P.L. 110-275: The Medicare Improvements for Patients and Providers Act of 2008

P.L. 110-275: The Medicare Improvements for
Patients and Providers Act of 2008
July 23, 2008
Hinda Chaikind, Coordinator
Jennifer O’Sullivan, Sibyl Tilson, Paulette C. Morgan,
Holly Stockdale, Jim Hahn, Gretchen A. Jacobson,
Richard Rimkunas, Evelyne P. Baumrucker, April Grady,
Jean Hearne, Elicia J. Herz, Julie Stone,
Gene Falk, and Emilie Stoltzfus
Domestic Social Policy Division



P.L. 110-275: The Medicare Improvements for Patients
and Providers Act of 2008
Summary
P.L. 110-275, the Medicare Improvements for Patients and Providers Act
(MIPPA), is designed to avert a statutory Medicare reduction in payments for
physicians and make other changes. MIPPA freezes physician fees at the June 2008
level until January 2009. In January 2009, fees will increase by 1.1%. In 2010, the
statutory reduction will again apply, resulting in a 21% reduction in Medicare
physician fees, according to the Congressional Budget Office (CBO). CBO estimates
that the physician payments provision costs $9.4 billion (over the 2008-2010 period).
Other provisions in the Act will offset these and other costs, so that in total, the
provisions in MIPPA will reduce deficits (or increase surpluses) by an estimated $0.1
billion over the 2008-2013 period and by less than an estimated $50 million over the
2008-2018 period. The main source for these offsets comes from reductions in
spending for (1) the Medicare Advantage program and (2) the physician assistance
and quality initiative (PAQI) fund. The Act also makes further changes to Medicare,
Medicaid, and other programs under the Social Security Act. This report provides
a description of the provisions of MIPPA.
MIPPA became law on July 15, 2008, after Congress overrode a presidential
veto on H.R. 6331. The bill was originally passed by the House on June 24, 2008,
under suspension of the rules by a vote of 355 to 59. On July 9, 2008, the Senate
passed the bill without amendment by unanimous consent and the bill was cleared
for the White House. On July 15, 2008, President Bush vetoed the bill. On the same
day, the House voted 383-41 to override the veto, and the Senate later voted 70-26
to override the veto.



Contents
In troduction ......................................................1
A Brief Description of the Current Programs............................2
Medicare ....................................................2
Medicaid ....................................................3
Summary of Provisions in P.L. 110-275................................3
Title I - Medicare..............................................3
Subtitle A - Beneficiary Improvements.............................3
Part I - Prevention, Mental Health, and Marketing...................3
Section 101. Improvements to Coverage of Preventive Services.....3
Section 102. Elimination of Discriminatory Copayment Rates for
Medicare Outpatient Psychiatric Services..................4
Section 103. Prohibitions and Limitations on Certain Sales and
Marketing Activities under Medicare Advantage Plans
and Prescription Drug Plans..............................4
Section 104. Improvements to the Medigap Program..............4
Part II - Low-Income Programs..................................5
Section 111. Extension of Qualifying Individual (QI) Program......5
Section 112. Application of Full Low Income Subsidy (LIS) Assets
Test under Medicare Savings Program.....................5
Section 113. Eliminating Barriers to Enrollment.................6
Section 114. Elimination of Medicare Part D Late Enrollment
Penalties Paid by Subsidy Eligible Individuals...............6
Section 115. Eliminating Application of Estate Recovery..........6
Section 116. Exemptions from Income and Resources for
Determination of Eligibility for Low-Income Subsidy.........7
Section 117. Judicial Review of Decisions of the Commissioner of
Social Security under the Medicare Part D Low-Income
Subsidy Program......................................7
Section 118. Translation of Model Form.......................7
Section 119. Medicare Enrollment Assistance...................7
Subtitle B - Provisions Relating to Part A...........................8
Section 121. Expansion and Extension of the Medicare Rural
Hospital Flexibility Program.............................8
Section 122. Rebasing for Sole Community Hospitals.............9
Section 123. Demonstration Project on Community Integration
Models in Certain Rural Counties.........................9
Section 124. Extension of the Reclassification of Certain Hospitals.10
Section 125. Revocation of Unique Deeming Authority of the
Joint Commission....................................10
Subtitle C - Provisions Relating to Part B..........................10
Part I - Physicians’ Services....................................10
Section 131. Physician Payment, Efficiency, and Quality
Improvements .......................................10
Section 132. Incentives for Electronic Prescribing...............12
Section 133. Expanding Access to Primary Care Services.........12



Geographic Adjustment under the Medicare Physician
Fee Schedule........................................12
Section 135. Imaging Provisions............................13
Section 136. Extension of Treatment of Certain Physician
Pathology Services under Medicare.......................13
Section 137. Accommodation of Physicians Ordered to Active Duty
in the Armed Services.................................14
Section 138. Adjustment for Medicare Mental Health Services.....14
Section 139. Improvements for Medicare Anesthesia Teaching
Programs ...........................................14
Part II - Other Payment and Coverage Improvements................14
Section 141. Extension of Exceptions Process for Medicare
Therapy Caps........................................14
Section 142. Extension of Payment Rule for Brachytherapy
and Therapeutic Radiopharmaceuticals....................14
Section 143. Speech-Language Pathology Services..............15
Section 144. Payment and Coverage Improvements for Patients
with Chronic Obstructive Pulmonary Disease and Other
Conditions ..........................................15
Section 145. Clinical Laboratory Tests........................15
Section 146. Improved Access to Ambulance Services...........15
Section 147. Extension and Expansion of the Medicare Hold Harmless
Provision under the Prospective Payment System for
Hospital Outpatient (HOPD) Services for Certain Hospitals...15
Section 148. Clarification of Payment for Clinical Laboratory
Tests Furnished by Critical Access Hospitals...............16
Section 149. Adding Certain Entities as Originating Sites for
Payment of Telehealth Services..........................16
Section 150. MedPAC Study and Report on Improving Chronic
Care Demonstration Programs...........................16
Section 151. Increase of FQHC Payment Limits................16
Section 152. Kidney Disease Education and Awareness Provisions.17
Section 153. Renal Dialysis Provisions.......................17
Section 154. Delay in and Reform of Medicare DMEPOS
Competitive Acquisition Program........................18
Subtitle D - Provisions Relating to Part C..........................20
Section 161. Phase-Out of Indirect Medical Education (IME)......20
Section 162. Revisions to Requirements for Medicare Advantage
Private Fee-for-Service (PFFS) Plans.....................20
Section 163. Revisions to Quality Improvement Programs........20
Section 164. Revisions Relating to Specialized Medicare Advantage
Plans for Special Needs Individuals.......................21
Section 165. Limitation on Out-Of-Pocket Costs for Dual Eligibles
and Qualified Medicare Beneficiaries Enrolled in a
Specialized Medicare Advantage Plan for Special
Needs Individuals.....................................21
Section 166. Adjustment to the Medicare Advantage Stabilization
Fund ...............................................22
Section 167. Access to Medicare Reasonable Cost Contract Plans..22
Section 168. MedPAC Study and Report on Quality Measures.....22



Advantage Payments..................................22
Subtitle E - Provisions Relating to Part D..........................23
Part I - Improving Pharmacy Access..............................23
Section 171. Prompt Payment by Prescription Drug Plans and
MA-PD Plans under Part D.............................23
Section 172. Submission of Claims by Pharmacies Located in
or Contracting with Long-Term Care Pharmacies............23
Section 173. Regular Update of Prescription Drug Pricing
Standard ............................................24
Part II - Other Provisions......................................24
Section 175. Inclusion of Barbiturates and Benzodiazepines as
Covered Part D Drugs.................................24
Section 176. Formulary Requirements With Respect to Certain
Categories or Classes of Drugs..........................24
Subtitle F - Other Provisions....................................25
Section 181. Use of Part D Data.............................25
Section 182. Revision of Definition of Medically Accepted Indication
for Drugs...........................................25
Section 183. Contract with a Consensus-Based Entity
Regarding Performance Measurement.....................25
Section 184. Cost-Sharing For Clinical Trials..................26
Section 185. Addressing Health Care Disparities................26
Section 186. Demonstration to Improve Care to Previously
Uninsured ...........................................26
Section 187. Office of the Inspector General Report on Compliance
with and Enforcement of National Standards on Culturally
and Linguistically Appropriate Services (CLAS) in Medicare..27
Section 188. Medicare Improvement Funding..................27
Section 189. Inclusion of Medicare Providers and Suppliers in
Federal Payment Levy and Administrative Offset Program....28
Title II - Medicaid............................................28
Section 201. Extension of Transitional Medical Assistance
(TMA) and Abstinence Education Program................28
Section 202. Medicaid DSH Extension.......................28
Section 203. Pharmacy Reimbursement under Medicaid..........29
Section 204. Review of Administrative Claim Determinations.....29
Section 205. County Medicaid Health Insuring Organizations.....30
Title III - Miscellaneous........................................30
Section 301. Extension of TANF Supplemental Grants...........30
Section 302. 70 Percent Federal Matching for Foster Care and
Adoption Assistance for the District of Columbia............30
Section 303. Extension of Special Diabetes Grant Programs.......31
Section 304. IOM Reports on Best Practices for Conducting
Systematic Reviews of Clinical Effectiveness Research
and for Developing Clinical Protocols.....................31



P.L. 110-275: The Medicare Improvements
for Patients and Providers Act of 2008
Introduction
P.L. 110-275, the Medicare Improvements for Patients and Providers Act
(MIPPA) became law on July 15, 2008, after Congress overrode a Presidential veto
on H.R. 6331. The bill was originally passed by the House on June 24, 2008, under
suspension of the rules by a vote of 355 to 59. On July 9, 2008, the Senate passed
the bill without amendment by unanimous consent after approval was given for
cloture by a vote of 69-30. The bill was cleared for the White House. On July 15,
2008 President Bush vetoed the bill. On the same day, the House voted 383-41 to
override the veto and the Senate later voted 70-26 to override the veto.
MIPPA is designed to avert a statutory Medicare reduction in payments for
physicians and make other changes. MIPPA freezes physician fees at the June 2008
level until January 2009. In January 2009, fees will increase by 1.1%. In 2010, the
statutory reduction will again apply, resulting in a 21% reduction in Medicare
physician payment levels, according to the Congressional Budget Office (CBO).
CBO estimates that the physician payments provision cost $9.4 billion (over the
2008-2010 period).1 Other provisions in the Act will offset these and other costs, so
that in total, the provisions in MIPPA will reduce deficits (or increase surpluses) by
an estimated $0.1 billion over the 2008-2013 period and by less than an estimated
$50 million over the 2008-2018 period. The main source for these offsets comes
from reductions in spending for (1) the Medicare Advantage program, and (2) the
physician assistance and quality initiative (PAQI) fund.
The Act also makes further changes to Medicare, Medicaid, and other programs
under the Social Security Act. For example, MIPPA (1) adds “additional preventive
services” to the list of Medicare-covered preventive services; (2) increases the
percentage that Medicare generally pays for mental health services and in 2014,
outpatient psychiatric services will be paid on the same basis as other Part B services;
(3) increases the assets tests applicable under the Medicare Savings program (MSP)
to those applicable under the low-income subsidy program under the Medicare Part
D prescription drug program; (4) repeals the current law requirement for competitive
bidding for clinical laboratory services; (5) makes changes to low-income programs
for Medicare beneficiaries, as well as Medicaid; and (6) makes changes to Medicare
provisions for hospitals, renal dialysis coverage, and Medicare prescription drug


