[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3617 Introduced in House (IH)]







109th CONGRESS
  1st Session
                                H. R. 3617

 To amend part B of title XVIII of the Social Security Act to provide 
  for value-based purchasing in the payment for physicians' services 
          under the Medicare Program, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 29, 2005

 Mrs. Johnson of Connecticut (for herself, Mr. Beauprez, Mr. Boustany, 
 Mr. Burgess, Mr. Camp, Mr. English of Pennsylvania, Mr. Gingrey, Mr. 
Sam Johnson of Texas, Mr. Lewis of Kentucky, Mr. Ney, Mr. Ramstad, Mr. 
  Shaw, Mr. Shays, Mr. Upton, Mr. Weldon of Florida, and Mrs. Kelly) 
 introduced the following bill; which was referred to the Committee on 
   Energy and Commerce, and in addition to the Committee on Ways and 
 Means, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
 To amend part B of title XVIII of the Social Security Act to provide 
  for value-based purchasing in the payment for physicians' services 
          under the Medicare Program, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Value-Based Purchasing for 
Physicians' Services Act of 2005''.

SEC. 2. VALUE-BASED PURCHASING FOR MEDICARE PHYSICIANS' SERVICES.

    (a) Link of Value-Based Purchasing to Payment for Services.--
Subsection (d) of section 1848 of the Social Security Act (42 U.S.C. 
1395w-4) is amended--
            (1) in paragraph (1)(A), by inserting ``and before 2006'' 
        after ``beginning with 2001'';
            (2) in paragraph (1)(A), by inserting before the period at 
        the end the following: ``, and for years beginning with 2006, 
        multiplied by the update established under paragraph (6) or a 
        succeeding paragraph, as is applicable to the year involved'';
            (3) by adding at the end the following new paragraphs:
            ``(6) Update for 2006.--The update to the single conversion 
        factor established in paragraph (1)(C) for 2006 shall be 1.5 
        percent.
            ``(7) Update for 2007 and 2008.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (C), the update to the single conversion factor 
                established in paragraph (1)(C) for 2007 and 2008 shall 
                be the percentage increase in the MEI (as defined in 
                section 1842(i)(3)) for the year involved minus 1 
                percentage point.
                    ``(B) Increase for submitting information.--In the 
                case of physicians' services furnished by a billing 
                unit under this part that is a new billing unit (as 
                defined by the Secretary) or that complies with the 
                requirement of subsection (k)(4) for the submission of 
                information for 2007 or 2008, the update to the single 
                conversion factor established in paragraph (1)(C) for 
                the year shall be the percentage increase in the MEI 
                (as defined in section 1842(i)(3)) for the year 
                involved.
                    ``(C) Treatment.--In computing the single 
                conversion factor under paragraph (1)(C)--
                            ``(i) for 2008, the update for 2007 shall 
                        be treated as the update described in 
                        subparagraph (B); or
                            ``(ii) for 2009 or a succeeding year, the 
                        updates for 2007 and 2008 shall be treated as 
                        the updates described in subparagraph (B).
            ``(8) Update for 2009 and succeeding years.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (C), the update to the single conversion factor 
                established in paragraph (1)(C) for 2009 and each 
                succeeding year shall be the percentage increase in the 
                MEI (as defined in section 1842(i)(3)) for the year 
                involved minus 1 percentage point.
                    ``(B) Increase for submitting information and 
                meeting quality and efficiency standards.--In the case 
                of physicians' services furnished by a billing unit 
                under this part that is a new billing unit (as defined 
                for purposes of paragraph (7)(B)) or that both complies 
                with the requirement of subsection (k)(4) for the 
                submission of information for a year (beginning with 
                2009) and meets (or is deemed to meet) performance 
                objectives applicable to the billing unit for the year 
                under subsection (k)(5), the update to the single 
                conversion factor established in paragraph (1)(C) for 
                the year shall be the percentage increase in the MEI 
                (as defined in section 1842(i)(3)) for the year 
                involved.
                    ``(C) Treatment.--In computing the single 
                conversion factor under paragraph (1)(C) for 2010 or a 
                succeeding year, the updates for each preceding year 
                (beginning with 2009) shall be treated as the update 
                described in subparagraph (B).''.
