[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5866 Introduced in House (IH)]








109th CONGRESS
  2d Session
                                H. R. 5866

   To amend titles XI and XVIII of the Social Security Act to reform 
physician payment under the Medicare Program, to modernize the quality 
    improvement organization (QIO) program, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 24, 2006

 Mr. Burgess (for himself, Mr. Norwood, Mr. Weldon of Florida, and Mr. 
  Boustany) 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 titles XI and XVIII of the Social Security Act to reform 
physician payment under the Medicare Program, to modernize the quality 
    improvement organization (QIO) 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare Physician 
Payment Reform and Quality Improvement Act of 2006''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
               TITLE I--MEDICARE PHYSICIAN PAYMENT REFORM

Sec. 101. Medicare physician payment update reform.
Sec. 102. Voluntary reporting of quality measures for physicians' 
                            services.
Sec. 103. Removing limitations on balance billing with beneficiary 
                            notice for highest income beneficiaries.
     TITLE II--QUALITY IMPROVEMENT ORGANIZATION (QIO) MODERNIZATION

Sec. 201. Quality improvement activities.
Sec. 202. Improved program administration.
Sec. 203. Data disclosure.
Sec. 204. Use of evaluation and competition.
Sec. 205. Quality improvement funding.
Sec. 206. Qualifications for QIOs.
Sec. 207. Coordination with medicaid.
            TITLE III--MEDICARE SAVINGS AND OTHER PROVISIONS

Sec. 301. Elimination of stabilization fund for regional PPOs.
Sec. 302. Ongoing examination of medicare funding.
Sec. 303. One-year delay in medicare adjustments in payments for 
                            imaging services; IOM study on utilization 
                            and appropriateness of imaging services.
Sec. 304. Eliminating phase-in for implementation of reduction in part 
                            B premium subsidy for higher income 
                            beneficiaries.
Sec. 305. Exclusion of indirect graduate medical education payment in 
                            computation of payments to medicare 
                            advantage organizations.

               TITLE I--MEDICARE PHYSICIAN PAYMENT REFORM

SEC. 101. MEDICARE PHYSICIAN PAYMENT UPDATE REFORM.

    (a) Substitution of MEI Increase for SGR Adjustments.--Section 
1848(d) of the Social Security Act (42 U.S.C. 1395w-4(d)) is amended--
            (1) in paragraph (1)(A), by inserting ``and before 2007'' 
        after ``beginning with 2001'';
            (2) in paragraph (1)(A), by inserting before the period at 
        the end the following: ``, and for years beginning with 2007, 
        multiplied by the update established under paragraph (7) 
        applicable to the year involved''; and
            (3) in paragraph (4)--
                    (A) in the heading by striking ``years beginning 
                with 2001'' and inserting ``2001, 2002, and 2003''; and
                    (B) in subparagraph (A), by inserting ``and ending 
                with 2003'' after ``beginning with 2001''; and
            (4) by adding at the end the following new paragraph:
            ``(7) Update beginning with 2007.--The update to the single 
        conversion factor established in paragraph (1)(C) for 2007 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) 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 2006)'' after ``each succeeding year''.
    (c) Effective Date.--The amendments made by this section shall 
apply to payment for services furnished on or after January 1, 2007.

SEC. 102. VOLUNTARY REPORTING OF QUALITY MEASURES FOR PHYSICIANS' 
              SERVICES.

