations so designated may 
                be modified pursuant to subparagraph (C).
                  (C) Review and modification of list of 
                accreditation organizations.--
                          (i) In general.--The Secretary shall 
                        review the list of accreditation 
                        organizations designated under 
                        subparagraph (B) taking into account 
                        the factors under subparagraph (A). 
                        Taking into account the results of such 
                        review, the Secretary may, by 
                        regulation, modify the list of 
                        accreditation organizations designated 
                        under subparagraph (B).
                          (ii) Special rule for accreditations 
                        done prior to removal from list of 
                        designated accreditation 
                        organizations.--In the case where the 
                        Secretary removes an organization from 
                        the list of accreditation organizations 
                        designated under subparagraph (B), any 
                        supplier that is accredited by the 
                        organization during the period 
                        beginning on the date on which the 
                        organization is designated as an 
                        accreditation organization under 
                        subparagraph (B) and ending on the date 
                        on which the organization is removed 
                        from such list shall be considered to 
                        have been accredited by an organization 
                        designated by the Secretary under 
                        subparagraph (B) for the remaining 
                        period such accreditation is in effect.
                  (D) Rule for accreditations made prior to 
                designation.--In the case of a supplier that is 
                accredited before January 1, 2021, by an 
                accreditation organization designated by the 
                Secretary under subparagraph (B) as of January 
                1, 2019, such supplier shall be considered to 
                have been accredited by an organization 
                designated by the Secretary under such 
                paragraph as of January 1, 2023, for the 
                remaining period such accreditation is in 
                effect.
          (6) Notification of infusion therapy options 
        available prior to furnishing home infusion therapy.--
        Prior to the furnishing of home infusion therapy to an 
        individual, the physician who establishes the plan 
        described in section 1861(iii)(1) for the individual 
        shall provide notification (in a form, manner, and 
        frequency determined appropriate by the Secretary) of 
        the options available (such as home, physician's 
        office, hospital outpatient department) for the 
        furnishing of infusion therapy under this part.
          (7) Home infusion therapy services temporary 
        transitional payment.--
                  (A) Temporary transitional payment.--
                          (i) In general.--The Secretary shall, 
                        in accordance with the payment 
                        methodology described in subparagraph 
                        (B) and subject to the provisions of 
                        this paragraph, provide a home infusion 
                        therapy services temporary transitional 
                        payment under this part to an eligible 
                        home infusion supplier (as defined in 
                        subparagraph (F)) for items and 
                        services described in subparagraphs (A) 
                        and (B) of section 1861(iii)(2)) 
                        furnished during the period specified 
                        in clause (ii) by such supplier in 
                        coordination with the furnishing of 
                        transitional home infusion drugs (as 
                        defined in clause (iii)).
                          (ii) Period specified.--For purposes 
                        of clause (i), the period specified in 
                        this clause is the period beginning on 
                        January 1, 2019, and ending on the day 
                        before the date of the implementation 
                        of the payment system under paragraph 
                        (1)(A).
                          (iii) Transitional home infusion drug 
                        defined.--For purposes of this 
                        paragraph, the term ``transitional home 
                        infusion drug'' has the meaning given 
                        to the term ``home infusion drug'' 
                        under section 1861(iii)(3)(C)), except 
                        that clause (ii) of such section shall 
                        not apply if a drug described in such 
                        clause is identified in clauses (i), 
                        (ii), (iii) or (iv) of subparagraph (C) 
                        as of the date of the enactment of this 
                        paragraph.
                  (B) Payment methodology.--For purposes of 
                this paragraph, the Secretary shall establish a 
                payment methodology, with respect to items and 
                services described in subparagraph (A)(i). 
                Under such payment methodology the Secretary 
                shall--
                          (i) create the three payment 
                        categories described in clauses (i), 
                        (ii), and (iii) of subparagraph (C);
                          (ii) assign drugs to such categories, 
                        in accordance with such clauses;
                          (iii) assign appropriate Healthcare 
                        Common Procedure Coding System (HCPCS) 
                        codes to each payment category; and
                          (iv) establish a single payment 
                        amount for each such payment category, 
                        in accordance with subparagraph (D), 
                        for each infusion drug administration 
                        calendar day in the individual's home 
                        for drugs assigned to such category.
                  (C) Payment categories.--
                          (i) Payment category 1.--The 
                        Secretary shall create a payment 
                        category 1 and assign to such category 
                        drugs which are covered under the Local 
                        Coverage Determination on External 
                        Infusion Pumps (LCD number L33794) and 
                        billed with the following HCPCS codes 
                        (as identified as of January 1, 2018, 
                        and as subsequently modified by the 
                        Secretary): J0133, J0285, J0287, J0288, 
                        J0289, J0895, J1170, J1250, J1265, 
                        J1325, J1455, J1457, J1570, J2175, 
                        J2260, J2270, J2274, J2278, J3010, or 
                        J3285.
                          (ii) Payment category 2.--The 
                        Secretary shall create a payment 
                        category 2 and assign to such category 
                        drugs which are covered under such 
                        local coverage determination and billed 
                        with the following HCPCS codes (as 
                        identified as of January 1, 2018, and 
                        as subsequently modified by the 
                        Secretary): J1555 JB, J1559 JB, J1561 
                        JB, J1562 JB, J1569 JB, or J1575 JB.
                          (iii) Payment category 3.--The 
                        Secretary shall create a payment 
                        category 3 and assign to such category 
                        drugs which are covered under such 
                        local coverage determination and billed 
                        with the following HCPCS codes (as 
                        identified as of January 1, 2018, and 
                        as subsequently modified by the 
                        Secretary): J9000, J9039, J9040, J9065, 
                        J9100, J9190, J9200, J9360, or J9370.
                          (iv) Infusion drugs not otherwise 
                        included.--With respect to drugs that 
                        are not included in payment category 1, 
                        2, or 3 under clause (i), (ii), or 
                        (iii), respectively, the Secretary 
                        shall assign to the most appropriate of 
                        such categories, as determined by the 
                        Secretary, drugs which are--
                                  (I) covered under such local 
                                coverage determination and 
                                billed under HCPCS codes J7799 
                                or J7999 (as identified as of 
                                July 1, 2017, and as 
                                subsequently modified by the 
                                Secretary); or
                                  (II) billed under any code 
                                that is implemented after the 
                                date of the enactment of this 
                                paragraph and included in such 
                                local coverage determination or 
                                included in subregulatory 
                                guidance as a home infusion 
                                drug described in subparagraph 
                                (A)(i).
                  (D) Payment amounts.--
                          (i) In general.--Under the payment 
                        methodology, the Secretary shall pay 
                        eligible home infusion suppliers, with 
                        respect to items and services described 
                        in subparagraph (A)(i) furnished during 
                        the period described in subparagraph 
                        (A)(ii) by such supplier to an 
                        individual, at amounts equal to the 
                        amounts determined under the physician 
                        fee schedule established under section 
                        1848 for services furnished during the 
                        year for codes and units of such codes 
                        described in clauses (ii), (iii), and 
                        (iv) with respect to drugs included in 
                        the payment category under subparagraph 
                        (C) specified in the respective clause, 
                        determined without application of the 
                        geographic adjustment under subsection 
                        (e) of such section.
                          (ii) Payment amount for category 1.--
                        For purposes of clause (i), the codes 
                        and units described in this clause, 
                        with respect to drugs included in 
                        payment category 1 described in 
                        subparagraph (C)(i), are one unit of 
                        HCPCS code 96365 plus three units of 
                        HCPCS code 96366 (as identified as of 
                        January 1, 2018, and as subsequently 
                        modified by the Secretary).
                          (iii) Payment amount for category 
                        2.--For purposes of clause (i), the 
                        codes and units described in this 
                        clause, with respect to drugs included 
                        in payment category 2 described in 
                        subparagraph (C)(i), are one unit of 
                        HCPCS code 96369 plus three units of 
                        HCPCS code 96370 (as identified as of 
                        January 1, 2018, and as subsequently 
                        modified by the Secretary).
                          (iv) Payment amount for category 3.--
                        For purposes of clause (i), the codes 
                        and units described in this clause, 
                        with respect to drugs included in 
                        payment category 3 described in 
                        subparagraph (C)(i), are one unit of 
                        HCPCS code 96413 plus three units of 
                        HCPCS code 96415 (as identified as of 
                        January 1, 2018, and as subsequently 
                        modified by the Secretary).
                  (E) Clarifications.--
                          (i) Infusion drug administration 
                        day.--For purposes of this subsection, 
                        with respect to the furnishing of 
                        transitional home infusion drugs or 
                        home infusion drugs to an individual by 
                        an eligible home infusion supplier or a 
                        qualified home infusion therapy 
                        supplier, a reference to payment to 
                        such supplier for an infusion drug 
                        administration calendar day in the 
                        individual's home shall refer to 
                        payment only for the date on which 
                        professional services (as described in 
                        section 1861(iii)(2)(A)) were furnished 
                        to administer such drugs to such 
                        individual. For purposes of the 
                        previous sentence, an infusion drug 
                        administration calendar day shall 
                        include all such drugs administered to 
                        such individual on such day.
                          (ii) Treatment of multiple drugs 
                        administered on same infusion drug 
                        administration day.--In the case that 
                        an eligible home infusion supplier, 
                        with respect to an infusion drug 
                        administration calendar day in an 
                        individual's home, furnishes to such 
                        individual transitional home infusion 
                        drugs which are not all assigned to the 
                        same payment category under 
                        subparagraph (C), payment to such 
                        supplier for such infusion drug 
                        administration calendar day in the 
                        individual's home shall be a single 
                        payment equal to the amount of payment 
                        under this paragraph for the drug, 
                        among all such drugs so furnished to 
                        such individual during such calendar 
                        day, for which the highest payment 
                        would be made under this paragraph.
                  (F) Eligible home infusion suppliers.--In 
                this paragraph, the term ``eligible home 
                infusion supplier'' means a supplier that is 
                enrolled under this part as a pharmacy that 
                provides external infusion pumps and external 
                infusion pump supplies and that maintains all 
                pharmacy licensure requirements in the State in 
                which the applicable infusion drugs are 
                administered.
                  (G) Implementation.--Notwithstanding any 
                other provision of law, the Secretary may 
                implement this paragraph by program instruction 
                or otherwise.
  (v) Payment for Outpatient Physical Therapy Services and 
Outpatient Occupational Therapy Services Furnished by a Therapy 
Assistant.--
          (1) In general.--In the case of an outpatient 
        physical therapy service or outpatient occupational 
        therapy service furnished on or after January 1, 2022, 
        for which payment is made under section 1848 or 
        subsection (k), that is furnished in whole or in part 
        by a therapy assistant (as defined by the Secretary), 
        the amount of payment for such service shall be an 
        amount equal to 85 percent of the amount of payment 
        otherwise applicable for the service under this part. 
        Nothing in the preceding sentence shall be construed to 
        change applicable requirements with respect to such 
        services.
          (2) Use of modifier.--
                  (A) Establishment.--Not later than January 1, 
                2019, the Secretary shall establish a modifier 
                to indicate (in a form and manner specified by 
                the Secretary), in the case of an outpatient 
                physical therapy service or outpatient 
                occupational therapy service furnished in whole 
                or in part by a therapy assistant (as so 
                defined), that the service was furnished by a 
                therapy assistant.
                  (B) Required use.--Each request for payment, 
                or bill submitted, for an outpatient physical 
                therapy service or outpatient occupational 
                therapy service furnished in whole or in part 
                by a therapy assistant (as so defined) on or 
                after January 1, 2020, shall include the 
                modifier established under subparagraph (A) for 
                each such service.
          (3) Implementation.--The Secretary shall implement 
        this subsection through notice and comment rulemaking.
  (w) Opioid Use Disorder Treatment Services.--
          (1) In general.--The Secretary shall pay to an opioid 
        treatment program (as defined in paragraph (2) of 
        section 1861(jjj)) an amount that is equal to 100 
        percent of a bundled payment under this part for opioid 
        use disorder treatment services (as defined in 
        paragraph (1) of such section) that are furnished by 
        such program to an individual during an episode of care 
        (as defined by the Secretary) beginning on or after 
        January 1, 2020. The Secretary shall ensure, as 
        determined appropriate by the Secretary, that no 
        duplicative payments are made under this part or part D 
        for items and services furnished by an opioid treatment 
        program.
          (2) Considerations.--The Secretary may implement this 
        subsection through one or more bundles based on the 
        type of medication provided (such as buprenorphine, 
        methadone, naltrexone, or a new innovative drug), the 
        frequency of services, the scope of services furnished, 
        characteristics of the individuals furnished such 
        services, or other factors as the Secretary determine 
        appropriate. In developing such bundles, the Secretary 
        may consider payment rates paid to opioid treatment 
        programs for comparable services under State plans 
        under title XIX or under the TRICARE program under 
        chapter 55 of title 10 of the United States Code.
          (3) Annual updates.--The Secretary shall provide an 
        update each year to the bundled payment amounts under 
        this subsection.
  (x) Limitation for Vision Services.--With respect to vision 
services (as defined in section 1861(kkk)) and an individual, 
payment may be made under this part for only 1 routine eye 
examination described in paragraph (1) of such section and 1 
contact lens fitting service described in paragraph (2) of such 
section during a 2-year period.

           *       *       *       *       *       *       *


         competitive acquisition of certain items and services

  Sec. 1847. (a) Establishment of Competitive Acquisition 
Programs.--
          (1) Implementation of programs.--
                  (A) In general.--The Secretary shall 
                establish and implement programs under which 
                competitive acquisition areas are established 
                throughout the United States for contract award 
                purposes for the furnishing under this part of 
                competitively priced items and services 
                (described in paragraph (2)) for which payment 
                is made under this part. Such areas may differ 
                for different items and services.
                  (B) Phased-in implementation.--The programs--
                          (i) shall be phased in among 
                        competitive acquisition areas in a 
                        manner consistent with subparagraph (D) 
                        so that the competition under the 
                        programs occurs in--
                                  (I) 10 of the largest 
                                metropolitan statistical areas 
                                in 2007;
                                  (II) an additional 91 of the 
                                largest metropolitan 
                                statistical areas in 2011; and
                                  (III) additional areas after 
                                2011 (or, in the case of 
                                national mail order for items 
                                and services, after 2010); and
                          (ii) may be phased in first among the 
                        highest cost and highest volume items 
                        and services or those items and 
                        services that the Secretary determines 
                        have the largest savings potential.
                  (C) Waiver of certain provisions.--In 
                carrying out the programs, the Secretary may 
                waive such provisions of the Federal 
                Acquisition Regulation as are necessary for the 
                efficient implementation of this section, other 
                than provisions relating to confidentiality of 
                information and such other provisions as the 
                Secretary determines appropriate.
          (D) Changes in competitive acquisition programs.--
                  (i) Round 1 of competitive acquisition 
                program.--Notwithstanding subparagraph 
                (B)(i)(I) and in implementing the first round 
                of the competitive acquisition programs under 
                this section--
                          (I) the contracts awarded under this 
                        section before the date of the 
                        enactment of this subparagraph are 
                        terminated, no payment shall be made 
                        under this title on or after the date 
                        of the enactment of this subparagraph 
                        based on such a contract, and, to the 
                        extent that any damages may be 
                        applicable as a result of the 
                        termination of such contracts, such 
                        damages shall be payable from the 
                        Federal Supplementary Medical Insurance 
                        Trust Fund under section 1841;
                          (II) the Secretary shall conduct the 
                        competition for such round in a manner 
                        so that it occurs in 2009 with respect 
                        to the same items and services and the 
                        same areas, except as provided in 
                        subclauses (III) and (IV);
                          (III) the Secretary shall exclude 
                        Puerto Rico so that such round of 
                        competition covers 9, instead of 10, of 
                        the largest metropolitan statistical 
                        areas; and
                          (IV) there shall be excluded negative 
                        pressure wound therapy items and 
                        services.
                Nothing in subclause (I) shall be construed to 
                provide an independent cause of action or right 
                to administrative or judicial review with 
                regard to the termination provided under such 
                subclause.
                  (ii) Round 2 of competitive acquisition 
                program.--In implementing the second round of 
                the competitive acquisition programs under this 
                section described in subparagraph (B)(i)(II)--
                          (I) the metropolitan statistical 
                        areas to be included shall be those 
                        metropolitan statistical areas selected 
                        by the Secretary for such round as of 
                        June 1, 2008;
                          (II) the Secretary shall include the 
                        next 21 largest metropolitan 
                        statistical areas by total population 
                        (after those selected under subclause 
                        (I)) for such round; and
                          (III) the Secretary may subdivide 
                        metropolitan statistical areas with 
                        populations (based upon the most recent 
                        data from the Census Bureau) of at 
                        least 8,000,000 into separate areas for 
                        competitive acquisition purposes.
                  (iii) Exclusion of certain areas in 
                subsequent rounds of competitive acquisition 
                programs.--In implementing subsequent rounds of 
                the competitive acquisition programs under this 
                section, including under subparagraph 
                (B)(i)(III), for competitions occurring before 
                2015, the Secretary shall exempt from the 
                competitive acquisition program (other than 
                national mail order) the following:
                          (I) Rural areas.
                          (II) Metropolitan statistical areas 
                        not selected under round 1 or round 2 
                        with a population of less than 250,000.
                          (III) Areas with a low population 
                        density within a metropolitan 
                        statistical area that is otherwise 
                        selected, as determined for purposes of 
                        paragraph (3)(A).
  (E) Verification by oig.--The Inspector General of the 
Department of Health and Human Services shall, through post-
award audit, survey, or otherwise, assess the process used by 
the Centers for Medicare & Medicaid Services to conduct 
competitive bidding and subsequent pricing determinations under 
this section that are the basis for pivotal bid amounts and 
single payment amounts for items and services in competitive 
bidding areas under rounds 1 and 2 of the competitive 
acquisition programs under this section and may continue to 
verify such calculations for subsequent rounds of such 
programs.
  (F) Supplier feedback on missing financial documentation.--
          (i) In general.--In the case of a bid where one or 
        more covered documents in connection with such bid have 
        been submitted not later than the covered document 
        review date specified in clause (ii), the Secretary--
                  (I) shall provide, by not later than 45 days 
                (in the case of the first round of the 
                competitive acquisition programs as described 
                in subparagraph (B)(i)(I)) or 90 days (in the 
                case of a subsequent round of such programs) 
                after the covered document review date, for 
                notice to the bidder of all such documents that 
                are missing as of the covered document review 
                date; and
                  (II) may not reject the bid on the basis that 
                any covered document is missing or has not been 
                submitted on a timely basis, if all such 
                missing documents identified in the notice 
                provided to the bidder under subclause (I) are 
                submitted to the Secretary not later than 10 
                business days after the date of such notice.
          (ii) Covered document review date.--The covered 
        document review date specified in this clause with 
        respect to a competitive acquisition program is the 
        later of--
                  (I) the date that is 30 days before the final 
                date specified by the Secretary for submission 
                of bids under such program; or
                  (II) the date that is 30 days after the first 
                date specified by the Secretary for submission 
                of bids under such program.
          (iii) Limitations of process.--The process provided 
        under this subparagraph--
                  (I) applies only to the timely submission of 
                covered documents;
                  (II) does not apply to any determination as 
                to the accuracy or completeness of covered 
                documents submitted or whether such documents 
                meet applicable requirements;
                  (III) shall not prevent the Secretary from 
                rejecting a bid based on any basis not 
                described in clause (i)(II); and
                  (IV) shall not be construed as permitting a 
                bidder to change bidding amounts or to make 
                other changes in a bid submission.
          (iv) Covered document defined.--In this subparagraph, 
        the term ``covered document'' means a financial, tax, 
        or other document required to be submitted by a bidder 
        as part of an original bid submission under a 
        competitive acquisition program in order to meet 
        required financial standards. Such term does not 
        include other documents, such as the bid itself or 
        accreditation documentation.
                  (G) Requiring bid bonds for bidding 
                entities.--With respect to rounds of 
                competitions beginning under this subsection 
                for contracts beginning not earlier than 
                January 1, 2017, and not later than January 1, 
                2019, an entity may not submit a bid for a 
                competitive acquisition area unless, as of the 
                deadline for bid submission, the entity has 
                obtained (and provided the Secretary with proof 
                of having obtained) a bid surety bond (in this 
                paragraph referred to as a ``bid bond'') in a 
                form specified by the Secretary consistent with 
                subparagraph (H) and in an amount that is not 
                less than $50,000 and not more than $100,000 
                for each competitive acquisition area in which 
                the entity submits the bid.
                  (H) Treatment of bid bonds submitted.--
                          (i) For bidders that submit bids at 
                        or below the median and are offered but 
                        do not accept the contract.--In the 
                        case of a bidding entity that is 
                        offered a contract for any product 
                        category for a competitive acquisition 
                        area, if--
                                  (I) the entity's composite 
                                bid for such product category 
                                and area was at or below the 
                                median composite bid rate for 
                                all bidding entities included 
                                in the calculation of the 
                                single payment amounts for such 
                                product category and area; and
                                  (II) the entity does not 
                                accept the contract offered for 
                                such product category and area,
                        the bid bond submitted by such entity 
                        for such area shall be forfeited by the 
                        entity and the Secretary shall collect 
                        on it.
                          (ii) Treatment of other bidders.--In 
                        the case of a bidding entity for any 
                        product category for a competitive 
                        acquisition area, if the entity does 
                        not meet the bid forfeiture conditions 
                        in subclauses (I) and (II) of clause 
                        (i) for any product category for such 
                        area, the bid bond submitted by such 
                        entity for such area shall be returned 
                        within 90 days of the public 
                        announcement of the contract suppliers 
                        for such area.
          (2) Items and services described.--The items and 
        services referred to in paragraph (1) are the 
        following:
                  (A) Durable medical equipment and medical 
                supplies.--Covered items (as defined in section 
                1834(a)(13)) for which payment would otherwise 
                be made under section 1834(a), including items 
                used in infusion and drugs (other than 
                inhalation drugs) and supplies used in 
                conjunction with durable medical equipment, but 
                excluding class III devices under the Federal 
                Food, Drug, and Cosmetic Act, excluding certain 
                complex rehabilitative power wheelchairs 
                recognized by the Secretary as classified 
                within group 3 or higher (and related 
                accessories when furnished in connection with 
                such wheelchairs), and excluding drugs and 
                biologicals describedin section 1842(o)(1)(D).
                  (B) Other equipment and supplies.--Items and 
                services described in section 1842(s)(2)(D), 
                other than parenteral nutrients, equipment, and 
                supplies.
                  (C) Off-the-shelf orthotics.--Orthotics 
                described in section 1861(s)(9) for which 
                payment would otherwise be made under section 
                1834(h) which require minimal self-adjustment 
                for appropriate use and do not require 
                expertise in trimming, bending, molding, 
                assembling, or customizing to fit to the 
                individual.
                  (D) Eyeglasses and contact lenses.--
                Eyeglasses and contact lenses for which payment 
                would otherwise be made under section 1834(h).
          (3) Exception authority.--In carrying out the 
        programs under this section, the Secretary may exempt--
                  (A) rural areas and areas with low population 
                density within urban areas that are not 
                competitive, unless there is a significant 
                national market through mail order for a 
                particular item or service; and
                  (B) items and services for which the 
                application of competitive acquisition is not 
                likely to result in significant savings.
          (4) Special rule for certain rented items of durable 
        medical equipment and oxygen.--In the case of a covered 
        item for which payment is made on a rental basis under 
        section 1834(a) and in the case of payment for oxygen 
        under section 1834(a)(5), the Secretary shall establish 
        a process by which rental agreements for the covered 
        items and supply arrangements with oxygen suppliers 
        entered into before the application of the competitive 
        acquisition program under this section for the item may 
        be continued notwithstanding this section. In the case 
        of any such continuation, the supplier involved shall 
        provide for appropriate servicing and replacement, as 
        required under section 1834(a).
          (5) Physician authorization.--
                  (A) In general.--With respect to items or 
                services included within a particular HCPCS 
                code, the Secretary may establish a process for 
                certain items and services under which a 
                physician may prescribe a particular brand or 
                mode of delivery of an item or service within 
                such code if the physician determines that use 
                of the particular item or service would avoid 
                an adverse medical outcome on the individual, 
                as determined by the Secretary.
                  (B) No effect on payment amount.--A 
                prescription under subparagraph (A) shall not 
                affect the amount of payment otherwise 
                applicable for the item or service under the 
                code involved.
          (6) Application.--For each competitive acquisition 
        area in which the program is implemented under this 
        subsection with respect to items and services, the 
        payment basis determined under the competition 
        conducted under subsection (b) shall be substituted for 
        the payment basis otherwise applied under section 
        1834(a), section 1834(h), or section 1842(s), as 
        appropriate.
