Professional Documents
Culture Documents
Medicare Modernization Act
Medicare Modernization Act
Medicare Modernization Act
8, 2003
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117 STAT. 2066 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2067
TITLE II—MEDICARE ADVANTAGE
Subtitle A—Implementation of Medicare Advantage Program
Sec. 201. Implementation of Medicare Advantage program.
Subtitle B—Immediate Improvements
Sec. 211. Immediate improvements.
Subtitle C—Offering of Medicare Advantage (MA) Regional Plans; Medicare
Advantage Competition
Sec. 221. Establishment of MA regional plans.
Sec. 222. Competition program beginning in 2006.
Sec. 223. Effective date.
Subtitle D—Additional Reforms
Sec. 231.
Specialized MA plans for special needs individuals.
Sec. 232.
Avoiding duplicative State regulation.
Sec. 233.
Medicare MSAs.
Sec. 234.
Extension of reasonable cost contracts.
Sec. 235.
Two-year extension of municipal health service demonstration projects.
Sec. 236.
Payment by PACE providers for medicare and medicaid services fur-
nished by noncontract providers.
Sec. 237. Reimbursement for federally qualified health centers providing services
under MA plans.
Sec. 238. Institute of Medicine evaluation and report on health care performance
measures.
Subtitle E—Comparative Cost Adjustment (CCA) Program
Sec. 241. Comparative Cost Adjustment (CCA) program.
TITLE III—COMBATTING WASTE, FRAUD, AND ABUSE
Sec. 301. Medicare secondary payor (MSP) provisions.
Sec. 302. Payment for durable medical equipment; competitive acquisition of cer-
tain items and services.
Sec. 303. Payment reform for covered outpatient drugs and biologicals.
Sec. 304. Extension of application of payment reform for covered outpatient drugs
and biologicals to other physician specialties.
Sec. 305. Payment for inhalation drugs.
Sec. 306. Demonstration project for use of recovery audit contractors.
Sec. 307. Pilot program for national and State background checks on direct patient
access employees of long-term care facilities or providers.
TITLE IV—RURAL PROVISIONS
Subtitle A—Provisions Relating to Part A Only
Sec. 401. Equalizing urban and rural standardized payment amounts under the
medicare inpatient hospital prospective payment system.
Sec. 402. Enhanced disproportionate share hospital (DSH) treatment for rural hos-
pitals and urban hospitals with fewer than 100 beds.
Sec. 403. Adjustment to the medicare inpatient hospital prospective payment sys-
tem wage index to revise the labor-related share of such index.
Sec. 404. More frequent update in weights used in hospital market basket.
Sec. 405. Improvements to critical access hospital program.
Sec. 406. Medicare inpatient hospital payment adjustment for low-volume hos-
pitals.
Sec. 407. Treatment of missing cost reporting periods for sole community hospitals.
Sec. 408. Recognition of attending nurse practitioners as attending physicians to
serve hospice patients.
Sec. 409. Rural hospice demonstration project.
Sec. 410. Exclusion of certain rural health clinic and federally qualified health cen-
ter services from the prospective payment system for skilled nursing fa-
cilities.
Sec. 410A. Rural community hospital demonstration program.
Subtitle B—Provisions Relating to Part B Only
Sec. 411. Two-year extension of hold harmless provisions for small rural hospitals
and sole community hospitals under the prospective payment system for
hospital outpatient department services.
Sec. 412. Establishment of floor on work geographic adjustment.
Sec. 413. Medicare incentive payment program improvements for physician scar-
city.
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117 STAT. 2068 PUBLIC LAW 108–173—DEC. 8, 2003
Sec. 414. Payment for rural and urban ambulance services.
Sec. 415. Providing appropriate coverage of rural air ambulance services.
Sec. 416. Treatment of certain clinical diagnostic laboratory tests furnished to hos-
pital outpatients in certain rural areas.
Sec. 417. Extension of telemedicine demonstration project.
Sec. 418. Report on demonstration project permitting skilled nursing facilities to be
originating telehealth sites; authority to implement.
Subtitle C—Provisions Relating to Parts A and B
Sec. 421. One-year increase for home health services furnished in a rural area.
Sec. 422. Redistribution of unused resident positions.
Subtitle D—Other Provisions
Sec. 431. Providing safe harbor for certain collaborative efforts that benefit medi-
cally underserved populations.
Sec. 432. Office of Rural Health Policy improvements.
Sec. 433. MedPAC study on rural hospital payment adjustments.
Sec. 434. Frontier extended stay clinic demonstration project.
TITLE V—PROVISIONS RELATING TO PART A
Subtitle A—Inpatient Hospital Services
Sec. 501. Revision of acute care hospital payment updates.
Sec. 502. Revision of the indirect medical education (IME) adjustment percentage.
Sec. 503. Recognition of new medical technologies under inpatient hospital prospec-
tive payment system.
Sec. 504. Increase in Federal rate for hospitals in Puerto Rico.
Sec. 505. Wage index adjustment reclassification reform.
Sec. 506. Limitation on charges for inpatient hospital contract health services pro-
vided to Indians by medicare participating hospitals.
Sec. 507. Clarifications to certain exceptions to medicare limits on physician refer-
rals.
Sec. 508. One-time appeals process for hospital wage index classification.
Subtitle B—Other Provisions
Sec. 511. Payment for covered skilled nursing facility services.
Sec. 512. Coverage of hospice consultation services.
Sec. 513. Study on portable diagnostic ultrasound services for beneficiaries in
skilled nursing facilities.
TITLE VI—PROVISIONS RELATING TO PART B
Subtitle A—Provisions Relating to Physicians’ Services
Sec. 601. Revision of updates for physicians’ services.
Sec. 602. Treatment of physicians’ services furnished in Alaska.
Sec. 603. Inclusion of podiatrists, dentists, and optometrists under private con-
tracting authority.
Sec. 604. GAO study on access to physicians’ services.
Sec. 605. Collaborative demonstration-based review of physician practice expense
geographic adjustment data.
Sec. 606. MedPAC report on payment for physicians’ services.
Subtitle B—Preventive Services
Sec. 611. Coverage of an initial preventive physical examination.
Sec. 612. Coverage of cardiovascular screening blood tests.
Sec. 613. Coverage of diabetes screening tests.
Sec. 614. Improved payment for certain mammography services.
Subtitle C—Other Provisions
Sec. 621. Hospital outpatient department (HOPD) payment reform.
Sec. 622. Limitation of application of functional equivalence standard.
Sec. 623. Payment for renal dialysis services.
Sec. 624. Two-year moratorium on therapy caps; provisions relating to reports.
Sec. 625. Waiver of part B late enrollment penalty for certain military retirees; spe-
cial enrollment period.
Sec. 626. Payment for services furnished in ambulatory surgical centers.
Sec. 627. Payment for certain shoes and inserts under the fee schedule for orthotics
and prosthetics.
Sec. 628. Payment for clinical diagnostic laboratory tests.
Sec. 629. Indexing part B deductible to inflation.
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2069
Sec. 630. Five-year authorization of reimbursement for all medicare part B services
furnished by certain Indian hospitals and clinics.
Subtitle D—Additional Demonstrations, Studies, and Other Provisions
Sec. 641. Demonstration project for coverage of certain prescription drugs and
biologicals.
Sec. 642. Extension of coverage of Intravenous Immune Globulin (IVIG) for the
treatment of primary immune deficiency diseases in the home.
Sec. 643. MedPAC study of coverage of surgical first assisting services of certified
registered nurse first assistants.
Sec. 644. MedPAC study of payment for cardio-thoracic surgeons.
Sec. 645. Studies relating to vision impairments.
Sec. 646. Medicare health care quality demonstration programs.
Sec. 647. MedPAC study on direct access to physical therapy services.
Sec. 648. Demonstration project for consumer-directed chronic outpatient services.
Sec. 649. Medicare care management performance demonstration.
Sec. 650. GAO study and report on the propagation of concierge care.
Sec. 651. Demonstration of coverage of chiropractic services under medicare.
TITLE VII—PROVISIONS RELATING TO PARTS A AND B
Subtitle A—Home Health Services
Sec. 701.
Update in home health services.
Sec. 702.
Demonstration project to clarify the definition of homebound.
Sec. 703.
Demonstration project for medical adult day care services.
Sec. 704.
Temporary suspension of OASIS requirement for collection of data on
non-medicare and non-medicaid patients.
Sec. 705. MedPAC study on medicare margins of home health agencies.
Sec. 706. Coverage of religious nonmedical health care institution services fur-
nished in the home.
Subtitle B—Graduate Medical Education
Sec. 711. Extension of update limitation on high cost programs.
Sec. 712. Exception to initial residency period for geriatric residency or fellowship
programs.
Sec. 713. Treatment of volunteer supervision.
Subtitle C—Chronic Care Improvement
Sec. 721. Voluntary chronic care improvement under traditional fee-for-service.
Sec. 722. Medicare Advantage quality improvement programs.
Sec. 723. Chronically ill medicare beneficiary research, data, demonstration strat-
egy.
Subtitle D—Other Provisions
Sec. 731. Improvements in national and local coverage determination process to re-
spond to changes in technology.
Sec. 732. Extension of treatment of certain physician pathology services under
medicare.
Sec. 733. Payment for pancreatic islet cell investigational transplants for medicare
beneficiaries in clinical trials.
Sec. 734. Restoration of medicare trust funds.
Sec. 735. Modifications to Medicare Payment Advisory Commission (MedPAC).
Sec. 736. Technical amendments.
TITLE VIII—COST CONTAINMENT
Subtitle A—Cost Containment
Sec. 801. Inclusion in annual report of medicare trustees of information on status
of medicare trust funds.
Sec. 802. Presidential submission of legislation.
Sec. 803. Procedures in the House of Representatives.
Sec. 804. Procedures in the Senate.
Subtitle B—Income-Related Reduction in Part B Premium Subsidy
Sec. 811. Income-related reduction in part B premium subsidy.
TITLE IX—ADMINISTRATIVE IMPROVEMENTS, REGULATORY
REDUCTION, AND CONTRACTING REFORM
Sec. 900. Administrative improvements within the Centers for Medicare & Med-
icaid Services (CMS).
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117 STAT. 2070 PUBLIC LAW 108–173—DEC. 8, 2003
Subtitle A—Regulatory Reform
Sec. 901. Construction; definition of supplier.
Sec. 902. Issuance of regulations.
Sec. 903. Compliance with changes in regulations and policies.
Sec. 904. Reports and studies relating to regulatory reform.
Subtitle B—Contracting Reform
Sec. 911. Increased flexibility in medicare administration.
Sec. 912. Requirements for information security for medicare administrative con-
tractors.
Subtitle C—Education and Outreach
Sec. 921.
Provider education and technical assistance.
Sec. 922.
Small provider technical assistance demonstration program.
Sec. 923.
Medicare Beneficiary Ombudsman.
Sec. 924.
Beneficiary outreach demonstration program.
Sec. 925.
Inclusion of additional information in notices to beneficiaries about skilled
nursing facility benefits.
Sec. 926. Information on medicare-certified skilled nursing facilities in hospital dis-
charge plans.
Subtitle D—Appeals and Recovery
Sec. 931. Transfer of responsibility for medicare appeals.
Sec. 932. Process for expedited access to review.
Sec. 933. Revisions to medicare appeals process.
Sec. 934. Prepayment review.
Sec. 935. Recovery of overpayments.
Sec. 936. Provider enrollment process; right of appeal.
Sec. 937. Process for correction of minor errors and omissions without pursuing ap-
peals process.
Sec. 938. Prior determination process for certain items and services; advance bene-
ficiary notices.
Sec. 939. Appeals by providers when there is no other party available.
Sec. 940. Revisions to appeals timeframes and amounts.
Sec. 940A. Mediation process for local coverage determinations.
Subtitle E—Miscellaneous Provisions
Sec. 941. Policy development regarding evaluation and management (E & M) docu-
mentation guidelines.
Sec. 942. Improvement in oversight of technology and coverage.
Sec. 943. Treatment of hospitals for certain services under medicare secondary
payor (MSP) provisions.
Sec. 944. EMTALA improvements.
Sec. 945. Emergency Medical Treatment and Labor Act (EMTALA) Technical Advi-
sory Group.
Sec. 946. Authorizing use of arrangements to provide core hospice services in cer-
tain circumstances.
