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

(name redacted), Coordinator

Specialist in Health Care Financing

July 23, 2008

Congressional Research Service

7-....

www.crs.gov

RL34592

CRS Report for Congress

Prepared for Members and Committees of Congress

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.

Congressional Research Service

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

Contents

Introduction ................................................................................................................................1

A Brief Description of the Current Programs ...............................................................................2

Medicare...............................................................................................................................2

Medicaid...............................................................................................................................2

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 ....................................................................................3

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 ............................................................................................4

Section 111. Extension of Qualifying Individual (QI) Program ........................................4

Section 112. Application of Full Low Income Subsidy (LIS) Assets Test under

Medicare Savings Program...........................................................................................5

Section 113. Eliminating Barriers to Enrollment ..............................................................5

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 .................................9

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 ......................................................... 11

Section 133. Expanding Access to Primary Care Services.............................................. 12

Section 134. Extension of Floor on Medicare Work Geographic Adjustment under

the Medicare Physician Fee Schedule......................................................................... 12

Section 135. Imaging Provisions ................................................................................... 12

Section 136. Extension of Treatment of Certain Physician Pathology Services

under Medicare .......................................................................................................... 13

Congressional Research Service

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

Section 137. Accommodation of Physicians Ordered to Active Duty in the Armed

Services ..................................................................................................................... 13

Section 138. Adjustment for Medicare Mental Health Services ...................................... 13

Section 139. Improvements for Medicare Anesthesia Teaching Programs ...................... 13

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 ....................................................... 14

Section 144. Payment and Coverage Improvements for Patients with Chronic

Obstructive Pulmonary Disease and Other Conditions ................................................ 14

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............................................................................................ 15

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................................ 16

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............................................................................ 19

Section 161. Phase-Out of Indirect Medical Education (IME)........................................ 19

Section 162. Revisions to Requirements for Medicare Advantage Private Fee-forService (PFFS) Plans ................................................................................................. 20

Section 163. Revisions to Quality Improvement Programs............................................. 20

Section 164. Revisions Relating to Specialized Medicare Advantage Plans for

Special Needs Individuals .......................................................................................... 20

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 ........................ 21

Section 167. Access to Medicare Reasonable Cost Contract Plans ................................. 21

Section 168. MedPAC Study and Report on Quality Measures....................................... 22

Section 169. MedPAC Study and Report on Medicare Advantage Payments .................. 22

Subtitle E - Provisions Relating to Part D ............................................................................ 22

Part I - Improving Pharmacy Access ................................................................................... 22

Section 171. Prompt Payment by Prescription Drug Plans and MA-PD Plans

under Part D............................................................................................................... 22

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 .............................. 23

Part II - Other Provisions.................................................................................................... 23

Congressional Research Service

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

Section 175. Inclusion of Barbiturates and Benzodiazepines as Covered Part D

Drugs......................................................................................................................... 23

Section 176. Formulary Requirements With Respect to Certain Categories or

Classes of Drugs ........................................................................................................ 24

Subtitle F - Other Provisions ............................................................................................... 24

Section 181. Use of Part D Data .................................................................................... 24

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 ................................................................ 25

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 ................................................................. 26

Section 188. Medicare Improvement Funding ............................................................... 27

Section 189. Inclusion of Medicare Providers and Suppliers in Federal Payment

Levy and Administrative Offset Program.................................................................... 27

Title II - Medicaid ............................................................................................................... 27

Section 201. Extension of Transitional Medical Assistance (TMA) and

Abstinence Education Program .................................................................................. 27

Section 202. Medicaid DSH Extension.......................................................................... 28

Section 203. Pharmacy Reimbursement under Medicaid................................................ 28

Section 204. Review of Administrative Claim Determinations....................................... 29

Section 205. County Medicaid Health Insuring Organizations ....................................... 29

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 .......................................... 30

Section 304. IOM Reports on Best Practices for Conducting Systematic Reviews

of Clinical Effectiveness Research and for Developing Clinical Protocols .................. 31

Contacts

Author Contact Information ...................................................................................................... 32

Congressional Research Service

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 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. 108173, MMA)

•

Deficit Reduction Act (P.L. 109-171, DRA)

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.

Congressional Research Service

1

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

•

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, briefly described below.

More complete and detailed descriptions are available from CRS.2 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).

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.

2

See, for example, CRS Report RL33712, Medicare: A Primer, by Jennifer O’Sullivan, and CRS Report RL33202,

Medicaid: A Primer, by (name redacted).