          (7) Exemption from competitive acquisition.--The 
        programs under this section shall not apply to the 
        following:
                  (A) Certain off-the-shelf orthotics.--Items 
                and services described in paragraph (2)(C) if 
                furnished--
                          (i) by a physician or other 
                        practitioner (as defined by the 
                        Secretary) to the physician's or 
                        practitioner's own patients as part of 
                        the physician's or practitioner's 
                        professional service; or
                          (ii) by a hospital to the hospital's 
                        own patients during an admission or on 
                        the date of discharge.
                  (B) Certain durable medical equipment.--Those 
                items and services described in paragraph 
                (2)(A)--
                          (i) that are furnished by a hospital 
                        to the hospital's own patients during 
                        an admission or on the date of 
                        discharge; and
                          (ii) to which such programs would not 
                        apply, as specified by the Secretary, 
                        if furnished by a physician to the 
                        physician's own patients as part of the 
                        physician's professional service.
                  (C) Certain eyeglasses and contact lenses.--
                Those items and services described in paragraph 
                (2)(D) if furnished by a physician or other 
                practitioner (as defined by the Secretary) to 
                the physician's or practitioner's own patients 
                as part of the physician's or practitioner's 
                professional service.
  (b) Program Requirements.--
          (1) In general.--The Secretary shall conduct a 
        competition among entities supplying items and services 
        described in subsection (a)(2) for each competitive 
        acquisition area in which the program is implemented 
        under subsection (a) with respect to such items and 
        services.
          (2) Conditions for awarding contract.--
                  (A) In general.--The Secretary may not award 
                a contract to any entity under the competition 
                conducted in an competitive acquisition area 
                pursuant to paragraph (1) to furnish such items 
                or services unless the Secretary finds all of 
                the following:
                          (i) The entity meets applicable 
                        quality standards specified by the 
                        Secretary under section 1834(a)(20).
                          (ii) The entity meets applicable 
                        financial standards specified by the 
                        Secretary, taking into account the 
                        needs of small providers.
                          (iii) The total amounts to be paid to 
                        contractors in a competitive 
                        acquisition area are expected to be 
                        less than the total amounts that would 
                        otherwise be paid.
                          (iv) Access of individuals to a 
                        choice of multiple suppliers in the 
                        area is maintained.
                          (v) The entity meets applicable State 
                        licensure requirements.
                  (B) Timely implementation of program.--Any 
                delay in the implementation of quality 
                standards under section 1834(a)(20) or delay in 
                the receipt of advice from the program 
                oversight committee established under 
                subsection (c) shall not delay the 
                implementation of the competitive acquisition 
                program under this section.
          (3) Contents of contract.--
                  (A) In general.--A contract entered into with 
                an entity under the competition conducted 
                pursuant to paragraph (1) is subject to terms 
                and conditions that the Secretary may specify.
                  (B) Term of contracts.--The Secretary shall 
                recompete contracts under this section not less 
                often than once every 3 years.
                  (C) Disclosure of subcontractors.--
                          (i) Initial disclosure.--Not later 
                        than 10 days after the date a supplier 
                        enters into a contract with the 
                        Secretary under this section, such 
                        supplier shall disclose to the 
                        Secretary, in a form and manner 
                        specified by the Secretary, the 
                        information on--
                                  (I) each subcontracting 
                                relationship that such supplier 
                                has in furnishing items and 
                                services under the contract; 
                                and
                                  (II) whether each such 
                                subcontractor meets the 
                                requirement of section 
                                1834(a)(20)(F)(i), if 
                                applicable to such 
                                subcontractor.
                          (ii) Subsequent disclosure.--Not 
                        later than 10 days after such a 
                        supplier subsequently enters into a 
                        subcontracting relationship described 
                        in clause (i)(II), such supplier shall 
                        disclose to the Secretary, in such form 
                        and manner, the information described 
                        in subclauses (I) and (II) of clause 
                        (i).
          (4) Limit on number of contractors.--
                  (A) In general.--The Secretary may limit the 
                number of contractors in a competitive 
                acquisition area to the number needed to meet 
                projected demand for items and services covered 
                under the contracts. In awarding contracts, the 
                Secretary shall take into account the ability 
                of bidding entities to furnish items or 
                services in sufficient quantities to meet the 
                anticipated needs of individuals for such items 
                or services in the geographic area covered 
                under the contract on a timely basis.
                  (B) Multiple winners.--The Secretary shall 
                award contracts to multiple entities submitting 
                bids in each area for an item or service.
          (5) Payment.--
                  (A) In general.--Payment under this part for 
                competitively priced items and services 
                described in subsection (a)(2) shall be based 
                on bids submitted and accepted under this 
                section for such items and services. Based on 
                such bids the Secretary shall determine a 
                single payment amount for each item or service 
                in each competitive acquisition area.
                  (B) Reduced beneficiary cost-sharing.--
                          (i) Application of coinsurance.--
                        Payment under this section for items 
                        and services shall be in an amount 
                        equal to 80 percent of the payment 
                        basis described in subparagraph (A).
                          (ii) Application of deductible.--
                        Before applying clause (i), the 
                        individual shall be required to meet 
                        the deductible described in section 
                        1833(b).
                  (C) Payment on assignment-related basis.--
                Payment for any item or service furnished by 
                the entity may only be made under this section 
                on an assignment-related basis.
                  (D) Construction.--Nothing in this section 
                shall be construed as precluding the use of an 
                advanced beneficiary notice with respect to a 
                competitively priced item and service.
          (6) Participating contractors.--
                  (A) In general.--Except as provided in 
                subsection (a)(4), payment shall not be made 
                for items and services described in subsection 
                (a)(2) furnished by a contractor and for which 
                competition is conducted under this section 
                unless--
                          (i) the contractor has submitted a 
                        bid for such items and services under 
                        this section; and
                          (ii) the Secretary has awarded a 
                        contract to the contractor for such 
                        items and services under this section.
                  (B) Bid defined.--In this section, the term 
                ``bid'' means an offer to furnish an item or 
                service for a particular price and time period 
                that includes, where appropriate, any services 
                that are attendant to the furnishing of the 
                item or service.
                  (C) Rules for mergers and acquisitions.--In 
                applying subparagraph (A) to a contractor, the 
                contractor shall include a successor entity in 
                the case of a merger or acquisition, if the 
                successor entity assumes such contract along 
                with any liabilities that may have occurred 
                thereunder.
                  (D) Protection of small suppliers.--In 
                developing procedures relating to bids and the 
                awarding of contracts under this section, the 
                Secretary shall take appropriate steps to 
                ensure that small suppliers of items and 
                services have an opportunity to be considered 
                for participation in the program under this 
                section.
          (7) Consideration in determining categories for 
        bids.--The Secretary may consider the clinical 
        efficiency and value of specific items within codes, 
        including whether some items have a greater therapeutic 
        advantage to individuals.
          (8) Authority to contract for education, monitoring, 
        outreach, and complaint services.--The Secretary may 
        enter into contracts with appropriate entities to 
        address complaints from individuals who receive items 
        and services from an entity with a contract under this 
        section and to conduct appropriate education of and 
        outreach to such individuals and monitoring quality of 
        services with respect to the program.
          (9) Authority to contract for implementation.--The 
        Secretary may contract with appropriate entities to 
        implement the competitive bidding program under this 
        section.
          (10) Special rule in case of competition for diabetic 
        testing strips.--
                  (A) In general.--With respect to the 
                competitive acquisition program for diabetic 
                testing strips conducted after the first round 
                of the competitive acquisition programs, if an 
                entity does not demonstrate to the Secretary 
                that its bid covers types of diabetic testing 
                strip products that, in the aggregate and 
                taking into account volume for the different 
                products, cover 50 percent (or such higher 
                percentage as the Secretary may specify) of all 
                such types of products, the Secretary shall 
                reject such bid. With respect to bids to 
                furnish such types of products on or after 
                January 1, 2019, the volume for such types of 
                products shall be determined by the Secretary 
                through the use of multiple sources of data 
                (from mail order and non-mail order Medicare 
                markets), including market-based data measuring 
                sales of diabetic testing strip products that 
                are not exclusively sold by a single retailer 
                from such markets.
                  (B) Study of types of testing strip 
                products.--Before 2011, the Inspector General 
                of the Department of Health and Human Services 
                shall conduct a study to determine the types of 
                diabetic testing strip products by volume that 
                could be used to make determinations pursuant 
                to subparagraph (A) for the first competition 
                under the competitive acquisition program 
                described in such subparagraph and submit to 
                the Secretary a report on the results of the 
                study. The Inspector General shall also conduct 
                such a study and submit such a report before 
                the Secretary conducts a subsequent competitive 
                acquistion program described in subparagraph 
                (A).
                  (C) Demonstration of ability to furnish types 
                of diabetic testing strip products.--With 
                respect to bids to furnish diabetic testing 
                strip products on or after January 1, 2019, an 
                entity shall attest to the Secretary that the 
                entity has the ability to obtain an inventory 
                of the types and quantities of diabetic testing 
                strip products that will allow the entity to 
                furnish such products in a manner consistent 
                with its bid and--
                          (i) demonstrate to the Secretary, 
                        through letters of intent with 
                        manufacturers, wholesalers, or other 
                        suppliers, or other evidence as the 
                        Secretary may specify, such ability; or
                          (ii) demonstrate to the Secretary 
                        that it made a good faith attempt to 
                        obtain such a letter of intent or such 
                        other evidence.
                  (D) Use of unlisted types in calculation of 
                percentage.--With respect to bids to furnish 
                diabetic testing strip products on or after 
                January 1, 2019, in determining under 
                subparagraph (A) whether a bid submitted by an 
                entity under such subparagraph covers 50 
                percent (or such higher percentage as the 
                Secretary may specify) of all types of diabetic 
                testing strip products, the Secretary may not 
                attribute a percentage to types of diabetic 
                testing strip products that the Secretary does 
                not identify by brand, model, and market share 
                volume.
                  (E) Adherence to demonstration.--
                          (i) In general.--In the case of an 
                        entity that is furnishing diabetic 
                        testing strip products on or after 
                        January 1, 2019, under a contract 
                        entered into under the competition 
                        conducted pursuant to paragraph (1), 
                        the Secretary shall establish a process 
                        to monitor, on an ongoing basis, the 
                        extent to which such entity continues 
                        to cover the product types included in 
                        the entity's bid.
                          (ii) Termination.--If the Secretary 
                        determines that an entity described in 
                        clause (i) fails to maintain in 
                        inventory, or otherwise maintain ready 
                        access to (through requirements, 
                        contracts, or otherwise) a type of 
                        product included in the entity's bid, 
                        the Secretary may terminate such 
                        contract unless the Secretary finds 
                        that the failure of the entity to 
                        maintain inventory of, or ready access 
                        to, the product is the result of the 
                        discontinuation of the product by the 
                        product manufacturer, a market-wide 
                        shortage of the product, or the 
                        introduction of a newer model or 
                        version of the product in the market 
                        involved.
          (11) Additional special rules in case of competition 
        for diabetic testing strips.--
                  (A) In general.--With respect to an entity 
                that is furnishing diabetic testing strip 
                products to individuals under a contract 
                entered into under the competitive acquisition 
                program established under this section, the 
                entity shall furnish to each individual a brand 
                of such products that is compatible with the 
                home blood glucose monitor selected by the 
                individual.
                  (B) Prohibition on influencing and 
                incentivizing.--An entity described in 
                subparagraph (A) may not attempt to influence 
                or incentivize an individual to switch the 
                brand of glucose monitor or diabetic testing 
                strip product selected by the individual, 
                including by--
                          (i) persuading, pressuring, or 
                        advising the individual to switch; or
                          (ii) furnishing information about 
                        alternative brands to the individual 
                        where the individual has not requested 
                        such information.
                  (C) Provision of information.--
                          (i) Standardized information.--Not 
                        later than January 1, 2019, the 
                        Secretary shall develop and make 
                        available to entities described in 
                        subparagraph (A) standardized 
                        information that describes the rights 
                        of an individual with respect to such 
                        an entity. The information described in 
                        the preceding sentence shall include 
                        information regarding--
                                  (I) the requirements 
                                established under subparagraphs 
                                (A) and (B);
                                  (II) the right of the 
                                individual to purchase diabetic 
                                testing strip products from 
                                another mail order supplier of 
                                such products or a retail 
                                pharmacy if the entity is not 
                                able to furnish the brand of 
                                such product that is compatible 
                                with the home blood glucose 
                                monitor selected by the 
                                individual; and
                                  (III) the right of the 
                                individual to return diabetic 
                                testing strip products 
                                furnished to the individual by 
                                the entity.
                          (ii) Requirement.--With respect to 
                        diabetic testing strip products 
                        furnished on or after the date on which 
                        the Secretary develops the standardized 
                        information under clause (i), an entity 
                        described in subparagraph (A) may not 
                        communicate directly to an individual 
                        until the entity has verbally provided 
                        the individual with such standardized 
                        information.
                  (D) Order refills.--With respect to diabetic 
                testing strip products furnished on or after 
                January 1, 2019, the Secretary shall require an 
                entity furnishing diabetic testing strip 
                products to an individual to contact and 
                receive a request from the individual for such 
                products not more than 14 days prior to 
                dispensing a refill of such products to the 
                individual.
          (12) No administrative or judicial review.--There 
        shall be no administrative or judicial review under 
        section 1869, section 1878, or otherwise, of--
                  (A) the establishment of payment amounts 
                under paragraph (5);
                  (B) the awarding of contracts under this 
                section;
                  (C) the designation of competitive 
                acquisition areas under subsection (a)(1)(A) 
                and the identification of areas under 
                subsection (a)(1)(D)(iii);
                  (D) the phased-in implementation under 
                subsection (a)(1)(B) and implementation of 
                subsection (a)(1)(D);
                  (E) the selection of items and services for 
                competitive acquisition under subsection 
                (a)(2);
                  (F) the bidding structure and number of 
                contractors selected under this section; or
                  (G) the implementation of the special rule 
                described in paragraph (10).
  (c) Program Advisory and Oversight Committee.--
          (1) Establishment.--The Secretary shall establish a 
        Program Advisory and Oversight Committee (hereinafter 
        in this section referred to as the ``Committee'').
          (2) Membership; terms.--The Committee shall consist 
        of such members as the Secretary may appoint who shall 
        serve for such term as the Secretary may specify.
          (3) Duties.--
                  (A) Advice.--The Committee shall provide 
                advice to the Secretary with respect to the 
                following functions:
                          (i) The implementation of the program 
                        under this section.
                          (ii) The establishment of financial 
                        standards for purposes of subsection 
                        (b)(2)(A)(ii).
                          (iii) The establishment of 
                        requirements for collection of data for 
                        the efficient management of the 
                        program.
                          (iv) The development of proposals for 
                        efficient interaction among 
                        manufacturers, providers of services, 
                        suppliers (as defined in section 
                        1861(d)), and individuals.
                          (v) The establishment of quality 
                        standards under section 1834(a)(20).
                  (B) Additional duties.--The Committee shall 
                perform such additional functions to assist the 
                Secretary in carrying out this section as the 
                Secretary may specify.
          (4) Inapplicability of faca.--The provisions of the 
        Federal Advisory Committee Act (5 U.S.C. App.) shall 
        not apply.
          (5) Termination.--The Committee shall terminate on 
        December 31, 2011.
  (d) Report.--Not later than July 1, 2011, the Secretary shall 
submit to Congress a report on the programs under this section. 
The report shall include information on savings, reductions in 
cost-sharing, access to and quality of items and services, and 
satisfaction of individuals.
  (f) Competitive Acquisition Ombudsman.--The Secretary shall 
provide for a competitive acquisition ombudsman within the 
Centers for Medicare & Medicaid Services in order to respond to 
complaints and inquiries made by suppliers and individuals 
relating to the application of the competitive acquisition 
program under this section. The ombudsman may be within the 
office of the Medicare Beneficiary Ombudsman appointed under 
section 1808(c). The ombudsman shall submit to Congress an 
annual report on the activities under this subsection, which 
report shall be coordinated with the report provided under 
section 1808(c)(2)(C).

           *       *       *       *       *       *       *


                    PAYMENT FOR PHYSICIANS' SERVICES

  Sec. 1848. (a) Payment Based on Fee Schedule.--
          (1) In general.--Effective for all physicians' 
        services (as defined in subsection (j)(3)) furnished 
        under this part during a year (beginning with 1992) for 
        which payment is otherwise made on the basis of a 
        reasonable charge or on the basis of a fee schedule 
        under section 1834(b), payment under this part shall 
        instead be based on the lesser of--
                  (A) the actual charge for the service, or
                  (B) subject to the succeeding provisions of 
                this subsection, the amount determined under 
                the fee schedule established under subsection 
                (b) for services furnished during that year (in 
                this subsection referred to as the ``fee 
                schedule amount'').
          (2) Transition to full fee schedule.--
                  (A) Limiting reductions and increases to 15 
                percent in 1992.--
                          (i) Limit on increase.--In the case 
                        of a service in a fee schedule area (as 
                        defined in subsection (j)(2)) for which 
                        the adjusted historical payment basis 
                        (as defined in subparagraph (D)) is 
                        less than 85 percent of the fee 
                        schedule amount for services furnished 
                        in 1992, there shall be substituted for 
                        the fee schedule amount an amount equal 
                        to the adjusted historical payment 
                        basis plus 15 percent of the fee 
                        schedule amount otherwise established 
                        (without regard to this paragraph).
                          (ii) Limit in reduction.--In the case 
                        of a service in a fee schedule area for 
                        which the adjusted historical payment 
                        basis exceeds 115 percent of the fee 
                        schedule amount for services furnished 
                        in 1992, there shall be substituted for 
                        the fee schedule amount an amount equal 
                        to the adjusted historical payment 
                        basis minus 15 percent of the fee 
                        schedule amount otherwise established 
                        (without regard to this paragraph).
                  (B) Special rule for 1993, 1994, and 1995.--
                If a physicians' service in a fee schedule area 
                is subject to the provisions of subparagraph 
                (A) in 1992, for physicians' services furnished 
                in the area--
                          (i) during 1993, there shall be 
                        substituted for the fee schedule amount 
                        an amount equal to the sum of--
                                  (I) 75 percent of the fee 
                                schedule amount determined 
                                under subparagraph (A), 
                                adjusted by the update 
                                established under subsection 
                                (d)(3) for 1993, and
                                  (II) 25 percent of the fee 
                                schedule amount determined 
                                under paragraph (1) for 1993 
                                without regard to this 
                                paragraph;
                          (ii) during 1994, there shall be 
                        substituted for the fee schedule amount 
                        an amount equal to the sum of--
                                  (I) 67 percent of the fee 
                                schedule amount determined 
                                under clause (i), adjusted by 
                                the update established under 
                                subsection (d)(3) for 1994 and 
                                as adjusted under subsection 
                                (c)(2)(F)(ii) and under section 
                                13515(b) of the Omnibus Budget 
                                Reconciliation Act of 1993, and
                                  (II) 33 percent of the fee 
                                schedule amount determined 
                                under paragraph (1) for 1994 
                                without regard to this 
                                paragraph; and
                          (iii) during 1995, there shall be 
                        substituted for the fee schedule amount 
                        an amount equal to the sum of--
                                  (I) 50 percent of the fee 
                                schedule amount determined 
                                under clause (ii) adjusted by 
                                the update established under 
                                subsection (d)(3) for 1995, and
                                  (II) 50 percent of the fee 
                                schedule amount determined 
                                under paragraph (1) for 1995 
                                without regard to this 
                                paragraph.
                  (C) Special rule for anesthesia and radiology 
                services.--With respect to physicians' services 
                which are anesthesia services, the Secretary 
                shall provide for a transition in the same 
                manner as a transition is provided for other 
                services under subparagraph (B). With respect 
                to radiology services, ``109 percent'' and ``9 
                percent'' shall be substituted for ``115 
                percent'' and ``15 percent'', respectively, in 
                subparagraph (A)(ii).
                  (D) Adjusted historical payment basis 
                defined.--
                          (i) In general.--In this paragraph, 
                        the term ``adjusted historical payment 
                        basis'' means, with respect to a 
                        physicians' service furnished in a fee 
                        schedule area, the weighted average 
                        prevailing charge applied in the area 
                        for the service in 1991 (as determined 
                        by the Secretary without regard to 
                        physician specialty and as adjusted to 
                        reflect payments for services with 
                        customary charges below the prevailing 
                        charge or other payment limitations 
                        imposed by law or regulation) adjusted 
                        by the update established under 
                        subsection (d)(3) for 1992.
                          (ii) Application to radiology 
                        services.--In applying clause (i) in 
                        the case of physicians' services which 
                        are radiology services (including 
                        radiologist services, as defined in 
                        section 1834(b)(6)), but excluding 
                        nuclear medicine services that are 
                        subject to section 6105(b) of the 
                        Omnibus Budget Reconciliation Act of 
                        1989, there shall be substituted for 
                        the weighted average prevailing charge 
                        the amount provided under the fee 
                        schedule established for the service 
                        for the fee schedule area under section 
                        1834(b).
                          (iii) Nuclear medicine services.--In 
                        applying clause (i) in the case of 
                        physicians' services which are nuclear 
                        medicine services, there shall be 
                        substituted for the weighted average 
                        prevailing charge the amount provided 
                        under section 6105(b) of the Omnibus 
                        Budget Reconciliation Act of 1989.
          (3) Incentives for participating physicians and 
        suppliers.--In applying paragraph (1)(B) in the case of 
        a nonparticipating physician or a nonparticipating 
        supplier or other person, the fee schedule amount shall 
        be 95 percent of such amount otherwise applied under 
        this subsection (without regard to this paragraph). In 
        the case of physicians' services (including services 
        which the Secretary excludes pursuant to subsection 
        (j)(3)) of a nonparticipating physician, supplier, or 
        other person for which payment is made under this part 
        on a basis other than the fee schedule amount, the 
        payment shall be based on 95 percent of the payment 
        basis for such services furnished by a participating 
        physician, supplier, or other person.
          (4) Special rule for medical direction.--
                  (A) In general.--With respect to physicians' 
                services furnished on or after January 1, 1994, 
                and consisting of medical direction of two, 
                three, or four concurrent anesthesia cases, 
                except as provided in paragraph (5), the fee 
                schedule amount to be applied shall be equal to 
                one-half of the amount described in 
                subparagraph (B).
                  (B) Amount.--The amount described in this 
                subparagraph, for a physician's medical 
                direction of the performance of anesthesia 
                services, is the following percentage of the 
                fee schedule amount otherwise applicable under 
                this section if the anesthesia services were 
                personally performed by the physician alone:
                          (i) For services furnished during 
                        1994, 120 percent.
                          (ii) For services furnished during 
                        1995, 115 percent.
                          (iii) For services furnished during 
                        1996, 110 percent.
                          (iv) For services furnished during 
                        1997, 105 percent.
                          (v) For services furnished after 
                        1997, 100 percent.
          (5) Incentives for electronic prescribing.--
                  (A) Adjustment.--
                          (i) In general.--Subject to 
                        subparagraph (B) and subsection 
                        (m)(2)(B), with respect to covered 
                        professional services furnished by an 
                        eligible professional during 2012, 2013 
                        or 2014, if the eligible professional 
                        is not a successful electronic 
                        prescriber for the reporting period for 
                        the year (as determined under 
                        subsection (m)(3)(B)), the fee schedule 
                        amount for such services furnished by 
                        such professional during the year 
                        (including the fee schedule amount for 
                        purposes of determining a payment based 
                        on such amount) shall be equal to the 
                        applicable percent of the fee schedule 
                        amount that would otherwise apply to 
                        such services under this subsection 
                        (determined after application of 
                        paragraph (3) but without regard to 
                        this paragraph).
                          (ii) Applicable percent.--For 
                        purposes of clause (i), the term 
                        ``applicable percent'' means--
                                  (I) for 2012, 99 percent;
                                  (II) for 2013, 98.5 percent; 
                                and
                                  (III) for 2014, 98 percent.
                  (B) Significant hardship exception.--The 
                Secretary may, on a case-by-case basis, exempt 
                an eligible professional from the application 
                of the payment adjustment under subparagraph 
                (A) if the Secretary determines, subject to 
                annual renewal, that compliance with the 
                requirement for being a successful electronic 
                prescriber would result in a significant 
                hardship, such as in the case of an eligible 
                professional who practices in a rural area 
                without sufficient Internet access.
                  (C) Application.--
                          (i) Physician reporting system 
                        rules.--Paragraphs (5), (6), and (8) of 
                        subsection (k) shall apply for purposes 
                        of this paragraph in the same manner as 
                        they apply for purposes of such 
                        subsection.