Sec. 947. Application of OSHA bloodborne pathogens standard to certain hospitals.
Sec. 948. BIPA-related technical amendments and corrections.
Sec. 949. Conforming authority to waive a program exclusion.
Sec. 950. Treatment of certain dental claims.
Sec. 951. Furnishing hospitals with information to compute DSH formula.
Sec. 952. Revisions to reassignment provisions.
Sec. 953. Other provisions.
TITLE X—MEDICAID AND MISCELLANEOUS PROVISIONS
Subtitle A—Medicaid Provisions
Sec. 1001. Medicaid disproportionate share hospital (DSH) payments.
Sec. 1002. Clarification of inclusion of inpatient drug prices charged to certain pub-
lic hospitals in the best price exemptions for the medicaid drug rebate
program.
Sec. 1003. Extension of moratorium.
Subtitle B—Miscellaneous Provisions
Sec. 1011. Federal reimbursement of emergency health services furnished to un-
documented aliens.
Sec. 1012. Commission on Systemic Interoperability.
Sec. 1013. Research on outcomes of health care items and services.
Sec. 1014. Health care that works for all Americans: Citizens Health Care Working
Group.
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2071
Sec. 1015. Funding start-up administrative costs for medicare reform.
Sec. 1016. Health care infrastructure improvement program.
TITLE XI—ACCESS TO AFFORDABLE PHARMACEUTICALS
Subtitle A—Access to Affordable Pharmaceuticals
Sec. 1101. Thirty-month stay-of-effectiveness period.
Sec. 1102. Forfeiture of 180-day exclusivity period.
Sec. 1103. Bioavailability and bioequivalence.
Sec. 1104. Conforming amendments.
Subtitle B—Federal Trade Commission Review
Sec. 1111. Definitions.
Sec. 1112. Notification of agreements.
Sec. 1113. Filing deadlines.
Sec. 1114. Disclosure exemption.
Sec. 1115. Enforcement.
Sec. 1116. Rulemaking.
Sec. 1117. Savings clause.
Sec. 1118. Effective date.
Subtitle C—Importation of Prescription Drugs
Sec. 1121. Importation of prescription drugs.
Sec. 1122. Study and report on importation of drugs.
Sec. 1123. Study and report on trade in pharmaceuticals.
TITLE XII—TAX INCENTIVES FOR HEALTH AND RETIREMENT
SECURITY
Sec. 1201. Health savings accounts.
Sec. 1202. Exclusion from gross income of certain Federal subsidies for prescription
drug plans.
Sec. 1203. Exception to information reporting requirements related to certain
health arrangements.
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117 STAT. 2072 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2073
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117 STAT. 2074 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2075
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117 STAT. 2076 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2077
‘‘(1) DEDUCTIBLE.—
‘‘(A) IN GENERAL.—The coverage has an annual
deductible—
‘‘(i) for 2006, that is equal to $250; or
‘‘(ii) for a subsequent year, that is equal to the
amount specified under this paragraph for the previous
year increased by the percentage specified in para-
graph (6) for the year involved.
‘‘(B) ROUNDING.—Any amount determined under
subparagraph (A)(ii) that is not a multiple of $5 shall
be rounded to the nearest multiple of $5.
‘‘(2) BENEFIT STRUCTURE.—
‘‘(A) 25 PERCENT COINSURANCE.—The coverage has
coinsurance (for costs above the annual deductible specified
in paragraph (1) and up to the initial coverage limit under
paragraph (3)) that is—
‘‘(i) equal to 25 percent; or
‘‘(ii) actuarially equivalent (using processes and
methods established under section 1860D–11(c)) to an
average expected payment of 25 percent of such costs.
‘‘(B) USE OF TIERS.—Nothing in this part shall be con-
strued as preventing a PDP sponsor or an MA organization
from applying tiered copayments under a plan, so long
as such tiered copayments are consistent with subpara-
graph (A)(ii).
‘‘(3) INITIAL COVERAGE LIMIT.—
‘‘(A) IN GENERAL.—Except as provided in paragraph
(4), the coverage has an initial coverage limit on the max-
imum costs that may be recognized for payment purposes
(including the annual deductible)—
‘‘(i) for 2006, that is equal to $2,250; or
‘‘(ii) for a subsequent year, that is equal to the
amount specified in this paragraph for the previous
year, increased by the annual percentage increase
described in paragraph (6) for the year involved.
‘‘(B) ROUNDING.—Any amount determined under
subparagraph (A)(ii) that is not a multiple of $10 shall
be rounded to the nearest multiple of $10.
‘‘(4) PROTECTION AGAINST HIGH OUT-OF-POCKET EXPENDI-
TURES.—
‘‘(A) IN GENERAL.—
‘‘(i) IN GENERAL.—The coverage provides benefits,
after the part D eligible individual has incurred costs
(as described in subparagraph (C)) for covered part
D drugs in a year equal to the annual out-of-pocket
threshold specified in subparagraph (B), with cost-
sharing that is equal to the greater of—
‘‘(I) a copayment of $2 for a generic drug or
a preferred drug that is a multiple source drug
(as defined in section 1927(k)(7)(A)(i)) and $5 for
any other drug; or
‘‘(II) coinsurance that is equal to 5 percent.
‘‘(ii) ADJUSTMENT OF AMOUNT.—For a year after
2006, the dollar amounts specified in clause (i)(I) shall
be equal to the dollar amounts specified in this
subparagraph for the previous year, increased by the
annual percentage increase described in paragraph (6)
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117 STAT. 2078 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2079
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117 STAT. 2080 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2081
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117 STAT. 2082 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2083
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117 STAT. 2084 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2085
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117 STAT. 2086 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2087
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117 STAT. 2088 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2089
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117 STAT. 2090 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2091
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117 STAT. 2092 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2093
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117 STAT. 2094 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2095
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117 STAT. 2096 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2097
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117 STAT. 2098 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2099
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117 STAT. 2100 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2101
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117 STAT. 2102 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2103
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117 STAT. 2104 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2105
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117 STAT. 2106 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2107
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117 STAT. 2108 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2109
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117 STAT. 2110 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2111
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117 STAT. 2112 PUBLIC LAW 108–173—DEC. 8, 2003
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made under this part that would have been made if the
Secretary had not applied such adjustment.
‘‘(d) PAYMENT METHODS.—
‘‘(1) IN GENERAL.—Payments under this section shall be
based on such a method as the Secretary determines. The
Secretary may establish a payment method by which interim
payments of amounts under this section are made during a
year based on the Secretary’s best estimate of amounts that
will be payable after obtaining all of the information.
‘‘(2) REQUIREMENT FOR PROVISION OF INFORMATION.—
‘‘(A) REQUIREMENT.—Payments under this section to
a PDP sponsor or MA organization are conditioned upon
the furnishing to the Secretary, in a form and manner
specified by the Secretary, of such information as may
be required to carry out this section.
‘‘(B) RESTRICTION ON USE OF INFORMATION.—Informa-
tion disclosed or obtained pursuant to subparagraph (A)
may be used by officers, employees, and contractors of
the Department of Health and Human Services only for
the purposes of, and to the extent necessary in, carrying
out this section.
‘‘(3) SOURCE OF PAYMENTS.—Payments under this section
shall be made from the Medicare Prescription Drug Account.
‘‘(4) APPLICATION OF ENROLLEE ADJUSTMENT.—The provi-
sions of section 1853(a)(2) shall apply to payments to PDP
sponsors under this section in the same manner as they apply
to payments to MA organizations under section 1853(a).
‘‘(e) PORTION OF TOTAL PAYMENTS TO A SPONSOR OR ORGANIZA-
TION SUBJECT TO RISK (APPLICATION OF RISK CORRIDORS).—
‘‘(1) COMPUTATION OF ADJUSTED ALLOWABLE RISK CORRIDOR
COSTS.—
‘‘(A) IN GENERAL.—For purposes of this subsection, the
term ‘adjusted allowable risk corridor costs’ means, for
a plan for a coverage year (as defined in subsection (b)(4))—
‘‘(i) the allowable risk corridor costs (as defined
in subparagraph (B)) for the plan for the year, reduced
by
‘‘(ii) the sum of (I) the total reinsurance payments
made under subsection (b) to the sponsor of the plan
for the year, and (II) the total subsidy payments made
under section 1860D–14 to the sponsor of the plan
for the year.
‘‘(B) ALLOWABLE RISK CORRIDOR COSTS.—For purposes
of this subsection, the term ‘allowable risk corridor costs’
means, with respect to a prescription drug plan offered
by a PDP sponsor or an MA–PD plan offered by an MA
organization, the part of costs (not including administrative
costs, but including costs directly related to the dispensing
of covered part D drugs during the year) incurred by the
sponsor or organization under the plan that are actually
paid (net of discounts, chargebacks, and average percentage
rebates) by the sponsor or organization under the plan,
but in no case more than the part of such costs that
would have been paid under the plan if the prescription
drug coverage under the plan were basic prescription drug
coverage, or, in the case of a plan providing supplemental
prescription drug coverage, if such coverage were basic
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117 STAT. 2118 PUBLIC LAW 108–173—DEC. 8, 2003
for the plan for the year that are more than the
first threshold upper limit of the risk corridor for
the plan for the year; and
‘‘(II) such plans represent at least 60 percent
of part D eligible individuals enrolled in any
prescription drug plan or MA–PD plan.
‘‘(C) REDUCTION IN PAYMENT IF ADJUSTED ALLOWABLE
RISK CORRIDOR COSTS BELOW LOWER LIMIT OF RISK COR-
RIDOR.—
‘‘(i) COSTS BETWEEN FIRST AND SECOND THRESHOLD
LOWER LIMITS.—If the adjusted allowable risk corridor
costs for the plan for the year are less than the first
threshold lower limit, but not less than the second
threshold lower limit, of the risk corridor for the plan
for the year, the Secretary shall reduce the total of
the payments made to the sponsor or organization
offering the plan for the year under this section by
an amount (or otherwise recover from the sponsor or
organization an amount) equal to 50 percent (or, for
2006 and 2007, 75 percent) of the difference between
the first threshold lower limit of the risk corridor and
such adjusted allowable risk corridor costs.
‘‘(ii) COSTS BELOW SECOND THRESHOLD LOWER
LIMIT.—If the adjusted allowable risk corridor costs
for the plan for the year are less the second threshold
lower limit of the risk corridor for the plan for the
year, the Secretary shall reduce the total of the pay-
ments made to the sponsor or organization offering
the plan for the year under this section by an amount
(or otherwise recover from the sponsor or organization
an amount) equal to the sum of—
‘‘(I) 50 percent (or, for 2006 and 2007, 75 per-
cent) of the difference between the first threshold
lower limit and the second threshold lower limit;
and
‘‘(II) 80 percent of the difference between the
second threshold upper limit of the risk corridor
and such adjusted allowable risk corridor costs.
‘‘(3) ESTABLISHMENT OF RISK CORRIDORS.—
‘‘(A) IN GENERAL.—For each plan year the Secretary
shall establish a risk corridor for each prescription drug
plan and each MA–PD plan. The risk corridor for a plan
for a year shall be equal to a range as follows:
‘‘(i) FIRST THRESHOLD LOWER LIMIT.—The first
threshold lower limit of such corridor shall be equal
to—
‘‘(I) the target amount described in subpara-
graph (B) for the plan; minus
‘‘(II) an amount equal to the first threshold
risk percentage for the plan (as determined under
subparagraph (C)(i)) of such target amount.
‘‘(ii) SECOND THRESHOLD LOWER LIMIT.—The second
threshold lower limit of such corridor shall be equal
to—
‘‘(I) the target amount described in subpara-
graph (B) for the plan; minus
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117 STAT. 2168 PUBLIC LAW 108–173—DEC. 8, 2003
42 USC SEC. 106. STATE PHARMACEUTICAL ASSISTANCE TRANSITION COMMIS-
1395w–101 note. SION.
(a) ESTABLISHMENT.—
(1) IN GENERAL.—There is established, as of the first day
of the third month beginning after the date of the enactment
of this Act, a State Pharmaceutical Assistance Transition
Commission (in this section referred to as the ‘‘Commission’’)
to develop a proposal for addressing the unique transitional
issues facing State pharmaceutical assistance programs, and
program participants, due to the implementation of the vol-
untary prescription drug benefit program under part D of title
XVIII of the Social Security Act, as added by section 101.
