P.L. 109–432, Approved December 20, 2006 (120 Stat. 2922)

SEC. 101.  PHYSICIAN PAYMENT AND QUALITY IMPROVEMENT.

(e)  Implementation.—For purposes of implementing the provisions of, and amendments made by, this section^[410], the Secretary of Health and Human Services shall provide for the transfer, from the Federal Supplementary Medical Insurance Trust Fund established under section 1841 of the Social Security Act (42 U.S.C. 1395t), of $60,000,000 to the Centers for Medicare & Medicaid Services Program Management Account for the period of fiscal years 2007, 2008, and 2009.

SEC. 103.  UPDATE TO THE COMPOSITE RATE COMPONENT OF THE BASIC CASE-MIX ADJUSTED PROSPECTIVE PAYMENT SYSTEM FOR DIALYSIS SERVICES.

(b)  Gao Report On Home Dialysis Payment.—Not later than January 1, 2009, the Comptroller General of the United States shall submit to Congress a report on the costs for home hemodialysis treatment and patient training for both home hemodialysis and peritoneal dialysis. Such report shall also include recommendations for a payment methodology for payment under section 1881 of the Social Security Act (42 U.S.C. 1395rr) that measures, and is based on, the costs of providing such services and takes into account the case mix of patients.

SEC. 106.  HOSPITAL MEDICARE REPORTS AND CLARIFICATIONS.

(a) [42 U.S.C. 1305ww note]  Correction of Mid-Year Reclassification Expiration.—Notwithstanding any other provision of law, in the case of a subsection (d) hospital (as defined for purposes of section 1886 of the Social Security Act (42 U.S.C. 1395ww)) with respect to which a reclassification of its wage index for purposes of such section would (but for this subsection) expire on March 31, 2007, such reclassification of such hospital shall be extended through March 31, 2012^[411]. The previous sentence shall not be effected in a budget-neutral manner.

(b)  Revision of the Medicare Wage Index Classification System.—

(1)  Medpac report.—

(A)  In general.—The Medicare Payment Advisory Commission shall submit to Congress, by not later than June 30, 2007, a report on its study of the wage index classification system applied under Medicare prospective payment systems, including under section 1886(d)(3)(E) of the Social Security Act (42 U.S.C. 1395ww(d)(3)(E)). Such report shall include any alternatives the Commission recommends to the method to compute the wage index under such section.

(B)  Funding.—Out of any funds in the Treasury not otherwise appropriated, there are appropriated to the Medicare Payment Advisory Commission, $2,000,000 for fiscal year 2007 to carry out this paragraph.

(2)  Proposal to revise the hospital wage index classification system.—The Secretary of Health and Human Services, taking into account the recommendations described in the report under paragraph (1), shall include in the proposed rule published under section 1886(e)(5)(A) of the Social Security Act (42 U.S.C. 1395ww(e)(5)(A)) for fiscal year 2009 one or more proposals to revise the wage index adjustment applied under section 1886(d)(3)(E) of such Act (42 U.S.C. 1395ww(d)(3)(E)) for purposes of the Medicare prospective payment system for inpatient hospital services. Such proposal (or proposals) shall consider each of the following:

(A)  Problems associated with the definition of labor markets for purposes of such wage index adjustment.

(B)  The modification or elimination of geographic reclassifications and other adjustments.

(C)  The use of Bureau of Labor Statistics data, or other data or methodologies, to calculate relative wages for each geographic area involved.

(D)  Minimizing variations in wage index adjustments between and within Metropolitan Statistical Areas and Statewide rural areas.

(E)  The feasibility of applying all components of the proposal to other settings, including home health agencies and skilled nursing facilities.

(F)  Methods to minimize the volatility of wage index adjustments, while maintaining the principle of budget neutrality in applying such adjustments.

(G)  The effect that the implementation of the proposal would have on health care providers and on each region of the country.

(H)  Methods for implementing the proposal, including methods to phase-in such implementation.

(I)  Issues relating to occupational mix, such as staffing practices and any evidence on the effect on quality of care and patient safety and any recommendations for alternative calculations

SEC. 108.  PAYMENT PROCESS UNDER THE COMPETITIVE ACQUISITION PROGRAM (CAP).

(b) [42 U.S.C. 1395w-3b note]  Construction.—Nothing in this section shall be construed as—

(1)  requiring the conduct of any additional competition under subsection (b)(1) of section 1847B of the Social Security Act (42 U.S.C. 1395w-3b); or

(2)  requiring any additional process for elections by physicians under subsection (a)(1)(A)(ii) of such section or additional selection by a selecting physician of a contractor under subsection (a)(5) of such section.

(c) [42 U.S.C. 1395w-3b note]  Effective date.—The amendments made by subsection (a) shall apply to payment for drugs and biologicals supplied under section 1847B of the Social Security Act (42 U.S.C. 1395w-3b)—

(1)  on or after April 1, 2007; and

(2)  on or after July 1, 2006, and before April 1, 2007, for claims that are unpaid as of April 1, 2007.