                          (ii) Incentive payment validation 
                        rules.--Clauses (ii) and (iii) of 
                        subsection (m)(5)(D) shall apply for 
                        purposes of this paragraph in a similar 
                        manner as they apply for purposes of 
                        such subsection.
                  (D) Definitions.--For purposes of this 
                paragraph:
                          (i) Eligible professional; covered 
                        professional services.--The terms 
                        ``eligible professional'' and ``covered 
                        professional services'' have the 
                        meanings given such terms in subsection 
                        (k)(3).
                          (ii) Physician reporting system.--The 
                        term ``physician reporting system'' 
                        means the system established under 
                        subsection (k).
                          (iii) Reporting period.--The term 
                        ``reporting period'' means, with 
                        respect to a year, a period specified 
                        by the Secretary.
          (6) Special rule for teaching anesthesiologists.--
        With respect to physicians' services furnished on or 
        after January 1, 2010, in the case of teaching 
        anesthesiologists involved in the training of physician 
        residents in a single anesthesia case or two concurrent 
        anesthesia cases, the fee schedule amount to be applied 
        shall be 100 percent of the fee schedule amount 
        otherwise applicable under this section if the 
        anesthesia services were personally performed by the 
        teaching anesthesiologist alone and paragraph (4) shall 
        not apply if--
                  (A) the teaching anesthesiologist is present 
                during all critical or key portions of the 
                anesthesia service or procedure involved; and
                  (B) the teaching anesthesiologist (or another 
                anesthesiologist with whom the teaching 
                anesthesiologist has entered into an 
                arrangement) is immediately available to 
                furnish anesthesia services during the entire 
                procedure.
          (7) Incentives for meaningful use of certified ehr 
        technology.--
                  (A) Adjustment.--
                          (i) In general.--Subject to 
                        subparagraphs (B) and (D), with respect 
                        to covered professional services 
                        furnished by an eligible professional 
                        during each of 2015 through 2018, if 
                        the eligible professional is not a 
                        meaningful EHR user (as determined 
                        under subsection (o)(2)) for an EHR 
                        reporting period for the year, the fee 
                        schedule amount for such services 
                        furnished by such professional during 
                        the year (including the fee schedule 
                        amount for purposes of determining a 
                        payment based on such amount) shall be 
                        equal to the applicable percent of the 
                        fee schedule amount that would 
                        otherwise apply to such services under 
                        this subsection (determined after 
                        application of paragraph (3) but 
                        without regard to this paragraph).
                          (ii) Applicable percent.--Subject to 
                        clause (iii), for purposes of clause 
                        (i), the term ``applicable percent'' 
                        means--
                                  (I) for 2015, 99 percent (or, 
                                in the case of an eligible 
                                professional who was subject to 
                                the application of the payment 
                                adjustment under section 
                                1848(a)(5) for 2014, 98 
                                percent);
                                  (II) for 2016, 98 percent; 
                                and
                                  (III) for 2017 and 2018, 97 
                                percent.
                          (iii) Authority to decrease 
                        applicable percentage for 2018.--For 
                        2018, if the Secretary finds that the 
                        proportion of eligible professionals 
                        who are meaningful EHR users (as 
                        determined under subsection (o)(2)) is 
                        less than 75 percent, the applicable 
                        percent shall be decreased by 1 
                        percentage point from the applicable 
                        percent in the preceding year.
                  (B) Significant hardship exception.--The 
                Secretary may, on a case-by-case basis (and, 
                with respect to the payment adjustment under 
                subparagraph (A) for 2017, for categories of 
                eligible professionals, as established by the 
                Secretary and posted on the Internet website of 
                the Centers for Medicare & Medicaid Services 
                prior to December 15, 2015, an application for 
                which must be submitted to the Secretary by not 
                later than March 15, 2016), exempt an eligible 
                professional from the application of the 
                payment adjustment under subparagraph (A) if 
                the Secretary determines, subject to annual 
                renewal, that compliance with the requirement 
                for being a meaningful EHR user would result in 
                a significant hardship, such as in the case of 
                an eligible professional who practices in a 
                rural area without sufficient Internet access. 
                The Secretary shall exempt an eligible 
                professional from the application of the 
                payment adjustment under subparagraph (A) with 
                respect to a year, subject to annual renewal, 
                if the Secretary determines that compliance 
                with the requirement for being a meaningful EHR 
                user is not possible because the certified EHR 
                technology used by such professional has been 
                decertified under a program kept or recognized 
                pursuant to section 3001(c)(5) of the Public 
                Health Service Act. In no case may an eligible 
                professional be granted an exemption under this 
                subparagraph for more than 5 years.
                  (C) Application of physician reporting system 
                rules.--Paragraphs (5), (6), and (8) of 
                subsection (k) shall apply for purposes of this 
                paragraph in the same manner as they apply for 
                purposes of such subsection.
                  (D) Non-application to hospital-based and 
                ambulatory surgical center-based eligible 
                professionals.--
                          (i) Hospital-based.--No payment 
                        adjustment may be made under 
                        subparagraph (A) in the case of 
                        hospital-based eligible professionals 
                        (as defined in subsection 
                        (o)(1)(C)(ii)).
                          (ii) Ambulatory surgical center-
                        based.--Subject to clause (iv), no 
                        payment adjustment may be made under 
                        subparagraph (A) for 2017 and 2018 in 
                        the case of an eligible professional 
                        with respect to whom substantially all 
                        of the covered professional services 
                        furnished by such professional are 
                        furnished in an ambulatory surgical 
                        center.
                          (iii) Determination.--The 
                        determination of whether an eligible 
                        professional is an eligible 
                        professional described in clause (ii) 
                        may be made on the basis of--
                                  (I) the site of service (as 
                                defined by the Secretary); or
                                  (II) an attestation submitted 
                                by the eligible professional.
                        Determinations made under subclauses 
                        (I) and (II) shall be made without 
                        regard to any employment or billing 
                        arrangement between the eligible 
                        professional and any other supplier or 
                        provider of services.
                          (iv) Sunset.--Clause (ii) shall no 
                        longer apply as of the first year that 
                        begins more than 3 years after the date 
                        on which the Secretary determines, 
                        through notice and comment rulemaking, 
                        that certified EHR technology 
                        applicable to the ambulatory surgical 
                        center setting is available.
                  (E) Definitions.--For purposes of this 
                paragraph:
                          (i) Covered professional services.--
                        The term ``covered professional 
                        services'' has the meaning given such 
                        term in subsection (k)(3).
                          (ii) EHR reporting period.--The term 
                        ``EHR reporting period'' means, with 
                        respect to a year, a period (or 
                        periods) specified by the Secretary.
                          (iii) Eligible professional.--The 
                        term ``eligible professional'' means a 
                        physician, as defined in section 
                        1861(r).
          (8) Incentives for quality reporting.--
                  (A) Adjustment.--
                          (i) In general.--With respect to 
                        covered professional services furnished 
                        by an eligible professional during each 
                        of 2015 through 2018, if the eligible 
                        professional does not satisfactorily 
                        submit data on quality measures for 
                        covered professional services for the 
                        quality reporting period for the year 
                        (as determined under subsection 
                        (m)(3)(A)), the fee schedule amount for 
                        such services furnished by such 
                        professional during the year (including 
                        the fee schedule amount for purposes of 
                        determining a payment based on such 
                        amount) shall be equal to the 
                        applicable percent of the fee schedule 
                        amount that would otherwise apply to 
                        such services under this subsection 
                        (determined after application of 
                        paragraphs (3), (5), and (7), but 
                        without regard to this paragraph).
                          (ii) Applicable percent.--For 
                        purposes of clause (i), the term 
                        ``applicable percent'' means--
                                  (I) for 2015, 98.5 percent; 
                                and
                                  (II) for 2016, 2017, and 
                                2018, 98 percent.
                  (B) Application.--
                          (i) Physician reporting system 
                        rules.--Paragraphs (5), (6), and (8) of 
                        subsection (k) shall apply for purposes 
                        of this paragraph in the same manner as 
                        they apply for purposes of such 
                        subsection.
                          (ii) Incentive payment validation 
                        rules.--Clauses (ii) and (iii) of 
                        subsection (m)(5)(D) shall apply for 
                        purposes of this paragraph in a similar 
                        manner as they apply for purposes of 
                        such subsection.
                  (C) Definitions.--For purposes of this 
                paragraph:
                          (i) Eligible professional; covered 
                        professional services.--The terms 
                        ``eligible professional'' and ``covered 
                        professional services'' have the 
                        meanings given such terms in subsection 
                        (k)(3).
                          (ii) Physician reporting system.--The 
                        term ``physician reporting system'' 
                        means the system established under 
                        subsection (k).
                          (iii) Quality reporting period.--The 
                        term ``quality reporting period'' 
                        means, with respect to a year, a period 
                        specified by the Secretary.
          (9) Information reporting on services included in 
        global surgical packages.--With respect to services for 
        which a physician is required to report information in 
        accordance with subsection (c)(8)(B)(i), the Secretary 
        may through rulemaking delay payment of 5 percent of 
        the amount that would otherwise be payable under the 
        physician fee schedule under this section for such 
        services until the information so required is reported.
  (b) Establishment of Fee Schedules.--
          (1) In general.--Before November 1 of the preceding 
        year, for each year beginning with 1998, subject to 
        subsection (p), the Secretary shall establish, by 
        regulation, fee schedules that establish payment 
        amounts for all physicians' services furnished in all 
        fee schedule areas (as defined in subsection (j)(2)) 
        for the year. Except as provided in paragraph (2), each 
        such payment amount for a service shall be equal to the 
        product of--
                  (A) the relative value for the service (as 
                determined in subsection (c)(2)),
                  (B) the conversion factor (established under 
                subsection (d)) for the year, and
                  (C) the geographic adjustment factor 
                (established under subsection (e)(2)) for the 
                service for the fee schedule area.
          (2) Treatment of radiology services and anesthesia 
        services.--
                  (A) Radiology services.--With respect to 
                radiology services (including radiologist 
                services, as defined in section 1834(b)(6)), 
                the Secretary shall base the relative values on 
                the relative value scale developed under 
                section 1834(b)(1)(A), with appropriate 
                modifications of the relative values to assure 
                that the relative values established for 
                radiology services which are similar or related 
                to other physicians' services are consistent 
                with the relative values established for those 
                similar or related services.
                  (B) Anesthesia services.--In establishing the 
                fee schedule for anesthesia services for which 
                a relative value guide has been established 
                under section 4048(b) of the Omnibus Budget 
                Reconciliation Act of 1987, the Secretary shall 
                use, to the extent practicable, such relative 
                value guide, with appropriate adjustment of the 
                conversion factor, in a manner to assure that 
                the fee schedule amounts for anesthesia 
                services are consistent with the fee schedule 
                amounts for other services determined by the 
                Secretary to be of comparable value. In 
                applying the previous sentence, the Secretary 
                shall adjust the conversion factor by 
                geographic adjustment factors in the same 
                manner as such adjustment is made under 
                paragraph (1)(C).
                  (C) Consultation.--The Secretary shall 
                consult with the Physician Payment Review 
                Commission and organizations representing 
                physicians or suppliers who furnish radiology 
                services and anesthesia services in applying 
                subparagraphs (A) and (B).
          (3) Treatment of interpretation of 
        electrocardiograms.--The Secretary--
                  (A) shall make separate payment under this 
                section for the interpretation of 
                electrocardiograms performed or ordered to be 
                performed as part of or in conjunction with a 
                visit to or a consultation with a physician, 
                and
                  (B) shall adjust the relative values 
                established for visits and consultations under 
                subsection (c) so as not to include relative 
                value units for interpretations of 
                electrocardiograms in the relative value for 
                visits and consultations.
          (4) Special rule for imaging services.--
                  (A) In general.--In the case of imaging 
                services described in subparagraph (B) 
                furnished on or after January 1, 2007, if--
                          (i) the technical component 
                        (including the technical component 
                        portion of a global fee) of the service 
                        established for a year under the fee 
                        schedule described in paragraph (1) 
                        without application of the geographic 
                        adjustment factor described in 
                        paragraph (1)(C), exceeds
                          (ii) the Medicare OPD fee schedule 
                        amount established under the 
                        prospective payment system for hospital 
                        outpatient department services under 
                        paragraph (3)(D) of section 1833(t) for 
                        such service for such year, determined 
                        without regard to geographic adjustment 
                        under paragraph (2)(D) of such section,
                the Secretary shall substitute the amount 
                described in clause (ii), adjusted by the 
                geographic adjustment factor described in 
                paragraph (1)(C), for the fee schedule amount 
                for such technical component for such year.
                  (B) Imaging services described.--For purposes 
                of this paragraph, imaging services described 
                in this subparagraph are imaging and computer-
                assisted imaging services, including X-ray, 
                ultrasound (including echocardiography), 
                nuclear medicine (including positron emission 
                tomography), magnetic resonance imaging, 
                computed tomography, and fluoroscopy, but 
                excluding diagnostic and screening mammography, 
                and for 2010, 2011, and the first 2 months of 
                2012, dual-energy x-ray absorptiometry services 
                (as described in paragraph (6)).
                  (C) Adjustment in imaging utilization rate.--
                With respect to fee schedules established for 
                2011, 2012, and 2013, in the methodology for 
                determining practice expense relative value 
                units for expensive diagnostic imaging 
                equipment under the final rule published by the 
                Secretary in the Federal Register on November 
                25, 2009 (42 CFR 410 et al.), the Secretary 
                shall use a 75 percent assumption instead of 
                the utilization rates otherwise established in 
                such final rule. With respect to fee schedules 
                established for 2014 and subsequent years, in 
                such methodology, the Secretary shall use a 90 
                percent utilization rate.
                  (D) Adjustment in technical component 
                discount on single-session imaging involving 
                consecutive body parts.--For services furnished 
                on or after July 1, 2010, the Secretary shall 
                increase the reduction in payments attributable 
                to the multiple procedure payment reduction 
                applicable to the technical component for 
                imaging under the final rule published by the 
                Secretary in the Federal Register on November 
                21, 2005 (part 405 of title 42, Code of Federal 
                Regulations) from 25 percent to 50 percent.
          (5) Treatment of intensive cardiac rehabilitation 
        program.--
                  (A) In general.--In the case of an intensive 
                cardiac rehabilitation program described in 
                section 1861(eee)(4), the Secretary shall 
                substitute the Medicare OPD fee schedule amount 
                established under the prospective payment 
                system for hospital outpatient department 
                service under paragraph (3)(D) of section 
                1833(t) for cardiac rehabilitation (under HCPCS 
                codes 93797 and 93798 for calendar year 2007, 
                or any succeeding HCPCS codes for cardiac 
                rehabilitation).
                  (B) Definition of session.--Each of the 
                services described in subparagraphs (A) through 
                (E) of section 1861(eee)(3), when furnished for 
                one hour, is a separate session of intensive 
                cardiac rehabilitation.
                  (C) Multiple sessions per day.--Payment may 
                be made for up to 6 sessions per day of the 
                series of 72 one-hour sessions of intensive 
                cardiac rehabilitation services described in 
                section 1861(eee)(4)(B).
          (6) Treatment of bone mass scans.--For dual-energy x-
        ray absorptiometry services (identified in 2006 by 
        HCPCS codes 76075 and 76077 (and any succeeding codes)) 
        furnished during 2010, 2011, and the first 2 months of 
        2012, instead of the payment amount that would 
        otherwise be determined under this section for such 
        years, the payment amount shall be equal to 70 percent 
        of the product of--
                  (A) the relative value for the service (as 
                determined in subsection (c)(2)) for 2006;
                  (B) the conversion factor (established under 
                subsection (d)) for 2006; and
                  (C) the geographic adjustment factor 
                (established under subsection (e)(2)) for the 
                service for the fee schedule area for 2010, 
                2011, and the first 2 months of 2012, 
                respectively.
          (7) Adjustment in discount for certain multiple 
        therapy services.--In the case of therapy services 
        furnished on or after January 1, 2011, and before April 
        1, 2013, and for which payment is made under fee 
        schedules established under this section, 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 20 percent. In the case 
        of such services furnished on or after April 1, 2013, 
        and for which payment is made under such fee schedules, 
        instead of the 25 percent multiple procedure payment 
        reduction specified in such final rule, the reduction 
        percentage shall be 50 percent.
          (8) Encouraging care management for individuals with 
        chronic care needs.--
                  (A) In general.--In order to encourage the 
                management of care for individuals with chronic 
                care needs the Secretary shall, subject to 
                subparagraph (B), make payment (as the 
                Secretary determines to be appropriate) under 
                this section for chronic care management 
                services furnished on or after January 1, 2015, 
                by a physician (as defined in section 
                1861(r)(1)), physician assistant or nurse 
                practitioner (as defined in section 
                1861(aa)(5)(A)), clinical nurse specialist (as 
                defined in section 1861(aa)(5)(B)), or 
                certified nurse midwife (as defined in section 
                1861(gg)(2)).
                  (B) Policies relating to payment.--In 
                carrying out this paragraph, with respect to 
                chronic care management services, the Secretary 
                shall--
                          (i) make payment to only one 
                        applicable provider for such services 
                        furnished to an individual during a 
                        period;
                          (ii) not make payment under 
                        subparagraph (A) if such payment would 
                        be duplicative of payment that is 
                        otherwise made under this title for 
                        such services; and
                          (iii) not require that an annual 
                        wellness visit (as defined in section 
                        1861(hhh)) or an initial preventive 
                        physical examination (as defined in 
                        section 1861(ww)) be furnished as a 
                        condition of payment for such 
                        management services.
          (9) Special rule to incentivize transition from 
        traditional x-ray imaging to digital radiography.--
                  (A) Limitation on payment for film x-ray 
                imaging services.--In the case of an imaging 
                service (including the imaging portion of a 
                service) that is an X-ray taken using film and 
                that is furnished during 2017 or a subsequent 
                year, the payment amount for the technical 
                component (including the technical component 
                portion of a global service) of such service 
                that would otherwise be determined under this 
                section (without application of this paragraph 
                and before application of any other adjustment 
                under this section) for such year shall be 
                reduced by 20 percent.
                  (B) Phased-in limitation on payment for 
                computed radiography imaging services.--In the 
                case of an imaging service (including the 
                imaging portion of a service) that is an X-ray 
                taken using computed radiography technology--
                          (i) in the case of such a service 
                        furnished during 2018, 2019, 2020, 
                        2021, or 2022, the payment amount for 
                        the technical component (including the 
                        technical component portion of a global 
                        service) of such service that would 
                        otherwise be determined under this 
                        section (without application of this 
                        paragraph and before application of any 
                        other adjustment under this section) 
                        for such year shall be reduced by 7 
                        percent; and
                          (ii) in the case of such a service 
                        furnished during 2023 or a subsequent 
                        year, the payment amount for the 
                        technical component (including the 
                        technical component portion of a global 
                        service) of such service that would 
                        otherwise be determined under this 
                        section (without application of this 
                        paragraph and before application of any 
                        other adjustment under this section) 
                        for such year shall be reduced by 10 
                        percent.
                  (C) Computed radiography technology 
                defined.--For purposes of this paragraph, the 
                term ``computed radiography technology'' means 
                cassette-based imaging which utilizes an 
                imaging plate to create the image involved.
                  (D) Implementation.--In order to implement 
                this paragraph, the Secretary shall adopt 
                appropriate mechanisms which may include use of 
                modifiers.
          (10) Reduction of discount in payment for 
        professional component of multiple imaging services.--
        In the case of the professional component of imaging 
        services furnished on or after January 1, 2017, instead 
        of the 25 percent reduction for multiple procedures 
        specified in the final rule published by the Secretary 
        in the Federal Register on November 28, 2011, as 
        amended in the final rule published by the Secretary in 
        the Federal Register on November 16, 2012, the 
        reduction percentage shall be 5 percent.
          (11) Special rule for certain radiation therapy 
        services.--The code definitions, the work relative 
        value units under subsection (c)(2)(C)(i), and the 
        direct inputs for the practice expense relative value 
        units under subsection (c)(2)(C)(ii) for radiation 
        treatment delivery and related imaging services 
        (identified in 2016 by HCPCS G-codes G6001 through 
        G6015) for the fee schedule established under this 
        subsection for services furnished in 2017, 2018, and 
        2019 shall be the same as such definitions, units, and 
        inputs for such services for the fee schedule 
        established for services furnished in 2016.
  (c) Determination of Relative Values for Physicians' 
Services.--
          (1) Division of physicians' services into 
        components.--In this section, with respect to a 
        physicians' service:
                  (A) Work component defined.--The term ``work 
                component'' means the portion of the resources 
                used in furnishing the service that reflects 
                physician time and intensity in furnishing the 
                service. Such portion shall--
                          (i) include activities before and 
                        after direct patient contact, and
                          (ii) be defined, with respect to 
                        surgical procedures, to reflect a 
                        global definition including pre-
                        operative and post-operative 
                        physicians' services.
                  (B) Practice expense component defined.--The 
                term ``practice expense component'' means the 
                portion of the resources used in furnishing the 
                service that reflects the general categories of 
                expenses (such as office rent and wages of 
                personnel, but excluding malpractice expenses) 
                comprising practice expenses.
                  (C) Malpractice component defined.--The term 
                ``malpractice component'' means the portion of 
                the resources used in furnishing the service 
                that reflects malpractice expenses in 
                furnishing the service.
          (2) Determination of relative values.--
                  (A) In general.--
                          (i) Combination of units for 
                        components.--The Secretary shall 
                        develop a methodology for combining the 
                        work, practice expense, and malpractice 
                        relative value units, determined under 
                        subparagraph (C), for each service in a 
                        manner to produce a single relative 
                        value for that service. Such relative 
                        values are subject to adjustment under 
                        subparagraph (F)(i) and section 
                        13515(b) of the Omnibus Budget 
                        Reconciliation Act of 1993.
                          (ii) Extrapolation.--The Secretary 
                        may use extrapolation and other 
                        techniques to determine the number of 
                        relative value units for physicians' 
                        services for which specific data are 
                        not available and shall take into 
                        account recommendations of the 
                        Physician Payment Review Commission and 
                        the results of consultations with 
                        organizations representing physicians 
                        who provide such services.
                  (B) Periodic review and adjustments in 
                relative values.--
                          (i) Periodic review.--The Secretary, 
                        not less often than every 5 years, 
                        shall review the relative values 
                        established under this paragraph for 
                        all physicians' services.
                          (ii) Adjustments.--
                                  (I) In general.--The 
                                Secretary shall, to the extent 
                                the Secretary determines to be 
                                necessary and subject to 
                                subclause (II) and paragraph 
                                (7), adjust the number of such 
                                units to take into account 
                                changes in medical practice, 
                                coding changes, new data on 
                                relative value components, or 
                                the addition of new procedures. 
                                The Secretary shall publish an 
                                explanation of the basis for 
                                such adjustments.
                                  (II) Limitation on annual 
                                adjustments.--Subject to 
                                clauses (iv) and (v), the 
                                adjustments under subclause (I) 
                                for a year may not cause the 
                                amount of expenditures under 
                                this part for the year to 
                                differ by more than $20,000,000 
                                from the amount of expenditures 
                                under this part that would have 
                                been made if such adjustments 
                                had not been made.
                          (iii) Consultation.--The Secretary, 
                        in making adjustments under clause 
                        (ii), shall consult with the Medicare 
                        Payment Advisory Commission and 
                        organizations representing physicians.
                          (iv) Exemption of certain additional 
                        expenditures from budget neutrality.--
                        The additional expenditures 
                        attributable to--
                                  (I) subparagraph (H) shall 
                                not be taken into account in 
                                applying clause (ii)(II) for 
                                2004;
                                  (II) subparagraph (I) insofar 
                                as it relates to a physician 
                                fee schedule for 2005 or 2006 
                                shall not be taken into account 
                                in applying clause (ii)(II) for 
                                drug administration services 
                                under the fee schedule for such 
                                year for a specialty described 
                                in subparagraph (I)(ii)(II);
                                  (III) subparagraph (J) 
                                insofar as it relates to a 
                                physician fee schedule for 2005 
                                or 2006 shall not be taken into 
                                account in applying clause 
                                (ii)(II) for drug 
                                administration services under 
                                the fee schedule for such year; 
                                [and]
                                  (IV) subsection (b)(6) shall 
                                not be taken into account in 
                                applying clause (ii)(II) for 
                                2010, 2011, or the first 2 
                                months of 2012[.]; and
                                  (V) the amendment made by 
                                section 2(d)(1) of the Medicare 
                                Vision Act of 2019 shall not be 
                                taken into account in applying 
                                clause (ii)(II) for 2022 and 
                                2023.