(2) DEFINITIONS.—For purposes of this section:
(A) STATE PHARMACEUTICAL ASSISTANCE PROGRAM
DEFINED.—The term ‘‘State pharmaceutical assistance pro-
gram’’ means a program (other than the medicaid program)
operated by a State (or under contract with a State) that
provides as of the date of the enactment of this Act financial
assistance to medicare beneficiaries for the purchase of
prescription drugs.
(B) PROGRAM PARTICIPANT.—The term ‘‘program
participant’’ means a low-income medicare beneficiary who
is a participant in a State pharmaceutical assistance pro-
gram.
(b) COMPOSITION.—The Commission shall include the following:
(1) A representative of each Governor of each State that
the Secretary identifies as operating on a statewide basis a
State pharmaceutical assistance program that provides for eligi-
bility and benefits that are comparable or more generous than
the low-income assistance eligibility and benefits offered under
section 1860D–14 of the Social Security Act.
(2) Representatives from other States that the Secretary
identifies have in operation other State pharmaceutical assist-
ance programs, as appointed by the Secretary.
(3) Representatives of organizations that have an inherent
interest in program participants or the program itself, as
appointed by the Secretary but not to exceed the number of
representatives under paragraphs (1) and (2).
(4) Representatives of Medicare Advantage organizations,
pharmaceutical benefit managers, and other private health
insurance plans, as appointed by the Secretary.
(5) The Secretary (or the Secretary’s designee) and such
other members as the Secretary may specify.
The Secretary shall designate a member to serve as Chair of the
Commission and the Commission shall meet at the call of the
Chair.
(c) DEVELOPMENT OF PROPOSAL.—The Commission shall develop
the proposal described in subsection (a) in a manner consistent
with the following principles:
(1) Protection of the interests of program participants in
a manner that is the least disruptive to such participants
and that includes a single point of contact for enrollment and
processing of benefits.
(2) Protection of the financial and flexibility interests of
States so that States are not financially worse off as a result
of the enactment of this title.
(3) Principles of medicare modernization under this Act.
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(d) REPORT.—By not later than January 1, 2005, the Commis- Deadline.
sion shall submit to the President and Congress a report that
contains a detailed proposal (including specific legislative or
administrative recommendations, if any) and such other rec-
ommendations as the Commission deems appropriate.
(e) SUPPORT.—The Secretary shall provide the Commission with
the administrative support services necessary for the Commission
to carry out its responsibilities under this section.
(f) TERMINATION.—The Commission shall terminate 30 days
after the date of submission of the report under subsection (d).
SEC. 107. STUDIES AND REPORTS.
(a) STUDY REGARDING REGIONAL VARIATIONS IN PRESCRIPTION 42 USC
DRUG SPENDING.— 1395w–111 note.
(1) IN GENERAL.—The Secretary shall conduct a study that
examines variations in per capita spending for covered part
D drugs under part D of title XVIII of the Social Security
Act among PDP regions and, with respect to such spending,
the amount of such variation that is attributable to—
(A) price variations (described in section 1860D–
15(c)(2) of such Act); and
(B) differences in per capita utilization that is not
taken into account in the health status risk adjustment
provided under section 1860D–15(c)(1) of such Act.
(2) REPORT AND RECOMMENDATIONS.—Not later than Deadline.
January 1, 2009, the Secretary shall submit to Congress a
report on the study conducted under paragraph (1). Such report
shall include—
(A) information regarding the extent of geographic vari-
ation described in paragraph (1)(B);
(B) an analysis of the impact on direct subsidies under
section 1860D–15(a)(1) of the Social Security Act in dif-
ferent PDP regions if such subsidies were adjusted to take
into account the variation described in subparagraph (A);
and
(C) recommendations regarding the appropriateness of
applying an additional geographic adjustment factor under
section 1860D–15(c)(2) that reflects some or all of the vari-
ation described in subparagraph (A).
(b) REVIEW AND REPORT ON CURRENT STANDARDS OF PRACTICE 42 USC 1395i–3
FOR PHARMACY SERVICES PROVIDED TO PATIENTS IN NURSING note.
FACILITIES.—
(1) REVIEW.—
(A) IN GENERAL.—Not later than 12 months after the Deadline.
date of the enactment of this Act, the Secretary shall
conduct a thorough review of the current standards of
practice for pharmacy services provided to patients in
nursing facilities.
(B) SPECIFIC MATTERS REVIEWED.—In conducting the
review under subparagraph (A), the Secretary shall—
(i) assess the current standards of practice, clinical
services, and other service requirements generally used
for pharmacy services in long-term care settings; and
(ii) evaluate the impact of those standards with
respect to patient safety, reduction of medication errors
and quality of care.
(2) REPORT.—
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(2) the final study under subsection (c) not later than
January 1, 2007.
(e) CONSULTATION.—The Comptroller General shall consult with
sponsors of employment-based retiree health coverage, benefits
experts, human resources professionals, employee benefits consult-
ants, and academics with experience in health benefits and survey
research in the development and design of the initial and final
studies under this section.
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2191
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2195
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2211
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2213
(a) EVALUATION.—
(1) IN GENERAL.—Not later than the date that is 2 months Deadline.
after the date of the enactment of this Act, the Secretary Contracts.
shall enter into an arrangement under which the Institute
of Medicine of the National Academy of Sciences (in this section
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117 STAT. 2214 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2215
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117 STAT. 2216 PUBLIC LAW 108–173—DEC. 8, 2003
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117 STAT. 2218 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2219
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117 STAT. 2220 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2221
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117 STAT. 2222 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2223
SEC. 302. PAYMENT FOR DURABLE MEDICAL EQUIPMENT; COMPETI-
TIVE ACQUISITION OF CERTAIN ITEMS AND SERVICES.
(a) QUALITY ENHANCEMENT AND FRAUD REDUCTION.—
(1) ESTABLISHMENT OF QUALITY STANDARDS AND ACCREDITA-
TION REQUIREMENTS FOR DURABLE MEDICAL EQUIPMENT SUP-
PLIERS.—Section 1834(a) (42 U.S.C. 1395m(a)) is amended—
(A) by transferring paragraph (17), as added by section
4551(c)(1) of the Balanced Budget Act of 1997 (111 Stat.
458), to the end of such section and redesignating such
paragraph as paragraph (19); and
(B) by adding at the end the following new paragraph:
‘‘(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 subpara-
graph (D) to be applied by recognized independent accredi-
tation 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 Deadline.
ORGANIZATIONS.—Not later than the date that is 1 year
after the date on which the Secretary implements the
quality standards under subparagraph (A), notwith-
standing section 1865(b), the Secretary shall designate and
approve one or more independent accreditation organiza-
tions 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 appro-
priate:
‘‘(i) Covered items (as defined in paragraph (13))
for which payment may otherwise be made under this
subsection.
‘‘(ii) Prosthetic devices and orthotics and pros-
thetics 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, after consultation with representa-
tives of relevant parties. Such standards shall be applied Publication.
prospectively and shall be published on the Internet
website of the Centers for Medicare & Medicaid Services.’’.
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117 STAT. 2226 PUBLIC LAW 108–173—DEC. 8, 2003
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117 STAT. 2228 PUBLIC LAW 108–173—DEC. 8, 2003
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117 STAT. 2230 PUBLIC LAW 108–173—DEC. 8, 2003
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117 STAT. 2232 PUBLIC LAW 108–173—DEC. 8, 2003
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117 STAT. 2236 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2237
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117 STAT. 2238 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2239
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2241
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117 STAT. 2242 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2247
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117 STAT. 2256 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2257
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117 STAT. 2258 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2261
the pilot program under this section for the period of fiscal years
2004 through 2007, $25,000,000.
(g) DEFINITIONS.—In this section:
(1) CONVICTION FOR A RELEVANT CRIME.—The term ‘‘convic-
tion for a relevant crime’’ means any Federal or State criminal
conviction for—
(A) any offense described in section 1128(a) of the
Social Security Act (42 U.S.C. 1320a–7); and
(B) such other types of offenses as a participating
State may specify for purposes of conducting the pilot pro-
gram in such State.
(2) DISQUALIFYING INFORMATION.—The term ‘‘disqualifying
information’’ means a conviction for a relevant crime or a
finding of patient or resident abuse.
(3) FINDING OF PATIENT OR RESIDENT ABUSE.—The term
‘‘finding of patient or resident abuse’’ means any substantiated
finding by a State agency under section 1819(g)(1)(C) or
1919(g)(1)(C) of the Social Security Act (42 U.S.C. 1395i–
3(g)(1)(C), 1396r(g)(1)(C)) or a Federal agency that a direct
patient access employee has committed—
(A) an act of patient or resident abuse or neglect or
a misappropriation of patient or resident property; or
(B) such other types of acts as a participating State
may specify for purposes of conducting the pilot program
in such State.
(4) DIRECT PATIENT ACCESS EMPLOYEE.—The term ‘‘direct
patient access employee’’ means any individual (other than
a volunteer) that has access to a patient or resident of a
long-term care facility or provider through employment or
through a contract with such facility or provider, as determined
by a participating State for purposes of conducting the pilot
program in such State.
(5) LONG-TERM CARE FACILITY OR PROVIDER.—
(A) IN GENERAL.—The term ‘‘long-term care facility
or provider’’ means the following facilities or providers
which receive payment for services under title XVIII or
XIX of the Social Security Act:
(i) A skilled nursing facility (as defined in section
1819(a) of the Social Security Act) (42 U.S.C. 1395i–
3(a)).
(ii) A nursing facility (as defined in section 1919(a)
in such Act) (42 U.S.C. 1396r(a)).
(iii) A home health agency.
(iv) A provider of hospice care (as defined in section
1861(dd)(1) of such Act) (42 U.S.C. 1395x(dd)(1)).
(v) A long-term care hospital (as described in sec-
tion 1886(d)(1)(B)(iv) of such Act) (42 U.S.C.
1395ww(d)(1)(B)(iv)).
(vi) A provider of personal care services.
(vii) A residential care provider that arranges for,
or directly provides, long-term care services.
(viii) An intermediate care facility for the mentally
retarded (as defined in section 1905(d) of such Act)
42 U.S.C. 1396d(d)).
(B) ADDITIONAL FACILITIES OR PROVIDERS.—During the
first year in which a pilot program under this section
is conducted in a participating State, the State may expand
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117 STAT. 2262 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2263
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117 STAT. 2264 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2265
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117 STAT. 2266 PUBLIC LAW 108–173—DEC. 8, 2003
42 USC 1395ww SEC. 404. MORE FREQUENT UPDATE IN WEIGHTS USED IN HOSPITAL
note. MARKET BASKET.
(a) MORE FREQUENT UPDATES IN WEIGHTS.—After revising the
weights used in the hospital market basket under section
1886(b)(3)(B)(iii) of the Social Security Act (42 U.S.C.
1395ww(b)(3)(B)(iii)) to reflect the most current data available, the
Secretary shall establish a frequency for revising such weights,
including the labor share, in such market basket to reflect the
most current data available more frequently than once every 5
years.
(b) INCORPORATION OF EXPLANATION IN RULEMAKING.—The Sec-
retary shall include in the publication of the final rule for payment
for inpatient hospital services under section 1886(d) of the Social
Security Act (42 U.S.C. 1395ww(d)) for fiscal year 2006, an expla-
nation of the reasons for, and options considered, in determining
frequency established under subsection (a).
SEC. 405. IMPROVEMENTS TO CRITICAL ACCESS HOSPITAL PROGRAM.
(a) INCREASE IN PAYMENT AMOUNTS.—
(1) IN GENERAL.—Sections 1814(l), 1834(g)(1), and
1883(a)(3) (42 U.S.C. 1395f(l), 1395m(g)(1), and 1395tt(a)(3))
are each amended by inserting ‘‘equal to 101 percent of’’ before
‘‘the reasonable costs’’.
42 USC 1395f (2) EFFECTIVE DATE.—The amendments made by paragraph
note. (1) shall apply to payments for services furnished during cost
reporting periods beginning on or after January 1, 2004.