    (b) Establishment of Value-Based Purchasing Program.--Section 1848 
of such Act is further amended by adding at the end the following new 
subsection:
    ``(k) Value-Based Purchasing Program.--
            ``(1) Selection of quality and efficiency measures (q & e 
        measures).--
                    ``(A) In general.--As part of the rulemaking 
                process for payments under this section for 2007, the 
                Secretary shall provide for the selection of quality 
                measures and efficiency measures (in this subsection 
                referred to as `Q-measures' and `E-measures', 
                respectively, or as `Q & E measures' collectively) 
                consistent with and in accordance with this paragraph 
                and paragraph (2).
                    ``(B) Level of measurement.--Q-measures and E-
                measures shall be measures that provide for assessment 
                of quality and efficiency, respectively, in the 
                provision of services to individuals enrolled under 
                this part at the level of a billing unit under this 
                part.
                    ``(C) Characteristics of measures.--To the extent 
                feasible and practicable, Q & E measures shall--
                            ``(i) include a mixture of outcome 
                        measures, process measures (such as furnishing 
                        a service), and structural measures (such as 
                        the use of health information technology for 
                        submission of measures);
                            ``(ii) include efficiency measures related 
                        to clinical care (such as overuse, misuse, or 
                        underuse);
                            ``(iii) include measures of care furnished 
                        to frail individuals over the age of 75 and to 
                        individuals with multiple complex chronic 
                        conditions;
                            ``(iv) be evidence-based, if pertaining to 
                        clinical care;
                            ``(v) be consistent, valid, practicable, 
                        and not overly burdensome to collect;
                            ``(vi) be relevant to physicians and other 
                        practitioners, individuals enrolled under this 
                        part, and the Federal Supplementary Medical 
                        Insurance Trust Fund;
                            ``(vii) include measures that, taken as a 
                        whole, provide a balanced measure of 
                        performance of a billing unit under this part;
                            ``(viii) include measures that capture 
                        individuals' assessment of clinical care 
                        provided; and
                            ``(ix) include measures that assess the 
                        relative use of resources, services, or 
                        expenditures.
                    ``(D) Fairness.--To the extent feasible and 
                practicable, this subsection shall be implemented in a 
                manner that--
                            ``(i) takes into account differences in 
                        individual health status;
                            ``(ii) takes into account individual's 
                        compliance with orders;
                            ``(iii) does not directly or indirectly 
                        encourage patient selection or de-selection by 
                        billing units under this part;
                            ``(iv) reduces health disparities across 
                        groups and areas; and
                            ``(v) uses appropriate statistical 
                        techniques to ensure valid results.
                    ``(E) Application to non-physician practitioners 
                and other suppliers for which payment is made under or 
                in relation to physician fee schedule.--Insofar as 
                physicians' services under this section are furnished 
                by non-physician practitioner or a supplier other than 
                a physician--
                            ``(i) any reference in this subsection to a 
                        physician shall be a reference to such 
                        practitioner or supplier; and
                            ``(ii) any reference to a physician 
                        specialty organization is deemed a reference to 
                        a specialty organization representing the 
                        speciality of such practitioners or suppliers.
            ``(2) Selection process for measures.--
                    ``(A) Submission of proposed measures to consensus-
                building organization.--
                            ``(i) By physician specialty 
                        organizations.--The Secretary shall request 
                        each physician specialty organization to submit 
                        to the consensus-building organization by March 
                        1, 2006, proposed Q & E measures described in 
                        clauses (i) through (vii) of paragraph (1)(C) 
                        that would be applicable to clinical care that 
                        billing units under this part practicing in the 
                        specialty provide to individuals enrolled under 
                        this part.
                            ``(ii) By secretary.--If the physician 
                        specialty organization for a physician 
                        specialty has not submitted proposed Q & E 
                        measures under clause (i) by March 1, 2006, the 
                        Secretary shall submit, as soon as possible but 
                        not later than April 1, 2006, proposed Q & E 
                        measures described in clauses (i) through (vii) 
                        of paragraph (1)(C) for such specialty to the 
                        consensus-building organization.