                          (v) Exemption of certain reduced 
                        expenditures from budget-neutrality 
                        calculation.--The following reduced 
                        expenditures, as estimated by the 
                        Secretary, shall not be taken into 
                        account in applying clause (ii)(II):
                                  (I) Reduced payment for 
                                multiple imaging procedures.--
                                Effective for fee schedules 
                                established beginning with 
                                2007, reduced expenditures 
                                attributable to the multiple 
                                procedure payment reduction for 
                                imaging under the final rule 
                                published by the Secretary in 
                                the Federal Register on 
                                November 21, 2005 (42 CFR 405, 
                                et al.) insofar as it relates 
                                to the physician fee schedules 
                                for 2006 and 2007.
                                  (II) OPD payment cap for 
                                imaging services.--Effective 
                                for fee schedules established 
                                beginning with 2007, reduced 
                                expenditures attributable to 
                                subsection (b)(4).
                                  (III) Change in utilization 
                                rate for certain imaging 
                                services.--Effective for fee 
                                schedules established beginning 
                                with 2011, reduced expenditures 
                                attributable to the changes in 
                                the utilization rate applicable 
                                to 2011 and 2014, as described 
                                in the first and second 
                                sentence, respectively, of 
                                subsection (b)(4)(C).
                                  (VI) Additional reduced 
                                payment for multiple imaging 
                                procedures.--Effective for fee 
                                schedules established beginning 
                                with 2010 (but not applied for 
                                services furnished prior to 
                                July 1, 2010), reduced 
                                expenditures attributable to 
                                the increase in the multiple 
                                procedure payment reduction 
                                from 25 to 50 percent (as 
                                described in subsection 
                                (b)(4)(D)).
                                  (VII) Reduced expenditures 
                                for multiple therapy 
                                services.--Effective for fee 
                                schedules established beginning 
                                with 2011, reduced expenditures 
                                attributable to the multiple 
                                procedure payment reduction for 
                                therapy services (as described 
                                in subsection (b)(7)).
                                  (VIII) Reduced expenditures 
                                attributable to application of 
                                quality incentives for computed 
                                tomography.--Effective for fee 
                                schedules established beginning 
                                with 2016, reduced expenditures 
                                attributable to the application 
                                of the quality incentives for 
                                computed tomography under 
                                section 1834(p)
                                  (IX) Reductions for misvalued 
                                services if target not met.--
                                Effective for fee schedules 
                                beginning with 2016, reduced 
                                expenditures attributable to 
                                the application of the target 
                                recapture amount described in 
                                subparagraph (O)(iii).
                                  (X) Reduced expenditures 
                                attributable to incentives to 
                                transition to digital 
                                radiography.--Effective for fee 
                                schedules established beginning 
                                with 2017, reduced expenditures 
                                attributable to subparagraph 
                                (A) of subsection (b)(9) and 
                                effective for fee schedules 
                                established beginning with 
                                2018, reduced expenditures 
                                attributable to subparagraph 
                                (B) of such subsection.
                                  (XI) Discount in payment for 
                                professional component of 
                                imaging services.--Effective 
                                for fee schedules established 
                                beginning with 2017, reduced 
                                expenditures attributable to 
                                subsection (b)(10).
                          (vi) Alternative application of 
                        budget-neutrality adjustment.--
                        Notwithstanding subsection (d)(9)(A), 
                        effective for fee schedules established 
                        beginning with 2009, with respect to 
                        the 5-year review of work relative 
                        value units used in fee schedules for 
                        2007 and 2008, in lieu of continuing to 
                        apply budget-neutrality adjustments 
                        required under clause (ii) for 2007 and 
                        2008 to work relative value units, the 
                        Secretary shall apply such budget-
                        neutrality adjustments to the 
                        conversion factor otherwise determined 
                        for years beginning with 2009.
                  (C) Computation of relative value units for 
                components.--For purposes of this section for 
                each physicians' service--
                          (i) Work relative value units.--The 
                        Secretary shall determine a number of 
                        work relative value units for the 
                        service or group of services based on 
                        the relative resources incorporating 
                        physician time and intensity required 
                        in furnishing the service or group of 
                        services.
                          (ii) Practice expense relative value 
                        units.--The Secretary shall determine a 
                        number of practice expense relative 
                        value units for the service for years 
                        before 1999 equal to the product of--
                                  (I) the base allowed charges 
                                (as defined in subparagraph 
                                (D)) for the service, and
                                  (II) the practice expense 
                                percentage for the service (as 
                                determined under paragraph 
                                (3)(C)(ii)),
                        and for years beginning with 1999 based 
                        on the relative practice expense 
                        resources involved in furnishing the 
                        service or group of services. For 1999, 
                        such number of units shall be 
                        determined based 75 percent on such 
                        product and based 25 percent on the 
                        relative practice expense resources 
                        involved in furnishing the service. For 
                        2000, such number of units shall be 
                        determined based 50 percent on such 
                        product and based 50 percent on such 
                        relative practice expense resources. 
                        For 2001, such number of units shall be 
                        determined based 25 percent on such 
                        product and based 75 percent on such 
                        relative practice expense resources. 
                        For a subsequent year, such number of 
                        units shall be determined based 
                        entirely on such relative practice 
                        expense resources.
                          (iii) Malpractice relative value 
                        units.--The Secretary shall determine a 
                        number of malpractice relative value 
                        units for the service or group of 
                        services for years before 2000 equal to 
                        the product of--
                                  (I) the base allowed charges 
                                (as defined in subparagraph 
                                (D)) for the service or group 
                                of services, and
                                  (II) the malpractice 
                                percentage for the service or 
                                group of services (as 
                                determined under paragraph 
                                (3)(C)(iii)),
                        and for years beginning with 2000 based 
                        on the malpractice expense resources 
                        involved in furnishing the service or 
                        group of services.
                  (D) Base allowed charges defined.--In this 
                paragraph, the term ``base allowed charges'' 
                means, with respect to a physician's service, 
                the national average allowed charges for the 
                service under this part for services furnished 
                during 1991, as estimated by the Secretary 
                using the most recent data available.
                  (E) Reduction in practice expense relative 
                value units for certain services.--
                          (i) In general.--Subject to clause 
                        (ii), the Secretary shall reduce the 
                        practice expense relative value units 
                        applied to services described in clause 
                        (iii) furnished in--
                                  (I) 1994, by 25 percent of 
                                the number by which the number 
                                of practice expense relative 
                                value units (determined for 
                                1994 without regard to this 
                                subparagraph) exceeds the 
                                number of work relative value 
                                units determined for 1994,
                                  (II) 1995, by an additional 
                                25 percent of such excess, and
                                  (III) 1996, by an additional 
                                25 percent of such excess.
                          (ii) Floor on reductions.--The 
                        practice expense relative value units 
                        for a physician's service shall not be 
                        reduced under this subparagraph to a 
                        number less than 128 percent of the 
                        number of work relative value units.
                          (iii) Services covered.--For purposes 
                        of clause (i), the services described 
                        in this clause are physicians' services 
                        that are not described in clause (iv) 
                        and for which--
                                  (I) there are work relative 
                                value units, and
                                  (II) the number of practice 
                                expense relative value units 
                                (determined for 1994) exceeds 
                                128 percent of the number of 
                                work relative value units 
                                (determined for such year).
                          (iv) Excluded services.--For purposes 
                        of clause (iii), the services described 
                        in this clause are services which the 
                        Secretary determines at least 75 
                        percent of which are provided under 
                        this title in an office setting.
                  (F) Budget neutrality adjustments.--The 
                Secretary--
                          (i) shall reduce the relative values 
                        for all services (other than anesthesia 
                        services) established under this 
                        paragraph (and in the case of 
                        anesthesia services, the conversion 
                        factor established by the Secretary for 
                        such services) by such percentage as 
                        the Secretary determines to be 
                        necessary so that, beginning in 1996, 
                        the amendment made by section 13514(a) 
                        of the Omnibus Budget Reconciliation 
                        Act of 1993 would not result in 
                        expenditures under this section that 
                        exceed the amount of such expenditures 
                        that would have been made if such 
                        amendment had not been made, and
                          (ii) shall reduce the amounts 
                        determined under subsection 
                        (a)(2)(B)(ii)(I) by such percentage as 
                        the Secretary determines to be required 
                        to assure that, taking into account the 
                        reductions made under clause (i), the 
                        amendment made by section 13514(a) of 
                        the Omnibus Budget Reconciliation Act 
                        of 1993 would not result in 
                        expenditures under this section in 1994 
                        that exceed the amount of such 
                        expenditures that would have been made 
                        if such amendment had not been made.
                  (G) Adjustments in relative value units for 
                1998.--
                          (i) In general.--The Secretary 
                        shall--
                                  (I) subject to clauses (iv) 
                                and (v), reduce the practice 
                                expense relative value units 
                                applied to any services 
                                described in clause (ii) 
                                furnished in 1998 to a number 
                                equal to 110 percent of the 
                                number of work relative value 
                                units, and
                                  (II) increase the practice 
                                expense relative value units 
                                for office visit procedure 
                                codes during 1998 by a uniform 
                                percentage which the Secretary 
                                estimates will result in an 
                                aggregate increase in payments 
                                for such services equal to the 
                                aggregate decrease in payments 
                                by reason of subclause (I).
                          (ii) Services covered.--For purposes 
                        of clause (i), the services described 
                        in this clause are physicians' services 
                        that are not described in clause (iii) 
                        and for which--
                                  (I) there are work relative 
                                value units, and
                                  (II) the number of practice 
                                expense relative value units 
                                (determined for 1998) exceeds 
                                110 percent of the number of 
                                work relative value units 
                                (determined for such year).
                          (iii) Excluded services.--For 
                        purposes of clause (ii), the services 
                        described in this clause are services 
                        which the Secretary determines at least 
                        75 percent of which are provided under 
                        this title in an office setting.
                          (iv) Limitation on aggregate 
                        reallocation.--If the application of 
                        clause (i)(I) would result in an 
                        aggregate amount of reductions under 
                        such clause in excess of $390,000,000, 
                        such clause shall be applied by 
                        substituting for 110 percent such 
                        greater percentage as the Secretary 
                        estimates will result in the aggregate 
                        amount of such reductions equaling 
                        $390,000,000.
                          (v) No reduction for certain 
                        services.--Practice expense relative 
                        value units for a procedure performed 
                        in an office or in a setting out of an 
                        office shall not be reduced under 
                        clause (i) if the in-office or out-of-
                        office practice expense relative value, 
                        respectively, for the procedure would 
                        increase under the proposed rule on 
                        resource-based practice expenses issued 
                        by the Secretary on June 18, 1997 (62 
                        Federal Register 33158 et seq.).
                  (H) Adjustments in practice expense relative 
                value units for certain drug administration 
                services beginning in 2004.--
                          (i) Use of survey data.--In 
                        establishing the physician fee schedule 
                        under subsection (b) with respect to 
                        payments for services furnished on or 
                        after January 1, 2004, the Secretary 
                        shall, in determining practice expense 
                        relative value units under this 
                        subsection, utilize a survey submitted 
                        to the Secretary as of January 1, 2003, 
                        by a physician specialty organization 
                        pursuant to section 212 of the 
                        Medicare, Medicaid, and SCHIP Balanced 
                        Budget Refinement Act of 1999 if the 
                        survey--
                                  (I) covers practice expenses 
                                for oncology drug 
                                administration services; and
                                  (II) meets criteria 
                                established by the Secretary 
                                for acceptance of such surveys.
                          (ii) Pricing of clinical oncology 
                        nurses in practice expense 
                        methodology.--If the survey described 
                        in clause (i) includes data on wages, 
                        salaries, and compensation of clinical 
                        oncology nurses, the Secretary shall 
                        utilize such data in the methodology 
                        for determining practice expense 
                        relative value units under subsection 
                        (c).
                          (iii) Work relative value units for 
                        certain drug administration services.--
                        In establishing the relative value 
                        units under this paragraph for drug 
                        administration services described in 
                        clause (iv) furnished on or after 
                        January 1, 2004, the Secretary shall 
                        establish work relative value units 
                        equal to the work relative value units 
                        for a level 1 office medical visit for 
                        an established patient.
                          (iv) Drug administration services 
                        described.--The drug administration 
                        services described in this clause are 
                        physicians' services--
                                  (I) which are classified as 
                                of October 1, 2003, within any 
                                of the following groups of 
                                procedures: therapeutic or 
                                diagnostic infusions (excluding 
                                chemotherapy); chemotherapy 
                                administration services; and 
                                therapeutic, prophylactic, or 
                                diagnostic injections;
                                  (II) for which there are no 
                                work relative value units 
                                assigned under this subsection 
                                as of such date; and
                                  (III) for which national 
                                relative value units have been 
                                assigned under this subsection 
                                as of such date.
                  (I) Adjustments in practice expense relative 
                value units for certain drug administration 
                services beginning with 2005.--
                          (i) In general.--In establishing the 
                        physician fee schedule under subsection 
                        (b) with respect to payments for 
                        services furnished on or after January 
                        1, 2005 or 2006, the Secretary shall 
                        adjust the practice expense relative 
                        value units for such year consistent 
                        with clause (ii).
                          (ii) Use of supplemental survey 
                        data.--
                                  (I) In general.--Subject to 
                                subclause (II), if a specialty 
                                submits to the Secretary by not 
                                later than March 1, 2004, for 
                                2005, or March 1, 2005, for 
                                2006, data that includes 
                                expenses for the administration 
                                of drugs and biologicals for 
                                which the payment amount is 
                                determined pursuant to section 
                                1842(o), the Secretary shall 
                                use such supplemental survey 
                                data in carrying out this 
                                subparagraph for the years 
                                involved insofar as they are 
                                collected and provided by 
                                entities and organizations 
                                consistent with the criteria 
                                established by the Secretary 
                                pursuant to section 212(a) of 
                                the Medicare, Medicaid, and 
                                SCHIP Balanced Budget 
                                Refinement Act of 1999.
                                  (II) Limitation on 
                                specialty.--Subclause (I) shall 
                                apply to a specialty only 
                                insofar as not less than 40 
                                percent of payments for the 
                                specialty under this title in 
                                2002 are attributable to the 
                                administration of drugs and 
                                biologicals, as determined by 
                                the Secretary.
                                  (III) Application.--This 
                                clause shall not apply with 
                                respect to a survey to which 
                                subparagraph (H)(i) applies.
                  (J) Provisions for appropriate reporting and 
                billing for physicians' services associated 
                with the administration of covered outpatient 
                drugs and biologicals.--
                          (i) Evaluation of codes.--The 
                        Secretary shall promptly evaluate 
                        existing drug administration codes for 
                        physicians' services to ensure accurate 
                        reporting and billing for such 
                        services, taking into account levels of 
                        complexity of the administration and 
                        resource consumption.
                          (ii) Use of existing processes.--In 
                        carrying out clause (i), the Secretary 
                        shall use existing processes for the 
                        consideration of coding changes and, to 
                        the extent coding changes are made, 
                        shall use such processes in 
                        establishing relative values for such 
                        services.
                          (iii) Implementation.--In carrying 
                        out clause (i), the Secretary shall 
                        consult with representatives of 
                        physician specialties affected by the 
                        implementation of section 1847A or 
                        section 1847B, and shall take such 
                        steps within the Secretary's authority 
                        to expedite such considerations under 
                        clause (ii).
                          (iv) Subsequent, budget neutral 
                        adjustments permitted.--Nothing in 
                        subparagraph (H) or (I) or this 
                        subparagraph shall be construed as 
                        preventing the Secretary from providing 
                        for adjustments in practice expense 
                        relative value units under (and 
                        consistent with) subparagraph (B) for 
                        years after 2004, 2005, or 2006, 
                        respectively.
                  (K) Potentially misvalued codes.--
                          (i) In general.--The Secretary 
                        shall--
                                  (I) periodically identify 
                                services as being potentially 
                                misvalued using criteria 
                                specified in clause (ii); and
                                  (II) review and make 
                                appropriate adjustments to the 
                                relative values established 
                                under this paragraph for 
                                services identified as being 
                                potentially misvalued under 
                                subclause (I).
                          (ii) Identification of potentially 
                        misvalued codes.--For purposes of 
                        identifying potentially misvalued codes 
                        pursuant to clause (i)(I), the 
                        Secretary shall examine codes (and 
                        families of codes as appropriate) based 
                        on any or all of the following 
                        criteria:
                                  (I) Codes that have 
                                experienced the fastest growth.
                                  (II) Codes that have 
                                experienced substantial changes 
                                in practice expenses.
                                  (III) Codes that describe new 
                                technologies or services within 
                                an appropriate time period 
                                (such as 3 years) after the 
                                relative values are initially 
                                established for such codes.
                                  (IV) Codes which are multiple 
                                codes that are frequently 
                                billed in conjunction with 
                                furnishing a single service.
                                  (V) Codes with low relative 
                                values, particularly those that 
                                are often billed multiple times 
                                for a single treatment.
                                  (VI) Codes that have not been 
                                subject to review since 
                                implementation of the fee 
                                schedule.
                                  (VII) Codes that account for 
                                the majority of spending under 
                                the physician fee schedule.
                                  (VIII) Codes for services 
                                that have experienced a 
                                substantial change in the 
                                hospital length of stay or 
                                procedure time.
                                  (IX) Codes for which there 
                                may be a change in the typical 
                                site of service since the code 
                                was last valued.
                                  (X) Codes for which there is 
                                a significant difference in 
                                payment for the same service 
                                between different sites of 
                                service.
                                  (XI) Codes for which there 
                                may be anomalies in relative 
                                values within a family of 
                                codes.
                                  (XII) Codes for services 
                                where there may be efficiencies 
                                when a service is furnished at 
                                the same time as other 
                                services.
                                  (XIII) Codes with high intra-
                                service work per unit of time.
                                  (XIV) Codes with high 
                                practice expense relative value 
                                units.
                                  (XV) Codes with high cost 
                                supplies.
                                  (XVI) Codes as determined 
                                appropriate by the Secretary.
                          (iii) Review and adjustments.--
                                  (I) The Secretary may use 
                                existing processes to receive 
                                recommendations on the review 
                                and appropriate adjustment of 
                                potentially misvalued services 
                                described in clause (i)(II).
                                  (II) The Secretary may 
                                conduct surveys, other data 
                                collection activities, studies, 
                                or other analyses as the 
                                Secretary determines to be 
                                appropriate to facilitate the 
                                review and appropriate 
                                adjustment described in clause 
                                (i)(II).
                                  (III) The Secretary may use 
                                analytic contractors to 
                                identify and analyze services 
                                identified under clause (i)(I), 
                                conduct surveys or collect 
                                data, and make recommendations 
                                on the review and appropriate 
                                adjustment of services 
                                described in clause (i)(II).
                                  (IV) The Secretary may 
                                coordinate the review and 
                                appropriate adjustment 
                                described in clause (i)(II) 
                                with the periodic review 
                                described in subparagraph (B).
                                  (V) As part of the review and 
                                adjustment described in clause 
                                (i)(II), including with respect 
                                to codes with low relative 
                                values described in clause 
                                (ii), the Secretary may make 
                                appropriate coding revisions 
                                (including using existing 
                                processes for consideration of 
                                coding changes) which may 
                                include consolidation of 
                                individual services into 
                                bundled codes for payment under 
                                the fee schedule under 
                                subsection (b).
                                  (VI) The provisions of 
                                subparagraph (B)(ii)(II) and 
                                paragraph (7) shall apply to 
                                adjustments to relative value 
                                units made pursuant to this 
                                subparagraph in the same manner 
                                as such provisions apply to 
                                adjustments under subparagraph 
                                (B)(ii)(I).
                          (iv) Treatment of certain radiation 
                        therapy services.--Radiation treatment 
                        delivery and related imaging services 
                        identified under subsection (b)(11) 
                        shall not be considered as potentially 
                        misvalued services for purposes of this 
                        subparagraph and subparagraph (O) for 
                        2017, 2018, and 2019.
                  (L) Validating relative value units.--
                          (i) In general.--The Secretary shall 
                        establish a process to validate 
                        relative value units under the fee 
                        schedule under subsection (b).
                          (ii) Components and elements of 
                        work.--The process described in clause 
                        (i) may include validation of work 
                        elements (such as time, mental effort 
                        and professional judgment, technical 
                        skill and physical effort, and stress 
                        due to risk) involved with furnishing a 
                        service and may include validation of 
                        the pre-, post-, and intra-service 
                        components of work.
                          (iii) Scope of codes.--The validation 
                        of work relative value units shall 
                        include a sampling of codes for 
                        services that is the same as the codes 
                        listed under subparagraph (K)(ii).
                          (iv) Methods.--The Secretary may 
                        conduct the validation under this 
                        subparagraph using methods described in 
                        subclauses (I) through (V) of 
                        subparagraph (K)(iii) as the Secretary 
                        determines to be appropriate.
                          (v) Adjustments.--The Secretary shall 
                        make appropriate adjustments to the 
                        work relative value units under the fee 
                        schedule under subsection (b). The 
                        provisions of subparagraph (B)(ii)(II) 
                        shall apply to adjustments to relative 
                        value units made pursuant to this 
                        subparagraph in the same manner as such 
                        provisions apply to adjustments under 
                        subparagraph (B)(ii)(II).
                  (M) Authority to collect and use information 
                on physicians' services in the determination of 
                relative values.--
                          (i) Collection of information.--
                        Notwithstanding any other provision of 
                        law, the Secretary may collect or 
                        obtain information on the resources 
                        directly or indirectly related to 
                        furnishing services for which payment 
                        is made under the fee schedule 
                        established under subsection (b). Such 
                        information may be collected or 
                        obtained from any eligible professional 
                        or any other source.
                          (ii) Use of information.--
                        Notwithstanding any other provision of 
                        law, subject to clause (v), the 
                        Secretary may (as the Secretary 
                        determines appropriate) use information 
                        collected or obtained pursuant to 
                        clause (i) in the determination of 
                        relative values for services under this 
                        section.
                          (iii) Types of information.--The 
                        types of information described in 
                        clauses (i) and (ii) may, at the 
                        Secretary's discretion, include any or 
                        all of the following:
                                  (I) Time involved in 
                                furnishing services.
                                  (II) Amounts and types of 
                                practice expense inputs 
                                involved with furnishing 
                                services.
                                  (III) Prices (net of any 
                                discounts) for practice expense 
                                inputs, which may include paid 
                                invoice prices or other 
                                documentation or records.
                                  (IV) Overhead and accounting 
                                information for practices of 
                                physicians and other suppliers.
                                  (V) Any other element that 
                                would improve the valuation of 
                                services under this section.
                          (iv) Information collection 
                        mechanisms.--Information may be 
                        collected or obtained pursuant to this 
                        subparagraph from any or all of the 
                        following:
                                  (I) Surveys of physicians, 
                                other suppliers, providers of 
                                services, manufacturers, and 
                                vendors.
                                  (II) Surgical logs, billing 
                                systems, or other practice or 
                                facility records.
                                  (III) Electronic health 
                                records.
                                  (IV) Any other mechanism 
                                determined appropriate by the 
                                Secretary.
                          (v) Transparency of use of 
                        information.--
                                  (I) In general.--Subject to 
                                subclauses (II) and (III), if 
                                the Secretary uses information 
                                collected or obtained under 
                                this subparagraph in the 
                                determination of relative 
                                values under this subsection, 
                                the Secretary shall disclose 
                                the information source and 
                                discuss the use of such 
                                information in such 
                                determination of relative 
                                values through notice and 
                                comment rulemaking.
                                  (II) Thresholds for use.--The 
                                Secretary may establish 
                                thresholds in order to use such 
                                information, including the 
                                exclusion of information 
                                collected or obtained from 
                                eligible professionals who use 
                                very high resources (as 
                                determined by the Secretary) in 
                                furnishing a service.
                                  (III) Disclosure of 
                                information.--The Secretary 
                                shall make aggregate 
                                information available under 
                                this subparagraph but shall not 
                                disclose information in a form 
                                or manner that identifies an 
                                eligible professional or a 
                                group practice, or information 
                                collected or obtained pursuant 
                                to a nondisclosure agreement.
                          (vi) Incentive to participate.--The 
                        Secretary may provide for such payments 
                        under this part to an eligible 
                        professional that submits such 
                        solicited information under this 
                        subparagraph as the Secretary 
                        determines appropriate in order to 
                        compensate such eligible professional 
                        for such submission. Such payments 
                        shall be provided in a form and manner 
                        specified by the Secretary.
                          (vii) Administration.--Chapter 35 of 
                        title 44, United States Code, shall not 
                        apply to information collected or 
                        obtained under this subparagraph.
                          (viii) Definition of eligible 
                        professional.--In this subparagraph, 
                        the term ``eligible professional'' has 
                        the meaning given such term in 
                        subsection (k)(3)(B).
