Medicare physician payment reform

(a)

Repeal of SGR payment methodology

Section 1848 of the Social Security Act (42 U.S.C. 1395w–4) is amended— (1)in subsection (d)— (A)in paragraph (1)(A), by inserting or a subsequent paragraph after paragraph (4); and (B)in paragraph (4)— (i)in the heading, by striking

years beginning with 2001

and inserting

2001, 2002, and 2003

; and (ii)in subparagraph (A), by striking a year beginning with 2001 and inserting 2001, 2002, and 2003; and (2)in subsection (f)— (A)in paragraph (1)(B), by inserting through 2013 after of such succeeding year; and (B)in paragraph (2), by inserting and ending with 2013 after beginning with 2000. (b)

Stabilizing 2014 payment rates at current level

(1)

In general

Subsection (d) of section 1848 of the Social Security Act (42 U.S.C. 1395w–4), as amended by section 601 of the American Taxpayer Relief Act of 2012 (Public Law 112–240), is amended by adding at the end the following new paragraph:

(15)

Update for 2014

In lieu of the update to the single conversion factor established in paragraph (1)(C) that would otherwise apply for 2014, the update to the single conversion factor shall be 0 percent for 2014.

(2)

Technical amendment

Effective for years beginning with 2014, subparagraph (C)(i) of paragraph (7) of section 1848(m) of the Social Security Act (42 U.S.C. 1395w–4(m)(7)(C)(i); relating to additional incentive payment) is amended by inserting , the program of Osteopathic Continuous Certification of the American Osteopathic Association, after Specialties Maintenance of Certification program. (c)

Establishment of differential updates beginning with 2015 To promote access to primary care services

(1)

Establishment of service categories

Subsection (j) of section 1848 of the Social Security Act (42 U.S.C. 1395w–4) is amended by adding at the end the following new paragraphs:

(5)

Service categories

(A)

In general

For services furnished on or after January 1, 2015, each of the following categories of services shall be treated as a separate service category: (i)

Primary care

Primary care services (as defined in subparagraph (B)) furnished by a qualifying practitioner. (ii)

Other services

Other physicians’ services. (B)

Primary care services

In this subsection, the term primary care services means services identified, as of April 1, 2013, with the following HCPCS codes (and as subsequently modified by the Secretary): (i)

Office and outpatient visits

99201 through 99215. (ii)

Hospital observational services

99217 through 99220. (iii)

Hospital inpatient visits services

99221 through 99239. (iv)

Nursing home, domiciliary, rest home or custodial care visits

99304 through 99340. (v)

Home service visits

99341 through 99350. (vi)

Welcome to Medicare visit

G0402. (vii)

Annual wellness visits

G0438 and G0439. (C)

Inclusion of preventive services

Such term also includes preventive services described in section 1861(ddd)(3) and additional preventive services described in section 1861(ddd)(1). (D)

Inclusion of additional services

Such term also includes services, such as care coordination services, telemedicine services, non-face-to-face care management services, preparation and supervision of long-term care plans, home care plan oversight services, and similar services that the Secretary identifies, by regulation, as being similar to the services described in subparagraph (B) or (C). (6)

Qualifying practitioner

The term qualifying practitioner means, with respect to the furnishing of primary care services, an individual— (A)for whom primary care services has accounted for at least 60 percent of the allowed charges under this part (not counting any such charges attributable to in-office clinical laboratory services) in a prior period as determined by the Secretary; or (B)who does not have claims under this part during such a prior period and whom the Secretary determines is likely to meet the requirement of subparagraph (A) for the subsequent period.

(2)

Establishment of separate conversion factors for each service category

Section 1848(d)(1) of the Social Security Act (42 U.S.C. 1395w–4(d)(1)), as amended by subsection (a)(1)(A), is further amended— (A)in subparagraph (A)— (i)by designating the sentence beginning The conversion factor as clause (i) with the heading

Application of single conversion factor.—

and with appropriate indentation; (ii)by striking The conversion factor and inserting Subject to clause (ii), the conversion factor; and (iii)by adding at the end the following new clause:

(ii)

Application of multiple conversion factors beginning with 2015

(I)

In general

In applying clause (i) for each year beginning with 2015, separate conversion factors shall be established for each service category of physicians’ services (as defined in subsection (j)(5)(A)) and any reference in this section to a conversion factor for such years shall be deemed a reference to the conversion factor for each of such categories. (II)

Initial conversion factors

Such factors for 2015 shall be based upon the single conversion factor for the previous year multiplied by the update established under paragraph (16) for such category for 2015. (III)

Updating of conversion factors

Such factor for a service category for a subsequent year shall be based upon the conversion factor for such category for the previous year and adjusted by the update established for such category under paragraph (16) or a subsequent paragraph for the year involved.