1 The CBO cost estimate for H.R. 6331 as enacted as P.L. 110-275) is available at
[http://www.cbo.gov/ftpdocs/95xx/doc9595/hr6331pgo.pdf]. The total budgetary effect is
estimated in the memorandum of the cost estimate, which assumed passage of the
Supplemental Appropriations Act of 2008, now P.L. 110-252.

coverage, among others. Finally, MIPPA terminates all contracts under the first
round of the Durable Medical Equipment, prosthetics, orthotics, and other medical
supplies (DMEPOS) competitive acquisition program, set to start July 1, 2008. It
requires the Secretary to re-bid the first round in 2009 and delays the second round
of bidding until 2011.
This report provides a description of each of the provisions of MIPPA. In this
report, references are also made to the following public laws:
!Balanced Budget Act of 1997 (P.L. 105-33, BBA)
!Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (P.L. 108-173, MMA)
!Deficit Reduction Act (P.L. 109-171, DRA)
!Tax Relief and Health Care Act of 2006 (P.L. 109-432, TRHCA)
!Medicare, Medicaid, and SCHIP Extension Act of 2007 (P.L. 110-

173, MMSEA)


A Brief Description of the Current Programs
P.L. 110-275 makes changes to the Medicare, and Medicaid programs, briefly2
described below. More complete and detailed descriptions are available from CRS.
It also makes changes to other programs, such as Temporary Assistance for Needy
Families (TANF) and Foster Care and Adoption Assistance.
Medicare
Medicare is the nation’s health insurance program for persons aged 65 and over
and certain disabled persons. In FY2008, the program will cover an estimated 44.6
million persons (37.3 million aged and 7.3 million disabled) at a total cost of $459.4
billion, according to the CBO March 2008 baseline.3 Federal costs (after deduction
of beneficiary premiums and other offsetting receipts) will total $389.9 billion. In
FY2007, federal Medicare spending represented approximately 13% of the total
federal budget and 3% of GDP. Medicare is an entitlement program, which means
that it is required to pay for all covered services provided to eligible persons, so long
as specific criteria are met.
Medicare consists of four distinct parts: Part A (Hospital Insurance, or HI); Part
B (Supplementary Medical Insurance, or SMI); Part C (Medicare Advantage, or
MA); and Part D (the prescription drug benefit added by the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003, or MMA). The program is
administered by the Centers for Medicare and Medicaid Services (CMS).


2 See, for example, CRS Report RL33712, Medicare: A Primer, by Jennifer O’Sullivan, and
CRS Report RL33202, Medicaid: A Primer, by Elicia J. Herz.
3 See [http://www.cbo.gov/budget/factsheets/2008b/medicare.pdf].

Medicaid
Medicaid is a means-tested entitlement program that finances the delivery of
primary and acute medical services as well as long-term care to more than 63 million
people at an estimated cost to the federal government of roughly $206.9 billion,
according to the CBO March 2008 baseline. Federal expenditures represent
approximately 57% of total costs for the year, with states paying the remainder. Each
state designs and administers its own version of Medicaid under broad federal rules.
State variability in eligibility, covered services, and how those services are
reimbursed and delivered is the rule rather than the exception. In the federal budget,
Medicaid is an entitlement program that constitutes a large share of mandatory
spending. Federal Medicaid spending is open-ended, with total outlays dependent
on the spending levels of state Medicaid programs.
Summary of Provisions in P.L. 110-275
Title I - Medicare
Subtitle A - Beneficiary Improvements
Part I - Prevention, Mental Health, and Marketing
Section 101. Improvements to Coverage of Preventive Services.
The provision adds “additional preventive services” to the list of Medicare-covered
preventive services. The term “additional preventive services” means services not
otherwise described in Medicare law that identify medical conditions or risk factors
and that the Secretary determines are (1) reasonable and necessary for the prevention
or early detection of an illness or disability, (2) recommended with a grade of A or
B by the United States Preventive Services Task Force, and (3) appropriate for
individuals entitled to Medicare Part A or enrolled in Part B. In making the
determinations, the Secretary is required to use the process for making national
coverage determinations.4 As part of the use of such process, the Secretary may
conduct an assessment of the relation between predicted outcomes and the
expenditures for such services and may take into the account the results of such
assessment in making such determination.
The provision modifies the list of services covered under the initial preventive
physical exam (also known as “Welcome to Medicare”) to include measurement of
body mass index. It also adds end-of-life planning upon agreement with the
individual. End of life planning is defined as verbal or written information regarding
an individual’s ability to prepare an advance directive in the case that an injury or
illness caused the individual to be unable to make health care decisions and whether
or not the physician is willing to follow the individual’s wishes as expressed in an
advance directive.


4 See [http://www.ahrq.gov/clinic/pocketgd.htm] for a listing of preventive services
recommended by the United States Preventive Services Task Force.

The provision waives the deductible for the initial preventive screening exam
and extends the eligibility period for this service from the first six months to the first
year of Part B enrollment. This section applies to services furnished on or after
January 1, 2009.
Section 102. Elimination of Discriminatory Copayment Rates for
Medicare Outpatient Psychiatric Services. Medicare Part B generally pays

80% of the approved amount for covered services in excess of the annual deductible.


However, Medicare recognizes only 62.5% of covered expenses incurred in
connection with the treatment of mental, psychoneurotic and personality disorders
of a person who is not a hospital inpatient. As a result, it generally pays 50% (80%
X 62.5%) of Medicare’s recognized amount for these services. The provision raises
the 62.5% level to 68.75% in 2010 and 2011, 75% in 2012, 81.25% in 2013, and

100% in 2014 and subsequent years. When the provision is fully phased-in in 2014,


outpatient psychiatric services will be paid on the same basis as other Part B services.
Section 103. Prohibitions and Limitations on Certain Sales and
Marketing Activities under Medicare Advantage Plans and Prescription
Drug Plans. This provision establishes new prohibitions on the marketing
activities of Medicare Advantage (MA) plans and Prescription Drug Plans (PDPs)
and their agents. Except in instances when the beneficiary initiates contact, plans
will be prohibited from soliciting beneficiaries door-to-door or on the phone.
Cross-selling of non-health related products, providing meals to prospective
enrollees, marketing in areas where health care is delivered (i.e., physician offices or
pharmacies), and using sales agents that are not state licensed are also prohibited.
The provision requires that by November 15, 2008, the Secretary establish limitations
on other plan marketing activities such as co-branding, marketing appointments with
prospective enrollees, and agent compensation and training. MA and PDP plans will
be required to provide states with information on (1) agent and broker terminations,
and (2) at state request, performance and licensing of agents and brokers. Finally,
after January 1, 2010, MA and PDP plans will be required to include plan type in all
plan names.
Section 104. Improvements to the Medigap Program. Many Medicare
beneficiaries have individually purchased health insurance policies, commonly
referred to as “Medigap” policies that supplement Medicare’s coverage. Medigap
policies are subject to certain statutory requirements. The law incorporates by
reference, as part of the statutory requirements, certain minimum standards
established by the National Association of Insurance Commissioners (NAIC) and
provides for modification where appropriate to reflect program changes. The
provision requires the Secretary to provide for the implementation of the changes in
the NAIC model law and regulation approved by the NAIC on March 11, 2007, as
modified to reflect the changes in this Act and the Genetic Information5
Nondiscrimination Act of 2008 (GINA, P.L. 110-233). The provision prohibits a


5 For more information on this NAIC model law, see CRS Report RL31223, Medicare:
Supplementary 'Medigap' Coverage, by Jennifer O’Sullivan. For more information on
GINA, see CRS Report RL34584, The Genetic Information Nondiscrimination Act of 2008
(continued...)

carrier from issuing a new or revised Medigap policy that meets the requirements of
the revised NAIC model law and regulations for coverage effective before June 1,
2010. Further, policy issuers will be required to offer at least policies with benefit
packages labeled “C” or “F” in addition to the current requirement that issuers offer
at least policies designated “A.”
Part II - Low-Income Programs
Section 111. Extension of Qualifying Individual (QI) Program.
Certain low-income individuals who are aged or have disabilities, as defined under
the Supplemental Security Income (SSI) program, and who are eligible for Medicare
are also eligible to have their Medicare Part B premiums paid for by Medicaid under
the Medicare Savings Program (MSP). Eligible groups include Qualified Medicare
Beneficiaries (QMBs), Specified Low-Income Medicare Beneficiaries (SLMBs), and
Qualifying Individuals (QI-1s). QMBs have incomes no greater than 100% of the
federal poverty level (FPL) and assets no greater than $4,000 for an individual and
$6,000 for a couple. SLMBs meet QMB criteria, except that their incomes are
greater than 100% of FPL but do not exceed 120% FPL. QI-1s meet the QMB
criteria, except that their income is between 120% and 135% of poverty and they are
not otherwise eligible for Medicaid. Previously, the QI-1 program was funded
through June 2008. The Act extends authorization for the QI-1 program through
December 2009.
In general, Medicaid payments are shared between federal and state
governments according to a matching formula. Unlike the QMB and SLMB
programs, federal spending under the QI-1 program is subject to annual limits.
Expenditures under the QI-1 program are paid 100% by the federal government (from
the Part B trust fund) up to a state’s allocation level. States are required to cover only
the number of people which will bring their annual spending on these population
groups to their allocation levels. For the period beginning on January 1, 2008, and
ending on June 30, 2008, the total allocation amount was $200 million. The Act
extends the allocation of $200 million from the period of January 1, 2008, through
June 30, 2008, to the period of January 1, 2008, through September 30, 2008, and
increases the allocation amount for this period to $300 million. The provision also
allocates $100 million for the period that begins October 1, 2008, and ends December
31, 2008; allocates $350 million for the period that begins January 1, 2009 and ends
September 30, 2009; and allocates $150 million for the period that begins October

1, 2009 and ends on December 31, 2009.