                            ``(iii) Consensus-building organization 
                        defined.--For purposes of this paragraph, the 
                        term `consensus-building organization' means an 
                        organization, such as the National Quality 
                        Forum, that the Secretary identifies as--
                                    ``(I) having experience in using a 
                                process (such as the process described 
                                in OMB circular A-119 published in the 
                                Federal Register on February 10, 1998) 
                                for reaching a group consensus with 
                                respect to measures, such as Q & E 
                                measures, relating to performance of 
                                those providing health care services; 
                                and
                                    ``(II) including in such process 
                                representatives of the Secretary, 
                                practicing physicians (and, as provided 
                                under paragraph (1)(E), practicing non-
                                physician practitioners and other 
                                suppliers), practitioners with 
                                experience in the care of the frail 
                                elderly and individuals with multiple 
                                complex chronic conditions, 
                                organizations and individuals 
                                representative of the specialty 
                                involved, individuals enrolled under 
                                this part, experts in health care 
                                quality and efficiency, and individuals 
                                with experience in the delivery of 
                                health care in urban, rural, and 
                                frontier areas and to underserved 
                                populations.
                    ``(B) Recommendations by consensus-building 
                organization.--The consensus-building organization that 
                receives proposed measures under subparagraph (A) is 
                requested to submit to the Secretary by July 1, 2006, 
                recommendations respecting the Q & E measures described 
                in clauses (i) through (vii) of paragraph (1)(C) to be 
                implemented under this subsection.
                    ``(C) Secretarial selection.--The Secretary shall 
                select Q & E measures described in paragraph (1)(C) for 
                purposes of this subsection consistent with the 
                following:
                            ``(i) Use of recommendations for clinical 
                        care measures submitted by certain 
                        organizations.--Except as provided in clause 
                        (ii), the Secretary shall not select a Q & E 
                        measure described in clauses (i) through (vii) 
                        of paragraph (1)(C) and relating to clinical 
                        care unless that measure has been submitted by 
                        a physician specialty organization (or through 
                        a physician-consensus building process, such as 
                        the Physician Consortium for Performance 
                        Improvement) and recommended by the consensus-
                        building organization under subparagraph (B).
                            ``(ii) Provision by regulation.--The 
                        Secretary may by regulation select--
                                    ``(I) Q & E measures described in 
                                clauses (i) through (vii) of paragraph 
                                (1)(C) and relating to clinical care 
                                that do not meet the requirements of 
                                clause (i) only if the Secretary 
                                determines that there were no, or 
                                insufficient, recommendations regarding 
                                such Q & E measures under such clause; 
                                and
                                    ``(II) Q & E measures described in 
                                clause (viii) or (ix) of paragraph 
                                (1)(C) and Q & E measures described in 
                                clause (i) through (vii) of such 
                                paragraph that do not relate to 
                                clinical care.
                    ``(D) Periodic revision of selection.--The 
                Secretary shall provide for the periodic revision and 
                selection of Q & E measures consistent with the 
                provisions of this paragraph and paragraph (1) and the 
                application of such revised Q & E measures on a 
                prospective basis for a following year.
            ``(3) Ratings of physicians based on measures.--
                    ``(A) Ratings and identification of quality 
                performance.--
                            ``(i) In general.--The Secretary shall 
                        determine a single rating of each billing unit 
                        under this part based on Q & E measures 
                        selected under paragraph (2) and information 
                        reported under paragraph (4). Such a rating 
                        shall be determined for a billing unit based on 
                        its performance on Q & E measures relative to 
                        the performance of its peers.
                            ``(ii) No direct disclosure of rating.--
                        Subject to subparagraph (B), the Secretary 
                        shall not make such ratings of identifiable 
                        billing units under this part available other 
                        than to the respective unit.
                            ``(iii) Improvement and performance 
                        thresholds.--For specification of improvement 
                        and performance thresholds, see paragraph 
                        (5)(D).