                          (ix) Funding.--For purposes of 
                        carrying out this subparagraph, in 
                        addition to funds otherwise 
                        appropriated, the Secretary shall 
                        provide for the transfer, from the 
                        Federal Supplementary Medical Insurance 
                        Trust Fund under section 1841, of 
                        $2,000,000 to the Centers for Medicare 
                        & Medicaid Services Program Management 
                        Account for each fiscal year beginning 
                        with fiscal year 2014. Amounts 
                        transferred under the preceding 
                        sentence for a fiscal year shall be 
                        available until expended.
                  (N) Authority for alternative approaches to 
                establishing practice expense relative 
                values.--The Secretary may establish or adjust 
                practice expense relative values under this 
                subsection using cost, charge, or other data 
                from suppliers or providers of services, 
                including information collected or obtained 
                under subparagraph (M).
                  (O) Target for relative value adjustments for 
                misvalued services.--With respect to fee 
                schedules established for each of 2016 through 
                2018, the following shall apply:
                          (i) Determination of net reduction in 
                        expenditures.--For each year, the 
                        Secretary shall determine the estimated 
                        net reduction in expenditures under the 
                        fee schedule under this section with 
                        respect to the year as a result of 
                        adjustments to the relative values 
                        established under this paragraph for 
                        misvalued codes.
                          (ii) Budget neutral redistribution of 
                        funds if target met and counting 
                        overages towards the target for the 
                        succeeding year.--If the estimated net 
                        reduction in expenditures determined 
                        under clause (i) for the year is equal 
                        to or greater than the target for the 
                        year--
                                  (I) reduced expenditures 
                                attributable to such 
                                adjustments shall be 
                                redistributed for the year in a 
                                budget neutral manner in 
                                accordance with subparagraph 
                                (B)(ii)(II); and
                                  (II) the amount by which such 
                                reduced expenditures exceeds 
                                the target for the year shall 
                                be treated as a reduction in 
                                expenditures described in 
                                clause (i) for the succeeding 
                                year, for purposes of 
                                determining whether the target 
                                has or has not been met under 
                                this subparagraph with respect 
                                to that year.
                          (iii) Exemption from budget 
                        neutrality if target not met.--If the 
                        estimated net reduction in expenditures 
                        determined under clause (i) for the 
                        year is less than the target for the 
                        year, reduced expenditures in an amount 
                        equal to the target recapture amount 
                        shall not be taken into account in 
                        applying subparagraph (B)(ii)(II) with 
                        respect to fee schedules beginning with 
                        2016.
                          (iv) Target recapture amount.--For 
                        purposes of clause (iii), the target 
                        recapture amount is, with respect to a 
                        year, an amount equal to the difference 
                        between--
                                  (I) the target for the year; 
                                and
                                  (II) the estimated net 
                                reduction in expenditures 
                                determined under clause (i) for 
                                the year.
                          (v) Target.--For purposes of this 
                        subparagraph, with respect to a year, 
                        the target is calculated as 0.5 percent 
                        (or, for 2016, 1.0 percent) of the 
                        estimated amount of expenditures under 
                        the fee schedule under this section for 
                        the year.
          (3) Component percentages.--For purposes of paragraph 
        (2), the Secretary shall determine a work percentage, a 
        practice expense percentage, and a malpractice 
        percentage for each physician's service as follows:
                  (A) Division of services by specialty.--For 
                each physician's service or class of 
                physicians' services, the Secretary shall 
                determine the average percentage of each such 
                service or class of services that is performed, 
                nationwide, under this part by physicians in 
                each of the different physician specialties (as 
                identified by the Secretary).
                  (B) Division of specialty by component.--The 
                Secretary shall determine the average 
                percentage division of resources, among the 
                work component, the practice expense component, 
                and the malpractice component, used by 
                physicians in each of such specialties in 
                furnishing physicians' services. Such 
                percentages shall be based on national data 
                that describe the elements of physician 
                practice costs and revenues, by physician 
                specialty. The Secretary may use extrapolation 
                and other techniques to determine practice 
                costs and revenues for specialties for which 
                adequate data are not available.
                  (C) Determination of component percentages.--
                          (i) Work percentage.--The work 
                        percentage for a service (or class of 
                        services) is equal to the sum (for all 
                        physician specialties) of--
                                  (I) the average percentage 
                                division for the work component 
                                for each physician specialty 
                                (determined under subparagraph 
                                (B)), multiplied by
                                  (II) the proportion 
                                (determined under subparagraph 
                                (A)) of such service (or 
                                services) performed by 
                                physicians in that specialty.
                          (ii) Practice expense percentage.--
                        For years before 2002, the practice 
                        expense percentage for a service (or 
                        class of services) is equal to the sum 
                        (for all physician specialties) of--
                                  (I) the average percentage 
                                division for the practice 
                                expense component for each 
                                physician specialty (determined 
                                under subparagraph (B)), 
                                multiplied by
                                  (II) the proportion 
                                (determined under subparagraph 
                                (A)) of such service (or 
                                services) performed by 
                                physicians in that specialty.
                          (iii) Malpractice percentage.--For 
                        years before 1999, the malpractice 
                        percentage for a service (or class of 
                        services) is equal to the sum (for all 
                        physician specialties) of--
                                  (I) the average percentage 
                                division for the malpractice 
                                component for each physician 
                                specialty (determined under 
                                subparagraph (B)), multiplied 
                                by
                                  (II) the proportion 
                                (determined under subparagraph 
                                (A)) of such service (or 
                                services) performed by 
                                physicians in that specialty.
                  (D) Periodic recomputation.--The Secretary 
                may, from time to time, provide for the 
                recomputation of work percentages, practice 
                expense percentages, and malpractice 
                percentages determined under this paragraph.
          (4) Ancillary policies.--The Secretary may establish 
        ancillary policies (with respect to the use of 
        modifiers, local codes, and other matters) as may be 
        necessary to implement this section.
          (5) Coding.--The Secretary shall establish a uniform 
        procedure coding system for the coding of all 
        physicians' services. The Secretary shall provide for 
        an appropriate coding structure for visits and 
        consultations. The Secretary may incorporate the use of 
        time in the coding for visits and consultations. The 
        Secretary, in establishing such coding system, shall 
        consult with the Physician Payment Review Commission 
        and other organizations representing physicians.
          (6) No variation for specialists.--The Secretary may 
        not vary the conversion factor or the number of 
        relative value units for a physicians' service based on 
        whether the physician furnishing the service is a 
        specialist or based on the type of specialty of the 
        physician.
          (7) Phase-in of significant relative value unit (rvu) 
        reductions.--Effective for fee schedules established 
        beginning with 2016, for services that are not new or 
        revised codes, if the total relative value units for a 
        service for a year would otherwise be decreased by an 
        estimated amount equal to or greater than 20 percent as 
        compared to the total relative value units for the 
        previous year, the applicable adjustments in work, 
        practice expense, and malpractice relative value units 
        shall be phased-in over a 2-year period.
          (8) Global surgical packages.--
                  (A) Prohibition of implementation of rule 
                regarding global surgical packages.--
                          (i) In general.--The Secretary shall 
                        not implement the policy established in 
                        the final rule published on November 
                        13, 2014 (79 Fed. Reg. 67548 et seq.), 
                        that requires the transition of all 10-
                        day and 90-day global surgery packages 
                        to 0-day global periods.
                          (ii) Construction.--Nothing in clause 
                        (i) shall be construed to prevent the 
                        Secretary from revaluing misvalued 
                        codes for specific surgical services or 
                        assigning values to new or revised 
                        codes for surgical services.
                  (B) Collection of data on services included 
                in global surgical packages.--
                          (i) In general.--Subject to clause 
                        (ii), the Secretary shall through 
                        rulemaking develop and implement a 
                        process to gather, from a 
                        representative sample of physicians, 
                        beginning not later than January 1, 
                        2017, information needed to value 
                        surgical services. Such information 
                        shall include the number and level of 
                        medical visits furnished during the 
                        global period and other items and 
                        services related to the surgery and 
                        furnished during the global period, as 
                        appropriate. Such information shall be 
                        reported on claims at the end of the 
                        global period or in another manner 
                        specified by the Secretary. For 
                        purposes of carrying out this paragraph 
                        (other than clause (iii)), the 
                        Secretary shall transfer from the 
                        Federal Supplemental Medical Insurance 
                        Trust Fund under section 1841 
                        $2,000,000 to the Center for Medicare & 
                        Medicaid Services Program Management 
                        Account for fiscal year 2015. Amounts 
                        transferred under the previous sentence 
                        shall remain available until expended.
                          (ii) Reassessment and potential 
                        sunset.--Every 4 years, the Secretary 
                        shall reassess the value of the 
                        information collected pursuant to 
                        clause (i). Based on such a 
                        reassessment and by regulation, the 
                        Secretary may discontinue the 
                        requirement for collection of 
                        information under such clause if the 
                        Secretary determines that the Secretary 
                        has adequate information from other 
                        sources, such as qualified clinical 
                        data registries, surgical logs, billing 
                        systems or other practice or facility 
                        records, and electronic health records, 
                        in order to accurately value global 
                        surgical services under this section.
                          (iii) Inspector general audit.--The 
                        Inspector General of the Department of 
                        Health and Human Services shall audit a 
                        sample of the information reported 
                        under clause (i) to verify the accuracy 
                        of the information so reported.
                  (C) Improving accuracy of pricing for 
                surgical services.--For years beginning with 
                2019, the Secretary shall use the information 
                reported under subparagraph (B)(i) as 
                appropriate and other available data for the 
                purpose of improving the accuracy of valuation 
                of surgical services under the physician fee 
                schedule under this section.
  (d) Conversion Factors.--
          (1) Establishment.--
                  (A) In general.--The conversion factor for 
                each year shall be the conversion factor 
                established under this subsection for the 
                previous year (or, in the case of 1992, 
                specified in subparagraph (B)) adjusted by the 
                update (established under paragraph (3)) for 
                the year involved (for years before 2001) and, 
                for years beginning with 2001 and ending with 
                2025, multiplied by the update (established 
                under paragraph (4) or a subsequent paragraph) 
                for the year involved. There shall be two 
                separate conversion factors for each year 
                beginning with 2026, one for items and services 
                furnished by a qualifying APM participant (as 
                defined in section 1833(z)(2)) (referred to in 
                this subsection as the ``qualifying APM 
                conversion factor'') and the other for other 
                items and services (referred to in this 
                subsection as the ``nonqualifying APM 
                conversion factor''), equal to the respective 
                conversion factor for the previous year (or, in 
                the case of 2026, equal to the single 
                conversion factor for 2025) multiplied by the 
                update established under paragraph (20) for 
                such respective conversion factor for such 
                year.
                  (B) Special provision for 1992.--For purposes 
                of subparagraph (A), the conversion factor 
                specified in this subparagraph is a conversion 
                factor (determined by the Secretary) which, if 
                this section were to apply during 1991 using 
                such conversion factor, would result in the 
                same aggregate amount of payments under this 
                part for physicians' services as the estimated 
                aggregate amount of the payments under this 
                part for such services in 1991.
                  (C) Special rules for 1998.--Except as 
                provided in subparagraph (D), the single 
                conversion factor for 1998 under this 
                subsection shall be the conversion factor for 
                primary care services for 1997, increased by 
                the Secretary's estimate of the weighted 
                average of the three separate updates that 
                would otherwise occur were it not for the 
                enactment of chapter 1 of subtitle F of title 
                IV of the Balanced Budget Act of 1997.
                  (D) Special rules for anesthesia services.--
                The separate conversion factor for anesthesia 
                services for a year shall be equal to 46 
                percent of the single conversion factor (or, 
                beginning with 2026, applicable conversion 
                factor) established for other physicians' 
                services, except as adjusted for changes in 
                work, practice expense, or malpractice relative 
                value units.
                  (E) Publication and dissemination of 
                information.--The Secretary shall--
                          (i) cause to have published in the 
                        Federal Register not later than 
                        November 1 of each year (beginning with 
                        2000) the conversion factor which will 
                        apply to physicians' services for the 
                        succeeding year, the update determined 
                        under paragraph (4) for such succeeding 
                        year, and the allowed expenditures 
                        under such paragraph for such 
                        succeeding year; and
                          (ii) make available to the Medicare 
                        Payment Advisory Commission and the 
                        public by March 1 of each year 
                        (beginning with 2000) an estimate of 
                        the sustainable growth rate and of the 
                        conversion factor which will apply to 
                        physicians' services for the succeeding 
                        year and data used in making such 
                        estimate.
          (3) Update for 1999 and 2000.--
                  (A) In general.--Unless otherwise provided by 
                law, subject to subparagraph (D) and the 
                budget-neutrality factor determined by the 
                Secretary under subsection (c)(2)(B)(ii), the 
                update to the single conversion factor 
                established in paragraph (1)(C) for 1999 and 
                2000 is equal to the product of--
                          (i) 1 plus the Secretary's estimate 
                        of the percentage increase in the MEI 
                        (as defined in section 1842(i)(3)) for 
                        the year (divided by 100), and
                          (ii) 1 plus the Secretary's estimate 
                        of the update adjustment factor for the 
                        year (divided by 100),
                minus 1 and multiplied by 100.
                  (B) Update adjustment factor.--For purposes 
                of subparagraph (A)(ii), the ``update 
                adjustment factor'' for a year is equal (as 
                estimated by the Secretary) to--
                          (i) the difference between (I) the 
                        sum of the allowed expenditures for 
                        physicians' services (as determined 
                        under subparagraph (C)) for the period 
                        beginning April 1, 1997, and ending on 
                        March 31 of the year involved, and (II) 
                        the amount of actual expenditures for 
                        physicians' services furnished during 
                        the period beginning April 1, 1997, and 
                        ending on March 31 of the preceding 
                        year; divided by
                          (ii) the actual expenditures for 
                        physicians' services for the 12-month 
                        period ending on March 31 of the 
                        preceding year, increased by the 
                        sustainable growth rate under 
                        subsection (f) for the fiscal year 
                        which begins during such 12-month 
                        period.
                  (C) Determination of allowed expenditures.--
                For purposes of this paragraph and paragraph 
                (4), the allowed expenditures for physicians' 
                services for the 12-month period ending with 
                March 31 of--
                          (i) 1997 is equal to the actual 
                        expenditures for physicians' services 
                        furnished during such 12-month period, 
                        as estimated by the Secretary; or
                          (ii) a subsequent year is equal to 
                        the allowed expenditures for 
                        physicians' services for the previous 
                        year, increased by the sustainable 
                        growth rate under subsection (f) for 
                        the fiscal year which begins during 
                        such 12-month period.
                  (D) Restriction on variation from medicare 
                economic index.--Notwithstanding the amount of 
                the update adjustment factor determined under 
                subparagraph (B) for a year, the update in the 
                conversion factor under this paragraph for the 
                year may not be--
                          (i) greater than 100 times the 
                        following amount: (1.03 + (MEI 
                        percentage/100)) -1; or
                          (ii) less than 100 times the 
                        following amount: (0.93 + (MEI 
                        percentage/100)) -1,
                where ``MEI percentage'' means the Secretary's 
                estimate of the percentage increase in the MEI 
                (as defined in section 1842(i)(3)) for the year 
                involved.
          (4) Update for years beginning with 2001 and ending 
        with 2014.--
                  (A) In general.--Unless otherwise provided by 
                law, subject to the budget-neutrality factor 
                determined by the Secretary under subsection 
                (c)(2)(B)(ii) and subject to adjustment under 
                subparagraph (F), the update to the single 
                conversion factor established in paragraph 
                (1)(C) for a year beginning with 2001 and 
                ending with 2014 is equal to the product of--
                          (i) 1 plus the Secretary's estimate 
                        of the percentage increase in the MEI 
                        (as defined in section 1842(i)(3)) for 
                        the year (divided by 100); and
                          (ii) 1 plus the Secretary's estimate 
                        of the update adjustment factor under 
                        subparagraph (B) for the year.
                  (B) Update adjustment factor.--For purposes 
                of subparagraph (A)(ii), subject to 
                subparagraph (D) and the succeeding paragraphs 
                of this subsection, the ``update adjustment 
                factor'' for a year is equal (as estimated by 
                the Secretary) to the sum of the following:
                          (i) Prior year adjustment 
                        component.--An amount determined by--
                                  (I) computing the difference 
                                (which may be positive or 
                                negative) between the amount of 
                                the allowed expenditures for 
                                physicians' services for the 
                                prior year (as determined under 
                                subparagraph (C)) and the 
                                amount of the actual 
                                expenditures for such services 
                                for that year;
                                  (II) dividing that difference 
                                by the amount of the actual 
                                expenditures for such services 
                                for that year; and
                                  (III) multiplying that 
                                quotient by 0.75.
                          (ii) Cumulative adjustment 
                        component.--An amount determined by--
                                  (I) computing the difference 
                                (which may be positive or 
                                negative) between the amount of 
                                the allowed expenditures for 
                                physicians' services (as 
                                determined under subparagraph 
                                (C)) from April 1, 1996, 
                                through the end of the prior 
                                year and the amount of the 
                                actual expenditures for such 
                                services during that period;
                                  (II) dividing that difference 
                                by actual expenditures for such 
                                services for the prior year as 
                                increased by the sustainable 
                                growth rate under subsection 
                                (f) for the year for which the 
                                update adjustment factor is to 
                                be determined; and
                                  (III) multiplying that 
                                quotient by 0.33.
                  (C) Determination of allowed expenditures.--
                For purposes of this paragraph:
                          (i) Period up to april 1, 1999.--The 
                        allowed expenditures for physicians' 
                        services for a period before April 1, 
                        1999, shall be the amount of the 
                        allowed expenditures for such period as 
                        determined under paragraph (3)(C).
                          (ii) Transition to calendar year 
                        allowed expenditures.--Subject to 
                        subparagraph (E), the allowed 
                        expenditures for--
                                  (I) the 9-month period 
                                beginning April 1, 1999, shall 
                                be the Secretary's estimate of 
                                the amount of the allowed 
                                expenditures that would be 
                                permitted under paragraph 
                                (3)(C) for such period; and
                                  (II) the year of 1999, shall 
                                be the Secretary's estimate of 
                                the amount of the allowed 
                                expenditures that would be 
                                permitted under paragraph 
                                (3)(C) for such year.
                          (iii) Years beginning with 2000.--The 
                        allowed expenditures for a year 
                        (beginning with 2000) is equal to the 
                        allowed expenditures for physicians' 
                        services for the previous year, 
                        increased by the sustainable growth 
                        rate under subsection (f) for the year 
                        involved.
                  (D) Restriction on update adjustment 
                factor.--The update adjustment factor 
                determined under subparagraph (B) for a year 
                may not be less than -0.07 or greater than 
                0.03.
                  (E) Recalculation of allowed expenditures for 
                updates beginning with 2001.--For purposes of 
                determining the update adjustment factor for a 
                year beginning with 2001, the Secretary shall 
                recompute the allowed expenditures for previous 
                periods beginning on or after April 1, 1999, 
                consistent with subsection (f)(3).
                  (F) Transitional adjustment designed to 
                provide for budget neutrality.--Under this 
                subparagraph the Secretary shall provide for an 
                adjustment to the update under subparagraph 
                (A)--
                          (i) for each of 2001, 2002, 2003, and 
                        2004, of -0.2 percent; and
                          (ii) for 2005 of +0.8 percent.
          (5) Update for 2004 and 2005.--The update to the 
        single conversion factor established in paragraph 
        (1)(C) for each of 2004 and 2005 shall be not less than 
        1.5 percent.
          (6) Update for 2006.--The update to the single 
        conversion factor established in paragraph (1)(C) for 
        2006 shall be 0 percent.
          (7) Conversion factor for 2007.--
                  (A) In general.--The conversion factor that 
                would otherwise be applicable under this 
                subsection for 2007 shall be the amount of such 
                conversion factor divided by the product of--
                          (i) 1 plus the Secretary's estimate 
                        of the percentage increase in the MEI 
                        (as defined in section 1842(i)(3)) for 
                        2007 (divided by 100); and
                          (ii) 1 plus the Secretary's estimate 
                        of the update adjustment factor under 
                        paragraph (4)(B) for 2007.
                  (B) No effect on computation of conversion 
                factor for 2008.--The conversion factor under 
                this subsection shall be computed under 
                paragraph (1)(A) for 2008 as if subparagraph 
                (A) had never applied.
          (8) Update for 2008.--
                  (A) In general.--Subject to paragraph (7)(B), 
                in lieu of the update to the single conversion 
                factor established in paragraph (1)(C) that 
                would otherwise apply for 2008, the update to 
                the single conversion factor shall be 0.5 
                percent.
                  (B) No effect on computation of conversion 
                factor for 2009.--The conversion factor under 
                this subsection shall be computed under 
                paragraph (1)(A) for 2009 and subsequent years 
                as if subparagraph (A) had never applied.
          (9) Update for 2009.--
                  (A) In general.--Subject to paragraphs (7)(B) 
                and (8)(B), in lieu of the update to the single 
                conversion factor established in paragraph 
                (1)(C) that would otherwise apply for 2009, the 
                update to the single conversion factor shall be 
                1.1 percent.
                  (B) No effect on computation of conversion 
                factor for 2010 and subsequent years.--The 
                conversion factor under this subsection shall 
                be computed under paragraph (1)(A) for 2010 and 
                subsequent years as if subparagraph (A) had 
                never applied.
          (10) Update for January through may of 2010.--
                  (A) In general.--Subject to paragraphs 
                (7)(B), (8)(B), and (9)(B), in lieu of the 
                update to the single conversion factor 
                established in paragraph (1)(C) that would 
                otherwise apply for 2010 for the period 
                beginning on January 1, 2010, and ending on May 
                31, 2010, the update to the single conversion 
                factor shall be 0 percent for 2010.
                  (B) No effect on computation of conversion 
                factor for remaining portion of 2010 and 
                subsequent years.--The conversion factor under 
                this subsection shall be computed under 
                paragraph (1)(A) for the period beginning on 
                June 1, 2010, and ending on December 31, 2010, 
                and for 2011 and subsequent years as if 
                subparagraph (A) had never applied.
          (11) Update for june through december of 2010.--
                  (A) In general.--Subject to paragraphs 
                (7)(B), (8)(B), (9)(B), and (10)(B), in lieu of 
                the update to the single conversion factor 
                established in paragraph (1)(C) that would 
                otherwise apply for 2010 for the period 
                beginning on June 1, 2010, and ending on 
                December 31, 2010, the update to the single 
                conversion factor shall be 2.2 percent.
                  (B) No effect on computation of conversion 
                factor for 2011 and subsequent years.--The 
                conversion factor under this subsection shall 
                be computed under paragraph (1)(A) for 2011 and 
                subsequent years as if subparagraph (A) had 
                never applied.
          (12) Update for 2011.--
                  (A) In general.--Subject to paragraphs 
                (7)(B), (8)(B), (9)(B), (10)(B), and (11)(B), 
                in lieu of the update to the single conversion 
                factor established in paragraph (1)(C) that 
                would otherwise apply for 2011, the update to 
                the single conversion factor shall be 0 
                percent.
                  (B) No effect on computation of conversion 
                factor for 2012 and subsequent years.--The 
                conversion factor under this subsection shall 
                be computed under paragraph (1)(A) for 2012 and 
                subsequent years as if subparagraph (A) had 
                never applied.
          (13) Update for 2012.--
                  (A) In general.--Subject to paragraphs 
                (7)(B), (8)(B), (9)(B), (10)(B), (11)(B), and 
                (12)(B), in lieu of the update to the single 
                conversion factor established in paragraph 
                (1)(C) that would otherwise apply for 2012, the 
                update to the single conversion factor shall be 
                zero percent.
                  (B) No effect on computation of conversion 
                factor for 2013 and subsequent years.--The 
                conversion factor under this subsection shall 
                be computed under paragraph (1)(A) for 2013 and 
                subsequent years as if subparagraph (A) had 
                never applied.
          (14) Update for 2013.--
                  (A) In general.--Subject to paragraphs 
                (7)(B), (8)(B), (9)(B), (10)(B), (11)(B), 
                (12)(B), and (13)(B), in lieu of the update to 
                the single conversion factor established in 
                paragraph (1)(C) that would otherwise apply for 
                2013, the update to the single conversion 
                factor for such year shall be zero percent.
                  (B) No effect on computation of conversion 
                factor for 2014 and subsequent years.--The 
                conversion factor under this subsection shall 
                be computed under paragraph (1)(A) for 2014 and 
                subsequent years as if subparagraph (A) had 
                never applied.