Section 112. Application of Full Low Income Subsidy (LIS) Assets
Test under Medicare Savings Program. Certain low-income individuals who
are aged or have disabilities, as defined under the Supplemental Security Income
(SSI) program, and who are eligible for Medicare are also eligible to have their
Medicare Part B premiums paid for by Medicaid under the Medicare Savings
Program (MSP) and are eligible to receive the Medicare Part D low-income subsidy.
Currently, in order for beneficiaries to be eligible for the MSP they must have assets


5 (...continued)
(GINA), by Nancy Lee Jones and Amanda K. Sarata.

that are no greater than $4,000 for an individual and $6,000 for a couple. The Act
alters these asset tests. Beginning January 1, 2010, individuals may qualify under the
MSP program if their resource fall below the assets level applicable under the low
income subsidy program (LIS) for Medicare Part D. They asset levels are updated
annually by increases in the Consumer Price Index (CPI) and rounded to the nearest
multiple of $10. (The 2008 levels are $6,290 for an individual and $9,440 for a
couple.) MIPPA further modifies the definition of assets to exclude the value of an
individual’s or couple’s life insurance.
Section 113. Eliminating Barriers to Enrollment. The Commissioner
of the Social Security Administration (SSA) is required to make low-income subsidy
(LIS) determinations for persons applying at SSA offices. The provision extends the
outreach requirements currently applicable to the Commissioner of SSA, effective
January 2010. The Commissioner will be required, for each individual submitting
an application for LIS, requesting an application for LIS, or otherwise identified by
the Commissioner as potentially eligible for LIS, to (1) provide information
describing the LIS program and the Medicare Savings program ((MSP) which
provides Medicaid assistance for Medicare Part B premiums, and for some persons,
Medicare cost-sharing charges); (2) provide an application for enrollment under the
LIS program; (3) transmit data from such application to the state for purposes of
initiating an application for MSP (beginning January 2010), with the applicant’s
consent; (4) provide information on how the individual may obtain assistance in
completing the application and an application under the MSP program, including
information on how they may contact the appropriate State health insurance
assistance program; and (5) make such application and information available in local
social security offices. The Commissioner will be required to provide training to
SSA employees who were involved in receiving LIS applications.
The provision provides for reimbursement of SSA costs. The Government
Accountability Office (GAO) will be required to conduct a study of the impact of this
section on increasing participation in MSP and on states and the SSA. GAO will be
required to submit a report by January 1, 2012, to Congress, the Commissioner, and
the Secretary.
Section 114. Elimination of Medicare Part D Late Enrollment
Penalties Paid by Subsidy Eligible Individuals. A late enrollment penalty is
assessed on persons who go for 63 days or longer after the close of their initial Part
D enrollment period without creditable prescription drug coverage and subsequently
enroll in Part D. CMS has waived this penalty through 2008 for persons deemed
eligible for a low-income subsidy after the close of their initial enrollment period.
The provision waives late enrollment penalties for persons who are determined to be
eligible for a low-income subsidy beginning January 2009.
Section 115. Eliminating Application of Estate Recovery.
Beneficiaries are allowed to retain certain assets and still qualify for Medicaid. The
Medicaid estate recovery program is intended to enable states to recoup these private
assets upon a beneficiary’s death to recover certain Medicaid expenditures made on
behalf of these individuals. Since 1993, Medicaid law has required states to recover,
from the estate of the beneficiary, amounts paid by the program for certain long-term
care and related services, and given states the option to recover for other services,



such as amounts Medicaid paid for Medicare cost-sharing on behalf of dual eligibles
who are entitled to Medicare Part A and/or Part B and are eligible for full Medicaid
benefits.
States recover amounts paid from the estates of those beneficiaries who (1) were
inpatients in a nursing facility or an intermediate care facility for the mentally
retarded (ICF/MR) and were not reasonably expected to be discharged from the
institution and return home; and (2) received Medicaid assistance for nursing facility
services, home and community-based services and related hospital and prescription
drug services at age 55 or older. Included in these groups are those who were dual
eligibles and were entitled to Medicare Part A and/or Part B and were eligible for full
Medicaid benefits.
MIPPA will prohibit states from recovering amounts paid for Medicare
cost-sharing on behalf of dual eligibles who are entitled to Medicare Part A and/or
Part B and who are eligible for full Medicaid benefits. The provision will take effect
as of January 1, 2010.
Section 116. Exemptions from Income and Resources for
Determination of Eligibility for Low-Income Subsidy. The definitions of
income and assets used for making eligibility determinations for the Part D
low-income subsidy (LIS) program generally follow those used for determining
eligibility under the Medicare Savings program (which in turn link back to the
definitions used for purposes of the Supplemental Security Income program). For
purposes of the LIS, the provision excludes from the definition of income, support
and maintenance furnished in kind. It also excludes from the definition of resources
any part of the value of any life insurance policy. The provision is effective January

1, 2010.


Section 117. Judicial Review of Decisions of the Commissioner of
Social Security under the Medicare Part D Low-Income Subsidy
Program. A right to a judicial review is added for those found ineligible for LIS by
the Commissioner of Social Security.
Section 118. Translation of Model Form. Medicaid law requires the
Secretary to develop and distribute to the states a simplified application form for use
by Medicare Savings applicants in states which elect to use the model form. The
provision requires the Secretary to provide for the translation of the model
application form into at least 10 languages, other than English, effective January 1,

2010.


Section 119. Medicare Enrollment Assistance. Beneficiaries may
obtain information on Medicare from a variety of sources including from state health
insurance assistance programs (SHIPs). SHIPs are state-based programs that use
community-based networks to provide Medicare beneficiaries with local personalized
assistance on a wide variety of Medicare and health insurance topics. They receive
Federal funding for their activities. The provision will require the Secretary to
provide for the transfer of a total of $7.5 million to the CMS Program Management
Account for FY2009 for the purpose of making grants to the states for SHIPs.
Two-thirds of the total will be allocated among the states based on the number of



persons in each state with incomes below 150% of poverty who had not enrolled to
receive a low income subsidy relative to the total number of such individuals in all
states. One third of the total will be allocated among the states based on the number
of Part D eligible beneficiaries residing in rural areas in each state relative to the total
number of such individuals in all states.
The provision also requires the Secretary, to provide $7.5 million to the
Administration on Aging for FY2009 for the purpose of making grants to the states
for area agencies on aging to be used to provide outreach to eligible Medicare
beneficiaries. It requires the Secretary to provide for the transfer of a total of $5.0
million to the Administration on Aging for FY2009 for the purpose of making grants
to Aging and Disability Resource Centers (that are established centers on the date of
enactment) under the Aging and Disability Resource Center grant program. Each
grant will be used to provide outreach to individuals regarding benefits under Part D
and the Medicare Savings Program.
Subtitle B - Provisions Relating to Part A
Section 121. Expansion and Extension of the Medicare Rural
Hospital Flexibility Program. BBA established the Medicare Rural Hospital
Flexibility Program which created the critical access hospital (CAH) designation
under Medicare and authorized a grant program (FLEX grants) which is administered
by the Health Resources and Services Administration (HRSA). There are certain
limitations imposed on the use of grant funds for administrative expenses, both at the
state and federal level. The grant program has been authorized at $35 million from
FY2005 through FY2008.
With the passage of MIPPA, the purpose of the grant program will be expanded.
The Secretary will be able to award grants to States to increase the delivery of mental
health services or other health services deemed necessary to meet the needs of
veterans of Operation Iraqi Freedom and Operation Enduring Freedom and other
residents of rural areas, including rural census tracks, as defined by HRSA. The
Secretary will require that the State demonstrate appropriate consultation with the
state hospital association, rural hospitals, mental health providers, and other
stakeholders.
When awarding grants, the Secretary is required to give special consideration
to applications submitted by states where veterans make up a high percentage of the
state’s total population. This consideration will be given without regard to the
number of veterans of Operation Iraqi Freedom and Operation Enduring Freedom
living in the areas in which mental health care and other health care services will be
delivered. The Director of the Office of Rural Health of the Department of Veterans
Affairs will be consulted when awarding grants to states. A state awarded such a
grant may use the funds to reimburse providers of services. A state will not be able
to expend more than 15% of the grant amount on administrative expenses.
An independent evaluation of the mental and other health grants is required. No
later than one year after the date on which the last grant is awarded, the Secretary will
submit a report to Congress which will assess the impact of the grants on increasing
the delivery of mental health services to veterans living in rural areas, particularly



those who served in Operation Iraqi Freedom and Operation Enduring Freedom and
to other rural individuals.
HRSA is authorized to spend up to 5% of the total amount appropriated for
FLEX grants for each of the fiscal years from 2005 through 2008 on administering
the grants. Beginning FY2009, HRSA will be authorized to spend up to 5% of the
total amount appropriated for the grant program.
The FLEX grant program will be expanded to provide support for CAHs for
quality improvement, quality reporting, performance improvements and
benchmarking and will be authorized at $55 million for each fiscal year from 2009
and 2010. The new rural mental health and other services grants will be authorized
at $50 million for fiscal years 2009 and 2010, money which is available until
expended.
An additional grant program is established where eligible CAHs may receive a
grant to transition to a skilled nursing or assisted living facility. An eligible CAH is
one that has an average daily acute census of less than 0.5 and an average daily swing
bed census of greater than 10.0. Matching funds from the state are required. The
CAH will surrender its CAH status within 180 days of receiving the grant. These
grants cannot exceed $1 million. There is $5 million appropriated from the Federal
Hospital Insurance Trust Fund for making these grants.
Section 122. Rebasing for Sole Community Hospitals. Medicare
payments to sole community hospitals (SCHs) for inpatient hospital services are
made on the basis of the federal per discharge payment amount or on the basis of its
updated hospital-specific per discharge amount from FY1982, FY1987, or FY1996,
whichever will result in the largest payment. Under MIPPA, for cost reporting
periods beginning on or after January 1, 2009, an SCH will be able to elect payment
based on its FY2006 hospital-specific payment amount per discharge. This amount
will be increased by the annual update starting for discharges on or after January 1,

2009.


Section 123. Demonstration Project on Community Integration
Models in Certain Rural Counties. A three-year demonstration project in up
to 4 states will be established, beginning October 1, 2009, that will allow states to
develop and test a new model for the delivery of health care services for the purpose
of better integrating the delivery of acute care, extended care, and other essential
health care services. Eligible participants will be Rural Hospital Flexibility Program
grantees in a state where at least 65% of the counties have six or few residents per
square mile. Eligible entities will apply to participate in the demonstration project.
The Secretary will select eligible entities in no more than four states. Each eligible
entity will select no more than six eligible counties in the state to participate in the
project. An eligible county has six or fewer residents per square mile and must have
a facility designated as a CAH on the date of enactment that meets certain criteria.
Participating health care providers will be paid at a rate that covers at least the
reasonable costs of furnishing acute care, extended care, and other essential health
care services. Methods to coordinate the survey and certification process will be
tested. Participants and the Secretary will work to revise states’ Medicaid payments.



The demonstration will be administered jointly by the Office of Rural Health Policy
(ORHP) in HRSA and CMS.
The Secretary will ensure that the aggregate Medicare expenditures under the
project do not exceed the amount that would have been expended without the project
and will provide for the transfer of necessary funds from the Medicare trust funds.
There will be $800,000 authorized to be appropriated to ORHP for each of the fiscal
years 2010, 2011, and 2112, which will remain available for the project’s duration.
No later than two years after the demonstration’s implementation date, ORHP
in coordination with CMS, will submit a status report to Congress with initial
recommendations. A final report with recommendations for legislation and for
administrative action is due no later than one year after the project’s completion.
Section 124. Extension of the Reclassification of Certain Hospitals.
Section 508 of MMA provided $900 million for a one-time, three year geographic
reclassification of certain hospitals who were otherwise unable to qualify for
administrative reclassification to areas with higher wage index values. These
reclassifications were subsequently extended to September 30, 2008. MMSEA
extended certain hospital reclassifications made through the Secretary’s authority to
make exceptions and adjustments during the FY2005 rulemaking process until
September 30, 2008. This provision extends the Section 508 and the special
exception reclassifications until September 30, 2009.
Section 125. Revocation of Unique Deeming Authority of the Joint
Commission. In order to receive Medicare payments, Medicare providers and
suppliers must meet certain health and safety requirements specified in statute.
Alternatively, a provider can be deemed to meet these requirements if it has been
accredited by an approved national accreditation body. This provision will revoke
the unique authority granted the Joint Commission on Accreditation of Healthcare
Organizations (JCAHO) to accredit hospitals. Hospitals, like other Medicare
provider entities, will be accredited by national accrediting organizations approved
by the Secretary. This provision will take effect 24 months after the legislation is
enacted and will not affect those hospitals currently being accredited or under
accreditation by JCAHO. The provision does not remove the unique authority
granted the American Osteopathic Association (AOA) to accredit provider entities
for participation in the program.
Subtitle C - Provisions Relating to Part B
Part I - Physicians’ Services
Section 131. Physician Payment, Efficiency, and Quality
Improvements. Medicare payments for services of physicians and certain
nonphysician practitioners are made on the basis of a fee schedule. The fee schedule
assigns relative values to services that reflect physician work (i.e., time, skill, and
intensity it takes to provide the service), practice expenses, and malpractice costs.
The relative values are adjusted for geographic variation in costs. The adjusted
relative values are then converted into a dollar payment amounts by a conversion



factor. The law specifies a formula for calculating the annual update to the
conversion factors. This formula would have resulted in a 10.1% cut effective
January 1, 2009. However, Section 101 of the MMSEA increased the update to the
conversion factor for Medicare physician payment by 0.5% compared with 2007 rates
for the first six months of 2008. The update formula would have required a reduction
in the conversion factor of 10.6% for services provided between July 1 and December

31, 2008, and by additional amounts annually for at least several years thereafter.