; and

(B)in subparagraph (D), by striking other physicians’ services and inserting for physicians’ services in the service category described in subsection (j)(5)(A)(ii)). (3)

Establishment of separate updates for conversion factors for each service category

Section 1848(d) of the Social Security Act (42 U.S.C. 1395w–4(d)), as amended by subsection (b), is amended by adding at the end the following new paragraph:

(16)

Updates by service category beginning with 2015; updates for 2015 through 2018

In applying paragraph (4) for each year beginning with 2015, the following rules apply: (A)

Application of separate update adjustments for each service category

Pursuant to paragraph (1)(A)(ii)(I), for each year beginning with 2014, the update shall be made to the conversion factor for each service category (as defined in subsection (j)(5)(A)). (B)

Updates for 2015 through 2018

The updates for 2015, 2016, 2017, and 2018 for the conversion factor for the services category described in— (i)subsection (j)(5)(A)(i) shall be 2.5 percent; and (ii)subsection (j)(5)(A)(ii) shall be 0.5 percent.

(d)

Promoting testing and evaluation of new payment and delivery models (Phase I)

(1)

Expansion of testing in multiple geographic regions

Section 1115A(a)(5) of the Social Security Act (42 U.S.C. 1315a(a)(5)) is amended by inserting before the period at the end the following: , but shall (to the maximum extent feasible) including testing of each such model in geographic areas in at least 3 regions. (2)

Inclusion of physician implementation costs in evaluations

Section 1115A(b)(4)(A) of the Social Security Act (42 U.S.C. 1315a(b)(4)(A)) is amended— (A)by striking and at the end of clause (i); (B)by striking the period at the end of clause (ii) and inserting ; and; and (C)by adding at the end the following new clause:

(iii)the average cost, per physician, of implementation of the model with respect to physicians’ services.

(3)

Accelerating testing and evaluation process

Section 1115A(b) of the Social Security Act (42 U.S.C. 1315a(b)) is amended by adding at the end the following new paragraph:

(5)

Timing

The Secretary, acting through the CMI, shall conduct activities under this subsection in such a timely manner so that evaluations of initial models can be initially completed so that physicians and other providers can begin to transition to implementation of such models with respect to services for which payment is made under section 1848 beginning not later than January 1, 2018.

(4)

Involvement of provider groups in selection of models

Section 1115A(b)(4) of such Act is amended by adding at the end the following subparagraph:

(D)

Involvement of provider groups in model selection

The Secretary shall consult and work closely with physician and other provider groups in the selection of models under this subsection and subsection (c).

(5)

Use of other models

Section 1115A of such Act is further amended— (A)by adding at the end of subsection (b)(2)(B) the following new clause:

(xxi)Providing payment for outpatient therapy services and speech language pathology services on the basis of a treatment session, an episode of care, or other bundled payment methodology that takes into account varying levels of severity and complexity of patient diagnoses, conditions, and comorbidities and the varying intensity of services needed for effective treatment of patients.

; and

(B)in subsection (c), in the matter preceding paragraph (1), by— (i)striking or after tested under subsection (b) and inserting a comma; and (ii)by inserting , or other model (including a model that was not tested under subsection (b)) after section 1866C. (6)

GAO review and study

The Comptroller General of the United States shall conduct a study of the evaluations made under subsection (b) of section 1115A of the Social Security Act, as amended by this section. Such study shall include an analysis of the alternative payment and delivery models identified under such section for payment for physicians’ services (and other services) under the Medicare program. Not later than April 1, 2017, the Comptroller General shall submit a report to Congress on such study and shall include in the report such recommendations as the Comptroller General deems appropriate for— (A)changes in the development and implementation process under such section; and (B)alternative payment and delivery models identified under such section as being appropriate for expansion under subsection (c) of such section. (7)

