PHASE-OUT OF INDIRECT MEDICAL EDUCATION (IME).

SEC. 161. PHASE-OUT OF INDIRECT MEDICAL EDUCATION (IME).(a) In General.—Section 1853(k) of the Social Security Act (42 U.S.C. 1395w–23(k)) is amended—(1) in paragraph (1), in the matter preceding subparagraph (A), by striking “paragraph (2)” and inserting “paragraphs (2) and (4)”; and(2) by adding at the end the following new paragraph:“(4) Phase-out of the indirect costs of medical education from capitation rates.—“(A) In general.—After determining the applicable amount for an area for a year under paragraph (1) (beginning with 2010), the Secretary shall adjust such applicable amount to exclude from such applicable amount the phase-in percentage (as defined in subparagraph (B)(i)) for the year of the Secretary’s estimate of the standardized costs for payments under section 1886(d)(5)(B) in the area for 122 STAT. 2569 the year. Any adjustment under the preceding sentence shall be made prior to the application of paragraph (2).“(B) Percentages defined.—For purposes of this paragraph:“(i) Phase-in percentage.—The term ‘phase-in percentage’ means, for an area for a year, the ratio (expressed as a percentage, but in no case greater than 100 percent) of—“(I) the maximum cumulative adjustment percentage for the year (as defined in clause (ii)); to“(II) the standardized IME cost percentage (as defined in clause (iii)) for the area and year.“(ii) Maximum cumulative adjustment percentage.—The term ‘maximum cumulative adjustment percentage’ means, for—“(I) 2010, 0.60 percent; and“(II) a subsequent year, the maximum cumulative adjustment percentage for the previous year increased by 0.60 percentage points.“(iii) Standardized ime cost percentage.—The term ‘standardized IME cost percentage’ means, for an area for a year, the per capita costs for payments under section 1886(d)(5)(B) (expressed as a percentage of the fee-for-service amount specified in subparagraph (C)) for the area and the year.“(C) Fee-for-service amount.—The fee-for-service amount specified in this subparagraph for an area for a year is the amount specified under subsection (c)(1)(D) for the area and the year.”.(b) Excluding Adjustment From the Update.—Section 1853(k)(1)(B)(i) of the Social Security Act (42 U.S.C. 1395w–23(k)(1)(B)(i)) is amended by striking “paragraph (2)” and inserting “paragraphs (2) and (4)”.(c) Hold Harmless for PACE Program Payments.—Section 1894(d) of the Social Security Act (42 U.S.C. 1395eee(d)) is amended by adding at the end the following new paragraph:“(3) Capitation rates determined without regard to the phase-out of the indirect costs of medical education from the annual medicare advantage capitation rate.—Capitation amounts under this subsection shall be determined without regard to the application of section 1853(k)(4).”.