This provision averts this reduction and extends the 0.5% increase in the physician
fee schedule that was set to expire on June 30, 2008, through the end of 2008. For
2009, the update to the conversion factor will be 1.1%. The conversion factor for
2010 and subsequent years will be computed as if this modification had never
applied.
The Tax Relief and Health Care Act of 2006 (P.L. 109-432, TRHCA) created
the physician assistance and quality initiative (PAQI) Fund, which is to be available
to the Secretary of HHS for physician payment and quality improvement initiatives.
The MMSEA, as well as provisions in the Departments of Labor, Health and Human
Services, and Education and Related Agencies Appropriations Act of 2008 (division
G of the Consolidated Appropriations Act of 2008) modified the amounts that will
be available in the PAQI Fund and the years in which the monies can be spent. This
provision in MIPPA together with a provision in the Supplemental Appropriations
Act, 2008 (P.L. 110-252), further modifies the amounts available for the PAQI Fund
by removing $4.96 billion from the fund in 2013-2015 and returning these amounts
to the Medicare Part A and Part B Trust Funds, to be made available for other
purposes.
The physician quality reporting system, which currently runs only through 2009,
is extended through 2010. Eligible professionals who provide covered professional
services will be eligible for the incentive payment if (1) there are quality measures
that have been established under the physician reporting system that are applicable
to any services furnished by such professional for the reporting period; and (2) the
eligible professional satisfactorily submits data to the Secretary on the quality
measures. These providers, in addition to the amount otherwise paid under Medicare,
will also be paid an incentive payment equal to 1.5% for 2008 and 2.0% for 2009 and
2010 of the allowed Medicare charges for all such covered professional services
furnished by the eligible professional. The provision also defines satisfactory
reporting of measures for group practices and includes qualified audiologists as
eligible professionals for purposes of Medicare payment, beginning in 2009.
Both MedPAC and GAO have recently recommended providing information to
physicians on their resource use. MedPAC asserts that physicians would be able to
assess their practice styles, evaluate whether they tend to use more resources than
their peers or what evidence-based research (if available) recommends, and revise
practice styles as appropriate. MedPAC notes that in certain instances, the private
sector use of feedback has led to a small downward trend in resource use. The GAO
noted that certain public and private health care purchasers routinely evaluate
physicians in their networks using measures of efficiency and other factors and that
the purchasers it studied linked their evaluation results to a range of incentives to
encourage efficiency. This provision of MIPPA will establish a physician feedback
program with the intent to improve efficiency and to control costs. Under the



Physician Feedback Program, to be implemented by January 1, 2009, the Secretary
will use Medicare claims data to provide confidential reports to physicians that
measure the resources involved in furnishing care to Medicare beneficiaries. The
resources to be considered in this program may be measured on an episode basis, on
a per capita basis, or on both an episode and a per capita basis. The GAO will
conduct a study of the Physician Feedback Program as described above, including the
implementation of the Program, and will submit a report to Congress by March 1,
2011 containing the results of the study, together with recommendations for such
legislation and administrative action as the Comptroller General determines
appropriate.
Finally, the provision requires the Secretary of Health and Human Services to
develop a plan to transition to a value-based purchasing program for payment under
the Medicare program for covered professional services. Not later than May 1, 2010,
the Secretary of Health and Human Services will submit a report to Congress
containing the plan, together with recommendations for such legislation and
administrative action as the Secretary determines appropriate.
Section 132. Incentives for Electronic Prescribing. The provision
establishes incentives for electronic prescribing in the Medicare program. For 2009
through 2013, Medicare professionals providing covered services to Medicare
beneficiaries and who are successful electronic prescribers will receive an incentive
payment of 2.0% for 2009 and 2010, 1.0% for 2011 and 2012, and 0.5% for 2013.
Providers who do not have a sufficient volume of qualifying services will be
excluded from the program, as will those for whom the Secretary determines that
compliance would be a significant hardship (such as for an eligible professional who
practices in a rural area without sufficient Internet access). Not later than September
1, 2012, the GAO will submit to Congress a report on the implementation of the
incentives for electronic prescribing established by this section.
Section 133. Expanding Access to Primary Care Services. The
provision gives the Secretary the authority to expand the duration and scope of the
Medical Home Demonstration Project if the expansion will meet either of the
following conditions: (1) the expansion of the project is expected to improve the
quality of patient care without increasing spending under Medicare, or (2) the
expansion of the project is expected to reduce spending under the Medicare program
without reducing the quality of patient care. To fund any potential expansion of the
demonstration project, $100 million will be made available from the Federal
Supplementary Medical Insurance Trust Fund.
The provision changes the application of the budget-neutrality adjustor used in
the calculation of Medicare physician fee schedule reimbursement from the relative
value units to the conversion factor, beginning with 2009.
Section 134. Extension of Floor on Medicare Work Geographic
Adjustment under the Medicare Physician Fee Schedule. Medicare makes
payment for physician services under the fee schedule. Three factors enter into the
calculation of the fee schedule payment amount: the relative value for the service, a
geographic adjustment and a national dollar conversion factor. The geographic
adjustments are indexes that reflect cost differences among areas compared to the



national average in a “market basket” of goods. A value of 1.00 represents an
average across all areas. The law placed a temporary floor of 1.00 on the geographic
work adjustment for January 2004-June 2008. The provision extends, through
December, 2009, the period that the floor is set at 1.00. In addition, beginning
January 1, 2009, it raises the work geographic adjustment to 1.5 in Alaska if the
index will otherwise be less than 1.5.
Section 135. Imaging Provisions. The provision specifies that beginning
January 1, 2012, payment may only be made under the physician fee schedule for the
technical component of advanced diagnostic imaging services furnished by a supplier
if such supplier is accredited by an accreditation organization. Advanced diagnostic
imaging services are defined as including diagnostic magnetic resonance imaging,
computed tomography, and certain other services as specified by the Secretary in
consultation with physician specialty organizations and other stakeholders.
The accreditation organization must be designated by the Secretary who will be
required to consider specified factors both in designating an accreditation
organization and in reviewing and modifying the list of designated organizations.
The Secretary will be required to establish procedures to ensure that the criteria used
by an accreditation organization to evaluate a supplier that furnishes the technical
component of advanced diagnostic imaging services is specific to each imaging
modality.
The provision requires the Secretary to establish a two-year demonstration
project using specified models to collect data regarding physician compliance with
appropriateness criteria for advanced diagnostic imaging services. The Secretary
may focus the demonstration project, such as on services that account for a large
amount of Medicare expenditures, services that have recently experienced a high rate
of growth, or services for which appropriateness criteria exist. The Secretary, in
consultation with medical specialty societies and other stakeholders, will select
criteria with respect to the clinical appropriateness of advanced diagnostic imaging
for use in the demonstration. The Secretary will develop mechanisms to provide
feedback reports to physicians participating in the project. In addition, the Secretary
is required to evaluate the demonstration project and submit a report to Congress
containing the results of the evaluation together with recommendations for legislative
and administrative action.
The GAO is required to conduct a study by imaging modality of the new
accreditation requirement and any other relevant questions involving access to and
the value of advanced diagnostic imaging services for beneficiaries.
Section 136. Extension of Treatment of Certain Physician
Pathology Services under Medicare. Legislation enacted in 1997 specified
that independent labs that had agreements with hospitals on July 22, 1999 to bill
directly for the technical component of pathology services could continue to do so
in 2001 and 2002. The provision has been periodically extended, most recently
through June 30, 2008. MIPPA further extends this provision through December 31,

2009.



Section 137. Accommodation of Physicians Ordered to Active Duty
in the Armed Services. Medicare payment may be made to a physician for
services furnished by a second physician to patients of the first physician, provided
certain conditions are met. In general, the services cannot be provided by the second
physician for more than 60 days. The law permits, for services provided prior to June
30, 2008, reciprocal billing over a longer period in cases where the first physician
was called or ordered to active duty as a member of a reserve component of the
Armed Forces. The provision will make the accommodation permanent.
Section 138. Adjustment for Medicare Mental Health Services.
Medicare pays for mental health services under the physician fee schedule. The
provision increases the fee schedule amount otherwise applicable for certain
specified mental health services by 5% for the period July 2008 - December 2009.
Section 139. Improvements for Medicare Anesthesia Teaching
Programs. Anesthesia services may be personally performed by the
anesthesiologist or the anesthesiologist may medically direct up to four concurrent
anesthesia cases. When the anesthesiologist medically directs a case, the payment
for the physician’s medical direction service is 50% of the amount otherwise
recognized if the anesthesiologist personally performed the service. The provision
establishes a special payment rule with respect to physicians’ services furnished on
or after January 1, 2010. In the case of teaching anesthesiologists involved in a
single anesthesia case or two concurrent anesthesia cases, the payment amount will
be 100% of the fee schedule amount otherwise applicable if the anesthesia services
were personally performed by the teaching anesthesiologist alone. This payment
provision will only apply if (1) the teaching anesthesiologist was present during all
critical or key portions of the anesthesia service or procedure involved; and (2) the
teaching anesthesiologist (or another anesthesiologist with whom the teaching
anesthesiologist had entered into an arrangement) was immediately available to
furnish anesthesia services during the entire procedure. Further, the provision
requires the Secretary to make appropriate payment adjustments for items and
services furnished by teaching certified registered nurse anesthetists.
Part II - Other Payment and Coverage Improvements
Section 141. Extension of Exceptions Process for Medicare
Therapy Caps. The law places annual per beneficiary payment limits for all
outpatient therapy services provided by non-hospital providers. There are two
beneficiary limits. The first is a $1,810 (in 2008) per beneficiary annual cap for all
outpatient physical therapy services and speech language pathology services. The
second is a $1,810 (in 2008) per beneficiary annual cap for all outpatient
occupational therapy services. The law required the Secretary to implement an
exceptions process for 2006, 2007, and the first half of 2008 for cases in which the
provision of additional therapy services was determined to be medically necessary.
The provision extends the exceptions process through 2009.
Section 142. Extension of Payment Rule for Brachytherapy and
Therapeutic Radiopharmaceuticals. MMA required Medicare’s outpatient
prospective payment system to make separate payments for specified brachytherapy
sources. Subsequent legislation established that the separate payment would be made