(b) COVERAGE OF COSTS FOR CERTAIN EMERGENCY ROOM ON-
CALL PROVIDERS.—
(1) IN GENERAL.—Section 1834(g)(5) (42 U.S.C. 1395m(g)(5))
is amended—
(A) in the heading—
(i) by inserting ‘‘CERTAIN’’ before ‘‘EMERGENCY’’; and
(ii) by striking ‘‘PHYSICIANS’’ and inserting ‘‘PRO-
VIDERS’’;
(B) by striking ‘‘emergency room physicians who are
on-call (as defined by the Secretary)’’ and inserting ‘‘physi-
cians, physician assistants, nurse practitioners, and clinical
nurse specialists who are on-call (as defined by the Sec-
retary) to provide emergency services’’; and
(C) by striking ‘‘physicians’ services’’ and inserting
‘‘services covered under this title’’.
42 USC 1395m (2) EFFECTIVE DATE.—The amendments made by paragraph
note. (1) shall apply with respect to costs incurred for services fur-
nished on or after January 1, 2005.
(c) AUTHORIZATION OF PERIODIC INTERIM PAYMENT (PIP).—
(1) IN GENERAL.—Section 1815(e)(2) (42 U.S.C. 1395g(e)(2))
is amended—
(A) in the matter before subparagraph (A), by inserting
‘‘, in the cases described in subparagraphs (A) through
(D)’’ after ‘‘1986’’;
(B) by striking ‘‘and’’ at the end of subparagraph (C);
(C) by adding ‘‘and’’ at the end of subparagraph (D);
and
(D) by inserting after subparagraph (D) the following
new subparagraph:
‘‘(E) inpatient critical access hospital services;’’.
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2267
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117 STAT. 2268 PUBLIC LAW 108–173—DEC. 8, 2003
or (2) from funds appropriated for fiscal year 2005 and subse-
quent fiscal years—
‘‘(A) CONSULTATION WITH THE STATE HOSPITAL ASSOCIA-
TION AND RURAL HOSPITALS ON THE MOST APPROPRIATE WAYS
TO USE GRANTS.—A State shall consult with the hospital
association of such State and rural hospitals located in
such State on the most appropriate ways to use the funds
under such grant.
‘‘(B) LIMITATION ON USE OF GRANT FUNDS FOR ADMINIS-
TRATIVE EXPENSES.—A State may not expend more than
the lesser of—
‘‘(i) 15 percent of the amount of the grant for
administrative expenses; or
‘‘(ii) the State’s federally negotiated indirect rate
for administering the grant.
‘‘(5) USE OF FUNDS FOR FEDERAL ADMINISTRATIVE
EXPENSES.—Of the total amount appropriated for grants under
paragraphs (1) and (2) for a fiscal year (beginning with fiscal
year 2005), up to 5 percent of such amount shall be available
to the Health Resources and Services Administration for pur-
poses of administering such grants.’’.
(g) AUTHORITY TO ESTABLISH PSYCHIATRIC AND REHABILITATION
DISTINCT PART UNITS.—
(1) IN GENERAL.—Section 1820(c)(2) (42 U.S.C. 1395i–
4(c)(2)) is amended by adding at the end the following:
‘‘(E) AUTHORITY TO ESTABLISH PSYCHIATRIC AND
REHABILITATION DISTINCT PART UNITS.—
‘‘(i) IN GENERAL.—Subject to the succeeding provi-
sions of this subparagraph, a critical access hospital
may establish—
‘‘(I) a psychiatric unit of the hospital that is
a distinct part of the hospital; and
‘‘(II) a rehabilitation unit of the hospital that
is a distinct part of the hospital,
if the distinct part meets the requirements (including
conditions of participation) that would otherwise apply
to the distinct part if the distinct part were established
by a subsection (d) hospital in accordance with the
matter following clause (v) of section 1886(d)(1)(B),
including any regulations adopted by the Secretary
under such section.
‘‘(ii) LIMITATION ON NUMBER OF BEDS.—The total
number of beds that may be established under clause
(i) for a distinct part unit may not exceed 10.
‘‘(iii) EXCLUSION OF BEDS FROM BED COUNT.—In
determining the number of beds of a critical access
hospital for purposes of applying the bed limitations
referred to in subparagraph (B)(iii) and subsection (f),
the Secretary shall not take into account any bed estab-
lished under clause (i).
‘‘(iv) EFFECT OF FAILURE TO MEET REQUIREMENTS.—
If a psychiatric or rehabilitation unit established under
clause (i) does not meet the requirements described
in such clause with respect to a cost reporting period,
no payment may be made under this title to the hos-
pital for services furnished in such unit during such
period. Payment to the hospital for services furnished
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2269
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117 STAT. 2270 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2271
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117 STAT. 2272 PUBLIC LAW 108–173—DEC. 8, 2003
42 USC 1395ww SEC. 410A. RURAL COMMUNITY HOSPITAL DEMONSTRATION PRO-
note. GRAM.
(a) ESTABLISHMENT OF RURAL COMMUNITY HOSPITAL (RCH)
DEMONSTRATION PROGRAM.—
(1) IN GENERAL.—The Secretary shall establish a dem-
onstration program to test the feasibility and advisability of
the establishment of rural community hospitals (as defined
in subsection (f)(1)) to furnish covered inpatient hospital serv-
ices (as defined in subsection (f)(2)) to medicare beneficiaries.
(2) DEMONSTRATION AREAS.—The program shall be con-
ducted in rural areas selected by the Secretary in States with
low population densities, as determined by the Secretary.
(3) APPLICATION.—Each rural community hospital that is
located in a demonstration area selected under paragraph (2)
that desires to participate in the demonstration program under
this section shall submit an application to the Secretary at
such time, in such manner, and containing such information
as the Secretary may require.
(4) SELECTION OF HOSPITALS.—The Secretary shall select
from among rural community hospitals submitting applications
under paragraph (3) not more than 15 of such hospitals to
participate in the demonstration program under this section.
(5) DURATION.—The Secretary shall conduct the demonstra-
tion program under this section for a 5-year period.
Deadline. (6) IMPLEMENTATION.—The Secretary shall implement the
demonstration program not later than January 1, 2005, but
may not implement the program before October 1, 2004.
(b) PAYMENT.—
(1) IN GENERAL.—The amount of payment under the dem-
onstration program for covered inpatient hospital services fur-
nished in a rural community hospital, other than such services
furnished in a psychiatric or rehabilitation unit of the hospital
which is a distinct part, is—
(A) for discharges occurring in the first cost reporting
period beginning on or after the implementation of the
demonstration program, the reasonable costs of providing
such services; and
(B) for discharges occurring in a subsequent cost
reporting period under the demonstration program, the
lesser of—
(i) the reasonable costs of providing such services
in the cost reporting period involved; or
(ii) the target amount (as defined in paragraph
(2), applicable to the cost reporting period involved.
(2) TARGET AMOUNT.—For purposes of paragraph (1)(B)(ii),
the term ‘‘target amount’’ means, with respect to a rural
community hospital for a particular 12-month cost reporting
period—
(A) in the case of the second such reporting period
for which this subsection is in effect, the reasonable costs
of providing such covered inpatient hospital services as
determined under paragraph (1)(A), and
(B) in the case of a later reporting period, the target
amount for the preceding 12-month cost reporting period,
increased by the applicable percentage increase (under clause
(i) of section 1886(b)(3)(B) of the Social Security Act (42 U.S.C.
1395ww(b)(3)(B))) in the market basket percentage increase
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2273
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117 STAT. 2274 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2275
SEC. 413. MEDICARE INCENTIVE PAYMENT PROGRAM IMPROVEMENTS
FOR PHYSICIAN SCARCITY.
(a) ADDITIONAL INCENTIVE PAYMENT FOR CERTAIN PHYSICIAN
SCARCITY AREAS.—Section 1833 (42 U.S.C. 1395l) is amended by
adding at the end the following new subsection:
‘‘(u) INCENTIVE PAYMENTS FOR PHYSICIAN SCARCITY AREAS.—
‘‘(1) IN GENERAL.—In the case of physicians’ services fur-
nished on or after January 1, 2005, and before January 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 Sec-
retary 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 physi-
cians.
‘‘(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 para-
graph 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
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2277
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117 STAT. 2278 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2279
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117 STAT. 2280 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2281
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117 STAT. 2282 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2283
SEC. 418. REPORT ON DEMONSTRATION PROJECT PERMITTING 42 USC 1395m
SKILLED NURSING FACILITIES TO BE ORIGINATING note.
TELEHEALTH SITES; AUTHORITY TO IMPLEMENT.
(a) EVALUATION.—The Secretary, acting through the Adminis-
trator of the Health Resources and Services Administration in con-
sultation with the Administrator of the Centers for Medicare &
Medicaid Services, shall evaluate demonstration projects conducted
by the Secretary under which skilled nursing facilities (as defined
in section 1819(a) of the Social Security Act (42 U.S.C. 1395i–
3(a)) are treated as originating sites for telehealth services.
(b) REPORT.—Not later than January 1, 2005, the Secretary Deadline.
shall submit to Congress a report on the evaluation conducted
under subsection (a). Such report shall include recommendations
on mechanisms to ensure that permitting a skilled nursing facility
to serve as an originating site for the use of telehealth services
or any other service delivered via a telecommunications system
does not serve as a substitute for in-person visits furnished by
a physician, or for in-person visits furnished by a physician assist-
ant, nurse practitioner or clinical nurse specialist, as is otherwise
required by the Secretary.
(c) AUTHORITY TO EXPAND ORIGINATING TELEHEALTH SITES TO
INCLUDE SKILLED NURSING FACILITIES.—Insofar as the Secretary
concludes in the report required under subsection (b) that it is
advisable to permit a skilled nursing facility to be an originating
site for telehealth services under section 1834(m) of the Social
Security Act (42 U.S.C. 1395m(m)), and that the Secretary can
establish the mechanisms to ensure such permission does not serve
as a substitute for in-person visits furnished by a physician, or
for in-person visits furnished by a physician assistant, nurse practi-
tioner or clinical nurse specialist, the Secretary may deem a skilled
nursing facility to be an originating site under paragraph (4)(C)(ii)
of such section beginning on January 1, 2006.
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117 STAT. 2284 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2285
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117 STAT. 2286 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2287
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117 STAT. 2288 PUBLIC LAW 108–173—DEC. 8, 2003
SEC. 432. OFFICE OF RURAL HEALTH POLICY IMPROVEMENTS.
Section 711(b) (42 U.S.C. 912(b)) is amended—
(1) in paragraph (3), by striking ‘‘and’’ after the comma
at the end;
(2) in paragraph (4), by striking the period at the end
and inserting ‘‘, and’’; and
(3) by inserting after paragraph (4) the following new para-
graph:
‘‘(5) administer grants, cooperative agreements, and con-
tracts to provide technical assistance and other activities as
necessary to support activities related to improving health care
in rural areas.’’.
42 USC 1395ww SEC. 433. MEDPAC STUDY ON RURAL HOSPITAL PAYMENT ADJUST-
note. MENTS.
(a) IN GENERAL.—The Medicare Payment Advisory Commission
shall conduct a study of the impact of sections 401 through 406,
411, 416, and 505. The Commission shall analyze the effect on
total payments, growth in costs, capital spending, and such other
payment effects under those sections.
Deadlines. (b) REPORTS.—
(1) INTERIM REPORT.—Not later than 18 months after the
date of the enactment of this Act, the Commission shall submit
to Congress an interim report on the matters studied under
subsection (a) with respect only to changes to the critical access
hospital provisions under section 405.
(2) FINAL REPORT.—Not later than 3 years after the date
of the enactment of this Act, the Commission shall submit
to Congress a final report on all matters studied under sub-
section (a).
42 USC 1395x SEC. 434. FRONTIER EXTENDED STAY CLINIC DEMONSTRATION
note. PROJECT.
(a) AUTHORITY TO CONDUCT DEMONSTRATION PROJECT.—The
Secretary shall waive such provisions of the medicare program
established under title XVIII of the Social Security Act (42 U.S.C.
1395 et seq.) as are necessary to conduct a demonstration project
under which frontier extended stay clinics described in subsection
(b) in isolated rural areas are treated as providers of items and
services under the medicare program.
(b) CLINICS DESCRIBED.—A frontier extended stay clinic is
described in this subsection if the clinic—
(1) is located in a community where the closest short-
term acute care hospital or critical access hospital is at least
75 miles away from the community or is inaccessible by public
road; and
(2) is designed to address the needs of—
(A) seriously or critically ill or injured patients who,
due to adverse weather conditions or other reasons, cannot
be transferred quickly to acute care referral centers; or
(B) patients who need monitoring and observation for
a limited period of time.