Publication of list of successful models

Beginning on October 1, 2017, and each year thereafter, the Secretary of Health and Human Services shall publicly release a comprehensive list of such health care delivery and payment models identified, under section 1115A of the Social Security Act or otherwise, as meeting (or likely to meet) the requirements of subsection (c)(1) of such section. Such list shall include at least 4 health care delivery and payment models and may include models not tested under subsection (b) of such section. (8)

Considerations

The Comptroller General in making recommendations under paragraph (6) and the Secretary in releasing the list of models under paragraph (7) shall take into account variations among providers in size, specialty mix, case mix, and patient demographics, as well as regional health care infrastructure variations and variations in cost of living among areas, and shall specifically consider appropriate variations that take into account the special circumstances of providers in rural and other underserved areas. (e)

Implementation of payment and delivery model options (Phase II)

(1)

In general

Based on the report of the Comptroller General under subsection (d)(4) and not later than October 1, 2017, the Secretary of Health and Human Services shall provide information to physicians (and nurse practitioners and other providers for which payment is determined based on the fee schedule under section 1848 of the Social Security Act) or group practices and institutions employing Medicare part B providers on how best to transition to alternative health care delivery and payment models that are aimed at improving the coordination, quality and efficiency of health care, including those developed under section 1115A or 1866E of the Social Security Act (42 U.S.C. 1315a, 1395cc–5). (2)

Increasing flexibility in implementation

Section 1115A(c) of the Social Security Act (42 U.S.C. 1315a(c)), as amended by subsection (c)(5), is further amended, in the matter preceding paragraph (1), by inserting, after through rulemaking, the following: (which may include the issuance of interim final rules) or through publication of a directive or other guidance. (3)

Timing

Section 1115A of such Act is further amended by adding at the end the following: The Secretary shall seek to effect such expansion to the maximum extent feasible so that physicians (and other providers paid in amounts determined based on the fee schedule under section 1848) may begin to transition to implementation of such models beginning not later than January 1, 2018.. (f)

Transition during 2019

(1)

Freeze in fee schedule for 2019

Subsection (d) of section 1848 of the Social Security Act (42 U.S.C. 1395w–4), as amended by subsections (b) and (c)(3), is amended by adding at the end the following new paragraph:

(17)

Update for 2019

The update to both of the conversion factors for 2019 shall be 0 percent.

(2)

Expanded assistance through regional extension centers and other qualified entities

Section 1115A(d) of the Social Security Act (42 U.S.C. 1315a(d)) is amended by adding at the end the following new paragraph:

(4)

Assistance in implementation

(A)

In general

Using funds available under subsection (f)(1) and consistent with this paragraph, the Secretary shall enter into contracts and agreements with regional extension centers, in coordination with the National Coordinator for Health Information Technology, and other appropriate entities to provide guidance and assistance on how physicians (and other providers paid in amounts determined based on the fee schedule under section 1848) may transition to implementation of alternative health care delivery models identified as representing best practices under this section. (B)

Dedicated funding

(i)

In general

Of the amounts available under subsection (f)(1)(B), the Secretary shall make $720,000,000 available to the Office of the National Coordinator for Health Information Technology for the awarding of grants and incentive payments under a competitive process to regional extension centers (receiving funding under section 3012(c) of the Public Health Service Act) and other qualified entities for activities described in subparagraph (A). Such grants and payments shall not be available for assistance after December 31, 2019. (ii)

Process

Under clause (i), the Office shall— (I)establish a competitive selection process for the selection of regional extension centers (and other qualified entities) in the third quarter of 2015; and (II)provide for the initial distribution of funds to such centers and entities by January 1, 2016. (iii)

Collaboration

The Center shall collaborate with the Office in providing direction to such centers and entities in conducting activities under this paragraph, including the development of performance benchmarks based on provider participation and progress toward integration. (iv)

Priority

The grants and incentive payments under this subparagraph shall be directed to target assistance to solo and small specialty practices as well as community health centers and similar providers of primary care services.