3

See http://www.cbo.gov/budget/factsheets/2008b/medicare.pdf.

Congressional Research Service

2

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

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.

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

4

See http://www.ahrq.gov/clinic/pocketgd.htm for a listing of preventive services recommended by the United States

Preventive Services Task Force.

Congressional Research Service

3

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

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 Information Nondiscrimination Act of

2008 (GINA, P.L. 110-233).5 The provision prohibits a 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

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 (GINA), by (name redacted) and (name redacted).

Congressional Research Service

4

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

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 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

Congressional Research Service

5

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

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.

Congressional Research Service

6

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

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.

Congressional Research Service

7

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

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.

Congressional Research Service

8

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

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 hospitalspecific 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

Congressional Research Service

9

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

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

Congressional Research Service

10

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

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,

Congressional Research Service

11

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

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

Congressional Research Service

12

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

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

Congressional Research Service

13

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

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.

Congressional Research Service

14

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

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

Congressional Research Service

15

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

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,

Congressional Research Service

16

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

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.

Congressional Research Service

17

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

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.

Congressional Research Service

18

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

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 phaseout percentage will be increased by 0.60 percentage points each year. This provision will not

Congressional Research Service

19

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

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 Feefor-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

Congressional Research Service

20

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

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.

Congressional Research Service

21

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

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.

Congressional Research Service

22

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

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.

Congressional Research Service

23

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

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. 1395w112(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.

Congressional Research Service

24

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

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

Congressional Research Service

25

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

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 costeffectiveness 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.

Congressional Research Service

26

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

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

Congressional Research Service

27

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

reasons. Since 2001, Section 1925 TMA requirements have been funded through a series of shortterm 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.

Congressional Research Service

28

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

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 60day 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.

Congressional Research Service

29

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

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 IVE 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.

Congressional Research Service

30

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

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.

Congressional Research Service

31

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

Author Contact Information

(name redacted),

(name redacted)

Coordinator

Analyst in Health Care

Specialist in Health Care Financing

Financing

[redacted]@crs.loc.gov

[redacted]@crs.loc.gov, 7-....

7-....

,

(name redacted)

(name redacted)

Specialist in Health Care Specialist in Health Care

Financing

Financing

[redacted]@crs.loc.gov, 7-[redacted]@crs.loc.gov, 7....

....

(name redacted)

(name redacted)

Specialist in Health Care Specialist in Health Care

Financing

Financing

[redacted]@crs.loc.gov, [redact ed]@crs.loc.gov, 77-....

....

(name redacted)

(name redacted)

Analyst in Health Care Specialist in Social Policy

[redacted]@crs.loc.gov, 7-....

Financing

[redacted]@crs.loc.gov,

7-....

(name redacted)

Analyst in Health Care

Financing

[redacted]@crs.loc.g

ov, 7....

(name redacted)

Specialist in Social Policy

[redacted]@crs.loc.gov, 7....

(name redacted)

Section Research

Manager

[redacted]@crs.loc.gov,

7-....

Acknowledgments

Jennifer O’Sullivan, Specialist in Health Care Financing; (name redacted), Analyst in Health Care

Financing; (name redacted), Analyst in Health Care Financing; and Jean Herne, Specialist in Social Legislation,

contributed to the original version of this report.

Congressional Research Service

32

EveryCRSReport.com

The Congressional Research Service (CRS) is a federal legislative branch agency, housed inside the

Library of Congress, charged with providing the United States Congress non-partisan advice on

issues that may come before Congress.

EveryCRSReport.com republishes CRS reports that are available to all Congressional staff. The

reports are not classified, and Members of Congress routinely make individual reports available to

the public.

Prior to our republication, we redacted names, phone numbers and email addresses of analysts

who produced the reports. We also added this page to the report. We have not intentionally made

any other changes to any report published on EveryCRSReport.com.

CRS reports, as a work of the United States government, are not subject to copyright protection in

the United States. Any CRS report may be reproduced and distributed in its entirety without

permission from CRS. However, as a CRS report may include copyrighted images or material from a

third party, you may need to obtain permission of the copyright holder if you wish to copy or

otherwise use copyrighted material.

Information in a CRS report should not be relied upon for purposes other than public

understanding of information that has been provided by CRS to members of Congress in

connection with CRS' institutional role.

EveryCRSReport.com is not a government website and is not affiliated with CRS. We do not claim

copyright on any CRS report we have republished.