(c) SPECIFICATION OF CODES.—The Secretary shall determine
the appropriate life-safety codes for such clinics that treat patients
for needs referred to in subsection (b)(2).
(d) FUNDING.—
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2289
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117 STAT. 2290 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2291
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117 STAT. 2292 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2293
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117 STAT. 2294 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2295
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117 STAT. 2296 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2297
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117 STAT. 2298 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2299
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117 STAT. 2300 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2301
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117 STAT. 2302 PUBLIC LAW 108–173—DEC. 8, 2003
Deadline. (b) REPORT.—Not later than 18 months after the date of the
enactment of this Act, the Comptroller General shall submit to
Congress a report on the study conducted under subsection (a).
The report shall include a determination whether—
(1) data from claims submitted by physicians under part
B of the medicare program indicate potential access problems
for medicare beneficiaries in certain geographic areas; and
(2) access by medicare beneficiaries to physicians’ services
may have improved, remained constant, or deteriorated over
time.
Deadlines. SEC. 605. COLLABORATIVE DEMONSTRATION-BASED REVIEW OF
42 USC 1395w–4 PHYSICIAN PRACTICE EXPENSE GEOGRAPHIC ADJUST-
note. MENT DATA.
(a) IN GENERAL.—Not later than January 1, 2005, the Secretary
shall, in collaboration with State and other appropriate organiza-
tions representing physicians, and other appropriate persons, review
and consider alternative data sources than those currently used
in establishing the geographic index for the practice expense compo-
nent under the medicare physician fee schedule under section
1848(e)(1)(A)(i) of the Social Security Act (42 U.S.C. 1395w–
4(e)(1)(A)(i)).
(b) SITES.—The Secretary shall select two physician payment
localities in which to carry out subsection (a). One locality shall
include rural areas and at least one locality shall be a statewide
locality that includes both urban and rural areas.
(c) REPORT AND RECOMMENDATIONS.—
(1) REPORT.—Not later than January 1, 2006, the Secretary
shall submit to Congress a report on the review and consider-
ation conducted under subsection (a). Such report shall include
information on the alternative developed data sources consid-
ered by the Secretary under subsection (a), including the
accuracy and validity of the data as measures of the elements
of the geographic index for practice expenses under the medi-
care physician fee schedule as well as the feasibility of using
such alternative data nationwide in lieu of current proxy data
used in such index, and the estimated impacts of using such
alternative data.
(2) RECOMMENDATIONS.—The report submitted under para-
graph (1) shall contain recommendations on which data sources
reviewed and considered under subsection (a) are appropriate
for use in calculating the geographic index for practice expenses
under the medicare physician fee schedule.
Deadlines. SEC. 606. MEDPAC REPORT ON PAYMENT FOR PHYSICIANS’ SERVICES.
42 USC 1395w–4
note. (a) PRACTICE EXPENSE COMPONENT.—Not later than 1 year
after the date of the enactment of this Act, the Medicare Payment
Advisory Commission shall submit to Congress a report on the
effect of refinements to the practice expense component of payments
for physicians’ services, after the transition to a full resource-
based payment system in 2002, under section 1848 of the Social
Security Act (42 U.S.C. 1395w–4). Such report shall examine the
following matters by physician specialty:
(1) The effect of such refinements on payment for physi-
cians’ services.
(2) The interaction of the practice expense component with
other components of and adjustments to payment for physicians’
services under such section.
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2303
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117 STAT. 2304 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2305
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117 STAT. 2306 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2307
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117 STAT. 2308 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2309
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117 STAT. 2310 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2311
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117 STAT. 2312 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2313
title XVIII of the Social Security Act for such drugs and
biologicals and the acquisition costs of such facilities for
such drugs and biologicals and which are separately billed
by end stage renal disease facilities, and
(B) estimate the rates of growth of expenditures for
such drugs and biologicals billed by such facilities.
(4) REPORTS.— Deadlines.
(A) EXISTING ESRD DRUGS.—Not later than April 1,
2004, the Inspector General shall report to the Secretary
on the study described in paragraph (2)(A).
(B) NEW ESRD DRUGS.—Not later than April 1, 2006,
the Inspector General shall report to the Secretary on
the study described in paragraph (2)(B).
(d) BASIC CASE-MIX ADJUSTED COMPOSITE RATE FOR RENAL
DIALYSIS FACILITY SERVICES.—(1) Section 1881(b) (42 U.S.C.
1395rr(b)) is amended by adding at the end the following new
paragraphs:
‘‘(12)(A) In lieu of payment under paragraph (7) beginning Effective dates.
with services furnished on January 1, 2005, the Secretary shall
establish a basic case-mix adjusted prospective payment system
for dialysis services furnished by providers of services and renal
dialysis facilities in a year to individuals in a facility and to such
individuals at home. The case-mix under such system shall be
for a limited number of patient characteristics.
‘‘(B) The system described in subparagraph (A) shall include—
‘‘(i) the services comprising the composite rate established
under paragraph (7); and
‘‘(ii) the difference between payment amounts under this
title for separately billed drugs and biologicals (including
erythropoietin) and acquisition costs of such drugs and
biologicals, as determined by the Inspector General reports
to the Secretary as required by section 623(c) of the Medicare
Prescription Drug, Improvement, and Modernization Act of
2003—
‘‘(I) beginning with 2005, for such drugs and biologicals
for which a billing code exists prior to January 1, 2004;
and
‘‘(II) beginning with 2007, for such drugs and
biologicals for which a billing code does not exist prior
to January 1, 2004,
adjusted to 2005, or 2007, respectively, as determined to be
appropriate by the Secretary.
‘‘(C)(i) In applying subparagraph (B)(ii) for 2005, such payment Applicability.
amounts under this title shall be determined using the methodology
specified in paragraph (13)(A)(i).
‘‘(ii) For 2006, the Secretary shall provide for an adjustment
to the payments under clause (i) to reflect the difference between
the payment amounts using the methodology under paragraph
(13)(A)(i) and the payment amount determined using the method-
ology applied by the Secretary under paragraph (13)(A)(iii) of such
paragraph, as estimated by the Secretary.
‘‘(D) The Secretary shall adjust the payment rates under such
system by a geographic index as the Secretary determines to be
appropriate. If the Secretary applies a geographic index under
this paragraph that differs from the index applied under paragraph
(7) the Secretary shall phase-in the application of the index under
this paragraph over a multiyear period.
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117 STAT. 2314 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2315
the bundling of payment for drugs and biologicals into the basic
case-mix adjusted payment system under this paragraph.’’.
(2) Paragraph (7) of such section is amended in the first sen-
tence by striking ‘‘The Secretary’’ and inserting ‘‘Subject to para-
graph (12), the Secretary’’.
(3) Paragraph (11)(B) of such section is amended by inserting
‘‘subject to paragraphs (12) and (13)’’ before ‘‘payment for such
item’’.
(e) DEMONSTRATION OF BUNDLED CASE-MIX ADJUSTED PAYMENT 42 USC 1395rr
SYSTEM FOR ESRD SERVICES.— note.
(1) IN GENERAL.—The Secretary shall establish a dem-
onstration project of the use of a fully case-mix adjusted pay-
ment system for end stage renal disease services under section
1881 of the Social Security Act (42 U.S.C. 1395rr) for patient
characteristics identified in the report under subsection (f) that
bundles into such payment rates amounts for—
(A) drugs and biologicals (including erythropoietin) fur-
nished to end stage renal disease patients under the medi-
care program which are separately billed by end stage
renal disease facilities (as of the date of the enactment
of this Act); and
(B) clinical laboratory tests related to such drugs and
biologicals.
(2) FACILITIES INCLUDED IN THE DEMONSTRATION.—In con-
ducting the demonstration under this subsection, the Secretary
shall ensure the participation of a sufficient number of pro-
viders of dialysis services and renal dialysis facilities, but in
no case to exceed 500. In selecting such providers and facilities,
the Secretary shall ensure that the following types of providers
are included in the demonstration:
(A) Urban providers and facilities.
(B) Rural providers and facilities.
(C) Not-for-profit providers and facilities.
(D) For-profit providers and facilities.
(E) Independent providers and facilities.
(F) Specialty providers and facilities, including pedi-
atric providers and facilities and small providers and facili-
ties.
(3) TEMPORARY ADD-ON PAYMENT FOR DIALYSIS SERVICES
FURNISHED UNDER THE DEMONSTRATION.—
(A) IN GENERAL.—During the period of the demonstra-
tion project, the Secretary shall increase payment rates
that would otherwise apply under section 1881(b) of such
Act (42 U.S.C. 1395rr(b)) by 1.6 percent for dialysis services
furnished in facilities in the demonstration site.
(B) RULES OF CONSTRUCTION.—Nothing in this sub-
section shall be construed as—
(i) as an annual update under section 1881(b) of
the Social Security Act (42 U.S.C. 1395rr(b));
(ii) as increasing the baseline for payments under
such section; or
(iii) requiring the budget neutral implementation
of the demonstration project under this subsection.
(4) 3-YEAR PERIOD.—The Secretary shall conduct the dem- Effective date.
onstration under this subsection for the 3-year period beginning
on January 1, 2006.
(5) USE OF ADVISORY BOARD.—
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117 STAT. 2316 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2317
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117 STAT. 2318 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2319
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117 STAT. 2320 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2321
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117 STAT. 2322 PUBLIC LAW 108–173—DEC. 8, 2003
days after the date of the enactment of this Act, but in no case
may the project extend beyond December 31, 2005.
(d) LIMITATION.—Under the demonstration project over the
duration of the project, the Secretary may not provide—
(1) coverage for more than 50,000 patients; and
(2) more than $500,000,000 in funding.
Deadline. (e) REPORT.—Not later than July 1, 2006, the Secretary shall
submit to Congress a report on the project. The report shall include
an evaluation of patient access to care and patient outcomes under
the project, as well as an analysis of the cost effectiveness of
the project, including an evaluation of the costs savings (if any)
to the medicare program attributable to reduced physicians’ services
and hospital outpatient departments services for administration
of the biological.
SEC. 642. EXTENSION OF COVERAGE OF INTRAVENOUS IMMUNE GLOB-
ULIN (IVIG) FOR THE TREATMENT OF PRIMARY IMMUNE
DEFICIENCY DISEASES IN THE HOME.
(a) IN GENERAL.—Section 1861 (42 U.S.C. 1395x), as amended
by sections 611(a) and 612(a) is amended—
(1) in subsection (s)(2)—
(A) by striking ‘‘and’’ at the end of subparagraph (X);
(B) by adding ‘‘and’’ at the end of subparagraph (Y);
and
(C) by adding at the end the following new subpara-
graph:
‘‘(Z) intravenous immune globulin for the treatment
of primary immune deficiency diseases in the home (as
defined in subsection (zz));’’; and
(2) by adding at the end the following new subsection:
‘‘Intravenous Immune Globulin
‘‘(zz) The term ‘intravenous immune globulin’ means an
approved pooled plasma derivative for the treatment in the patient’s
home of a patient with a diagnosed primary immune deficiency
disease, but not including items or services related to the adminis-
tration of the derivative, if a physician determines administration
of the derivative in the patient’s home is medically appropriate.’’.
(b) PAYMENT AS A DRUG OR BIOLOGICAL.—Section 1833(a)(1)(S)
(42 U.S.C. 1395l(a)(1)(S)) is amended by inserting ‘‘(including intra-
venous immune globulin (as defined in section 1861(zz)))’’ after
‘‘with respect to drugs and biologicals’’.
42 USC 1395l (c) EFFECTIVE DATE.—The amendments made by this section
note. shall apply to items furnished administered on or after January
1, 2004.
SEC. 643. MEDPAC STUDY OF COVERAGE OF SURGICAL FIRST
ASSISTING SERVICES OF CERTIFIED REGISTERED NURSE
FIRST ASSISTANTS.
(a) STUDY.—The Medicare Payment Advisory Commission (in
this section referred to as the ‘‘Commission’’) shall conduct a study
on the feasibility and advisability of providing for payment under
part B of title XVIII of the Social Security Act for surgical first
assisting services furnished by a certified registered nurse first
assistant to medicare beneficiaries.
Deadline. (b) REPORT.—Not later than January 1, 2005, the Commission
42 USC 1395x shall submit to Congress a report on the study conducted under
note.