SEC. 111.  CLARIFICATION OF HOSPICE SATELLITE DESIGNATION.

Notwithstanding any other provision of law, for purposes of calculating the hospice aggregate payment cap for 2004, 2005, and 2006 for a hospice program under section 1814(i)(2)(A) of the Social Security Act (42 U.S.C. 1395f(i)(2)(A)) for hospice care provided on or after November 1, 2003, and before December 27, 2005, Medicare provider number 29-1511 is deemed to be a multiple location of Medicare provider number 29-1500.

SEC. 203. [42 U.S.C. 1395w-102 note]  OIG STUDY OF NEVER EVENTS.

(a)  Study.—

(1)  In general.—The Inspector General in the Department of Health and Human Services shall conduct a study on—

(A)  incidences of never events for Medicare beneficiaries, including types of such events and payments by any party for such events;

(B)  the extent to which the Medicare program paid, denied payment, or recouped payment for services furnished in connection with such events and the extent to which beneficiaries paid for such services; and

(C)  the administrative processes of the Centers for Medicare & Medicaid Services to detect such events and to deny or

(2)  Conduct of study.—In conducting the study under paragraph (1), the Inspector General—

(A)  shall audit a representative sample of claims and medical records of Medicare beneficiaries to identify never events and any payment (or recoupment) for services furnished in connection with such events;

(B)  may request access to such claims and records from any Medicare contractor; and

(C)  shall not release individually identifiable information or facility-specific information.

(b)  Report.— Not later than 2 years after the date of the enactment of this Act, the Inspector General shall submit a report to Congress on the study conducted under this section. Such report shall include recommendations for such legislation and administrative action, such as a noncoverage policy or denial of payments, as the Inspector General determines appropriate, including—

(1)  recommendations on processes to identify never events and to deny or recoup payments for services furnished in connection with such events; and

(2)  a recommendation on a potential process (or processes) for public disclosure of never events which—

(A)  will ensure protection of patient privacy; and

(B)  will permit the use of the disclosed information for a root cause analysis to inform the public and the medical community about safety issues involved.

(c)  Funding.—Out of any funds in the Treasury not otherwise appropriated, there are appropriated to the Inspector General of the Department of Health and Human Services $3,000,000 to carry out this section, to be available until January 1, 2010.

(d)  Never Events Defined.—For purposes of this section, the term “never event” means an event that is listed and endorsed as a serious reportable event by the National Quality Forum as of November 16, 2006.

Sec. 204. [42 U.S.C. 1395b-1 note]  MEDICARE MEDICAL HOME DEMONSTRATION PROJECT.

(a)  In General.—The Secretary of Health and Human Services (in this section referred to as the “Secretary”) shall establish under title XVIII of the Social Security Act a medical home demonstration project (in this section referred to as the “project”) to redesign the health care delivery system to provide targeted, accessible, continuous and coordinated, family-centered care to high-need populations and under which—

(1)  care management fees are paid to persons performing services as personal physicians; and

(2)  incentive payments are paid to physicians participating in practices that provide services as a medical home under subsection (d).

For purposes of this subsection, the term “high-need population” means individuals with multiple chronic illnesses that require regular medical monitoring, advising, or treatment.

(b)  Details.—

(1)  Duration; scope.—Subject to paragraph (3), the project shall operate during a period of three years and shall include urban, rural, and underserved areas in a total of no more than 8 States.

(2)  Encouraging participation of small physician practices.—The project shall be designed to include the participation of physicians in practices with fewer than three full-time equivalent physicians, as well as physicians in larger practices particularly in rural and underserved areas.

(3)  Expansion.—The Secretary may expand the duration and the scope of the project under paragraph (1), to an extent determined appropriate by the Secretary, if the Secretary determines that such expansion will result in any of the following conditions being met:

(A)  The expansion of the project is expected to improve the quality of patient care without increasing spending under the Medicare program (not taking into account amounts available under subsection (g)).

(B)  The expansion of the project is expected to reduce spending under the Medicare program (not taking into account amounts available under subsection (g)) without reducing the quality of patient care.

(c)  Personal Physician Defined.—

(1)  In general.—For purposes of this section, the term “personal physician” means a physician (as defined in section 1861(r)(1) of the Social Security Act (42 U.S.C. 1395x(r)(1)) who—

(A)  meets the requirements described in paragraph (2); and

(B)  performs the services described in paragraph (3).

Nothing in this paragraph shall be construed as preventing such a physician from being a specialist or subspecialist for an individual requiring ongoing care for a specific chronic condition or multiple chronic conditions (such as severe asthma, complex diabetes, cardiovascular disease, rheumatologic disorder) or for an individual with a prolonged illness.

(2)  Requirements.—The requirements described in this paragraph for a personal physician are as follows:

(A)  The physician is a board certified physician who provides first contact and continuous care for individuals under the physician’s care.