          (15) Update for 2014.--
                  (A) In general.--Subject to paragraphs 
                (7)(B), (8)(B), (9)(B), (10)(B), (11)(B), 
                (12)(B), (13)(B), and (14)(B), in lieu of the 
                update to the single conversion factor 
                established in paragraph (1)(C) that would 
                otherwise apply for 2014, the update to the 
                single conversion factor shall be 0.5 percent.
                  (B) No effect on computation of conversion 
                factor for subsequent years.--The conversion 
                factor under this subsection shall be computed 
                under paragraph (1)(A) for 2015 and subsequent 
                years as if subparagraph (A) had never applied.
          (16) Update for january through june of 2015.--
        Subject to paragraphs (7)(B), (8)(B), (9)(B), (10)(B), 
        (11)(B), (12)(B), (13)(B), (14)(B), and (15)(B), in 
        lieu of the update to the single conversion factor 
        established in paragraph (1)(C) that would otherwise 
        apply for 2015 for the period beginning on January 1, 
        2015, and ending on June 30, 2015, the update to the 
        single conversion factor shall be 0.0 percent.
          (17) Update for july through december of 2015.--The 
        update to the single conversion factor established in 
        paragraph (1)(C) for the period beginning on July 1, 
        2015, and ending on December 31, 2015, shall be 0.5 
        percent.
          (18) Update for 2016 through 2019.--The update to the 
        single conversion factor established in paragraph 
        (1)(C)--
                  (A) for 2016 and each subsequent year through 
                2018 shall be 0.5 percent; and
                  (B) for 2019 shall be 0.25 percent.
          (19) Update for 2020 through 2025.--The update to the 
        single conversion factor established in paragraph 
        (1)(C) for 2020 and each subsequent year through 2025 
        shall be 0.0 percent.
          (20) Update for 2026 and subsequent years.--For 2026 
        and each subsequent year, the update to the qualifying 
        APM conversion factor established under paragraph 
        (1)(A) is 0.75 percent, and the update to the 
        nonqualifying APM conversion factor established under 
        such paragraph is 0.25 percent.
  (e) Geographic Adjustment Factors.--
          (1) Establishment of geographic indices.--
                  (A) In general.--Subject to subparagraphs 
                (B), (C), (E), (G), (H), and (I), the Secretary 
                shall establish--
                          (i) an index which reflects the 
                        relative costs of the mix of goods and 
                        services comprising practice expenses 
                        (other than malpractice expenses) in 
                        the different fee schedule areas 
                        compared to the national average of 
                        such costs,
                          (ii) an index which reflects the 
                        relative costs of malpractice expenses 
                        in the different fee schedule areas 
                        compared to the national average of 
                        such costs, and
                          (iii) an index which reflects \1/4\ 
                        of the difference between the relative 
                        value of physicians' work effort in 
                        each of the different fee schedule 
                        areas and the national average of such 
                        work effort.
                  (B) Class-specific geographic cost-of-
                practice indices.--The Secretary may establish 
                more than one index under subparagraph (A)(i) 
                in the case of classes of physicians' services, 
                if, because of differences in the mix of goods 
                and services comprising practice expenses for 
                the different classes of services, the 
                application of a single index under such clause 
                to different classes of such services would be 
                substantially inequitable.
                  (C) Peridic review and adjustments in 
                geographic adjustment factors.--The Secretary, 
                not less often than every 3 years, shall, in 
                consultation with appropriate representatives 
                of physicians, review the indices established 
                under subparagraph (A) and the geographic index 
                values applied under this subsection for all 
                fee schedule areas. Based on such review, the 
                Secretary may revise such index and adjust such 
                index values, except that, if more than 1 year 
                has elapsed since the date of the last previous 
                adjustment, the adjustment to be applied in the 
                first year of the next adjustment shall be \1/
                2\ of the adjustment that otherwise would be 
                made.
                  (D) Use of recent data.--In establishing 
                indices and index values under this paragraph, 
                the Secretary shall use the most recent data 
                available relating to practice expenses, 
                malpractice expenses, and physician work effort 
                in different fee schedule areas.
                  (E) Floor at 1.0 on work geographic index.--
                After calculating the work geographic index in 
                subparagraph (A)(iii), for purposes of payment 
                for services furnished on or after January 1, 
                2004, and before January 1, 2020, the Secretary 
                shall increase the work geographic index to 
                1.00 for any locality for which such work 
                geographic index is less than 1.00.
                  (G) Floor for practice expense, malpractice, 
                and work geographic indices for services 
                furnished in alaska.--For purposes of payment 
                for services furnished in Alaska on or after 
                January 1, 2004, and before January 1, 2006, 
                after calculating the practice expense, 
                malpractice, and work geographic indices in 
                clauses (i), (ii), and (iii) of subparagraph 
                (A) and in subparagraph (B), the Secretary 
                shall increase any such index to 1.67 if such 
                index would otherwise be less than 1.67. For 
                purposes of payment for services furnished in 
                the State described in the preceding sentence 
                on or after January 1, 2009, after calculating 
                the work geographic index in subparagraph 
                (A)(iii), the Secretary shall increase the work 
                geographic index to 1.5 if such index would 
                otherwise be less than 1.5
                  (H) Practice expense geographic adjustment 
                for 2010 and subsequent years.--
                          (i) For 2010.--Subject to clause 
                        (iii), for services furnished during 
                        2010, the employee wage and rent 
                        portions of the practice expense 
                        geographic index described in 
                        subparagraph (A)(i) shall reflect \1/2\ 
                        of the difference between the relative 
                        costs of employee wages and rents in 
                        each of the different fee schedule 
                        areas and the national average of such 
                        employee wages and rents.
                          (ii) For 2011.--Subject to clause 
                        (iii), for services furnished during 
                        2011, the employee wage and rent 
                        portions of the practice expense 
                        geographic index described in 
                        subparagraph (A)(i) shall reflect \1/2\ 
                        of the difference between the relative 
                        costs of employee wages and rents in 
                        each of the different fee schedule 
                        areas and the national average of such 
                        employee wages and rents.
                          (iii) Hold harmless.--The practice 
                        expense portion of the geographic 
                        adjustment factor applied in a fee 
                        schedule area for services furnished in 
                        2010 or 2011 shall not, as a result of 
                        the application of clause (i) or (ii), 
                        be reduced below the practice expense 
                        portion of the geographic adjustment 
                        factor under subparagraph (A)(i) (as 
                        calculated prior to the application of 
                        such clause (i) or (ii), respectively) 
                        for such area for such year.
                          (iv) Analysis.--The Secretary shall 
                        analyze current methods of establishing 
                        practice expense geographic adjustments 
                        under subparagraph (A)(i) and evaluate 
                        data that fairly and reliably 
                        establishes distinctions in the costs 
                        of operating a medical practice in the 
                        different fee schedule areas. Such 
                        analysis shall include an evaluation of 
                        the following:
                                  (I) The feasibility of using 
                                actual data or reliable survey 
                                data developed by medical 
                                organizations on the costs of 
                                operating a medical practice, 
                                including office rents and non-
                                physician staff wages, in 
                                different fee schedule areas.
                                  (II) The office expense 
                                portion of the practice expense 
                                geographic adjustment described 
                                in subparagraph (A)(i), 
                                including the extent to which 
                                types of office expenses are 
                                determined in local markets 
                                instead of national markets.
                                  (III) The weights assigned to 
                                each of the categories within 
                                the practice expense geographic 
                                adjustment described in 
                                subparagraph (A)(i).
                          (v) Revision for 2012 and subsequent 
                        years.--As a result of the analysis 
                        described in clause (iv), the Secretary 
                        shall, not later than January 1, 2012, 
                        make appropriate adjustments to the 
                        practice expense geographic adjustment 
                        described in subparagraph (A)(i) to 
                        ensure accurate geographic adjustments 
                        across fee schedule areas, including--
                                  (I) basing the office rents 
                                component and its weight on 
                                office expenses that vary among 
                                fee schedule areas; and
                                  (II) considering a 
                                representative range of 
                                professional and non-
                                professional personnel employed 
                                in a medical office based on 
                                the use of the American 
                                Community Survey data or other 
                                reliable data for wage 
                                adjustments.
                        Such adjustments shall be made without 
                        regard to adjustments made pursuant to 
                        clauses (i) and (ii) and shall be made 
                        in a budget neutral manner.
                  (I) Floor for practice expense index for 
                services furnished in frontier states.--
                          (i) In general.--Subject to clause 
                        (ii), for purposes of payment for 
                        services furnished in a frontier State 
                        (as defined in section 
                        1886(d)(3)(E)(iii)(II)) on or after 
                        January 1, 2011, after calculating the 
                        practice expense index in subparagraph 
                        (A)(i), the Secretary shall increase 
                        any such index to 1.00 if such index 
                        would otherwise be less that 1.00. The 
                        preceding sentence shall not be applied 
                        in a budget neutral manner.
                          (ii) Limitation.--This subparagraph 
                        shall not apply to services furnished 
                        in a State that receives a non-labor 
                        related share adjustment under section 
                        1886(d)(5)(H).
          (2) Computation of geographic adjustment factor.--For 
        purposes of subsection (b)(1)(C), for all physicians' 
        services for each fee schedule area the Secretary shall 
        establish a geographic adjustment factor equal to the 
        sum of the geographic cost-of-practice adjustment 
        factor (specified in paragraph (3)), the geographic 
        malpractice adjustment factor (specified in paragraph 
        (4)), and the geographic physician work adjustment 
        factor (specified in paragraph (5)) for the service and 
        the area.
          (3) Geographic cost-of-practice adjustment factor.--
        For purposes of paragraph (2), the ``geographic cost-
        of-practice adjustment factor'', for a service for a 
        fee schedule area, is the product of--
                  (A) the proportion of the total relative 
                value for the service that reflects the 
                relative value units for the practice expense 
                component, and
                  (B) the geographic cost-of-practice index 
                value for the area for the service, based on 
                the index established under paragraph (1)(A)(i) 
                or (1)(B) (as the case may be).
          (4) Geographic malpractice adjustment factor.--For 
        purposes of paragraph (2), the ``geographic malpractice 
        adjustment factor'', for a service for a fee schedule 
        area, is the product of--
                  (A) the proportion of the total relative 
                value for the service that reflects the 
                relative value units for the malpractice 
                component, and
                  (B) the geographic malpractice index value 
                for the area, based on the index established 
                under paragraph (1)(A)(ii).
          (5) Geographic physician work adjustment factor.--For 
        purposes of paragraph (2), the ``geographic physician 
        work adjustment factor'', for a service for a fee 
        schedule area, is the product of--
                  (A) the proportion of the total relative 
                value for the service that reflects the 
                relative value units for the work component, 
                and
                  (B) the geographic physician work index value 
                for the area, based on the index established 
                under paragraph (1)(A)(iii).
          (6) Use of msas as fee schedule areas in 
        california.--
                  (A) In general.--Subject to the succeeding 
                provisions of this paragraph and 
                notwithstanding the previous provisions of this 
                subsection, for services furnished on or after 
                January 1, 2017, the fee schedule areas used 
                for payment under this section applicable to 
                California shall be the following:
                          (i) Each Metropolitan Statistical 
                        Area (each in this paragraph referred 
                        to as an ``MSA''), as defined by the 
                        Director of the Office of Management 
                        and Budget as of December 31 of the 
                        previous year, shall be a fee schedule 
                        area.
                          (ii) All areas not included in an MSA 
                        shall be treated as a single rest-of-
                        State fee schedule area.
                  (B) Transition for msas previously in rest-
                of-state payment locality or in locality 3.--
                          (i) In general.--For services 
                        furnished in California during a year 
                        beginning with 2017 and ending with 
                        2021 in an MSA in a transition area (as 
                        defined in subparagraph (D)), subject 
                        to subparagraph (C), the geographic 
                        index values to be applied under this 
                        subsection for such year shall be equal 
                        to the sum of the following:
                                  (I) Current law component.--
                                The old weighting factor 
                                (described in clause (ii)) for 
                                such year multiplied by the 
                                geographic index values under 
                                this subsection for the fee 
                                schedule area that included 
                                such MSA that would have 
                                applied in such area (as 
                                estimated by the Secretary) if 
                                this paragraph did not apply.
                                  (II) MSA-based component.--
                                The MSA-based weighting factor 
                                (described in clause (iii)) for 
                                such year multiplied by the 
                                geographic index values 
                                computed for the fee schedule 
                                area under subparagraph (A) for 
                                the year (determined without 
                                regard to this subparagraph).
                          (ii) Old weighting factor.--The old 
                        weighting factor described in this 
                        clause--
                                  (I) for 2017, is \5/6\; and
                                  (II) for each succeeding 
                                year, is the old weighting 
                                factor described in this clause 
                                for the previous year minus \1/
                                6\.
                          (iii) MSA-based weighting factor.--
                        The MSA-based weighting factor 
                        described in this clause for a year is 
                        1 minus the old weighting factor under 
                        clause (ii) for that year.
                  (C) Hold harmless.--For services furnished in 
                a transition area in California during a year 
                beginning with 2017, the geographic index 
                values to be applied under this subsection for 
                such year shall not be less than the 
                corresponding geographic index values that 
                would have applied in such transition area (as 
                estimated by the Secretary) if this paragraph 
                did not apply.
                  (D) Transition area defined.--In this 
                paragraph, the term ``transition area'' means 
                each of the following fee schedule areas for 
                2013:
                          (i) The rest-of-State payment 
                        locality.
                          (ii) Payment locality 3.
                  (E) References to fee schedule areas.--
                Effective for services furnished on or after 
                January 1, 2017, for California, any reference 
                in this section to a fee schedule area shall be 
                deemed a reference to a fee schedule area 
                established in accordance with this paragraph.
  (f) Sustainable Growth Rate.--
          (1) Publication.--The Secretary shall cause to have 
        published in the Federal Register not later than--
                  (A) November 1, 2000, the sustainable growth 
                rate for 2000 and 2001; and
                  (B) November 1 of each succeeding year 
                through 2014 the sustainable growth rate for 
                such succeeding year and each of the preceding 
                2 years.
          (2) Specification of growth rate.--The sustainable 
        growth rate for all physicians' services for a fiscal 
        year (beginning with fiscal year 1998 and ending with 
        fiscal year 2000) and a year beginning with 2000 and 
        ending with 2014 shall be equal to the product of--
                  (A) 1 plus the Secretary's estimate of the 
                weighted average percentage increase (divided 
                by 100) in the fees for all physicians' 
                services in the applicable period involved,
                  (B) 1 plus the Secretary's estimate of the 
                percentage change (divided by 100) in the 
                average number of individuals enrolled under 
                this part (other than Medicare+Choice plan 
                enrollees) from the previous applicable period 
                to the applicable period involved,
                  (C) 1 plus the Secretary's estimate of the 
                annual average percentage growth in real gross 
                domestic product per capita (divided by 100) 
                during the 10-year period ending with the 
                applicable period involved, and
                  (D) 1 plus the Secretary's estimate of the 
                percentage change (divided by 100) in 
                expenditures for all physicians' services in 
                the applicable period (compared with the 
                previous applicable period) which will result 
                from changes in law and regulations, determined 
                without taking into account estimated changes 
                in expenditures resulting from the update 
                adjustment factor determined under subsection 
                (d)(3)(B) or (d)(4)(B), as the case may be,
        minus 1 and multiplied by 100.
          (3) Data to be used.--For purposes of determining the 
        update adjustment factor under subsection (d)(4)(B) for 
        a year beginning with 2001, the sustainable growth 
        rates taken into consideration in the determination 
        under paragraph (2) shall be determined as follows:
                  (A) For 2001.--For purposes of such 
                calculations for 2001, the sustainable growth 
                rates for fiscal year 2000 and the years 2000 
                and 2001 shall be determined on the basis of 
                the best data available to the Secretary as of 
                September 1, 2000.
                  (B) For 2002.--For purposes of such 
                calculations for 2002, the sustainable growth 
                rates for fiscal year 2000 and for years 2000, 
                2001, and 2002 shall be determined on the basis 
                of the best data available to the Secretary as 
                of September 1, 2001.
                  (C) For 2003 and succeeding years.--For 
                purposes of such calculations for a year after 
                2002--
                          (i) the sustainable growth rates for 
                        that year and the preceding 2 years 
                        shall be determined on the basis of the 
                        best data available to the Secretary as 
                        of September 1 of the year preceding 
                        the year for which the calculation is 
                        made; and
                          (ii) the sustainable growth rate for 
                        any year before a year described in 
                        clause (i) shall be the rate as most 
                        recently determined for that year under 
                        this subsection.
        Nothing in this paragraph shall be construed as 
        affecting the sustainable growth rates established for 
        fiscal year 1998 or fiscal year 1999.
          (4) Definitions.--In this subsection:
                  (A) Services included in physicians' 
                services.--The term ``physicians' services'' 
                includes other items and services (such as 
                clinical diagnostic laboratory tests and 
                radiology services), specified by the 
                Secretary, that are commonly performed or 
                furnished by a physician or in a physician's 
                office, but does not include services furnished 
                to a Medicare+Choice plan enrollee.
                  (B) Medicare+choice plan enrollee.--The term 
                ``Medicare+Choice plan enrollee'' means, with 
                respect to a fiscal year, an individual 
                enrolled under this part who has elected to 
                receive benefits under this title for the 
                fiscal year through a Medicare+Choice plan 
                offered under part C, and also includes an 
                individual who is receiving benefits under this 
                part through enrollment with an eligible 
                organization with a risk-sharing contract under 
                section 1876.
                  (C) Applicable period.--The term ``applicable 
                period'' means--
                          (i) a fiscal year, in the case of 
                        fiscal year 1998, fiscal year 1999, and 
                        fiscal year 2000; or
                          (ii) a calendar year with respect to 
                        a year beginning with 2000;
                as the case may be.
  (g) Limitation on Beneficiary Liability.--
          (1) Limitation on actual charges.--
                  (A) In general.--In the case of a 
                nonparticipating physician or nonparticipating 
                supplier or other person (as defined in section 
                1842(i)(2)) who does not accept payment on an 
                assignment-related basis for a physician's 
                service furnished with respect to an individual 
                enrolled under this part, the following rules 
                apply:
                          (i) Application of limiting charge.--
                        No person may bill or collect an actual 
                        charge for the service in excess of the 
                        limiting charge described in paragraph 
                        (2) for such service.
                          (ii) No liability for excess 
                        charges.--No person is liable for 
                        payment of any amounts billed for the 
                        service in excess of such limiting 
                        charge.
                          (iii) Correction of excess charges.--
                        If such a physician, supplier, or other 
                        person bills, but does not collect, an 
                        actual charge for a service in 
                        violation of clause (i), the physician, 
                        supplier, or other person shall reduce 
                        on a timely basis the actual charge 
                        billed for the service to an amount not 
                        to exceed the limiting charge for the 
                        service.
                          (iv) Refund of excess collections.--
                        If such a physician, supplier, or other 
                        person collects an actual charge for a 
                        service in violation of clause (i), the 
                        physician, supplier, or other person 
                        shall provide on a timely basis a 
                        refund to the individual charged in the 
                        amount by which the amount collected 
                        exceeded the limiting charge for the 
                        service. The amount of such a refund 
                        shall be reduced to the extent the 
                        individual has an outstanding balance 
                        owed by the individual to the 
                        physician.
                  (B) Sanctions.--If a physician, supplier, or 
                other person--
                          (i) knowingly and willfully bills or 
                        collects for services in violation of 
                        subparagraph (A)(i) on a repeated 
                        basis, or
                          (ii) fails to comply with clause 
                        (iii) or (iv) of subparagraph (A) on a 
                        timely basis,
                the Secretary may apply sanctions against the 
                physician, supplier, or other person in 
                accordance with paragraph (2) of section 
                1842(j). In applying this subparagraph, 
                paragraph (4) of such section applies in the 
                same manner as such paragraph applies to such 
                section and any reference in such section to a 
                physician is deemed also to include a reference 
                to a supplier or other person under this 
                subparagraph.
                  (C) Timely basis.--For purposes of this 
                paragraph, a correction of a bill for an excess 
                charge or refund of an amount with respect to a 
                violation of subparagraph (A)(i) in the case of 
                a service is considered to be provided ``on a 
                timely basis'', if the reduction or refund is 
                made not later than 30 days after the date the 
                physician, supplier, or other person is 
                notified by the carrier under this part of such 
                violation and of the requirements of 
                subparagraph (A).
          (2) Limiting charge defined.--
                  (A) For 1991.--For physicians' services of a 
                physician furnished during 1991, other than 
                radiologist services subject to section 
                1834(b), the ``limiting charge'' shall be the 
                same percentage (or, if less, 25 percent) above 
                the recognized payment amount under this part 
                with respect to the physician (as a 
                nonparticipating physician) as the percentage 
                by which--
                          (i) the maximum allowable actual 
                        charge (as determined under section 
                        1842(j)(1)(C) as of December 31, 1990, 
                        or, if less, the maximum actual charge 
                        otherwise permitted for the service 
                        under this part as of such date) for 
                        the service of the physician, exceeds
                          (ii) the recognized payment amount 
                        for the service of the physician (as a 
                        nonparticipating physician) as of such 
                        date.
In the case of evaluation and management services (as specified 
in section 1842(b)(16)(B)(ii)), the preceding sentence shall be 
applied by substituting ``40 percent'' for ``25 percent''.
          
                  (B) For 1992.--For physicians' services 
                furnished during 1992, other than radiologist 
                services subject to section 1834(b), the 
                ``limiting charge'' shall be the same 
                percentage (or, if less, 20 percent) above the 
                recognized payment amount under this part for 
                nonparticipating physicians as the percentage 
                by which--
                          (i) the limiting charge (as 
                        determined under subparagraph (A) as of 
                        December 31, 1991) for the service, 
                        exceeds
                          (ii) the recognized payment amount 
                        for the service for nonparticipating 
                        physicians as of such date.
                  (C) After 1992.--For physicians' services 
                furnished in a year after 1992, the ``limiting 
                charge'' shall be 115 percent of the recognized 
                payment amount under this part for 
                nonparticipating physicians or for 
                nonparticipating suppliers or other persons.
                  (D) Recognized payment amount.--In this 
                section, the term ``recognized payment amount'' 
                means, for services furnished on or after 
                January 1, 1992, the fee schedule amount 
                determined under subsection (a) (or, if payment 
                under this part is made on a basis other than 
                the fee schedule under this section, 95 percent 
                of the other payment basis), and, for services 
                furnished during 1991, the applicable 
                percentage (as defined in section 
                1842(b)(4)(A)(iv)) of the prevailing charge (or 
                fee schedule amount) for nonparticipating 
                physicians for that year.
          (3) Limitation on charges for medicare beneficiaries 
        eligible for medicaid benefits.--
                  (A) In general.--Payment for physicians' 
                services furnished on or after April 1, 1990, 
                to an individual who is enrolled under this 
                part and eligible for any medical assistance 
                (including as a qualified medicare beneficiary, 
                as defined in section 1905(p)(1)) with respect 
                to such services under a State plan approved 
                under title XIX may only be made on an 
                assignment-related basis and the provisions of 
                section 1902(n)(3)(A) apply to further limit 
                permissible charges under this section.
                  (B) Penalty.--A person may not bill for 
                physicians' services subject to subparagraph 
                (A) other than on an assignment-related basis. 
                No person is liable for payment of any amounts 
                billed for such a service in violation of the 
                previous sentence. If a person knowingly and 
                willfully bills for physicians' services in 
                violation of the first sentence, the Secretary 
                may apply sanctions against the person in 
                accordance with section 1842(j)(2).
          (4) Physician submission of claims.--
                  (A) In general.--For services furnished on or 
                after September 1, 1990, within 1 year after 
                the date of providing a service for which 
                payment is made under this part on a reasonable 
                charge or fee schedule basis, a physician, 
                supplier, or other person (or an employer or 
                facility in the cases described in section 
                1842(b)(6)(A))--
                          (i) shall complete and submit a claim 
                        for such service on a standard claim 
                        form specified by the Secretary to the 
                        carrier on behalf of a beneficiary, and
                          (ii) may not impose any charge 
                        relating to completing and submitting 
                        such a form.
                  (B) Penalty.--(i) With respect to an assigned 
                claim wherever a physician, provider, supplier 
                or other person (or an employer or facility in 
                the cases described in section 1842(b)(6)(A)) 
                fails to submit such a claim as required in 
                subparagraph (A), the Secretary shall reduce by 
                10 percent the amount that would otherwise be 
                paid for such claim under this part.
                  (ii) If a physician, supplier, or other 
                person (or an employer or facility in the cases 
                described in section 1842(b)(6)(A)) fails to 
                submit a claim required to be submitted under 
                subparagraph (A) or imposes a charge in 
                violation of such subparagraph, the Secretary 
                shall apply the sanction with respect to such a 
                violation in the same manner as a sanction may 
                be imposed under section 1842(p)(3) for a 
                violation of section 1842(p)(1).