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2323
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117 STAT. 2324 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2325
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117 STAT. 2326 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2327
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117 STAT. 2328 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2329
(a) ESTABLISHMENT.—
(1) IN GENERAL.—The Secretary shall establish a pay-for-
performance demonstration program with physicians to meet
the needs of eligible beneficiaries through the adoption and
use of health information technology and evidence-based out-
comes measures for—
(A) promoting continuity of care;
(B) helping stabilize medical conditions;
(C) preventing or minimizing acute exacerbations of
chronic conditions; and
(D) reducing adverse health outcomes, such as adverse
drug interactions related to polypharmacy.
(2) SITES.—The Secretary shall designate no more than
4 sites at which to conduct the demonstration program under
this section, of which—
(A) two shall be in an urban area;
(B) one shall be in a rural area; and
(C) one shall be in a State with a medical school
with a Department of Geriatrics that manages rural out-
reach sites and is capable of managing patients with mul-
tiple chronic conditions, one of which is dementia.
(3) DURATION.—The Secretary shall conduct the demonstra-
tion program under this section for a 3-year period.
(4) CONSULTATION.—In carrying out the demonstration pro-
gram under this section, the Secretary shall consult with pri-
vate sector and non-profit groups that are undertaking similar
efforts to improve quality and reduce avoidable hospitalizations
for chronically ill patients.
(b) PARTICIPATION.—
(1) IN GENERAL.—A physician who provides care for a min-
imum number of eligible beneficiaries (as specified by the Sec-
retary) may participate in the demonstration program under
this section if such physician agrees, to phase-in over the course
of the 3-year demonstration period and with the assistance
provided under subsection (d)(2)—
(A) the use of health information technology to manage
the clinical care of eligible beneficiaries consistent with
paragraph (3); and
(B) the electronic reporting of clinical quality and out-
comes measures in accordance with requirements estab-
lished by the Secretary under the demonstration program.
(2) SPECIAL RULE.—In the case of the sites referred to
in subparagraphs (B) and (C) of subsection (a)(2), a physician
who provides care for a minimum number of beneficiaries with
two or more chronic conditions, including dementia (as specified
by the Secretary), may participate in the program under this
section if such physician agrees to the requirements in subpara-
graphs (A) and (B) of paragraph (1).
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117 STAT. 2330 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2331
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117 STAT. 2332 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2333
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117 STAT. 2334 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2335
SEC. 702. DEMONSTRATION PROJECT TO CLARIFY THE DEFINITION 42 USC 1395x
OF HOMEBOUND. note.
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117 STAT. 2336 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2337
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117 STAT. 2338 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2339
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117 STAT. 2340 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2341
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117 STAT. 2342 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2343
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117 STAT. 2344 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2345
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117 STAT. 2346 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2347
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117 STAT. 2348 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2349
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117 STAT. 2350 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2351
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117 STAT. 2352 PUBLIC LAW 108–173—DEC. 8, 2003
SEC. 732. EXTENSION OF TREATMENT OF CERTAIN PHYSICIAN
PATHOLOGY SERVICES UNDER MEDICARE.
42 USC 1395w–4 Section 542(c) of BIPA (114 Stat. 2763A–551) is amended by
note. inserting ‘‘, and for services furnished during 2005 and 2006’’ before
the period at the end.
42 USC 1395l SEC. 733. PAYMENT FOR PANCREATIC ISLET CELL INVESTIGATIONAL
note. TRANSPLANTS FOR MEDICARE BENEFICIARIES IN CLIN-
ICAL TRIALS.
(a) CLINICAL TRIAL.—
(1) IN GENERAL.—The Secretary, acting through the
National Institute of Diabetes and Digestive and Kidney Dis-
orders, shall conduct a clinical investigation of pancreatic islet
cell transplantation which includes medicare beneficiaries.
(2) AUTHORIZATION OF APPROPRIATIONS.—There are author-
ized to be appropriated to the Secretary such sums as may
be necessary to conduct the clinical investigation under para-
graph (1).
Effective date. (b) MEDICARE PAYMENT.—Not earlier than October 1, 2004,
the Secretary shall pay for the routine costs as well as transplan-
tation and appropriate related items and services (as described
in subsection (c)) in the case of medicare beneficiaries who are
participating in a clinical trial described in subsection (a) as if
such transplantation were covered under title XVIII of such Act
and as would be paid under part A or part B of such title for
such beneficiary.
(c) SCOPE OF PAYMENT.—For purposes of subsection (b):
(1) The term ‘‘routine costs’’ means reasonable and nec-
essary routine patient care costs (as defined in the Centers
for Medicare & Medicaid Services Coverage Issues Manual,
section 30–1), including immunosuppressive drugs and other
followup care.
(2) The term ‘‘transplantation and appropriate related
items and services’’ means items and services related to the
acquisition and delivery of the pancreatic islet cell transplan-
tation, notwithstanding any national noncoverage determina-
tion contained in the Centers for Medicare & Medicaid Services
Coverage Issues Manual.
(3) The term ‘‘medicare beneficiary’’ means an individual
who is entitled to benefits under part A of title XVIII of the
Social Security Act, or enrolled under part B of such title,
or both.
(d) CONSTRUCTION.—The provisions of this section shall not
be construed—
(1) to permit payment for partial pancreatic tissue or islet
cell transplantation under title XVIII of the Social Security
Act other than payment as described in subsection (b); or
(2) as authorizing or requiring coverage or payment
conveying—
(A) benefits under part A of such title to a beneficiary
not entitled to such part A; or
(B) benefits under part B of such title to a beneficiary
not enrolled in such part B.
42 USC 1395i SEC. 734. RESTORATION OF MEDICARE TRUST FUNDS.
note.
(a) DEFINITIONS.—In this section:
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2353
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117 STAT. 2354 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2355
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117 STAT. 2356 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2357
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117 STAT. 2358 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2359
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117 STAT. 2360 PUBLIC LAW 108–173—DEC. 8, 2003
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117 STAT. 2362 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2363
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117 STAT. 2364 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2365
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117 STAT. 2366 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2367
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117 STAT. 2368 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2369
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117 STAT. 2370 PUBLIC LAW 108–173—DEC. 8, 2003
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117 STAT. 2372 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2373
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117 STAT. 2374 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2375
‘‘Supplier
‘‘(d) The term ‘supplier’ means, unless the context otherwise
requires, a physician or other practitioner, a facility, or other entity
(other than a provider of services) that furnishes items or services
under this title.’’.
SEC. 902. ISSUANCE OF REGULATIONS.
(a) REGULAR TIMELINE FOR PUBLICATION OF FINAL RULES.—
(1) IN GENERAL.—Section 1871(a) (42 U.S.C. 1395hh(a))
is amended by adding at the end the following new paragraph:
‘‘(3)(A) The Secretary, in consultation with the Director of the
Office of Management and Budget, shall establish and publish
a regular timeline for the publication of final regulations based
on the previous publication of a proposed regulation or an interim
final regulation.
‘‘(B) Such timeline may vary among different regulations based
on differences in the complexity of the regulation, the number
and scope of comments received, and other relevant factors, but
shall not be longer than 3 years except under exceptional cir-
cumstances. If the Secretary intends to vary such timeline with Federal Register,
respect to the publication of a final regulation, the Secretary shall publication.
cause to have published in the Federal Register notice of the dif-
ferent timeline by not later than the timeline previously established
with respect to such regulation. Such notice shall include a brief
explanation of the justification for such variation.
‘‘(C) In the case of interim final regulations, upon the expiration
of the regular timeline established under this paragraph for the
publication of a final regulation after opportunity for public com-
ment, the interim final regulation shall not continue in effect unless
the Secretary publishes (at the end of the regular timeline and,
if applicable, at the end of each succeeding 1-year period) a notice
of continuation of the regulation that includes an explanation of
why the regular timeline (and any subsequent 1-year extension)
was not complied with. If such a notice is published, the regular
timeline (or such timeline as previously extended under this para-
graph) for publication of the final regulation shall be treated as
having been extended for 1 additional year.
‘‘(D) The Secretary shall annually submit to Congress a report Reports.
that describes the instances in which the Secretary failed to publish
a final regulation within the applicable regular timeline under
this paragraph and that provides an explanation for such failures.’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph 42 USC 1395hh
(1) shall take effect on the date of the enactment of this Act. note.
The Secretary shall provide for an appropriate transition to
take into account the backlog of previously published interim
final regulations.
(b) LIMITATIONS ON NEW MATTER IN FINAL REGULATIONS.—
(1) IN GENERAL.—Section 1871(a) (42 U.S.C. 1395hh(a)),
as amended by subsection (a), is amended by adding at the
end the following new paragraph:
‘‘(4) If the Secretary publishes a final regulation that includes
a provision that is not a logical outgrowth of a previously published
notice of proposed rulemaking or interim final rule, such provision
shall be treated as a proposed regulation and shall not take effect
until there is the further opportunity for public comment and a
publication of the provision again as a final regulation.’’.
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2377
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117 STAT. 2378 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2379
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117 STAT. 2382 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2383
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117 STAT. 2384 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2385
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117 STAT. 2386 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2387
SEC. 912. REQUIREMENTS FOR INFORMATION SECURITY FOR MEDI-
CARE ADMINISTRATIVE CONTRACTORS.
(a) IN GENERAL.—Section 1874A, as added by section 911(a)(1),
is amended by adding at the end the following new subsection:
‘‘(e) REQUIREMENTS FOR INFORMATION SECURITY.—
‘‘(1) DEVELOPMENT OF INFORMATION SECURITY PROGRAM.—
A medicare administrative contractor that performs the func-
tions referred to in subparagraphs (A) and (B) of subsection
(a)(4) (relating to determining and making payments) shall
implement a contractor-wide information security program to
provide information security for the operation and assets of
the contractor with respect to such functions under this title.
An information security program under this paragraph shall
meet the requirements for information security programs
imposed on Federal agencies under paragraphs (1) through
(8) of section 3544(b) of title 44, United States Code (other
than the requirements under paragraphs (2)(D)(i), (5)(A), and
(5)(B) of such section).
‘‘(2) INDEPENDENT AUDITS.—
‘‘(A) PERFORMANCE OF ANNUAL EVALUATIONS.—Each
year a medicare administrative contractor that performs
the functions referred to in subparagraphs (A) and (B)
of subsection (a)(4) (relating to determining and making
payments) shall undergo an evaluation of the information
security of the contractor with respect to such functions
under this title. The evaluation shall—
‘‘(i) be performed by an entity that meets such
requirements for independence as the Inspector Gen-
eral of the Department of Health and Human Services
may establish; and
‘‘(ii) test the effectiveness of information security
control techniques of an appropriate subset of the con-
tractor’s information systems (as defined in section
3502(8) of title 44, United States Code) relating to
such functions under this title and an assessment of
compliance with the requirements of this subsection
and related information security policies, procedures,
standards and guidelines, including policies and proce-
dures as may be prescribed by the Director of the
Office of Management and Budget and applicable
information security standards promulgated under sec-
tion 11331 of title 40, United States Code.
‘‘(B) DEADLINE FOR INITIAL EVALUATION.—
‘‘(i) NEW CONTRACTORS.—In the case of a medicare
administrative contractor covered by this subsection
that has not previously performed the functions
referred to in subparagraphs (A) and (B) of subsection
(a)(4) (relating to determining and making payments)
as a fiscal intermediary or carrier under section 1816
or 1842, the first independent evaluation conducted
pursuant to subparagraph (A) shall be completed prior
to commencing such functions.
‘‘(ii) OTHER CONTRACTORS.—In the case of a medi-
care administrative contractor covered by this sub-
section that is not described in clause (i), the first
independent evaluation conducted pursuant to
subparagraph (A) shall be completed within 1 year
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2389
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117 STAT. 2390 PUBLIC LAW 108–173—DEC. 8, 2003
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117 STAT. 2392 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2393
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117 STAT. 2394 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2395
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117 STAT. 2396 PUBLIC LAW 108–173—DEC. 8, 2003
42 USC 1395b–7 SEC. 925. INCLUSION OF ADDITIONAL INFORMATION IN NOTICES TO
note. BENEFICIARIES ABOUT SKILLED NURSING FACILITY
BENEFITS.