using hospitals’ charges adjusted to their costs until January 1, 2008. MMSEA
extended this payment method for brachytherapy services until July 1, 2008 and
established these type of payments for therapeutic radiopharmaceuticals for services
provided on or after January 1, 2008, and before July 1, 2008. This provision extends
cost reimbursement for brachytherapy and therapeutic radiopharmaceuticals until
January 1, 2010.
Section 143. Speech-Language Pathology Services. The provision
establishes a separate definition for outpatient speech-language pathology services
and permits speech-language pathologists practicing independently to bill Part B
subject to the same conditions applicable to physical and occupational therapists in
independent practice. The provision is effective July 1, 2009.
Section 144. Payment and Coverage Improvements for Patients
with Chronic Obstructive Pulmonary Disease and Other Conditions. The
provision will include, within the definition of covered medical and other health
services, items and services furnished under a cardiac rehabilitation program or under
a pulmonary rehabilitation program, subject to specified conditions. The provision
will be effective January 1, 2010.
This provision repeals the requirement that medical equipment suppliers transfer
the title for oxygen equipment to the beneficiary after a 36 months rental period,
effective January 1, 2009; suppliers will retain ownership of the equipment but will
continue to furnish the equipment to the beneficiary during the period of medical
need.
Section 145. Clinical Laboratory Tests. The provision repeals the
requirement for competitive bidding for clinical laboratory services. In addition, it
specifies that the clinical laboratory fee schedule update, otherwise slated to occur
each year, will be reduced each year from 2009 through 2013 by 0.5 percentage
points.
Section 146. Improved Access to Ambulance Services. The
provision increases payments for ground ambulance transports originating in rural
areas or rural census tracts by 3% and the payments for such transports originating
in other areas by 2% for the period July 1, 2008 - December 31, 2009. The provision
also specifies that any area designated as rural for the purposes of making payments
for air ambulance services on December 31, 2006, will be treated as rural for the
purpose of making air ambulance payments during the period July 1, 2008-December

31, 2009.


Section 147. Extension and Expansion of the Medicare Hold
Harmless Provision under the Prospective Payment System for Hospital
Outpatient (HOPD) Services for Certain Hospitals. Small rural hospitals
(with no more than 100 beds) that are not sole community hospitals (SCHs) can
receive additional Medicare payments if their outpatient prospective payment system
(OPPS) payments are less than those under the prior reimbursement system. For
calendar year (CY) 2006, these hospitals received 95% of the difference, 90% of the
difference in CY2007 and 85% of the difference in CY2008. The provision
establishes that small rural hospitals will receive 85% of the payment difference in



CY2009. SCHs with not more than 100 beds will receive 85% of the payment
difference for covered HOPD services furnished on or after January 1, 2009, and
before January 1, 2010.
Section 148. Clarification of Payment for Clinical Laboratory Tests
Furnished by Critical Access Hospitals. Medicare outpatient clinical
laboratory services are generally paid based on a fee schedule. Clinical diagnostic
laboratory services provided to patients who receive services directly from critical
access hospitals (CAHs) on an outpatient basis are paid 101% of reasonable costs.
Clinical laboratory services provided by CAHs to those who are not patients are paid
on the basis of the Medicare fee schedule. In no instance are Medicare beneficiaries
liable for any coinsurance or deductible amounts. Generally, clinical laboratory
services provided to skilled nursing facility (SNF) patients (who are Medicare
beneficiaries that are covered under Medicare Part A) are paid under consolidated
billing as part of the SNF-PPS. Under this provision, starting for services furnished
on July 1, 2009, clinical diagnostic laboratory services furnished by a CAH will be
reimbursed as outpatient hospital services at 101% of costs without regard to whether
the individual who receives the service is physically present in the CAH, or in a
skilled nursing home or a clinic (including a rural health clinic) that is operated by
a CAH at the time the specimen is collected.
Section 149. Adding Certain Entities as Originating Sites for
Payment of Telehealth Services. Originating sites are defined as the site where
a Medicare provider delivers the telehealth service to the patient. The following are
qualified as originating sites: (1) office of a physician or physician practitioner; (2)
a critical access hospital; (3) a rural health clinic; (4) a federally qualified health
center, and (5) a hospital. The provision adds: (1) a hospital-based or critical access
hospital based renal dialysis center (including satellites), (2) a skilled nursing facility,
and (3) a community health center to the list of originating sites for payment of
telehealth services, effective on January 1, 2009.
Section 150. MedPAC Study and Report on Improving Chronic Care
Demonstration Programs. The Medicare Payment Advisory Commission
(MedPAC) will be required to conduct a study and provide a report to Congress no
later than June 15, 2009, on the feasibility and advisability of establishing a Medicare
Chronic Care Practice Research Network to serve as a standing network of providers
testing new models of care coordination and other care approaches for chronically ill
beneficiaries, including the initiation, operation, evaluation, and if appropriate,
expansion of such models to the broader Medicare patient population. They will also
be required to make recommendations for appropriate legislative and administrative
action.
Section 151. Increase of FQHC Payment Limits. The provision will
increase the payment limits otherwise applicable for federally qualified health centers
(FQHCs) in 2010 by $5 for each patient visit. In subsequent years the previous year’s
amount will be increased by the increase in the Medicare economic index (MEI).
The provision also requires the GAO to study whether the structure for FQHC
payments adequately reimburses FQHCs for care furnished to Medicare beneficiaries.



Section 152. Kidney Disease Education and Awareness Provisions.
A new section is added to the Public Health Service Act, allowing the Secretary to
establish pilot projects for chronic kidney disease to (1) increase awareness; (2)
increase screening; and (3) enhance surveillance systems to better assess prevalence
and incidence. The Secretary will select at least 3 states in which to conduct pilot
projects, for no longer than five years, beginning on January 1, 2009. GAO will
conduct an evaluation and report to Congress not later than 12 months after
completion of the pilot projects. There are authorized to be appropriated such sums
as may be necessary to carry out this provision.
Medicare coverage is expanded to include coverage for kidney disease education
services, defined as education services (1) for an individual with stage IV chronic
kidney disease who requires dialysis or a kidney transplant; (2) furnished upon the
referral of the physician managing the individual’s kidney condition or by a qualified
person; (3) designed to provide comprehensive information regarding managing
co-morbidities, including delaying the need for dialysis, prevention of uremic
complications, and options for renal replacement therapy; and (4) designed to meet
an individual’s needs and provide an opportunity to participate in the choice of
therapy. The Secretary will set standards for the educational services. Individuals
will be eligible for no more than six sessions of kidney disease education services,
effective for services furnished on or after January 1, 2010.
Section 153. Renal Dialysis Provisions. The composite rate for dialysis
services furnished on or after January 1, 2009, and before January 1, 2010, will be
increased by 1% above the December 31, 2008 amount. Beginning January 1, 2010,
the composite rate will be increased by 1% above the December 31, 2009 amount.
Beginning January 1, 2009, the payment rate for dialysis services will be “site
neutral” and in applying the geographic index to providers of services, the labor share
will be based on the labor share otherwise applied for renal dialysis facilities.
Adjustments will no longer be made to the composite rate for hospital-based dialysis
facilities to reflect higher overhead costs.
Beginning January 1, 2011, the Secretary will implement a bundled payment
system making a single payment for Medicare renal dialysis services, ensuring that
the estimated total payment for 2011 for Medicare renal dialysis services will equal
98% of payments that would have been made if the bundled payment system had not
been implemented. The term “renal dialysis services” will include (1) items and
services which were included in the composite rate as of December 31, 2010; (2)
erythropoiesis stimulating agents (ESAs) or any other oral form of such agents
furnished to individuals for the treatment of End Stage Renal Disease (ESRD); (3)
other drugs and biologicals for which payment was made separately (before
bundling), and any oral equivalent form of such drug or biological; and (4) diagnostic
laboratory tests and other items and services furnished to individuals for the
treatment of ESRD. The term “renal dialysis services” will not include vaccines.
Payments will include adjustments for (1) case mix; (2) high cost outliers due
to unusual variations in the type or amount of medically necessary care, including
variations in the amount of ESAs necessary for anemia management; (3) the extent
that costs in rural, low-volume facilities exceed the costs incurred by other facilities,



with a minimum payment adjustment of 10% for services furnished between January

1, 2011, and January 1, 2014; and (4) other items as determined by the Secretary.


The bundled payments system will be phased-in equally over four years, (fully
implemented by January 1, 2014). A provider of dialysis services or facility will be
allowed to make a one-time election to be excluded from the phase-in and be paid
entirely based on the bundled payment system. Estimated total payments during the
phase-in will equal the estimated total payments that would otherwise occur.
Beginning in 2012, the Secretary will annually increase the bundled payment
amounts by an ESRD market basket increase factor appropriate for a bundled
payment system for renal dialysis minus 1 percentage point. For the portion of the
payment based on the old composite rate system, the composite rate will be updated
by the ESRD market basket increase factor minus 1 percentage point.
The demonstration established in the MMA for a bundled case-mix adjusted
payment system for ESRD services is repealed.
Beginning in January 1, 2012, providers of renal dialysis services and renal
dialysis facilities will be subject to quality incentive requirements and they will be
subject to a reduction of up to 2% if they do not meet the requirements. The
requirements will include measures on (1) anemia management and dialysis
adequacy; (2) to the extent feasible, patient satisfaction; and (3) other areas.
The Secretary will develop a methodology to assess the total performance of
each provider or facility, referred to as the “total performance score.” Any reductions
in payments will apply a larger reduction to those achieving the lowest scores. The
Secretary will make performance information available to the public, provide
certificates to be displayed in patient areas, and will allow the provider or facility the
opportunity to review the information, prior to it being made public.
No later than March 1, 2013, GAO must submit a report to Congress on the
implementation of the payment system and the quality initiatives.
Section 154. Delay in and Reform of Medicare DMEPOS
Competitive Acquisition Program. Medicare generally pays for most durable
medical equipment, prosthetics, orthotics and supplies (DMEPOS) on the basis of a
fee schedule. MMA required the Secretary to establish a DMEPOS Competitive
Acquisition Program for specified medical equipment in specified areas; the
Competitive Acquisition Program is to be phased-in and will replace the Medicare
fee schedule. This provision terminates all contracts awarded for the first round of
the Program and requires the Secretary to re-bid the first round in 2009. Damages
for the delay could be paid from the Part B Trust Fund. Suppliers will be precluded
from seeking administrative or judicial review of the terminations. Puerto Rico,
negative pressure wound therapy, and complex rehabilitative power wheelchairs will
be excluded from the competition.
The second round of bidding and expansion of the program beyond the original

80 locations will be delayed by two years to 2011. National mail order items,


however, could be implemented after 2010. After the first two rounds, but prior to