          (5) Electronic billing; direct deposit.--The 
        Secretary shall encourage and develop a system 
        providing for expedited payment for claims submitted 
        electronically. The Secretary shall also encourage and 
        provide incentives allowing for direct deposit as 
        payments for services furnished by participating 
        physicians. The Secretary shall provide physicians with 
        such technical information as necessary to enable such 
        physicians to submit claims electronically. The 
        Secretary shall submit a plan to Congress on this 
        paragraph by May 1, 1990.
          (6) Monitoring of charges.--
                  (A) In general.--The Secretary shall 
                monitor--
                          (i) the actual charges of 
                        nonparticipating physicians for 
                        physicians' services furnished on or 
                        after January 1, 1991, to individuals 
                        enrolled under this part, and
                          (ii) changes (by specialty, type of 
                        service, and geographic area) in (I) 
                        the proportion of expenditures for 
                        physicians' services provided under 
                        this part by participating physicians, 
                        (II) the proportion of expenditures for 
                        such services for which payment is made 
                        under this part on an assignment-
                        related basis, and (III) the amounts 
                        charged above the recognized payment 
                        amounts under this part.
                  (B) Report.--The Secretary shall, by not 
                later than April 15 of each year (beginning in 
                1992), report to the Congress information on 
                the extent to which actual charges exceed 
                limiting charges, the number and types of 
                services involved, and the average amount of 
                excess charges and information regarding the 
                changes described in subparagraph (A)(ii).
                  (C) Plan.--If the Secretary finds that there 
                has been a significant decrease in the 
                proportions described in subclauses (I) and 
                (II) of subparagraph (A)(ii) or an increase in 
                the amounts described in subclause (III) of 
                that subparagraph, the Secretary shall develop 
                a plan to address such a problem and transmit 
                to Congress recommendations regarding the plan. 
                The Medicare Payment Advisory Commission shall 
                review the Secretary's plan and recommendations 
                and transmit to Congress its comments regarding 
                such plan and recommendations.
          (7) Monitoring of utilization and access.--
                  (A) In general.--The Secretary shall 
                monitor--
                          (i) changes in the utilization of and 
                        access to services furnished under this 
                        part within geographic, population, and 
                        service related categories,
                          (ii) possible sources of 
                        inappropriate utilization of services 
                        furnished under this part which 
                        contribute to the overall level of 
                        expenditures under this part, and
                          (iii) factors underlying these 
                        changes and their interrelationships.
                  (B) Report.--The Secretary shall by not later 
                than April 15, of each year (beginning with 
                1991) report to the Congress on the changes 
                described in subparagraph (A)(i) and shall 
                include in the report an examination of the 
                factors (including factors relating to 
                different services and specific categories and 
                groups of services and geographic and 
                demographic variations in utilization) which 
                may contribute to such changes.
                  (C) Recommendations.--The Secretary shall 
                include in each annual report under 
                subparagraph (B) recommendations--
                          (i) addressing any identified 
                        patterns of inappropriate utilization,
                          (ii) on utilization review,
                          (iii) on physician education or 
                        patient education,
                          (iv) addressing any problems of 
                        beneficiary access to care made evident 
                        by the monitoring process, and
                          (v) on such other matters as the 
                        Secretary deems appropriate.
                The Medicare Payment Advisory Commission shall 
                comment on the Secretary's recommendations and 
                in developing its comments, the Commission 
                shall convene and consult a panel of physician 
                experts to evaluate the implications of medical 
                utilization patterns for the quality of and 
                access to patient care.
  (h) Sending Information to Physicians.--Before the beginning 
of each year (beginning with 1992), the Secretary shall send to 
each physician or nonparticipating supplier or other person 
furnishing physicians' services (as defined in section 
1848(j)(3)) furnishing physicians' services under this part, 
for services commonly performed by the physician, supplier, or 
other person, information on fee schedule amounts that apply 
for the year in the fee schedule area for participating and 
non-participating physicians, and the maximum amount that may 
be charged consistent with subsection (g)(2). Such information 
shall be transmitted in conjunction with notices to physicians, 
suppliers, and other persons under section 1842(h) (relating to 
the participating physician program) for a year.
  (i) Miscellaneous Provisions.--
          (1) Restriction on administrative and judicial 
        review.--There shall be no administrative or judicial 
        review under section 1869 or otherwise of--
                  (A) the determination of the adjusted 
                historical payment basis (as defined in 
                subsection (a)(2)(D)(i)),
                  (B) the determination of relative values and 
                relative value units under subsection (c), 
                including adjustments under subsections 
                (c)(2)(F), (c)(2)(H), and (c)(2)(I) and section 
                13515(b) of the Omnibus Budget Reconciliation 
                Act of 1993,
                  (C) the determination of conversion factors 
                under subsection (d), including without 
                limitation a prospective redetermination of the 
                sustainable growth rates for any or all 
                previous fiscal years,
                  (D) the establishment of geographic 
                adjustment factors under subsection (e),
                  (E) the establishment of the system for the 
                coding of physicians' services under this 
                section, and
                  (F) the collection and use of information in 
                the determination of relative values under 
                subsection (c)(2)(M).
          (2) Assistants-at-surgery.--
                  (A) In general.--Subject to subparagraph (B), 
                in the case of a surgical service furnished by 
                a physician, if payment is made separately 
                under this part for the services of a physician 
                serving as an assistant-at-surgery, the fee 
                schedule amount shall not exceed 16 percent of 
                the fee schedule amount otherwise determined 
                under this section for the global surgical 
                service involved.
                  (B) Denial of payment in certain cases.--If 
                the Secretary determines, based on the most 
                recent data available, that for a surgical 
                procedure (or class of surgical procedures) the 
                national average percentage of such procedure 
                performed under this part which involve the use 
                of a physician as an assistant at surgery is 
                less than 5 percent, no payment may be made 
                under this part for services of an assistant at 
                surgery involved in the procedure.
          (3) No comparability adjustment.--For physicians' 
        services for which payment under this part is 
        determined under this section--
                  (A) a carrier may not make any adjustment in 
                the payment amount under section 1842(b)(3)(B) 
                on the basis that the payment amount is higher 
                than the charge applicable, for comparable 
                services and under comparable circumstances, to 
                the policyholders and subscribers of the 
                carrier,
                  (B) no payment adjustment may be made under 
                section 1842(b)(8), and
                  (C) section 1842(b)(9) shall not apply.
  (j) Definitions.--In this section:
          (1) Category.--For services furnished before January 
        1, 1998, the term ``category'' means, with respect to 
        physicians' services, surgical services (as defined by 
        the Secretary and including anesthesia services), 
        primary care services (as defined in section 
        1842(i)(4)), and all other physicians' services. The 
        Secretary shall define surgical services and publish 
        such definitions in the Federal Register no later than 
        May 1, 1990, after consultation with organizations 
        representing physicians.
          (2) Fee schedule area.--Except as provided in 
        subsection (e)(6)(D), the term ``fee schedule area'' 
        means a locality used under section 1842(b) for 
        purposes of computing payment amounts for physicians' 
        services.
          (3) Physicians' services.--The term ``physicians' 
        services'' includes items and services described in 
        paragraphs (1), (2)(A), (2)(D), (2)(G), (2)(P) (with 
        respect to services described in subparagraphs (A) and 
        (C) of section 1861(oo)(2)), (2)(R) (with respect to 
        services described in suparagraphs (B), (C), and (D) of 
        section 1861(pp)(1)), (2)(S), (2)(W), (2)(AA), (2)(DD), 
        (2)(EE), (2)(FF) (including administration of the 
        health risk assessment), (2)(II) ,  (3), (4), (13), 
        (14) (with respect to services described in section 
        1861(nn)(2)), and (15) of section 1861(s) (other than 
        clinical diagnostic laboratory tests and, except for 
        purposes of subsection (a)(3), (g), and (h) such other 
        items and services as the Secretary may specify).
          (4) Practice expenses.--The term ``practice 
        expenses'' includes all expenses for furnishing 
        physicians' services, excluding malpractice expenses, 
        physician compensation, and other physician fringe 
        benefits.
  (k) Quality Reporting System.--
          (1) In general.--The Secretary shall implement a 
        system for the reporting by eligible professionals of 
        data on quality measures specified under paragraph (2). 
        Such data shall be submitted in a form and manner 
        specified by the Secretary (by program instruction or 
        otherwise), which may include submission of such data 
        on claims under this part.
          (2) Use of consensus-based quality measures.--
                  (A) For 2007.--
                          (i) In general.--For purposes of 
                        applying this subsection for the 
                        reporting of data on quality measures 
                        for covered professional services 
                        furnished during the period beginning 
                        July 1, 2007, and ending December 31, 
                        2007, the quality measures specified 
                        under this paragraph are the measures 
                        identified as 2007 physician quality 
                        measures under the Physician Voluntary 
                        Reporting Program as published on the 
                        public website of the Centers for 
                        Medicare & Medicaid Services as of the 
                        date of the enactment of this 
                        subsection, except as may be changed by 
                        the Secretary based on the results of a 
                        consensus-based process in January of 
                        2007, if such change is published on 
                        such website by not later than April 1, 
                        2007.
                          (ii) Subsequent refinements in 
                        application permitted.--The Secretary 
                        may, from time to time (but not later 
                        than July 1, 2007), publish on such 
                        website (without notice or opportunity 
                        for public comment) modifications or 
                        refinements (such as code additions, 
                        corrections, or revisions) for the 
                        application of quality measures 
                        previously published under clause (i), 
                        but may not, under this clause, change 
                        the quality measures under the 
                        reporting system.
                          (iii) Implementation.--
                        Notwithstanding any other provision of 
                        law, the Secretary may implement by 
                        program instruction or otherwise this 
                        subsection for 2007.
                  (B) For 2008 and 2009.--
                          (i) In general.--For purposes of 
                        reporting data on quality measures for 
                        covered professional services furnished 
                        during 2008 and 2009, the quality 
                        measures specified under this paragraph 
                        for covered professional services shall 
                        be measures that have been adopted or 
                        endorsed by a consensus organization 
                        (such as the National Quality Forum or 
                        AQA), that include measures that have 
                        been submitted by a physician 
                        specialty, and that the Secretary 
                        identifies as having used a consensus-
                        based process for developing such 
                        measures. Such measures shall include 
                        structural measures, such as the use of 
                        electronic health records and 
                        electronic prescribing technology.
                          (ii) Proposed set of measures.--Not 
                        later than August 15 of each of 2007 
                        and 2008, the Secretary shall publish 
                        in the Federal Register a proposed set 
                        of quality measures that the Secretary 
                        determines are described in clause (i) 
                        and would be appropriate for eligible 
                        professionals to use to submit data to 
                        the Secretary in 2008 or 2009, as 
                        applicable. The Secretary shall provide 
                        for a period of public comment on such 
                        set of measures.
                          (iii) Final set of measures.--Not 
                        later than November 15 of each of 2007 
                        and 2008, the Secretary shall publish 
                        in the Federal Register a final set of 
                        quality measures that the Secretary 
                        determines are described in clause (i) 
                        and would be appropriate for eligible 
                        professionals to use to submit data to 
                        the Secretary in 2008 or 2009, as 
                        applicable.
                  (C) For 2010 and subsequent years.--
                          (i) In general.--Subject to clause 
                        (ii), for purposes of reporting data on 
                        quality measures for covered 
                        professional services furnished during 
                        2010 and each subsequent year, subject 
                        to subsection (m)(3)(C), the quality 
                        measures (including electronic 
                        prescribing quality measures) specified 
                        under this paragraph shall be such 
                        measures selected by the Secretary from 
                        measures that have been endorsed by the 
                        entity with a contract with the 
                        Secretary under section 1890(a).
                          (ii) Exception.--In the case of a 
                        specified area or medical topic 
                        determined appropriate by the Secretary 
                        for which a feasible and practical 
                        measure has not been endorsed by the 
                        entity with a contract under section 
                        1890(a), the Secretary may specify a 
                        measure that is not so endorsed as long 
                        as due consideration is given to 
                        measures that have been endorsed or 
                        adopted by a consensus organization 
                        identified by the Secretary, such as 
                        the AQA alliance.
                  (D) Opportunity to provide input on measures 
                for 2009 and subsequent years.--For each 
                quality measure (including an electronic 
                prescribing quality measure) adopted by the 
                Secretary under subparagraph (B) (with respect 
                to 2009) or subparagraph (C), the Secretary 
                shall ensure that eligible professionals have 
                the opportunity to provide input during the 
                development, endorsement, or selection of 
                measures applicable to services they furnish.
          (3) Covered professional services and eligible 
        professionals defined.--For purposes of this 
        subsection:
                  (A) Covered professional services.--The term 
                ``covered professional services'' means 
                services for which payment is made under, or is 
                based on, the fee schedule established under 
                this section and which are furnished by an 
                eligible professional.
                  (B) Eligible professional.--The term 
                ``eligible professional'' means any of the 
                following:
                          (i) A physician.
                          (ii) A practitioner described in 
                        section 1842(b)(18)(C).
                          (iii) A physical or occupational 
                        therapist or a qualified speech-
                        language pathologist.
                          (iv) Beginning with 2009, a qualified 
                        audiologist (as defined in section 
                        1861(ll)(3)(B)).
          (4) Use of registry-based reporting.--As part of the 
        publication of proposed and final quality measures for 
        2008 under clauses (ii) and (iii) of paragraph (2)(B), 
        the Secretary shall address a mechanism whereby an 
        eligible professional may provide data on quality 
        measures through an appropriate medical registry (such 
        as the Society of Thoracic Surgeons National Database) 
        or through a Maintenance of Certification program 
        operated by a specialty body of the American Board of 
        Medical Specialties that meets the criteria for such a 
        registry, as identified by the Secretary.
          (5) Identification units.--For purposes of applying 
        this subsection, the Secretary may identify eligible 
        professionals through billing units, which may include 
        the use of the Provider Identification Number, the 
        unique physician identification number (described in 
        section 1833(q)(1)), the taxpayer identification 
        number, or the National Provider Identifier. For 
        purposes of applying this subsection for 2007, the 
        Secretary shall use the taxpayer identification number 
        as the billing unit.
          (6) Education and outreach.--The Secretary shall 
        provide for education and outreach to eligible 
        professionals on the operation of this subsection.
          (7) Limitations on review.--There shall be no 
        administrative or judicial review under section 1869, 
        section 1878, or otherwise, of the development and 
        implementation of the reporting system under paragraph 
        (1), including identification of quality measures under 
        paragraph (2) and the application of paragraphs (4) and 
        (5).
          (8) Implementation.--The Secretary shall carry out 
        this subsection acting through the Administrator of the 
        Centers for Medicare & Medicaid Services.
          (9) Continued application for purposes of mips and 
        for certain professionals volunteering to report.--The 
        Secretary shall, in accordance with subsection 
        (q)(1)(F), carry out the provisions of this 
        subsection--
                  (A) for purposes of subsection (q); and
                  (B) for eligible professionals who are not 
                MIPS eligible professionals (as defined in 
                subsection (q)(1)(C)) for the year involved.
  (l) Physician Assistance and Quality Initiative Fund.--
          (1) Establishment.--The Secretary shall establish 
        under this subsection a Physician Assistance and 
        Quality Initiative Fund (in this subsection referred to 
        as the ``Fund'') which shall be available to the 
        Secretary for physician payment and quality improvement 
        initiatives, which may include application of an 
        adjustment to the update of the conversion factor under 
        subsection (d).
          (2) Funding.--
                  (A) Amount available.--
                          (i) In general.--Subject to clause 
                        (ii), there shall be available to the 
                        Fund the following amounts:
                                  (I) For expenditures during 
                                2008, an amount equal to 
                                $150,500,000.
                                  (II) For expenditures during 
                                2009, an amount equal to 
                                $24,500,000.
                          (ii) Limitations on expenditures.--
                                  (I) 2008.--The amount 
                                available for expenditures 
                                during 2008 shall be reduced as 
                                provided by subparagraph (A) of 
                                section 225(c)(1) and section 
                                524 of the Departments of 
                                Labor, Health and Human 
                                Services, and Education, and 
                                Related Agencies Appropriations 
                                Act, 2008 (division G of the 
                                Consolidated Appropriations 
                                Act, 2008).
                                  (II) 2009.--The amount 
                                available for expenditures 
                                during 2009 shall be reduced as 
                                provided by subparagraph (B) of 
                                such section 225(c)(1).
                  (B) Timely obligation of all available funds 
                for services.--The Secretary shall provide for 
                expenditures from the Fund in a manner designed 
                to provide (to the maximum extent feasible) for 
                the obligation of the entire amount available 
                for expenditures, after application of 
                subparagraph (A)(ii), during--
                          (i) 2008 for payment with respect to 
                        physicians' services furnished during 
                        2008; and
                          (ii) 2009 for payment with respect to 
                        physicians' services furnished during 
                        2009.
                  (C) Payment from trust fund.--The amount 
                specified in subparagraph (A) shall be 
                available to the Fund, as expenditures are made 
                from the Fund, from the Federal Supplementary 
                Medical Insurance Trust Fund under section 
                1841.
                  (D) Funding limitation.--Amounts in the Fund 
                shall be available in advance of appropriations 
                in accordance with subparagraph (B) but only if 
                the total amount obligated from the Fund does 
                not exceed the amount available to the Fund 
                under subparagraph (A). The Secretary may 
                obligate funds from the Fund only if the 
                Secretary determines (and the Chief Actuary of 
                the Centers for Medicare & Medicaid Services 
                and the appropriate budget officer certify) 
                that there are available in the Fund sufficient 
                amounts to cover all such obligations incurred 
                consistent with the previous sentence.
                  (E) Construction.--In the case that 
                expenditures from the Fund are applied to, or 
                otherwise affect, a conversion factor under 
                subsection (d) for a year, the conversion 
                factor under such subsection shall be computed 
                for a subsequent year as if such application or 
                effect had never occurred.
  (m) Incentive Payments for Quality Reporting.--
          (1) Incentive payments.--
                  (A) In general.--For 2007 through 2014, with 
                respect to covered professional services 
                furnished during a reporting period by an 
                eligible professional, if--
                          (i) there are any quality measures 
                        that have been established under the 
                        physician reporting system that are 
                        applicable to any such services 
                        furnished by such professional for such 
                        reporting period;
                          (ii) the eligible professional 
                        satisfactorily submits (as determined 
                        under this subsection) to the Secretary 
                        data on such quality measures in 
                        accordance with such reporting system 
                        for such reporting period,
                in addition to the amount otherwise paid under 
                this part, there also shall be paid to the 
                eligible professional (or to an employer or 
                facility in the cases described in clause (A) 
                of section 1842(b)(6)) or, in the case of a 
                group practice under paragraph (3)(C), to the 
                group practice, from the Federal Supplementary 
                Medical Insurance Trust Fund established under 
                section 1841 an amount equal to the applicable 
                quality percent of the Secretary's estimate 
                (based on claims submitted not later than 2 
                months after the end of the reporting period) 
                of the allowed charges under this part for all 
                such covered professional services furnished by 
                the eligible professional (or, in the case of a 
                group practice under paragraph (3)(C), by the 
                group practice) during the reporting period.
                  (B) Applicable quality percent.--For purposes 
                of subparagraph (A), the term ``applicable 
                quality percent'' means--
                          (i) for 2007 and 2008, 1.5 percent; 
                        and
                          (ii) for 2009 and 2010, 2.0 percent;
                          (iii) for 2011, 1.0 percent; and
                          (iv) for 2012, 2013, and 2014, 0.5 
                        percent.
          (2) Incentive payments for electronic prescribing.--
                  (A) In general.--Subject to subparagraph (D), 
                for 2009 through 2013, with respect to covered 
                professional services furnished during a 
                reporting period by an eligible professional, 
                if the eligible professional is a successful 
                electronic prescriber for such reporting 
                period, in addition to the amount otherwise 
                paid under this part, there also shall be paid 
                to the eligible professional (or to an employer 
                or facility in the cases described in clause 
                (A) of section 1842(b)(6)) or, in the case of a 
                group practice under paragraph (3)(C), to the 
                group practice, from the Federal Supplementary 
                Medical Insurance Trust Fund established under 
                section 1841 an amount equal to the applicable 
                electronic prescribing percent of the 
                Secretary's estimate (based on claims submitted 
                not later than 2 months after the end of the 
                reporting period) of the allowed charges under 
                this part for all such covered professional 
                services furnished by the eligible professional 
                (or, in the case of a group practice under 
                paragraph (3)(C), by the group practice) during 
                the reporting period.
                  (B) Limitation with respect to electronic 
                prescribing quality measures.--The provisions 
                of this paragraph and subsection (a)(5) shall 
                not apply to an eligible professional (or, in 
                the case of a group practice under paragraph 
                (3)(C), to the group practice) if, for the 
                reporting period (or, for purposes of 
                subsection (a)(5), for the reporting period for 
                a year)--
                          (i) the allowed charges under this 
                        part for all covered professional 
                        services furnished by the eligible 
                        professional (or group, as applicable) 
                        for the codes to which the electronic 
                        prescribing quality measure applies (as 
                        identified by the Secretary and 
                        published on the Internet website of 
                        the Centers for Medicare & Medicaid 
                        Services as of January 1, 2008, and as 
                        subsequently modified by the Secretary) 
                        are less than 10 percent of the total 
                        of the allowed charges under this part 
                        for all such covered professional 
                        services furnished by the eligible 
                        professional (or the group, as 
                        applicable); or
                          (ii) if determined appropriate by the 
                        Secretary, the eligible professional 
                        does not submit (including both 
                        electronically and nonelectronically) a 
                        sufficient number (as determined by the 
                        Secretary) of prescriptions under part 
                        D.
                If the Secretary makes the determination to 
                apply clause (ii) for a period, then clause (i) 
                shall not apply for such period.
                  (C) Applicable electronic prescribing 
                percent.--For purposes of subparagraph (A), the 
                term ``applicable electronic prescribing 
                percent'' means--
                          (i) for 2009 and 2010, 2.0 percent;
                          (ii) for 2011 and 2012, 1.0 percent; 
                        and
                          (iii) for 2013, 0.5 percent.
                  (D) Limitation with respect to ehr incentive 
                payments.--The provisions of this paragraph 
                shall not apply to an eligible professional 
                (or, in the case of a group practice under 
                paragraph (3)(C), to the group practice) if, 
                for the EHR reporting period the eligible 
                professional (or group practice) receives an 
                incentive payment under subsection (o)(1)(A) 
                with respect to a certified EHR technology (as 
                defined in subsection (o)(4)) that has the 
                capability of electronic prescribing.
          (3) Satisfactory reporting and successful electronic 
        prescriber and described.--
                  (A) In general.--For purposes of paragraph 
                (1), an eligible professional shall be treated 
                as satisfactorily submitting data on quality 
                measures for covered professional services for 
                a reporting period (or, for purposes of 
                subsection (a)(8), for the quality reporting 
                period for the year) if quality measures have 
                been reported as follows:
                          (i) Three or fewer quality measures 
                        applicable.--If there are no more than 
                        3 quality measures that are provided 
                        under the physician reporting system 
                        and that are applicable to such 
                        services of such professional furnished 
                        during the period, each such quality 
                        measure has been reported under such 
                        system in at least 80 percent of the 
                        cases in which such measure is 
                        reportable under the system.
                          (ii) Four or more quality measures 
                        applicable.--If there are 4 or more 
                        quality measures that are provided 
                        under the physician reporting system 
                        and that are applicable to such 
                        services of such professional 
                        furnishedduring the period, at least 3 
                        such quality measures have been 
                        reported under such system in at least 
                        80 percent of the cases in which the 
                        respective measure is reportable under 
                        the system.
                For years after 2008, quality measures for 
                purposes of this subparagraph shall not include 
                electronic prescribing quality measures.
                  (B) Successful electronic prescriber.--
                          (i) In general.--For purposes of 
                        paragraph (2) and subsection (a)(5), an 
                        eligible professional shall be treated 
                        as a successful electronic prescriber 
                        for a reporting period (or, for 
                        purposes of subsection (a)(5), for the 
                        reporting period for a year) if the 
                        eligible professional meets the 
                        requirement described in clause (ii), 
                        or, if the Secretary determines 
                        appropriate, the requirement described 
                        in clause (iii). If the Secretary makes 
                        the determination under the preceding 
                        sentence to apply the requirement 
                        described in clause (iii) for a period, 
                        then the requirement described in 
                        clause (ii) shall not apply for such 
                        period.