(a) IN GENERAL.—The Secretary shall provide that in medicare
beneficiary notices provided (under section 1806(a) of the Social
Security Act, 42 U.S.C. 1395b–7(a)) with respect to the provision
of post-hospital extended care services under part A of title XVIII
of the Social Security Act, there shall be included information
on the number of days of coverage of such services remaining
under such part for the medicare beneficiary and spell of illness
involved.
(b) EFFECTIVE DATE.—Subsection (a) shall apply to notices pro-
vided during calendar quarters beginning more than 6 months
after the date of the enactment of this Act.
42 USC 1395x SEC. 926. INFORMATION ON MEDICARE-CERTIFIED SKILLED NURSING
note. FACILITIES IN HOSPITAL DISCHARGE PLANS.
(a) AVAILABILITY OF DATA.—The Secretary shall publicly pro-
vide information that enables hospital discharge planners, medicare
beneficiaries, and the public to identify skilled nursing facilities
that are participating in the medicare program.
(b) INCLUSION OF INFORMATION IN CERTAIN HOSPITAL DIS-
CHARGE PLANS.—
(1) IN GENERAL.—Section 1861(ee)(2)(D) (42 U.S.C.
1395x(ee)(2)(D)) is amended—
(A) by striking ‘‘hospice services’’ and inserting ‘‘hospice
care and post-hospital extended care services’’; and
(B) by inserting before the period at the end the fol-
lowing: ‘‘and, in the case of individuals who are likely
to need post-hospital extended care services, the avail-
ability of such services through facilities that participate
in the program under this title and that serve the area
in which the patient resides’’.
42 USC 1395x (2) EFFECTIVE DATE.—The amendments made by paragraph
note. (1) shall apply to discharge plans made on or after such date
as the Secretary shall specify, but not later than 6 months
after the date the Secretary provides for availability of informa-
tion under subsection (a).
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117 STAT. 2398 PUBLIC LAW 108–173—DEC. 8, 2003
under section 1869 of the Social Security Act (42 U.S.C. 1395ff)
(as amended by this Act).
Reports. (4) GAO EVALUATION.—The Comptroller General of the
United States shall evaluate the plan and, not later than the
date that is 6 months after the date on which the plan is
received by the Comptroller General, shall submit to Congress
a report on such evaluation.
(b) TRANSFER OF ADJUDICATION AUTHORITY.—
(1) IN GENERAL.—Not earlier than July 1, 2005, and not
later than October 1, 2005, the Commissioner of Social Security
and the Secretary shall implement the transition plan under
subsection (a) and transfer the administrative law judge func-
tions described in such subsection from the Social Security
Administration to the Secretary.
(2) ASSURING INDEPENDENCE OF JUDGES.—The Secretary
shall assure the independence of administrative law judges
performing the administrative law judge functions transferred
under paragraph (1) from the Centers for Medicare & Medicaid
Services and its contractors. In order to assure such independ-
ence, the Secretary shall place such judges in an administrative
office that is organizationally and functionally separate from
such Centers. Such judges shall report to, and be under the
general supervision of, the Secretary, but shall not report to,
or be subject to supervision by, another officer of the Depart-
ment of Health and Human Services.
(3) GEOGRAPHIC DISTRIBUTION.—The Secretary shall pro-
vide for an appropriate geographic distribution of administra-
tive law judges performing the administrative law judge func-
tions transferred under paragraph (1) throughout the United
States to ensure timely access to such judges.
(4) HIRING AUTHORITY.—Subject to the amounts provided
in advance in appropriations Acts, the Secretary shall have
authority to hire administrative law judges to hear such cases,
taking into consideration those judges with expertise in han-
dling medicare appeals and in a manner consistent with para-
graph (3), and to hire support staff for such judges.
(5) FINANCING.—Amounts payable under law to the
Commissioner for administrative law judges performing the
administrative law judge functions transferred under paragraph
(1) from the Federal Hospital Insurance Trust Fund and the
Federal Supplementary Medical Insurance Trust Fund shall
become payable to the Secretary for the functions so trans-
ferred.
(6) SHARED RESOURCES.—The Secretary shall enter into
such arrangements with the Commissioner as may be appro-
priate with respect to transferred functions of administrative
law judges to share office space, support staff, and other
resources, with appropriate reimbursement from the Trust
Funds described in paragraph (5).
Appropriation (c) INCREASED FINANCIAL SUPPORT.—In addition to any
authorization. amounts otherwise appropriated, to ensure timely action on appeals
before administrative law judges and the Departmental Appeals
Board consistent with section 1869 of the Social Security Act (42
U.S.C. 1395ff) (as amended by this Act), there are authorized to
be appropriated (in appropriate part from the Federal Hospital
Insurance Trust Fund, established under section 1817 of the Social
Security Act (42 U.S.C. 1395i), and the Federal Supplementary
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117 STAT. 2400 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2401
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117 STAT. 2402 PUBLIC LAW 108–173—DEC. 8, 2003
(and their staffs) and the appellate level staff at the Depart-
mental Appeals Board of the Department of Health and Human
Services and educating such judges and staffs on long-term
care issues.
42 USC 1395i–3 (d) EFFECTIVE DATE.—The amendments made by this section
note. shall apply to appeals filed on or after October 1, 2004.
SEC. 933. REVISIONS TO MEDICARE APPEALS PROCESS.
(a) REQUIRING FULL AND EARLY PRESENTATION OF EVIDENCE.—
(1) IN GENERAL.—Section 1869(b) (42 U.S.C. 1395ff(b)), as
amended by section 932(a), is further amended by adding at
the end the following new paragraph:
‘‘(3) REQUIRING FULL AND EARLY PRESENTATION OF EVI-
DENCE BY PROVIDERS.—A provider of services or supplier may
not introduce evidence in any appeal under this section that
was not presented at the reconsideration conducted by the
qualified independent contractor under subsection (c), unless
there is good cause which precluded the introduction of such
evidence at or before that reconsideration.’’.
42 USC 1395ff (2) EFFECTIVE DATE.—The amendment made by paragraph
note. (1) shall take effect on October 1, 2004.
(b) USE OF PATIENTS’ MEDICAL RECORDS.—Section
1869(c)(3)(B)(i) (42 U.S.C. 1395ff(c)(3)(B)(i)) is amended by inserting
‘‘(including the medical records of the individual involved)’’ after
‘‘clinical experience’’.
(c) NOTICE REQUIREMENTS FOR MEDICARE APPEALS.—
(1) INITIAL DETERMINATIONS AND REDETERMINATIONS.—Sec-
tion 1869(a) (42 U.S.C. 1395ff(a)) is amended by adding at
the end the following new paragraphs:
‘‘(4) REQUIREMENTS OF NOTICE OF DETERMINATIONS.—With
respect to an initial determination insofar as it results in a
denial of a claim for benefits—
‘‘(A) the written notice on the determination shall
include—
‘‘(i) the reasons for the determination, including
whether a local medical review policy or a local cov-
erage determination was used;
‘‘(ii) the procedures for obtaining additional
information concerning the determination, including
the information described in subparagraph (B); and
‘‘(iii) notification of the right to seek a redetermina-
tion or otherwise appeal the determination and instruc-
tions on how to initiate such a redetermination under
this section;
‘‘(B) such written notice shall be provided in printed
form and written in a manner calculated to be understood
by the individual entitled to benefits under part A or
enrolled under part B, or both; and
‘‘(C) the individual provided such written notice may
obtain, upon request, information on the specific provision
of the policy, manual, or regulation used in making the
redetermination.
‘‘(5) REQUIREMENTS OF NOTICE OF REDETERMINATIONS.—
With respect to a redetermination insofar as it results in a
denial of a claim for benefits—
‘‘(A) the written notice on the redetermination shall
include—
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117 STAT. 2404 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2405
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117 STAT. 2406 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2407
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117 STAT. 2408 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2409
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117 STAT. 2410 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2411
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117 STAT. 2412 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2413
SEC. 938. PRIOR DETERMINATION PROCESS FOR CERTAIN ITEMS AND
SERVICES; ADVANCE BENEFICIARY NOTICES.
(a) IN GENERAL.—Section 1869 (42 U.S.C. 1395ff(b)), as
amended by section 933(d)(2)(B), is further amended by adding
at the end the following new subsection:
‘‘(h) PRIOR DETERMINATION PROCESS FOR CERTAIN ITEMS AND
SERVICES.—
‘‘(1) ESTABLISHMENT OF PROCESS.—
‘‘(A) IN GENERAL.—With respect to a medicare adminis-
trative contractor that has a contract under section 1874A
that provides for making payments under this title with
respect to physicians’ services (as defined in section
1848(j)(3)), the Secretary shall establish a prior determina-
tion process that meets the requirements of this subsection
and that shall be applied by such contractor in the case
of eligible requesters.
‘‘(B) ELIGIBLE REQUESTER.—For purposes of this sub-
section, each of the following shall be an eligible requester:
‘‘(i) A participating physician, but only with respect
to physicians’ services to be furnished to an individual
who is entitled to benefits under this title and who
has consented to the physician making the request
under this subsection for those physicians’ services.
‘‘(ii) An individual entitled to benefits under this
title, but only with respect to a physicians’ service
for which the individual receives, from a physician,
an advance beneficiary notice under section 1879(a).
‘‘(2) SECRETARIAL FLEXIBILITY.—The Secretary shall estab- Regulations.
lish by regulation reasonable limits on the physicians’ services
for which a prior determination of coverage may be requested
under this subsection. In establishing such limits, the Secretary
may consider the dollar amount involved with respect to the
physicians’ service, administrative costs and burdens, and other
relevant factors.
‘‘(3) REQUEST FOR PRIOR DETERMINATION.—
‘‘(A) IN GENERAL.—Subject to paragraph (2), under the
process established under this subsection an eligible
requester may submit to the contractor a request for a
determination, before the furnishing of a physicians’
service, as to whether the physicians’ service is covered
under this title consistent with the applicable requirements
of section 1862(a)(1)(A) (relating to medical necessity).
‘‘(B) ACCOMPANYING DOCUMENTATION.—The Secretary
may require that the request be accompanied by a descrip-
tion of the physicians’ service, supporting documentation
relating to the medical necessity for the physicians’ service,
and any other appropriate documentation. In the case of
a request submitted by an eligible requester who is
described in paragraph (1)(B)(ii), the Secretary may require
that the request also be accompanied by a copy of the
advance beneficiary notice involved.
‘‘(4) RESPONSE TO REQUEST.—
‘‘(A) IN GENERAL.—Under such process, the contractor Notification.
shall provide the eligible requester with written notice
of a determination as to whether—
‘‘(i) the physicians’ service is so covered;
‘‘(ii) the physicians’ service is not so covered; or
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2415
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117 STAT. 2416 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2417
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117 STAT. 2418 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2419
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117 STAT. 2420 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2421
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117 STAT. 2422 PUBLIC LAW 108–173—DEC. 8, 2003
Public ‘‘(ii) make available to the public the data (other than
information. 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).’’.
(c) GAO STUDY ON IMPROVEMENTS IN EXTERNAL DATA COLLEC-
TION FOR USE IN THE MEDICARE INPATIENT PAYMENT SYSTEM.—
(1) STUDY.—The Comptroller General of the United States
shall conduct a study that analyzes which external data can
be collected in a shorter timeframe by the Centers for Medicare
& Medicaid Services for use in computing payments for
inpatient hospital services. The study may include an evalua-
tion of the feasibility and appropriateness of using quarterly
samples or special surveys or any other methods. The study
shall include an analysis of whether other executive agencies,
such as the Bureau of Labor Statistics in the Department
of Commerce, are best suited to collect this information.
Deadline. (2) REPORT.—By not later than October 1, 2004, the Comp-
troller General shall submit a report to Congress on the study
under paragraph (1).
42 USC 1395y SEC. 943. TREATMENT OF HOSPITALS FOR CERTAIN SERVICES UNDER
note. MEDICARE SECONDARY PAYOR (MSP) PROVISIONS.
(a) IN GENERAL.—The Secretary shall not require a hospital
(including a critical access hospital) to ask questions (or obtain
information) relating to the application of section 1862(b) of the
Social Security Act (relating to medicare secondary payor provisions)
in the case of reference laboratory services described in subsection
(b), if the Secretary does not impose such requirement in the case
of such services furnished by an independent laboratory.