(B)  The physician has the staff and resources to manage the comprehensive and coordinated health care of each such individual.

(3)  Services performed.—A personal physician shall perform or provide for the performance of at least the following services:

(A)  Advocates for and provides ongoing support, oversight, and guidance to implement a plan of care that provides an integrated, coherent, cross-discipline plan for ongoing medical care developed in partnership with patients and including all other physicians furnishing care to the patient involved and other appropriate medical personnel or agencies (such as home health agencies).

(B)  Uses evidence-based medicine and clinical decision support tools to guide decision-making at the point-of-care based on patient-specific factors.

(C)  Uses health information technology, that may include remote monitoring and patient registries, to monitor and track the health status of patients and to provide patients with enhanced and convenient access to health care services.

(D)  Encourages patients to engage in the management of their own health through education and support systems.

(d)  Medical Home Defined.—For purposes of this section, the term “medical home” means a physician practice that—

(1)  is in charge of targeting beneficiaries for participation in the project; and

(2)  is responsible for—

(A)  providing safe and secure technology to promote patient access to personal health information;

(B)  developing a health assessment tool for the individuals targeted; and

(C)  providing training programs for personnel involved in the coordination of care.

(e)  Payment Mechanisms.—

(1)  Personal physician care management fee.—Under the project, the Secretary shall provide for payment under section 1848 of the Social Security Act (42 U.S.C. 1395w-4) of a care management fee to personal physicians providing care management under the project. Under such section and using the relative value scale update committee (RUC) process under such section, the Secretary shall develop a care management fee code for such payments and a value for such code.

(2)  Medical home sharing in savings.—The Secretary shall provide for payment under the project of a medical home based on the payment methodology applied to physician group practices under section 1866A of the Social Security Act (42 U.S.C. 1395cc-1). Under such methodology, 80 percent of the reductions in expenditures under title XVIII of the Social Security Act resulting from participation of individuals that are attributable to the medical home (as reduced by the total care managements fees paid to the medical home under the project) shall be paid to the medical home. The amount of such reductions in expenditures shall be determined by using assumptions with respect to reductions in the occurrence of health complications, hospitalization rates, medical errors, and adverse drug reactions.

(3)  Source.—Payments paid under the project shall be made from the Federal Supplementary Medical Insurance Trust Fund under section 1841 of the Social Security Act (42 U.S.C. 1395t).

(f)  Evaluations and Reports.—

(1)  Annual interim evaluations and reports.—For each year of the project, the Secretary shall provide for an evaluation of the project and shall submit to Congress, by a date specified by the Secretary, a report on the project and on the evaluation of the project for each such year.

(2)  Final evaluation and report.—The Secretary shall provide for an evaluation of the project and shall submit to Congress, not later than one year after completion of the project, a report on the project and on the evaluation of the project.

(g)  Funding from SMI Trust Fund.—There shall be available, from the Federal Supplementary Medical Insurance Trust Fund (under section 1841 of the Social Security Act (42 U.S.C. 1395t)), the amount of $100,000,000 to carry out the project.

(h)  Application.—Chapter 35 of title 44, United States Code, shall not apply to the conduct of the project.

SEC. 302.  EXTENSION AND EXPANSION OF RECOVERY AUDIT CONTRACTOR PROGRAM UNDER THE MEDICARE INTEGRITY PROGRAM.

(b) [42 U.S.C. 1395 ddd note]  Access to Coordination of Benefits Contractor Database.—The Secretary of Health and Human Services shall provide for access by recovery audit contractors conducting audit and recovery activities under section 1893(h) of the Social Security Act, as added by subsection (a), to the database of the Coordination of Benefits Contractor of the Centers for Medicare & Medicaid Services with respect to the audit and recovery periods described in paragraph (4) of such section 1893(h).

SEC. 304.  IMPLEMENTATION FUNDING.

For purposes of implementing the provisions of, and amendments made by, this title and titles I and II of this division, other than section 203, the Secretary of Health and Human Services shall provide for the transfer, in appropriate part from the Federal Hospital Insurance Trust Fund established under section 1817 of the Social Security Act (42 U.S.C. 1395i) and the Federal Supplementary Medical Insurance Trust Fund established under section 1841 of such Act (42 U.S.C. 1395t), of $45,000,000 to the Centers for Medicare & Medicaid Services Program Management Account for the period of fiscal years 2007 and 2008.

SEC. 401.  EXTENSION OF TRANSITIONAL MEDICAL ASSISTANCE (TMA) AND ABSTINENCE EDUCATION PROGRAM.

Activities authorized by sections 510 and 1925 of the Social Security Act shall continue through June 30, 2009, in the manner authorized for fiscal year 2007, notwithstanding section 1902(e)(1)(A) of such Act, and out of any money in the Treasury of the United States not otherwise appropriated, there are hereby appropriated such sums as may be necessary for such purpose. Grants and payments may be made pursuant to this authority through the third quarter of fiscal year 2007 at the level provided for such activities through the third quarter of fiscal year 2008.