                    ``(B) Disclosure of performance in relation to 
                performance thresholds.--
                            ``(i) In general.--Subject to the 
                        succeeding provisions of this subparagraph, 
                        each year the Secretary shall make widely 
                        available to the public the following 
                        information regarding a billing unit's 
                        performance on the Q & E measures:
                                    ``(I) Whether the unit was a new 
                                billing unit or otherwise had 
                                insufficient data to provide for a 
                                measurement of whether it met the 
                                performance objectives under paragraph 
                                (5)(C).
                                    ``(II) For any other unit, whether 
                                the unit met the performance objectives 
                                under such paragraph.
                            ``(ii) Limitation during first 2 years.--
                        During 2007 and 2008, the Secretary shall not 
                        make the information under clause (i) with 
                        respect to an identifiable billing unit 
                        available other than to the respective unit.
                            ``(iii) Physician notification and 
                        opportunity for comment or appeal.--Before 
                        making information under clause (i) available 
                        with respect to a billing unit under this part 
                        for years beginning with 2009, the Secretary 
                        shall notify the unit of the performance on Q & 
                        E measures (including information on the unit's 
                        performance in relation to performance 
                        objectives and aggregate information regarding 
                        the performance of peers) and provide the 
                        opportunity for the unit to provide written 
                        comments regarding the unit's performance. The 
                        Secretary shall respond in writing to the 
                        comments and seek to reach agreement on the 
                        unit's performance and shall establish a formal 
                        appeals process in the event of continued 
                        disagreement concerning such performance. Upon 
                        conclusion of the appeals process, if the unit 
                        provides comments relating directly to the 
                        final determination under clause (i) respecting 
                        such performance, the Secretary shall disclose 
                        such comments with the disclosure of the 
                        information under such clause.
                            ``(iv) Application of hipaa privacy 
                        rules.--Nothing in this subparagraph shall be 
                        construed as changing or affecting the 
                        application of rules promulgated under section 
                        264(c) of the Health Insurance Portability and 
                        Accountability Act of 1996.
                    ``(C) Peers defined.--For purposes of this 
                subsection, the term `peers' means, with respect to a 
                billing unit under this part that practices in a 
                specialty in an MA region (as established under section 
                1858(a)(2)), other billing units under this part that 
                practice in the same specialty in the same region, or, 
                beginning with the update for 2012, or in the United 
                States.
            ``(4) Reporting on performance beginning with 2007.--For 
        purposes of, and in order to be provided a higher update under, 
        subsection (d)(7) beginning with 2007, each billing unit under 
        this part may submit information on performance on the Q & E 
        measures selected under this subsection with respect to 
        individuals enrolled under this part. Such information shall be 
        submitted in a form and manner and time specified by the 
        Secretary, which may include submission as part of claims data 
        under this part. The Secretary shall provide a process for 
        auditing the accuracy of the information submitted under this 
        paragraph.
            ``(5) Incentives based on performance beginning with 
        2009.--
                    ``(A) In general.--For purposes of, and in order to 
                be provided an increased update under, subsection 
                (d)(7) for 2009 and each subsequent year and for 
                purposes of disclosure under paragraph (3)(B), the 
                Secretary shall establish quality and efficiency 
                performance objectives for billing units under this 
                part.
                    ``(B) Increased update.--For purposes of subsection 
                (d)(7), such a billing unit is considered to meet 
                performance objectives for a year if, based on ratings 
                under paragraph (3)--
                            ``(i) the unit has demonstrated clear 
                        improvement (as determined in accordance with 
                        improvement standards specified by the 
                        Secretary under subparagraph (D)) in 
                        performance from its performance in the 
                        previous year; or
                            ``(ii) the unit's performance meets or 
                        exceeds the performance thresholds specified by 
                        the Secretary under subparagraph (D).
                    ``(C) Disclosure.--For purposes of paragraph 
                (3)(B), such a billing unit is considered to meet 
                performance objectives for a year if, based on the 
                unit's rating under paragraph (3)(A), the unit's 
                performance meets or exceeds the performance thresholds 
                specified by the Secretary under subparagraph (D).
                    ``(D) Improvement standards and performance 
                thresholds.--The Secretary shall specify improvement 
                standards under subparagraph (B)(i) and the performance 
                thresholds under subparagraphs (B)(ii) and (C) before 
                the beginning of the year involved.