(b) REFERENCE LABORATORY SERVICES DESCRIBED.—Reference
laboratory services described in this subsection are clinical labora-
tory diagnostic tests (or the interpretation of such tests, or both)
furnished without a face-to-face encounter between the individual
entitled to benefits under part A or enrolled under part B, or
both, and the hospital involved and in which the hospital submits
a claim only for such test or interpretation.
SEC. 944. EMTALA IMPROVEMENTS.
(a) PAYMENT FOR EMTALA-MANDATED SCREENING AND STA-
BILIZATION SERVICES.—
(1) IN GENERAL.—Section 1862 (42 U.S.C. 1395y) is
amended by inserting after subsection (c) the following new
subsection:
‘‘(d) For purposes of subsection (a)(1)(A), in the case of any
item or service that is required to be provided pursuant to section
1867 to an individual who is entitled to benefits under this title,
determinations as to whether the item or service is reasonable
and necessary shall be made on the basis of the information avail-
able to the treating physician or practitioner (including the patient’s
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2423
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117 STAT. 2424 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2425
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117 STAT. 2426 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2427
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117 STAT. 2428 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2429
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117 STAT. 2430 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2431
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117 STAT. 2432 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2433
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117 STAT. 2434 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2435
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117 STAT. 2436 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2437
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117 STAT. 2438 PUBLIC LAW 108–173—DEC. 8, 2003
42 USC 299b–7. SEC. 1013. RESEARCH ON OUTCOMES OF HEALTH CARE ITEMS AND
SERVICES.
(a) RESEARCH, DEMONSTRATIONS, AND EVALUATIONS.—
(1) IMPROVEMENT OF EFFECTIVENESS AND EFFICIENCY.—
(A) IN GENERAL.—To improve the quality, effectiveness,
and efficiency of health care delivered pursuant to the
programs established under titles XVIII, XIX, and XXI
of the Social Security Act, the Secretary acting through
the Director of the Agency for Healthcare Research and
Quality (in this section referred to as the ‘‘Director’’), shall
conduct and support research to meet the priorities and
requests for scientific evidence and information identified
by such programs with respect to—
(i) the outcomes, comparative clinical effectiveness,
and appropriateness of health care items and services
(including prescription drugs); and
(ii) strategies for improving the efficiency and
effectiveness of such programs, including the ways in
which such items and services are organized, managed,
and delivered under such programs.
(B) SPECIFICATION.—To respond to priorities and
information requests in subparagraph (A), the Secretary
may conduct or support, by grant, contract, or interagency
agreement, research, demonstrations, evaluations, tech-
nology assessments, or other activities, including the provi-
sion of technical assistance, scientific expertise, or methodo-
logical assistance.
(2) PRIORITIES.—
(A) IN GENERAL.—The Secretary shall establish a
process to develop priorities that will guide the research,
demonstrations, and evaluation activities undertaken
pursuant to this section.
(B) INITIAL LIST.—Not later than 6 months after the
date of the enactment of this Act, the Secretary shall
establish an initial list of priorities for research related
to health care items and services (including prescription
drugs).
(C) PROCESS.—In carrying out subparagraph (A), the
Secretary—
(i) shall ensure that there is broad and ongoing
consultation with relevant stakeholders in identifying
the highest priorities for research, demonstrations, and
evaluations to support and improve the programs
established under titles XVIII, XIX, and XXI of the
Social Security Act;
(ii) may include health care items and services
which impose a high cost on such programs, as well
as those which may be underutilized or overutilized
and which may significantly improve the prevention,
treatment, or cure of diseases and conditions (including
chronic conditions) which impose high direct or indirect
costs on patients or society; and
(iii) shall ensure that the research and activities
undertaken pursuant to this section are responsive
to the specified priorities and are conducted in a timely
manner.
(3) EVALUATION AND SYNTHESIS OF SCIENTIFIC EVIDENCE.—
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2439
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117 STAT. 2440 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2441
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117 STAT. 2442 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2443
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117 STAT. 2444 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2445
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117 STAT. 2446 PUBLIC LAW 108–173—DEC. 8, 2003
of the Working Group used to carry out its duties under this
section.
(n) SUNSET OF WORKING GROUP.—The Working Group shall
terminate on the date that is 2 years after the date on which
all the members of the Working Group have been appointed under
subsection (d)(1) and appropriations are first made available to
carry out this section.
Reports. (o) ADMINISTRATION REVIEW AND COMMENTS.—Not later than
Deadline. 45 days after receiving the final recommendations of the Working
Group under subsection (i), the President shall submit a report
to Congress which shall contain—
(1) additional views and comments on such recommenda-
tions; and
(2) recommendations for such legislation and administra-
tive actions as the President considers appropriate.
(p) REQUIRED CONGRESSIONAL ACTION.—Not later than 45 days
after receiving the report submitted by the President under sub-
section (o), each committee of jurisdiction of Congress, the Com-
mittee on Finance of the Senate, the Committee on Health, Edu-
cation, Labor, and Pensions of the Senate, the Committee on Ways
and Means of the House of Representatives, the Committee on
Energy and Commerce of the House of Representatives, Committee
on Education and the Workforce of the House of Representatives,
shall hold at least 1 hearing on such report and on the final
recommendations of the Working Group submitted under subsection
(i).
(q) AUTHORIZATION OF APPROPRIATIONS.—
(1) IN GENERAL.—There are authorized to be appropriated
to carry out this section, other than subsection (h)(3), $3,000,000
for each of fiscal years 2005 and 2006.
(2) HEALTH REPORT TO THE AMERICAN PEOPLE.—There are
authorized to be appropriated for the preparation and dissemi-
nation of the Health Report to the American People described
in subsection (h)(3), such sums as may be necessary for the
fiscal year in which the report is required to be submitted.
SEC. 1015. FUNDING START-UP ADMINISTRATIVE COSTS FOR MEDI-
CARE REFORM.
(a) IN GENERAL.—There are appropriated to carry out this
Act (including the amendments made by this Act), to be transferred
from the Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund—
(1) not to exceed $1,000,000,000 for the Centers for Medi-
care & Medicaid Services; and
(2) not to exceed $500,000,000 for the Social Security
Administration.
(b) AVAILABILITY.—Amounts provided under subsection (a) shall
remain available until September 30, 2005.
(c) APPLICATION.—From amounts provided under subsection
(a)(2), the Social Security Administration may reimburse the
Internal Revenue Service for expenses in carrying out this Act
(and the amendments made by this Act).
(d) TRANSFER.—The President may transfer amounts provided
under subsection (a) between the Centers for Medicare & Medicaid
Services and the Social Security Administration. Notice of such
transfers shall be transmitted within 15 days to the authorizing
committees of the House of Representatives and of the Senate.
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2447
SEC. 1016. HEALTH CARE INFRASTRUCTURE IMPROVEMENT PROGRAM.
Title XVIII is amended by adding at the end the following
new section:
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117 STAT. 2448 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2449
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117 STAT. 2450 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2451
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117 STAT. 2452 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2453
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117 STAT. 2454 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2455
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117 STAT. 2456 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2457
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117 STAT. 2458 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2459
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117 STAT. 2460 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2461
between the drug and the listed drug in safety and therapeutic
effect.’’.
(b) EFFECT OF AMENDMENT.—The amendment made by sub- 21 USC 355 note.
section (a) does not alter the standards for approval of drugs under
section 505(j) of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 355(j)).
SEC. 1104. CONFORMING AMENDMENTS.
Section 505A of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 355a) is amended—
(1) in subsections (b)(1)(A)(i) and (c)(1)(A)(i), by striking
‘‘(j)(5)(D)(ii)’’ each place it appears and inserting ‘‘(j)(5)(F)(ii)’’;
(2) in subsections (b)(1)(A)(ii) and (c)(1)(A)(ii), by striking
‘‘(j)(5)(D)’’ each place it appears and inserting ‘‘(j)(5)(F)’’; and
(3) in subsections (e) and (l), by striking ‘‘505(j)(5)(D)’’ each
place it appears and inserting ‘‘505(j)(5)(F)’’.
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117 STAT. 2462 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2463
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117 STAT. 2464 PUBLIC LAW 108–173—DEC. 8, 2003
21 USC 355 note. SEC. 1118. EFFECTIVE DATE.
This subtitle shall—
(1) take effect 30 days after the date of the enactment
of this Act; and
(2) shall apply to agreements described in section 1112
that are entered into 30 days after the date of the enactment
of this Act.
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2465
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117 STAT. 2466 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2467
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117 STAT. 2468 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2469
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117 STAT. 2470 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2471
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117 STAT. 2472 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2473
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117 STAT. 2474 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2475
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117 STAT. 2476 PUBLIC LAW 108–173—DEC. 8, 2003
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2477
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117 STAT. 2478 PUBLIC LAW 108–173—DEC. 8, 2003
‘‘Sec. 4980G. Failure of employer to make comparable health savings account con-
tributions.’’.
26 USC 4973. (e) TAX ON EXCESS CONTRIBUTIONS.—Section 4973 of such Code
(relating to tax on excess contributions to certain tax-favored
accounts and annuities) is amended—
(1) by striking ‘‘or’’ at the end of subsection (a)(3), by
inserting ‘‘or’’ at the end of subsection (a)(4), and by inserting
after subsection (a)(4) the following new paragraph:
‘‘(5) a health savings account (within the meaning of section
223(d)),’’, and
(2) by adding at the end the following new subsection:
‘‘(g) EXCESS CONTRIBUTIONS TO HEALTH SAVINGS ACCOUNTS.—
For purposes of this section, in the case of health savings accounts
(within the meaning of section 223(d)), the term ‘excess contribu-
tions’ means the sum of—
‘‘(1) the aggregate amount contributed for the taxable year
to the accounts (other than a rollover contribution described
in section 220(f)(5) or 223(f)(5)) which is neither excludable
from gross income under section 106(d) nor allowable as a
deduction under section 223 for such year, and
‘‘(2) the amount determined under this subsection for the
preceding taxable year, reduced by the sum of—
‘‘(A) the distributions out of the accounts which were
included in gross income under section 223(f)(2), and
‘‘(B) the excess (if any) of—
‘‘(i) the maximum amount allowable as a deduction
under section 223(b) (determined without regard to
section 106(d)) for the taxable year, over
‘‘(ii) the amount contributed to the accounts for
the taxable year.
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PUBLIC LAW 108–173—DEC. 8, 2003 117 STAT. 2479
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117 STAT. 2480 PUBLIC LAW 108–173—DEC. 8, 2003
SEC. 1202. EXCLUSION FROM GROSS INCOME OF CERTAIN FEDERAL
SUBSIDIES FOR PRESCRIPTION DRUG PLANS.
(a) IN GENERAL.—Part III of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 is amended by inserting after
section 139 the following new section:
26 USC 139A. ‘‘SEC. 139A. FEDERAL SUBSIDIES FOR PRESCRIPTION DRUG PLANS.
‘‘Gross income shall not include any special subsidy payment
received under section 1860D–22 of the Social Security Act. This
section shall not be taken into account for purposes of determining
whether any deduction is allowable with respect to any cost taken
into account in determining such payment.’’.
(b) ALTERNATIVE MINIMUM TAX RELIEF.—Section 56(g)(4)(B) of
26 USC 56. such Code is amended by inserting ‘‘or 139A’’ after ‘‘section 114’’.
(c) CONFORMING AMENDMENT.—The table of sections for part
III of subchapter B of chapter 1 of such Code is amended by
inserting after the item relating to section 139 the following new
item:
‘‘Sec. 139A. Federal subsidies for prescription drug plans.’’.
26 USC 56 note. (d) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years ending after the date of the enactment
of this Act.
SEC. 1203. EXCEPTION TO INFORMATION REPORTING REQUIREMENTS
RELATED TO CERTAIN HEALTH ARRANGEMENTS.
(a) IN GENERAL.—Section 6041 of the Internal Revenue Code
26 USC 6041. of 1986 (relating to information at source) is amended by adding
at the end the following new subsection:
‘‘(f) SECTION DOES NOT APPLY TO CERTAIN HEALTH ARRANGE-
MENTS.—This section shall not apply to any payment for medical
care (as defined in section 213(d)) made under—
‘‘(1) a flexible spending arrangement (as defined in section
106(c)(2)), or
‘‘(2) a health reimbursement arrangement which is treated
as employer-provided coverage under an accident or health
plan for purposes of section 106.’’.
26 USC 6041 (b) EFFECTIVE DATE.—The amendment made by this section
note. shall apply to payments made after December 31, 2002.
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