                          (ii) Requirement for submitting data 
                        on electronic prescribing quality 
                        measures.--The requirement described in 
                        this clause is that, with respect to 
                        covered professional services furnished 
                        by an eligible professional during a 
                        reporting period (or, for purposes of 
                        subsection (a)(5), for the reporting 
                        period for a year), if there are any 
                        electronic prescribing quality measures 
                        that have been established under the 
                        physician reporting system and are 
                        applicable to any such services 
                        furnished by such professional for the 
                        period, such professional reported each 
                        such measure under such system in at 
                        least 50 percent of the cases in which 
                        such measure is reportable by such 
                        professional under such system.
                          (iii) Requirement for electronically 
                        prescribing under part d.--The 
                        requirement described in this clause is 
                        that the eligible professional 
                        electronically submitted a sufficient 
                        number (as determined by the Secretary) 
                        of prescriptions under part D during 
                        the reporting period (or, for purposes 
                        of subsection (a)(5), for the reporting 
                        period for a year).
                          (iv) Use of part d data.--
                        Notwithstanding sections 1860D-
                        15(d)(2)(B) and 1860D-15(f)(2), the 
                        Secretary may use data regarding drug 
                        claims submitted for purposes of 
                        section 1860D-15 that are necessary for 
                        purposes of clause (iii), paragraph 
                        (2)(B)(ii), and paragraph (5)(G).
                          (v) Standards for electronic 
                        prescribing.--To the extent 
                        practicable, in determining whether 
                        eligible professionals meet the 
                        requirements under clauses (ii) and 
                        (iii) for purposes of clause (i), the 
                        Secretary shall ensure that eligible 
                        professionals utilize electronic 
                        prescribing systems in compliance with 
                        standards established for such systems 
                        pursuant to the Part D Electronic 
                        Prescribing Program under section 
                        1860D-4(e).
                  (C) Satisfactory reporting measures for group 
                practices.--
                          (i) In general.--By January 1, 2010, 
                        the Secretary shall establish and have 
                        in place a process under which eligible 
                        professionals in a group practice (as 
                        defined by the Secretary) shall be 
                        treated as satisfactorily submitting 
                        data on quality measures under 
                        subparagraph (A) and as meeting the 
                        requirement described in subparagraph 
                        (B)(ii) for covered professional 
                        services for a reporting period (or, 
                        for purposes of subsection (a)(5), for 
                        a reporting period for a year, or, for 
                        purposes of subsection (a)(8), for a 
                        quality reporting period for the year) 
                        if, in lieu of reporting measures under 
                        subsection (k)(2)(C), the group 
                        practice reports measures determined 
                        appropriate by the Secretary, such as 
                        measures that target high-cost chronic 
                        conditions and preventive care, in a 
                        form and manner, and at a time, 
                        specified by the Secretary.
                          (ii) Statistical sampling model.--The 
                        process under clause (i) shall provide 
                        and, for 2016 and subsequent years, may 
                        provide for the use of a statistical 
                        sampling model to submit data on 
                        measures, such as the model used under 
                        the Physician Group Practice 
                        demonstration project under section 
                        1866A.
                          (iii) No double payments.--Payments 
                        to a group practice under this 
                        subsection by reason of the process 
                        under clause (i) shall be in lieu of 
                        the payments that would otherwise be 
                        made under this subsection to eligible 
                        professionals in the group practice for 
                        satisfactorily submitting data on 
                        quality measures.
                  (D) Satisfactory reporting measures through 
                participation in a qualified clinical data 
                registry.--For 2014 and subsequent years, the 
                Secretary shall treat an eligible professional 
                as satisfactorily submitting data on quality 
                measures under subparagraph (A) and, for 2016 
                and subsequent years, subparagraph (A) or (C) 
                if, in lieu of reporting measures under 
                subsection (k)(2)(C), the eligible professional 
                is satisfactorily participating, as determined 
                by the Secretary, in a qualified clinical data 
                registry (as described in subparagraph (E)) for 
                the year.
                  (E) Qualified clinical data registry.--
                          (i) In general.--The Secretary shall 
                        establish requirements for an entity to 
                        be considered a qualified clinical data 
                        registry. Such requirements shall 
                        include a requirement that the entity 
                        provide the Secretary with such 
                        information, at such times, and in such 
                        manner, as the Secretary determines 
                        necessary to carry out this subsection.
                          (ii) Considerations.--In establishing 
                        the requirements under clause (i), the 
                        Secretary shall consider whether an 
                        entity--
                                  (I) has in place mechanisms 
                                for the transparency of data 
                                elements and specifications, 
                                risk models, and measures;
                                  (II) requires the submission 
                                of data from participants with 
                                respect to multiple payers;
                                  (III) provides timely 
                                performance reports to 
                                participants at the individual 
                                participant level; and
                                  (IV) supports quality 
                                improvement initiatives for 
                                participants.
                          (iii) Measures.--With respect to 
                        measures used by a qualified clinical 
                        data registry--
                                  (I) sections 1890(b)(7) and 
                                1890A(a) shall not apply; and
                                  (II) measures endorsed by the 
                                entity with a contract with the 
                                Secretary under section 1890(a) 
                                may be used.
                          (iv) Consultation.--In carrying out 
                        this subparagraph, the Secretary shall 
                        consult with interested parties.
                          (v) Determination.--The Secretary 
                        shall establish a process to determine 
                        whether or not an entity meets the 
                        requirements established under clause 
                        (i). Such process may involve one or 
                        both of the following:
                                  (I) A determination by the 
                                Secretary.
                                  (II) A designation by the 
                                Secretary of one or more 
                                independent organizations to 
                                make such determination.
                  (F) Authority to revise satisfactorily 
                reporting data.--For years after 2009, the 
                Secretary, in consultation with stakeholders 
                and experts, may revise the criteria under this 
                subsection for satisfactorily submitting data 
                on quality measures under subparagraph (A) and 
                the criteria for submitting data on electronic 
                prescribing quality measures under subparagraph 
                (B)(ii).
          (4) Form of payment.--The payment under this 
        subsection shall be in the form of a single 
        consolidated payment.
          (5) Application.--
                  (A) Physician reporting system rules.--
                Paragraphs (5), (6),and (8) of subsection (k) 
                shall apply for purposes of this subsection in 
                the same manner as they apply for purposes of 
                such subsection.
                  (B) Coordination with other bonus payments.--
                The provisions of this subsection shall not be 
                taken into account in applying subsections (m) 
                and (u) of section 1833 and any payment under 
                such subsections shall not be taken into 
                account in computing allowable charges under 
                this subsection.
                  (C) Implementation.--Notwithstanding any 
                other provision of law, for 2007, 2008, and 
                2009, the Secretary may implement by program 
                instruction or otherwise this subsection.
                  (D) Validation.--
                          (i) In general.--Subject to the 
                        succeeding provisions of this 
                        subparagraph, for purposes of 
                        determining whether a measure is 
                        applicable to the covered professional 
                        services of an eligible professional 
                        under this subsection for 2007 and 288, 
                        the Secretary shall presume that if an 
                        eligible professional submits data for 
                        a measure, such measure is applicable 
                        to such professional.
                          (ii) Method.--The Secretary may 
                        establish procedures to validate (by 
                        sampling or other means as the 
                        Secretary determines to be appropriate) 
                        whether measures applicable to covered 
                        professional services of an eligible 
                        professional have been reported.
                          (iii) Denial of payment authority.--
                        If the Secretary determines that an 
                        eligible professional (or, in the case 
                        of a group practice under paragraph 
                        (3)(C), the group practice) has not 
                        reported measures applicable to covered 
                        professional services of such 
                        professional, the Secretary shall not 
                        pay the incentive payment under this 
                        subsection. If such payments for such 
                        period have already been made, the 
                        Secretary shall recoup such payments 
                        from the eligible professional (or the 
                        group practice).
                  (E) Limitations on review.--
                          Except as provided in subparagraph 
                        (I), there shall be no administrative 
                        or judicial review under 1869, section 
                        1878, or otherwise of
                          (i) the determination of measures 
                        applicable to services furnished by 
                        eligible professionals under this 
                        subsection;
                          (ii) the determination of 
                        satisfactory reporting under this 
                        subsection;
                          (iii) the determination of a 
                        successful electronic prescriber under 
                        paragraph (3), the limitation under 
                        paragraph (2)(B), and the exception 
                        under subsection (a)(5)(B); and
                          (iv) the determination of any 
                        incentive payment under this subsection 
                        and the payment adjustment under 
                        paragraphs (5)(A) and (8)(A) of 
                        subsection (a).
                  (F) Extension.--For 2008 through reporting 
                periods occurring in 2015, the Secretary shall 
                establish and, for reporting periods occurring 
                in 2016 and subsequent years, the Secretary may 
                establish alternative criteria for 
                satisfactorily reporting under this subsection 
                and alternative reporting periods under 
                paragraph (6)(C) for reporting groups of 
                measures under subsection (k)(2)(B) and for 
                reporting using the method specified in 
                subsection (k)(4).
                  (G) Posting on website.--The Secretary shall 
                post on the Internet website of the Centers for 
                Medicare & Medicaid Services, in an easily 
                understandable format, a list of the names of 
                the following:
                          (i) The eligible professionals (or, 
                        in the case of reporting under 
                        paragraph (3)(C), the group practices) 
                        who satisfactorily submitted data on 
                        quality measures under this subsection.
                          (ii) The eligible professionals (or, 
                        in the case of reporting under 
                        paragraph (3)(C), the group practices) 
                        who are successful electronic 
                        prescribers.
                  (H) Feedback.--The Secretary shall provide 
                timely feedback to eligible professionals on 
                the performance of the eligible professional 
                with respect to satisfactorily submitting data 
                on quality measures under this subsection.
                  (I) Informal appeals process.--The Secretary 
                shall, by not later than January 1, 2011, 
                establish and have in place an informal process 
                for eligible professionals to seek a review of 
                the determination that an eligible professional 
                did not satisfactorily submit data on quality 
                measures under this subsection.
          (6) Definitions.--For purposes of this subsection:
                  (A) Eligible professional; covered 
                professional services.--The terms ``eligible 
                professional'' and ``covered professional 
                services'' have the meanings given such termsin 
                subsection (k)(3).
                  (B) Physician reporting system.--The term 
                ``physician reporting system'' means the system 
                established under subsection (k).
                  (C) Reporting period.--
                          (i) In general.--Subject to clauses 
                        (ii) and (iii), the term ``reporting 
                        period'' means--
                                  (I) for 2007, the period 
                                beginning on July 1, 2007, and 
                                ending on December 31, 2007; 
                                and
                                  (II) for 2008 and subsequent 
                                years, the entire year.
                          (ii) Authority to revise reporting 
                        period.--For years after 2009, the 
                        Secretary may revise the reporting 
                        period under clause (i) if the 
                        Secretary determines such revision is 
                        appropriate, produces valid results on 
                        measures reported, and is consistent 
                        with the goals of maximizing scientific 
                        validity and reducing administrative 
                        burden. If the Secretary revises such 
                        period pursuant to the preceding 
                        sentence, the term ``reporting period'' 
                        shall mean such revised period.
                          (iii) Reference.--Any reference in 
                        this subsection to a reporting period 
                        with respect to the application of 
                        subsection (a)(5) (a)(8) shall be 
                        deemed a reference to the reporting 
                        period under subsection (a)(5)(D)(iii) 
                        or the quality reporting period under 
                        subsection (a)(8)(D)(iii), 
                        respectively.
          (7) Integration of physician quality reporting and 
        ehr reporting.--Not later than January 1, 2012, the 
        Secretary shall develop a plan to integrate reporting 
        on quality measures under this subsection with 
        reporting requirements under subsection (o) relating to 
        the meaningful use of electronic health records. Such 
        integration shall consist of the following:
                  (A) The selection of measures, the reporting 
                of which would both demonstrate--
                          (i) meaningful use of an electronic 
                        health record for purposes of 
                        subsection (o); and
                          (ii) quality of care furnished to an 
                        individual.
                  (B) Such other activities as specified by the 
                Secretary.
          (8) Additional incentive payment.--
                  (A) In general.--For 2011 through 2014, if an 
                eligible professional meets the requirements 
                described in subparagraph (B), the applicable 
                quality percent for such year, as described in 
                clauses (iii) and (iv) of paragraph (1)(B), 
                shall be increased by 0.5 percentage points.
                  (B) Requirements described.--In order to 
                qualify for the additional incentive payment 
                described in subparagraph (A), an eligible 
                professional shall meet the following 
                requirements:
                          (i) The eligible professional shall--
                                  (I) satisfactorily submit 
                                data on quality measures for 
                                purposes of paragraph (1) for a 
                                year; and
                                  (II) have such data submitted 
                                on their behalf through a 
                                Maintenance of Certification 
                                Program (as defined in 
                                subparagraph (C)(i)) that 
                                meets--
                                          (aa) the criteria for 
                                        a registry (as 
                                        described in subsection 
                                        (k)(4)); or
                                          (bb) an alternative 
                                        form and manner 
                                        determined appropriate 
                                        by the Secretary.
                          (ii) The eligible professional, more 
                        frequently than is required to qualify 
                        for or maintain board certification 
                        status--
                                  (I) participates in such a 
                                Maintenance of Certification 
                                program for a year; and
                                  (II) successfully completes a 
                                qualified Maintenance of 
                                Certification Program practice 
                                assessment (as defined in 
                                subparagraph (C)(ii)) for such 
                                year.
                          (iii) A Maintenance of Certification 
                        program submits to the Secretary, on 
                        behalf of the eligible professional, 
                        information--
                                  (I) in a form and manner 
                                specified by the Secretary, 
                                that the eligible professional 
                                has successfully met the 
                                requirements of clause (ii) 
                                (which may be in the form of a 
                                structural measure);
                                  (II) if requested by the 
                                Secretary, on the survey of 
                                patient experience with care 
                                (as described in subparagraph 
                                (C)(ii)(II)); and
                                  (III) as the Secretary may 
                                require, on the methods, 
                                measures, and data used under 
                                the Maintenance of 
                                Certification Program and the 
                                qualified Maintenance of 
                                Certification Program practice 
                                assessment.
                  (C) Definitions.--For purposes of this 
                paragraph:
                          (i) The term ``Maintenance of 
                        Certification Program'' means a 
                        continuous assessment program, such as 
                        qualified American Board of Medical 
                        Specialties Maintenance of 
                        Certification program or an equivalent 
                        program (as determined by the 
                        Secretary), that advances quality and 
                        the lifelong learning and self-
                        assessment of board certified specialty 
                        physicians by focusing on the 
                        competencies of patient care, medical 
                        knowledge, practice-based learning, 
                        interpersonal and communication skills 
                        and professionalism. Such a program 
                        shall include the following:
                                  (I) The program requires the 
                                physician to maintain a valid, 
                                unrestricted medical license in 
                                the United States.
                                  (II) The program requires a 
                                physician to participate in 
                                educational and self-assessment 
                                programs that require an 
                                assessment of what was learned.
                                  (III) The program requires a 
                                physician to demonstrate, 
                                through a formalized, secure 
                                examination, that the physician 
                                has the fundamental diagnostic 
                                skills, medical knowledge, and 
                                clinical judgment to provide 
                                quality care in their 
                                respective specialty.
                                  (IV) The program requires 
                                successful completion of a 
                                qualified Maintenance of 
                                Certification Program practice 
                                assessment as described in 
                                clause (ii).
                          (ii) The term ``qualified Maintenance 
                        of Certification Program practice 
                        assessment'' means an assessment of a 
                        physician's practice that--
                                  (I) includes an initial 
                                assessment of an eligible 
                                professional's practice that is 
                                designed to demonstrate the 
                                physician's use of evidence-
                                based medicine;
                                  (II) includes a survey of 
                                patient experience with care; 
                                and
                                  (III) requires a physician to 
                                implement a quality improvement 
                                intervention to address a 
                                practice weakness identified in 
                                the initial assessment under 
                                subclause (I) and then to 
                                remeasure to assess performance 
                                improvement after such 
                                intervention.
          (9) Continued application for purposes of mips and 
        for certain professionals volunteering to report.--The 
        Secretary shall, in accordance with subsection 
        (q)(1)(F), carry out the processes under this 
        subsection--
                  (A) for purposes of subsection (q); and
                  (B) for eligible professionals who are not 
                MIPS eligible professionals (as defined in 
                subsection (q)(1)(C)) for the year involved.
  (n) Physician Feedback Program.--
          (1) Establishment.--
                  (A) In general.--
                          (i) Establishment.--The Secretary 
                        shall establish a Physician Feedback 
                        Program (in this subsection referred to 
                        as the ``Program'').
                          (ii) Reports on resources.--The 
                        Secretary shall use claims data under 
                        this title (and may use other data) to 
                        provide confidential reports to 
                        physicians (and, as determined 
                        appropriate by the Secretary, to groups 
                        of physicians) that measure the 
                        resources involved in furnishing care 
                        to individuals under this title.
                          (iii) Inclusion of certain 
                        information.--If determined appropriate 
                        by the Secretary, the Secretary may 
                        include information on the quality of 
                        care furnished to individuals under 
                        this title by the physician (or group 
                        of physicians) in such reports.
                  (B) Resource use.--The resources described in 
                subparagraph (A)(ii) may be measured--
                          (i) on an episode basis;
                          (ii) on a per capita basis; or
                          (iii) on both an episode and a per 
                        capita basis.
          (2) Implementation.--The Secretary shall implement 
        the Program by not later than January 1, 2009.
          (3) Data for reports.--To the extent practicable, 
        reports under the Program shall be based on the most 
        recent data available.
          (4) Authority to focus initial application.--The 
        Secretary may focus the initial application of the 
        Program as appropriate, such as focusing the Program 
        on--
                  (A) physician specialties that account for a 
                certain percentage of all spending for 
                physicians' services under this title;
                  (B) physicians who treat conditions that have 
                a high cost or a high volume, or both, under 
                this title;
                  (C) physicians who use a high amount of 
                resources compared to other physicians;
                  (D) physicians practicing in certain 
                geographic areas; or
                  (E) physicians who treat a minimum number of 
                individuals under this title.
          (5) Authority to exclude certain information if 
        insufficient information.--The Secretary may exclude 
        certain information regarding a service from a report 
        under the Program with respect to a physician (or group 
        of physicians) if the Secretary determines that there 
        is insufficient information relating to that service to 
        provide a valid report on that service.
          (6) Adjustment of data.--To the extent practicable, 
        the Secretary shall make appropriate adjustments to the 
        data used in preparing reports under the Program, such 
        as adjustments to take into account variations in 
        health status and other patient characteristics. For 
        adjustments for reports on utilization under paragraph 
        (9), see subparagraph (D) of such paragraph.
          (7) Education and outreach.--The Secretary shall 
        provide for education and outreach activities to 
        physicians on the operation of, and methodologies 
        employed under, the Program.
          (8) Disclosure exemption.--Reports under the Program 
        shall be exempt from disclosure under section 552 of 
        title 5, United States Code.
          (9) Reports on utilization.--
                  (A) Development of episode grouper.--
                          (i) In general.--The Secretary shall 
                        develop an episode grouper that 
                        combines separate but clinically 
                        related items and services into an 
                        episode of care for an individual, as 
                        appropriate.
                          (ii) Timeline for development.--The 
                        episode grouper described in 
                        subparagraph (A) shall be developed by 
                        not later than January 1, 2012.
                          (iii) Public availability.--The 
                        Secretary shall make the details of the 
                        episode grouper described in 
                        subparagraph (A) available to the 
                        public.
                          (iv) Endorsement.--The Secretary 
                        shall seek endorsement of the episode 
                        grouper described in subparagraph (A) 
                        by the entity with a contract under 
                        section 1890(a).
                  (B) Reports on utilization.--Effective 
                beginning with 2012, the Secretary shall 
                provide reports to physicians that compare, as 
                determined appropriate by the Secretary, 
                patterns of resource use of the individual 
                physician to such patterns of other physicians.
                  (C) Analysis of data.--The Secretary shall, 
                for purposes of preparing reports under this 
                paragraph, establish methodologies as 
                appropriate, such as to--
                          (i) attribute episodes of care, in 
                        whole or in part, to physicians;
                          (ii) identify appropriate physicians 
                        for purposes of comparison under 
                        subparagraph (B); and
                          (iii) aggregate episodes of care 
                        attributed to a physician under clause 
                        (i) into a composite measure per 
                        individual.
                  (D) Data adjustment.--In preparing reports 
                under this paragraph, the Secretary shall make 
                appropriate adjustments, including 
                adjustments--
                          (i) to account for differences in 
                        socioeconomic and demographic 
                        characteristics, ethnicity, and health 
                        status of individuals (such as to 
                        recognize that less healthy individuals 
                        may require more intensive 
                        interventions); and
                          (ii) to eliminate the effect of 
                        geographic adjustments in payment rates 
                        (as described in subsection (e)).
                  (E) Public availability of methodology.--The 
                Secretary shall make available to the public--
                          (i) the methodologies established 
                        under subparagraph (C);
                          (ii) information regarding any 
                        adjustments made to data under 
                        subparagraph (D); and
                          (iii) aggregate reports with respect 
                        to physicians.
                  (F) Definition of physician.--In this 
                paragraph:
                          (i) In general.--The term 
                        ``physician'' has the meaning given 
                        that term in section 1861(r)(1).
                          (ii) Treatment of groups.--Such term 
                        includes, as the Secretary determines 
                        appropriate, a group of physicians.
                  (G) Limitations on review.--There shall be no 
                administrative or judicial review under section 
                1869, section 1878, or otherwise of the 
                establishment of the methodology under 
                subparagraph (C), including the determination 
                of an episode of care under such methodology.
          (10) Coordination with other value-based purchasing 
        reforms.--The Secretary shall coordinate the Program 
        with the value-based payment modifier established under 
        subsection (p) and, as the Secretary determines 
        appropriate, other similar provisions of this title.
          (11) Reports ending with 2017.--Reports under the 
        Program shall not be provided after December 31, 2017. 
        See subsection (q)(12) for reports under the eligible 
        professionals Merit-based Incentive Payment System.
  (o) Incentives for Adoption and Meaningful Use of Certified 
EHR Technology.--
          (1) Incentive payments.--
                  (A) In general.--
                          (i) In general.--Subject to the 
                        succeeding subparagraphs of this 
                        paragraph, with respect to covered 
                        professional services furnished by an 
                        eligible professional during a payment 
                        year (as defined in subparagraph (E)), 
                        if the eligible professional is a 
                        meaningful EHR user (as determined 
                        under paragraph (2)) for the EHR 
                        reporting period with respect to such 
                        year, in addition to the amount 
                        otherwise paid under this part, there 
                        also shall be paid to the eligible 
                        professional (or to an employer or 
                        facility in the cases described in 
                        clause (A) of section 1842(b)(6)), from 
                        the Federal Supplementary Medical 
                        Insurance Trust Fund established under 
                        section 1841 an amount equal to 75 
                        percent of the Secretary's estimate 
                        (based on claims submitted not later 
                        than 2 months after the end of the 
                        payment year) of the allowed charges 
                        under this part for all such covered 
                        professional services furnished by the 
                        eligible professional during such year.
                          (ii) No incentive payments with 
                        respect to years after 2016.--No 
                        incentive payments may be made under 
                        this subsection with respect to a year 
                        after 2016.
                  (B) Limitations on amounts of incentive 
                payments.--
                          (i) In general.--In no case shall the 
                        amount of the incentive payment 
                        provided under this paragraph for an 
                        eligible professional for a payment 
                        year exceed the applicable amount 
                        specified under this subparagraph with 
                        respect to such eligible professional 
                        and such year.
                          (ii) Amount.--Subject to clauses 
                        (iii) through (v), the applicable 
                        amount specified in this subparagraph 
                        for an eligible professional is as 
                        follows:
                                  (I) For the first payment 
                                year for such professional, 
                                $15,000 (or, if the first 
                                payment year for such eligible 
                                professional is 2011 or 2012, 
                                $18,000).
                                  (II) For the second payment 
                                year for such professional, 
                                $12,000.
                                  (III) For the third payment 
                                year for such professional, 
                                $8,000.
                                  (IV) For the fourth payment 
                                year for such professional, 
                                $4,000.
                                  (V) For the fifth payment 
                                year for such professional, 
                                $2,000.
                                  (VI) For any succeeding 
                                payment year for such 
                                professional, $0.
                          (iii) Phase down for eligible 
                        professionals first adopting ehr after 
                        2013.--If the first payment year for an 
                        eligible professional is after 2013, 
                        then the amount specified in this 
                        subparagraph for a payment year for 
                        such professional is the same as the 
                        amount specified in clause (ii) for 
                        such payment year for an eligible 
                        professional whose first payment year 
                        is 2013.
                          (iv) Increase for certain eligible 
                        professionals.--In the case of an 
                        eligible professional who predominantly 
                        furnishes services u