2015, the Secretary will be prohibited from expanding competitive acquisition into
(1) rural areas, (2) metropolitan statistical areas (MSAs) of fewer than 250,000 if not
previously selected, and (3) areas with low population density within MSAs that are
otherwise selected for competitive acquisition. The Inspector General (IG) will be
required to assess the program through post-award audits, surveys, or other means.
The Secretary will be required to notify bidders if certain financial documents were
missing and allow the bidders to resubmit those documents by a specified date.
To pay for the program delay, the fee schedule update in 2009 will be reduced
by 9.5% for all round 1 items, services and accessories. The reduction will apply to
all areas, not just competitive acquisition areas. For items or services that were not
part of round 1, the fee schedule update in 2009 will be the increase in the consumer
price index (CPI), as required by law. For 2010 through 2013, the fee schedule
update will be the increase in the CPI for all items and services outside competitive
bidding areas. For 2014, the update will be the increase in the CPI plus 2 percentage
points for items and services that (1) had received a 9.5% reduction in 2009, (2) had
not received a payment adjustment based on the Secretary’s authority to adjust
payments outside of competitive areas based on data from competitive acquisition,
and (3) were not part of a competitive bidding area. For all others, the 2014 update
will be the increase in the CPI.
The provision will delay (from January 1, 2009 to January 1, 2011) the
Secretary’s authority to use information from the competitive acquisition program to
adjust the payments in areas that are not competitive acquisition areas. Prior to
exercising this authority, the Secretary is required promulgate regulations describing
the method to be used in adjusting rates.
The provision will require suppliers (directly or as subcontractors) to submit
evidence of accreditation by October 1, 2009. The Secretary will be given authority
to exempt certain professionals from the accreditation requirement. Contracted
suppliers will be required to inform the Secretary of the identity of each
subcontractor and whether the subcontractor met accreditation requirements.
The Secretary will be required to create a competitive acquisition ombudsman
within CMS to respond to complaints and inquiries made by suppliers and
individuals.
The provision will exempt off-the-shelf orthotics and other DME and supplies
from competitive acquisition when furnished by a physician or other practitioner (as
defined by the Secretary) to their own patients as part of their professional services,
or by a hospital to its own patients during an admission or on the date of discharge.
The provision will expand the definition of physician with respect to the requirement
that the Secretary establish standards on the types or classes of items requiring a
face-to-face examination as a condition of coverage.
Starting in the second round of the program, the suppliers will be required to
demonstrate that their bid covers over 50% of all types of diabetic test strips in use.
The IG will determine the types of diabetic test strips that could be used to make this
determination, and submit the report prior to the start of the second round of the
program.



The Secretary will be required to evaluate the Healthcare Common Procedure
Coding System (HCPCS) for negative pressure wound therapy.
Various reports and requirements will be delayed to conform with the delay in
the bidding schedule. The scope of one required GAO report will be expanded.
The Secretary will be required to transfer $20 million for FY2008 and $25
million for each of FY2009 through 2012 from the Part B Trust Fund to the CMS
Program Management Account as additional funding to implement the provisions of
the Act. These provisions are effective June 30, 2008.
Subtitle D - Provisions Relating to Part C
Section 161. Phase-Out of Indirect Medical Education (IME).
Beginning in 2010, the Medicare Advantage benchmarks for every county will be
adjusted to phase-out the cost of indirect medical education (IME). The amount
phased-out each year will be based on a ratio of (1) a specified percentage (0.60% in
the first year), relative to (2) the proportion of per capita costs in original Medicare
in the county that IME costs represent. The effect of the ratio is to phase-out a higher
proportion of IME costs in areas where IME makes up a smaller percentage of per
capita spending in original Medicare. After 2010, the numerator phase-out
percentage will be increased by 0.60 percentage points each year. This provision will
not apply to the benchmarks for plans in the PACE program (Programs of
All-Inclusive Care for the Elderly).
Section 162. Revisions to Requirements for Medicare Advantage
Private Fee-for-Service (PFFS) Plans. Prior to enactment of MIPPA, MA
coordinated care plans were required to meet medical access requirements by forming
networks of contracted providers; PFFS plans could meet access requirements either
by establishing payment rates for providers that were not less than rates paid under
original Medicare or by developing contracts and agreements with a sufficient
number and range of providers within a category to provide covered services under
the terms of the plan. The Act makes some access requirements for some PFFS plans
move closer to the access requirements for coordinated care plans. Starting in 2010,
any PFFS plan that chooses to contract with a category of providers is required to
meet the same general access to services requirements applicable to coordinated care
plans.
Starting in 2011, PFFS plans sponsored by employers or unions are required to
establish contracted networks of providers to meet access requirements.
Non-employer sponsored MA PFFS plans are required to establish contracted
networks of providers in network areas defined as areas having at least two plans
with networks (such as health maintenance organizations [HMOs], provider
sponsored organizations [PSOs], or local preferred provider organizations [PPOs]).
In areas without at least two network-based plans, the non-employer PFFS plans
retain the ability to establish access requirements through establishing payment rates
that are not less than those under original Medicare.
Section 163. Revisions to Quality Improvement Programs. With the
enactment of MIPPA, beginning January 1, 2010, PFFS and Medical Savings



Account (MSA) plans are required to have a quality improvement program similar
to other MA plans. Starting in 2011, data collection, reporting, and analysis
requirements for PFFS and MSA plans may not exceed the requirements for local
PPO plans, which are limited to those data from providers in the plan’s contracted
network, but not from out-of-network providers. In 2010, the data requirements for
PFFS and MSA plans are limited to administrative data, but must be collected from
both in-network and out-of-network providers. MIPPA removes the requirement that
the Secretary establish separate data collection requirements for MA regional plans;
it requires regional and local PPO plans to adhere to the same data collection
requirements.
Section 164. Revisions Relating to Specialized Medicare
Advantage Plans for Special Needs Individuals. This provision extends the
time current Special Needs Plans (SNPs) may restrict enrollment to special needs
individuals and extends the moratorium on the Secretary’s authority to designate new
SNPs until January 1, 2011. Starting January 1, 2010, all new enrollees in a SNP will
be required to meet the definition of a special needs individual.
Additional requirements are specified for all three types of SNPs: Institutional,
Medicaid, and Chronic Care. For institutional SNPs, individuals living in the
community who may need an institutional level of care are not eligible to enroll in
the SNP unless it is determined by an entity other than the SNP using a state
assessment tool, that the individual needs an institutional level of care.
Medicaid SNPs are required to have a contract with the State to provide
Medicaid benefits, or arrange for benefits to be provided; Medicaid SNPs that do not
comply with the contracting requirement will be permitted to participate in 2010, but
will not be allowed to expand their service area. Further, Medicaid SNPs are
required to provide prospective enrollees with descriptions of benefits and cost
sharing under the Medicaid program and which are be covered by the SNP.
Chronic Care SNPs are required to comply with a revised definition of a
Chronic Care SNP; the Secretary is also required to convene a panel of clinical
advisors to determine which conditions meet the definition of a severe and disabling
chronic condition.
The Act requires all SNPs to comply with certain care management
requirements such as having an appropriate network of providers, performing
enrollee health assessments, and arranging for interdisciplinary teams to manage care
for enrollees. By no later than January 1, 2010, SNPs are required to collect and
report data related to the care management requirements. To ensure compliance with
the care management requirements, the Secretary is required to conduct a review of
SNPs in conjunction with its periodic financial audit of MA plans. Plans would be
expected to comply with these new requirements beginning January 1, 2010.
Section 165. Limitation on Out-Of-Pocket Costs for Dual Eligibles
and Qualified Medicare Beneficiaries Enrolled in a Specialized Medicare
Advantage Plan for Special Needs Individuals. Effective January 1, 2010,
Medicaid Special Needs Plans (SNPs) serving beneficiaries eligible for full benefits
under Medicaid, or limited benefits under the Qualified Medicare Beneficiary



program, are prohibited from charging cost-sharing in excess of what would be
permitted under Medicaid.
Section 166. Adjustment to the Medicare Advantage Stabilization
Fund. The MMA created the MA Regional Plan Stabilization Fund with an initial
level of $10 billion. Subsequent legislation reduced this amount to $1.79 billion.
Also, currently a portion of the savings accrued in the regional plan bidding process
is added to the Fund. MIPPA reduces the initial funding to one dollar. Money from
the regional plan bidding process continues to flow into the Fund. Expenditures are
delayed one year, until 2014.
Section 167. Access to Medicare Reasonable Cost Contract Plans.
Reasonable Cost Contract Plans are MA plans that are reimbursed by Medicare for
the actual cost of providing services to enrollees. Prior to MIPPA, these plans were
allowed to operate indefinitely unless there were two other MA plans of the same
type that operated for the entire year in the cost contract’s service area. The Act
extends for one year — from January 1, 2009, to January 1, 2010 — the length of
time reasonable cost plans may continue operating regardless of any other MA plans
serving the area. It specifies that to prohibit the cost plan from participating after
January 1, 2010, the two plans in the service area must be offered by different
organizations. Finally, MIPPA modifies the minimum enrollment requirements for
local or regional plans operating within the cost plan’s service area.
GAO is required to submit a report to Congress on the reasons why cost-based
plans may be unable to become MA plans, together with recommendations for
legislation and administrative action as appropriate by December 31, 2009.
Section 168. MedPAC Study and Report on Quality Measures. The
Medicare Payment Advisory Commission (MedPAC) is required to conduct a study
on how comparable measures of performance and patient experience can be collected
and reported by 2011 for MA and original Medicare. Not later than March 31, 2010,
MedPAC is required to submit a report to Congress containing the results of the
study, together with recommendations for legislation and administrative action as
appropriate.
Section 169. MedPAC Study and Report on Medicare Advantage
Payments. MedPAC is required to conduct a study on the correlation between MA
costs of providing Medicare coverage (as reflected in plan bids) and county level,
per-capita spending in the original fee-for-service (FFS) program. The study is
required to include differences by plan type and geographic area. Based on the
results of this study, and other data, MedPAC is required to examine (1) alternatives
to county-level payments and (2) the accuracy and completeness of county-level
estimates of spending in original Medicare. Not later than March 31, 2010, MedPAC
is required to submit a report to Congress containing the results of the study, together
with recommendations for improving estimates, legislation and administrative action
as appropriate.