                    ``(E) Treatment of cases of insufficient 
                information.--A billing unit is deemed to meet 
                performance objectives under subparagraphs (B) and (C) 
                if the unit complied with the reporting requirement 
                under paragraph (4) but there was insufficient 
                information, as determined by the Secretary, to provide 
                a valid measure of performance.
            ``(6) Review of additional expenses.--Not later than May 1, 
        2008, and after consultation with the medical community, the 
        Secretary shall review, and report to Congress on, the extent 
        to which billing unit compliance with the reporting provisions 
        of paragraph (4) results in increased work and practice 
        expenses to billing units.
            ``(7) Physician and beneficiary education.--During 2006, 
        the Secretary shall establish a program to educate billing 
        units under this part and individuals enrolled under this part 
        about the value-based purchasing program under this subsection, 
        including information regarding financial incentives for 
        reporting information on Q & E measures and, beginning in 2009, 
        financial incentives based on performance on such measures.
            ``(8) Annual report on growth in volume of physicians' 
        services.--
                    ``(A) In general.--The Secretary shall report to 
                the Medicare Payment Advisory Commission and Congress 
                by April 1 of each year (beginning with 2006) 
                information on the growth in volume of services per 
                enrollee and growth in expenditures per enrollee, based 
                upon services and expenditures for which payment is 
                based, or related to, the fee schedule established 
                under this section.
                    ``(B) Details.--The information under subparagraph 
                (A) shall--
                            ``(i) be disaggregated by type of service, 
                        by geographic area, and by specialty of 
                        physicians (or, if applicable, of non-physician 
                        practitioners or suppliers);
                            ``(ii) distinguish between growth in 
                        expenditures due to price change versus volume 
                        change and intensity change; and
                            ``(iii) identify types of service or 
                        geographic areas where changes in volume or 
                        expenditures are inappropriate or unjustified, 
                        taking into account clinical outcomes.
                    ``(C) Recommendations.--Each such report shall 
                include recommendations to respond to inappropriate 
                growth in service volume. Such recommendations may 
                include regulatory or legislative changes, or both.
                    ``(D) Medpac response.--The Medicare Payment 
                Advisory Committee shall review each report submitted 
                under this paragraph, including recommendations 
                included under subparagraph (C). The Commission shall 
                include in its report to Congress in June following 
                such report an analysis of the Secretary's findings and 
                recommendations.
            ``(9) Evaluation; report.--
                    ``(A) Evaluation.--The Secretary shall provide for 
                an evaluation of the operation of this subsection 
                during the 5-year period in which this subsection is 
                first applied. Such evaluation shall review the impact 
                of this subsection on improving the quality and 
                efficiency of services and on access to such services 
                and on the fairness of its implementation.
                    ``(B) Report.--The Secretary shall submit to 
                Congress a report on such evaluation by not later than 
                September 30, 2011.
            ``(10) Waiver of administrative and judicial review.--There 
        shall be no administrative or judicial review under section 
        1869 or otherwise of--
                    ``(A) the selection of Q & E measures under 
                paragraphs (1) and (2);
                    ``(B) the development and computation of ratings 
                under paragraph (3)(A), standards and thresholds under 
                paragraph (5)(D), and the application of such standards 
                and thresholds under paragraphs (3)(B), (5)(B), and 
                (5)(C); and
                    ``(C) the definition of peers and new billing units 
                under this subsection.''.
    (c) Ending Application of Sustainable Growth Rate (SGR).--Section 
1848(f)(1)(B) of such Act (42 U.S.C. 1395w-4(f)(1)(B)) is amended by 
inserting ``(and before 2005)'' after ``each succeeding year''.
    (d) Conforming MedPAC Duties.--Section 1805(b)(2) of such Act (42 
U.S.C. 1395b-6(b)(2)) is amended by adding at the end the following new 
subparagraph:
                    ``(D) Review of report on growth in physician 
                services.--Specifically, under section 1848(k)(8)(D), 
                the Commission shall review and make recommendations 
                concerning the Secretary's report on the growth of 
                physicians' services under section 1848.''.
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