(g)

Continuing incentives for providing high-Quality, high-Value care

(1)

Fee schedule adjustments

Subsection (d) of section 1848 of the Social Security Act (42 U.S.C. 1395w–4), as amended by subsections (b), (c)(3), and (f), is amended by adding at the end the following:

(18)

Updates for 2020 through 2023

(A)

In general

Except as provided in this paragraph, the update to each of the conversion factors— (i)for 2020 shall be minus 2 percent; (ii)for 2021 shall be minus 3 percent; (iii)for 2022 shall be minus 4 percent; and (iv)for 2023 shall be minus 5 percent. (B)

Treatment of services paid using alternative payment and delivery models

In the case of physicians’ services for which payment is covered under an alternative payment and delivery model, such as those implemented under section 1115A, subparagraph (A) does not apply. (C)

General exemption

The Secretary shall, by regulation, exempt a provider from the application of the negative payment update specified in subparagraph (A) for a year if the Secretary determines that— (i)the provider— (I)is a meaningful EHR user (as determined under subsection (o)(2) with respect to the year); and (II)meets the qualifications under subparagraph (B) of subsection (m)(7) (relating to additional incentive payments) for an additional incentive payment under subparagraph (A) of such subsection (which includes satisfactory participation in the quality reporting system and participation in an approved Maintenance of Certification program); (ii)the payment modifier for the provider under subsection (p), which is based upon the performance of the provider on measures of quality of care furnished compared to cost and which is expressed as a percentage of payment, is within the top 25 percent of such payment modifiers for providers within the same fee schedule area, as determined by the Secretary; or (iii)in the case of outpatient therapy services, the provider of such services adheres to a comprehensive list of cost, quality, and outcome measures as demonstrated by— (I)participation in a certified registry; (II)if applicable, participation in the physician quality reporting system under subsection (k); (III)use of an approved patient assessment tool; (IV)current certification as a physical therapist clinical specialist by the American Physical Therapy Association (APTA), an occupational therapist by the American Occupational Therapy Association, or as an audiologist or a speech-language pathologist by the American Speech-Language-Hearing Association; or (V)compliance with comparable functional measures reporting requirements as recognized by the Secretary. (D)

Case-by-case hardship exemption

The Secretary may, on a case-by-case basis, exempt a provider from the application of the negative payment update specified in subparagraph (A) for a year if the Secretary determines, subject to annual renewal, that because of limitations in the nature of a medical practice, limitations in the number of Medicare beneficiaries that may be served by the provider, or other special circumstances, imposing a financial disincentive under such subparagraph for failure to adopt an alternative payment and delivery model referred to in subparagraph (B) would result in a significant hardship to the provider. (19)

Updates beginning with 2024

(A)

In general

The update to both of the conversion factors for each year beginning with 2024 shall be 0 percent. (B)

Treatment of services paid using alternative payment and delivery models

In the case of physicians’ services for which payment is covered under an alternative payment and delivery model, such as those implemented under section 1115A, subparagraph (A) does not apply.

(2)

Considerations in promulgating growth rates for alternative payment and delivery models

(A)

In general

In determining the growth rates to be recognized beginning with 2020 for alternative payment and delivery models under the Medicare program that cover physicians’ services, such as those implemented under section 1115A of the Social Security Act, the Secretary of Health and Human Services shall consider (among other factors) the following: (i)Ensuring access to primary care and specialty services, including participation of primary care practitioners and specialists and newly graduating practitioners. (ii)Restraining spending growth. (iii)Ensuring access to services for vulnerable populations. (B)

Limitations

In no case shall the growth factor determined under this paragraph for a year— (i)be less than 1 percent; or (ii)be greater than the percentage increase in the MEI (as defined in section 1842(i)(3) of the Social Security Act, 42 U.S.C. 1395u(i)(3)) for such year. (C)

Application of Congressional Review Act

Chapter 8 of title 5, United States Code, applies with respect to the promulgation of a growth factor under this paragraph for a year. (h)

Impact report

Not later than January 1, 2023, the Secretary of Health and Human Services shall submit to Congress a report on the impact on spending and on access to services under title XVIII of the Social Security Act, including under part A of such title, resulting from changes to Medicare delivery and payment systems, including under the amendments made by this section.