Subtitle E - Provisions Relating to Part D
Part I - Improving Pharmacy Access
Section 171. Prompt Payment by Prescription Drug Plans and
MA-PD Plans under Part D. For plan years beginning on or after January 1,
2010, the negotiated contracts between pharmacies and Medicare Part D prescription
drug plans (PDP sponsors or MA-PD plans) will be required to provide that payment
will be issued, mailed, or otherwise transmitted with respect to all “clean claims”
submitted by pharmacies within the “applicable number of calendar days” after the
date on which the claim is received. This requirement will not apply to pharmacies
that dispense drugs by mail order only or are located in, or contract with, a long-term
care facility. “Clean claims” are defined as those claims that have no defect or
impropriety such as the lack of any required substantiating documentation, or any
circumstances requiring special treatment that prevents timely payment from being
made. Claims submitted electronically will be considered to have been received on
the date on which the claim is transferred. Claims not submitted electronically will
be considered to have been received on the 5th day after the postmark date of the
claim or the date specified in the time stamp of the transmission. The term
“applicable number of calendar days” will be defined as 14 days for claims submitted
electronically and 30 days for claims submitted otherwise.
If payment is not issued, mailed, or otherwise transmitted within the applicable
number of calendar days after a clean claim is received, the PDP sponsor or MA-PD
plan will be required to pay interest to the pharmacy that submitted the claim. This
interest charge will not be counted against the administrative costs of a PDP sponsor
or MA-PD plan or treated as allowable risk corridor costs. The Secretary may
provide that a PDP sponsor or MA-PD plan will not be charged interest in cases with
exigent circumstances, including natural disasters and other unique and unexpected
events, that prevent the timely processing of claims.
A claim will be deemed to be clean if the PDP sponsor or MA-PD plan does not
provide notice of any deficiency in the claim within 10 days of the date of receipt, for
claims submitted electronically, and, otherwise, within 15 days of the date of receipt.
If the PDP sponsor or MA-PD plan determines that the submitted claim is not a clean
claim, the PDP sponsor or MA-PD plan will be required to notify the claimant,
specifying all defects or improprieties in the claim and listing all additional
information or documents necessary for the proper processing and payment of the
claim. If the sponsor or plan does not notify the claimant of any defect or
impropriety in the claim within 10 days of the date on which additional information
is received, the claim will be deemed a clean claim. If a PDP sponsor or MA-PD
plan does not pay or contest a claim within the applicable number of days after the
date of receipt, the claim will be deemed a clean claim and will be required to be
paid. PDP sponsors or MA-PD plans will be required to pay all clean claims (and
remittance) submitted electronically by electronic transfer of funds if the pharmacy
so requests or has requested previously.
Section 172. Submission of Claims by Pharmacies Located in or
Contracting with Long-Term Care Pharmacies. For plan years beginning on



or after January 1, 2010, contracts between PDP sponsors and pharmacies located in
or contracting with long-term care facilities will be required to provide that the
pharmacy has between 30 and 90 days to submit claims for reimbursement.
Section 173. Regular Update of Prescription Drug Pricing
Standard. For plan years beginning on or after January 1, 2009, contracts between
pharmacies and PDP sponsors or MA-PD plans that use the cost of a drug as the
standard for reimbursement of pharmacies will be required to provide that the
sponsor update the standard at least every seven days, to accurately reflect the market
price of acquiring the drug.
Part II - Other Provisions
Section 175. Inclusion of Barbiturates and Benzodiazepines as
Covered Part D Drugs. Prescription drug plans and MA-PD plans are not
currently required to include barbiturates or benzodiazepines in their formularies.
For prescriptions dispensed on or after January 1, 2013, plans will be required to
include benzodiazepines in their formularies. Barbiturates will also be required to
be included in formularies for the indications of epilepsy, cancer, or chronic mental
health disorder.
Section 176. Formulary Requirements With Respect to Certain
Categories or Classes of Drugs. Under Medicare Part D, formularies of
prescription drug plans and MA-PD plans must include drugs within each therapeutic
category and class of covered Part D drugs, although not necessarily all drugs within
such categories and classes. CMS has required plans to cover all or substantially all
drugs in the following six classes: anticonvulsants, antineoplastics, antiretrovirals,
antidepressants, antipsychotics, and immunosuppressives. CMS stated that it
instituted the policy because it felt it necessary to ensure that Medicare beneficiaries
reliant on these drugs will not be substantially discouraged from enrolling with Part
D plans and to mitigate the risks and complications associated with interruption of
therapy for vulnerable populations.
Beginning with plan year 2010, the Secretary will be required to identify
categories and classes of drugs (which may be different from the six classes required
by CMS) for which (1) restricted access to the category or class will have major or
life threatening clinical consequences for individuals who have a disease or disorder
treated by the drugs in such category or class; and (2) there is significant clinical need
for such individuals to have access to multiple drugs within a category or class due
to unique chemical actions and pharmacological effects of the drugs within the
category or class, such as drugs used in the treatment of cancer.
Prescription drug plan (PDP) sponsors will be required to include all covered
Part D drugs in the categories and classes identified by the Secretary. However, the
Secretary may establish a formal exceptions process that ensures that any exception
is based upon scientific evidence and medical standards of practice (which for
antiretroviral medications must be consistent with HHS Guidelines for the Use of
Antiretroviral Agents in HIV-1-Infected Adults and Adolescents), and includes a
public notice and comment period.



Subtitle F - Other Provisions
Section 181. Use of Part D Data. In order to maintain the confidentiality
of sensitive data, and to protect trade secrets, MMA placed restrictions on Medicare
Part D data and limited access only for specific purposes. On May 27, 2008, the CMS
issued a final rule that would allow the Secretary to use the claims information that
is now being collected for Part D payment purposes for other research, analysis,
reporting, and public health functions. Some organizations who submitted comments
on the rule questioned the CMS’s authority to use the Part D data for other than
payment purposes. This provision in MIPPA grants CMS authority to use and share
data from the Medicare Part D program by amending Section 1860D-12(b)(3)(D) of
the Social Security Act (42 U.S.C. 1395w-112(b)(3)(D)). As a result of this
modification, information provided to the Secretary in the administration of the Part
D program may be used for the purposes of improving public health through research
on the utilization, safety, effectiveness, quality, and efficiency of health care services
(as the Secretary determines appropriate), and shall be made available to
Congressional support agencies (in accordance with their obligations to support
Congress as set out in their authorizing statutes) for the purposes of conducting
Congressional oversight, monitoring, making recommendations, and analysis of the
Medicare program.
Section 182. Revision of Definition of Medically Accepted
Indication for Drugs. The term medically accepted indication includes any use
which has been approved by the Food and Drug Administration (FDA). The term
also includes another use if the drug itself has been approved by the FDA and the use
has been supported by one or more citations (or approved for inclusion) in one or
more compendia specified in the law or other authoritative compendia identified by
the Secretary, unless the Secretary determines that the use is not medically
appropriate or the use is identified as not indicated in one or more compendia. The
Secretary may revise the list of compendia as appropriate. CMS has proposed a
formal process for accepting and acting on requests for changes to the list of
compendia.
On and after January 1, 2010, no compendia will be permitted to be included on
the Secretary’s list of compendia unless the compendia has a publicly transparent
process for evaluating therapies and for identifying potential conflicts of interests.
For plan years beginning on or after January 1, 2009, the Secretary will be required
to include the compendia used in the Medicaid program in the list of compendia,
provided that the compendia for the Medicaid program has a publicly transparent
process for evaluating therapies and for identifying potential conflicts of interests on
and after January 1, 2010. If the compendia for the Medicaid program do not meet
these criteria, the Secretary will be required to revise the compendia for the Medicaid
program accordingly. In the case of a covered part D drug to be used in an anticancer
chemotherapeutic regimen, PDPs and MA-PDs will have the authority to determine,
based upon guidance provided by the Secretary, whether such use is medically
accepted based on supportive clinical evidence in peer reviewed medical literature
appearing in publications which have been identified by the Secretary.
Section 183. Contract with a Consensus-Based Entity Regarding
Performance Measurement. This provision will enable the Secretary to contract



with an organization that will develop and endorse health care quality measures. For
this purpose, up to $10 million from the Medicare Part A and Part B Trust Funds will
be made available for the period of fiscal years 2009 through 2012. The provision
also includes the Sense of the Senate that the contract with the consensus-based entity
should not be construed as diminishing the significant contributions of the Boards of
Medicine, the quality alliances, and other clinical and technical experts for efforts to
measure and improve the quality of health care services. The GAO will conduct
studies on the performance of the consensus-based entity and report on (1) its duties
under the contract and (2) the costs incurred by the entity in performing such duties.
These reports will be due not later than 18 months and 36 months after the effective
date of the first contract, together with recommendations for such legislation and
administrative action as the Comptroller General determined appropriate.
Section 184. Cost-Sharing For Clinical Trials. This provision gives the
Secretary the authority to develop alternative methods of payment for items and
services provided under clinical trials and comparative effectiveness studies
sponsored or supported by an agency of the Department of Health and Human
Services, as determined by the Secretary. These are payments which would be
necessary to preserve the scientific validity of such trials or studies, such as in the
case where masking the identity of interventions from patients and investigators is
necessary to comply with the particular trial or study design.
Section 185. Addressing Health Care Disparities. The provision gives
the Secretary the authority to initiate data collection and analysis efforts to address
health care disparities across race, ethnicity, and gender. The Secretary will prepare
several reports that will (1) identify approaches (including defining methodologies)
for identifying and collecting and evaluating data on health care disparities on the
basis of race, ethnicity, and gender for the original Medicare fee-for-service program,
and (2) include recommendations on the most effective strategies and approaches to
reporting Health Effectiveness Data and Information Set (HEDIS) quality measures
and other nationally recognized quality performance measures, as appropriate, on the
basis of race, ethnicity, and gender. Not later than four years after enactment, and
four years thereafter, the Secretary will submit to Congress a report that includes
recommendations for improving the identification of health care disparities for
Medicare beneficiaries based on analyses of the data collected as described above.
Not later than 24 months after the date of the enactment of this section, the Secretary
will implement the approaches identified in this report for the ongoing, accurate, and
timely collection and evaluation of data on health care disparities on the basis of race,
ethnicity, and gender.
Section 186. Demonstration to Improve Care to Previously
Uninsured. Within one year after enactment, the Secretary will establish a
demonstration project to determine the greatest needs and most effective methods of
outreach to Medicare beneficiaries who were previously uninsured. The
demonstration will be in no fewer than 10 sites, and will include state health
insurance assistance programs, community health centers, community-based
organizations, community health workers, and other service providers under
Medicare Parts A, B, and C. The Secretary will conduct the demonstration project for
a period of two years and will submit a report to Congress not later than one year
after completion that will include (1) an analysis of the effectiveness of outreach



activities targeting beneficiaries who were previously uninsured, and (2) the effect
of the outreach on beneficiary access to care, utilization of services, efficiency and
cost-effectiveness of health care delivery, patient satisfaction, and select health
outcomes.
Section 187. Office of the Inspector General Report on Compliance
with and Enforcement of National Standards on Culturally and
Linguistically Appropriate Services (CLAS) in Medicare. The National
Standards on Culturally and Linguistically Appropriate Services (CLAS) were
published in the Federal Register on December 22, 2000 (Vol. 65, No. 247, pp.
80865-80879) as national standards for adoption or adaptation by stakeholder
organizations and agencies. The CLAS standards are primarily directed at health care
organizations and were initially derived from an analysis of current practice and
policy on cultural competence. The CLAS standards are intended to provide a
common understanding and consistent definitions of culturally and linguistically
appropriate services in health care, and to offer a practical framework for the
implementation of services and organizational structures that can help health care
organizations and providers be responsive to the cultural and linguistic issues
presented by diverse populations.
Not later than two years after enactment, the HHS Inspector General will
prepare and publish a report on (1) the extent to which Medicare providers and plans
are complying with the Office for Civil Rights’ Guidance to Federal Financial
Assistance Recipients Regarding Title VI Prohibition Against National Origin
Discrimination Affecting Limited English Proficient Persons and the Office of
Minority Health’s Culturally and Linguistically Appropriate Services Standards in
health care, and (2) a description of the costs associated with or savings related to the
provision of language services. The report will include recommendations on
improving compliance with CLAS Standards and recommendations on improving
enforcement of CLAS Standards. Not later than one year after the date of publication
of the report, the Department of Health and Human Services will implement changes
responsive to any deficiencies identified in the report.
Section 188. Medicare Improvement Funding. The Secretary will
establish a Medicare Improvement Fund that will be available to the Secretary to
make improvements under the original fee-for-service program under Parts A and B
for Medicare beneficiaries. MIPPA, together with a provision in the Supplemental
Appropriations Act, 2008 (P.L. 110-252), makes $2.22 billion from the Part A and
B Trust Funds available for services furnished during FY2014 and an additional
$19.9 billion available for fiscal years 2014 through 2017.
For purposes of carrying out the provisions of, and amendments made by, this
Act, in addition to any other amounts provided in such provisions and amendments,
additional funds will be made available to CMS. For fiscal years 2009 through 2013,
the Secretary of Health and Human Services will transfer $140 million from the
Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical
Insurance Trust Fund to the CMS Program Management Account. The amounts
drawn from the funds will be in the same proportion as for Medicare managed care
payments (Medicare Advantage), that is, in a proportion that reflects the relative



weight that benefits under part A and under part B represent of the actuarial value of
the total benefits.
Section 189. Inclusion of Medicare Providers and Suppliers in
Federal Payment Levy and Administrative Offset Program. The Federal
Payment Levy Program (FPLP) authorizes the Internal Revenue Service (IRS) to
collect overdue taxes through a continuous levy on federal payments made to
delinquent taxpayers. This provision will require that CMS process all payments
through the FPLP by September 30, 2011.
Title II - Medicaid
Section 201. Extension of Transitional Medical Assistance (TMA)
and Abstinence Education Program. States are required to continue Medicaid
benefits for certain low-income families who will otherwise lose coverage because
of changes in their income (e.g., an increase in hours of employment). This
continuation is called transitional medical assistance (TMA). Permanent law requires
four months of TMA, and Section 1925 of the Social Security Act (which has a
sunset date) requires up to 12 months for families who will otherwise lose coverage
for work-related reasons. Since 2001, Section 1925 TMA requirements have been
funded through a series of short-term extensions, most recently through June 30,

2008.


P.L. 104-193, the 1996 welfare reform law, provided $250 million in federal
funds specifically for an abstinence education program ($50 million per year for each
of five years, FY1998-FY2002). Funds for this program (referred to as the Title V
Abstinence Education block grant) must be requested by states when they solicit Title
V Maternal and Child Health block grant funds and must be used exclusively for
teaching abstinence. Although it has not been reauthorized, the latest temporary
extension continued funding through June 30, 2008.
The provision will extend Section 1925 TMA requirements and the abstinence
education program through June 30, 2009, with funding at the level provided through
the third quarter of FY2008.
Section 202. Medicaid DSH Extension. When establishing hospital
payment rates, state Medicaid programs are required to recognize the situation of
hospitals that provide a disproportionate share of care to low-income patients with
special needs. Such “disproportionate share hospital (DSH) payments” are subject
to statewide allotment caps. Allotments for Tennessee and Hawaii, however, are
equal to zero because the states operate their state Medicaid programs under the
provisions of a Section 1115 research and demonstration waiver. Such research and
demonstration waivers allow for states to waive various provisions of Medicaid law
specified in Title XIX of SSA (such as the requirement to make disproportionate
share payments) to conduct demonstrations as long as the demonstrations are likely
to assist in promoting the objectives of the Medicaid program.
Congress has enacted special DSH provisions for Tennessee and Hawaii in the
past. Both states received a special allotment for FY2007 and part of FY2008.
Tennessee’s allotment amount was set at $30 million for FY2007, and the same



amount was prorated for the applicable portion of FY2008. Hawaii’s allotment was
set at $10 million for 2007 and similarly prorated for FY2008. Both states have, in
addition, been allowed to submit state plan amendments describing their
methodologies for distributing such payments for the Secretary’s approval.
The provision will extend the special DSH allotment arrangements for
Tennessee and Hawaii through a portion of FY2010. Allotment amounts will be
equal to $30 million for Tennessee for each full year — 2008 and 2009 — and
one-quarter of that amount will be available for the first quarter of FY2010. Hawaii’s
$10 million allotment will be extended for each full fiscal year — 2008 and 2009 —
and $2.5 million will be available for the first quarter of FY2010.
Section 203. Pharmacy Reimbursement under Medicaid. State
Medicaid programs set the prices paid to pharmacies for Medicaid outpatient drugs.
Federal reimbursements for those drugs, however, are limited to a federal upper limit
(FUL). The DRA established that FULs applying to drugs available from multiple
sources (generic drugs, for the most part) be re-calculated by CMS to be equal to
250% of the average manufacturer’s price (AMP, the average price paid by
wholesalers to manufacturers) as reported to CMS by the manufacturers. Upon full
implementation of the DRA provisions, AMPs are to become publicly available.
Important components of the new FUL formula have been issued in a final rule in
July of 2007. The rule defines a number of terms related to drug pricing under
Medicaid, including definitions impacted by DRA provisions such as AMP, multiple
source drugs, and nominal prices. The rule has been contested, and CMS is
prohibited from implementing its provisions until the court hears the case and makes
a final determination of its legality. In the interim, FUL formulas remain calculated
by CMS as equal to 150% of the published price for the least costly therapeutic
equivalent.
The provision will retain, through September 30, 2009, the FUL formulas for
federal reimbursement of multiple source drugs as described in federal regulations
in effect as of December 21, 2006 (42 CFR 447). Under those instructions, FULS
are calculated to be equal to 150% of the published price for the least costly
therapeutic equivalent. In addition, the Secretary will not be permitted to make AMP
prices publicly available prior to such date.
Section 204. Review of Administrative Claim Determinations. The
federal government and the states share in the cost of Medicaid expenditures that
states incur for services provided to Medicaid beneficiaries and for the administration
of their Medicaid programs. States submit quarterly expense reports in order to
receive federal reimbursement for a share of these costs. If the Department of Heath
and Human Services (HHS) believes that a state’s claim for federal financial
participation (FFP) for state expenditures is improper or erroneous, it may disallow
the claim. Disputes that pertain to disallowances of FFP in Medicaid expenditures
are heard by the HHS, Departmental Appeals Board (the Board) in accordance with
specified procedures.
The provision will establish new timelines and procedures for the administrative
review of disallowances of federal financial participation under Medicaid. In the
case where the Secretary disallows FFP for a state claim under Medicaid, the state



will be permitted to receive a reconsideration of the disallowance (or a
reconsideration of an unfavorable reconsideration of a disallowance) if the state files
an appeal with the Board within 60 days after receiving notice. The provision will
also permit States to obtain judicial review by filing an action in any United States
District Court located within the appealing state, or if several States jointly appeal,
in any United States District Court that is located within any State that is a party to
the appeal. Judicial review will be permitted only in the case that (1) no motion for
reconsideration was filed during the 60-day period after the state received notice of
the disallowance of FFP under Medicaid, or (2) if the State filed a motion for an
appeal, during the 60 day period that begins on the date of the Board’s decision on
such motion.
Section 205. County Medicaid Health Insuring Organizations. In
general, Medicaid managed care organizations are subject to contracting
requirements described in section 1903(m)(2)(A) of the Social Security Act.
However, certain county-operated managed care plans in California that serve
Medicaid beneficiaries, which are referred to as “county organized health systems”
or “health insuring organizations” (HIOs), are exempt from these contracting
requirements. The Consolidated Omnibus Budget Reconciliation Act of 1985 (P.L.
99-272) grandfathered the 1903(m)(2)(A) exemption for HIOs operating before
January 1, 1986. In addition, the Omnibus Budget Reconciliation Act of 1990 (P.L.
101-508) provided an exemption for up to three county-operated HIOs in California
that became operational on or after January 1, 1986, provided that certain
requirements were met. For example, the three entities could enroll no more than

10% of all Medicaid beneficiaries in California, later raised to 14% by MMSEA.


The provision will add an exemption for HIOs operated by Ventura County and
Merced County, and will raise the allowable percentage of beneficiaries to 16%.
Title III - Miscellaneous
Section 301. Extension of TANF Supplemental Grants. Temporary
Assistance for Needy Families (TANF) provides supplemental grants for 17 states
with exceptionally high population growth in the early 1990s, historic (pre-1996)
welfare grants per poor person lower than 35 percent of the national average, or a
combination of above average population growth and below average historic welfare
grants per poor person. Grants were authorized at $800 million over FY1998 through
FY2001, and annual grants grew from $79 million in FY1998 to $319 million in
FY2001. Congress froze supplemental grants at the $319 million annual level when
it extended supplemental grants for FY2002 and subsequent years. DRA provided
the last extension of supplemental grants, continuing their funding through FY2008.
(Other TANF grants are funded through FY2010.) This provision extends
supplemental grants at the $319 million level through FY2009. In FY2009, each of
the 17 qualifying states will receive the same supplemental grant amount as it did in
FY2008.
Section 302. 70 Percent Federal Matching for Foster Care and
Adoption Assistance for the District of Columbia. Under Title IV-E of the
Social Security Act, states are entitled to receive federal reimbursement for a portion
of the cost of each foster care maintenance payment or adoption assistance payment



provided on behalf of an eligible child. The federal reimbursement rate for these
payments is equal to each state’s Federal Medical Assistance Percentage (FMAP) rate
as defined under Title XIX. In general, Title XIX provides that a state’s FMAP
(including the District of Columbia’s FMAP) is calculated annually and may range
from 50%-83% based on the state’s per capita income. (States with higher per capita
income receive a lower reimbursement rate and vice versa.) However, for purposes
of the Medicaid program and the State Children’s Health Insurance Program
(SCHIP), only, Title XIX sets the District of Columbia’s FMAP at 70%.
This provision will entitle the District of Columbia to receive federal
reimbursement for its eligible foster care maintenance and adoption assistance
payments at 70% (by amending Title IV-E to fix the District of Columbia’s FMAP
at that rate for those payments). It will make this change effective beginning with the
first day of the first quarter of FY2009.
Section 303. Extension of Special Diabetes Grant Programs. As
specified in the Public Health Service Act, the Secretary, directly or through grants,
must provide for research into the prevention and cure of Type I diabetes (Section
330B), and must make grants for providing services for the prevention and treatment
of diabetes among American Indians and Alaskan Natives (Section 330C). For each
grant program, appropriations are set at $150 million per year during the period
FY2004 through FY2009. An evaluation is required for each program. For both
programs, MIPPA will provide appropriations of $150 million per year for FY2010
and FY2011. It will also re-designate the final report in current law that was due in
January 2007 to be a second interim report (an initial interim report was due in
January, 2000), and will add a new final report that will be due not later than January

1, 2011.


Section 304. IOM Reports on Best Practices for Conducting
Systematic Reviews of Clinical Effectiveness Research and for
Developing Clinical Protocols. Within 60 days after the date of enactment of
this Act, the Secretary will be required to enter into a contract with the IOM to
conduct (1) a study on the best methods used in developing clinical practice
guidelines, and (2) a study to identify the methodological standards for conducting
systematic reviews of clinical effectiveness research on health and health care. The
purpose of these studies is to ensure that organizations developing such guidelines
have information on approaches that are objective, scientifically valid, and consistent.
Not later than 18 months after the effective date of the contract, the IOM will be
required to submit a report to the Secretary and the appropriate committees of
Congress, that contains the results of the studies and recommendations for legislation
and administrative action. The contract with the IOM will require that stakeholders
with expertise in making clinical recommendations participate on the panel
responsible for study (1), and stakeholders with expertise in conducting clinical
effectiveness research participate on the panel responsible for study (2).
To carry out these studies, this provision appropriates, out of any funds in the
Treasury not otherwise appropriated, $3 million for FY2009 and FY2010.