    (a) Reporting Program.--Section 1848 of the Social Security Act (42 
U.S.C. 1395w-4) is amended by adding at the end the following new 
subsection:
    ``(k) Quality Improvement.--
            ``(1) Selection of quality measures (q measures).--
                    ``(A) In general.--Not later than January 1, 2009, 
                the Secretary shall provide for the selection of 
                quality measures (in this subsection referred to as `Q-
                measures') consistent with and in accordance with this 
                paragraph and paragraph (2).
                    ``(B) Level of measurement.--Q-measures shall be 
                measures that provide for assessment of quality 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 measures shall--
                            ``(i) include a mixture of outcome 
                        measures, process measures (such as furnishing 
                        a service), and structural measures (such as 
                        the use of physician extenders, disease 
                        management, and health information technology 
                        for submission of measures);
                            ``(ii) include measures of care furnished 
                        to frail individuals over the age of 75 and to 
                        individuals with multiple complex chronic 
                        conditions;
                            ``(iii) be evidence-based, if pertaining to 
                        clinical care;
                            ``(iv) be consistent, valid, practicable, 
                        and not overly burdensome to collect;
                            ``(v) be relevant to physicians and other 
                        practitioners and individuals enrolled under 
                        this part;
                            ``(vi) include measures that, taken as a 
                        whole, provide a balanced measure of 
                        performance of a billing unit under this part; 
                        and
                            ``(vii) include measures that capture 
                        individuals' assessment of clinical care 
                        provided.
                    ``(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.
                    ``(F) Development.--In developing Q measures, the 
                Secretary shall provide for--
                            ``(i) measurement of quality by stratified 
                        groups and the review of the absolute level of 
                        quality provided by a physician or medical 
                        group; and
                            ``(ii) including practicing physicians with 
                        expertise in eliminating racial and ethnic 
                        health disparities in the design, 
                        implementation and evaluation of the program.
            ``(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 
                        January 1, 2008, proposed Q measures described 
                        in clauses (i) through (vi) of paragraph (1)(C) 
                        that would be applicable to core clinical 
                        services 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 measures 
                        under clause (i) by January 1, 2008, the 
                        Secretary shall submit, as soon as possible but 
                        not later than February 1, 2008, proposed Q 
                        measures described in clauses (i) through (vi) 
                        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 
                                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 individuals with 
                                experience in the delivery of health 
                                care in urban, rural, and frontier 
                                areas and to underserved populations 
                                and those who serve a disproportionate 
                                number of minority patients.
                    ``(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 May 1, 2008, 
                recommendations respecting the Q measures described in 
                clauses (i) through (vi) of paragraph (1)(C) to be 
                implemented under this subsection.
                    ``(C) Secretarial selection.--The Secretary shall 
                select Q 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 
                        measure described in clauses (i) through (vi) 
                        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 measures described in 
                                clauses (i) through (vi) 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 measures under such clause and 
                                only if the Secretary takes into 
                                account research-based peer-reviewed 
                                medical publications in selecting such 
                                measures; and
                                    ``(II) Q measures described in 
                                clause (vii) or (viii) of paragraph 
                                (1)(C) and Q measures described in 
                                clause (i) through (vi) 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 measures consistent with the provisions 
                of this paragraph and paragraph (1) and the application 
                of such revised Q 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 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 measures relative to the 
                        performance of its peers taking into account 
                        the voluntary nature of the reporting system 
                        under this subsection.
                            ``(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)(C).
                    ``(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 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 2009 and 2010, 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 2010, the Secretary 
                        shall notify the unit of the performance on Q 
                        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 2013, or in the United 
                States.
            ``(4) Reporting on performance beginning with 2008.--
        Beginning with 2008, each billing unit under this part may 
        submit information on performance on the Q 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) Informational performance standards and thresholds.--
                    ``(A) In general.--For purposes of disclosure under 
                paragraph (3)(B), the Secretary shall establish quality 
                performance objectives for billing units under this 
                part.
                    ``(B) 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 (C).
                    ``(C) Improvement standards and performance 
                thresholds.--The Secretary shall specify the 
                performance thresholds under subparagraphs (B) before 
                the beginning of the year involved.
                    ``(D) 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 
        January 1, 2010, 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 and whether 
        participating billing units showed a demonstrable improvement 
        in the delivery of quality health care.
            ``(7) Physician and beneficiary education.--During 2008, 
        the Secretary shall establish a program to educate billing 
        units under this part and individuals enrolled under this part 
        about the voluntary quality disclosure system under this 
        subsection and recommendations on training opportunities to 
        improve ratings and performance on Q 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 2008) 
                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, including growth 
                        due to the development and improvement of 
                        procedures; 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 
                each 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 of services 
                and on access to such services and on the fairness of 
                its implementation. Such evaluation shall include a 
                study of the extent to which--
                            ``(i) payment policies under this section 
                        exacerbate or diminish racial and ethnic health 
                        disparities; and
                            ``(ii) there has been improvement in 
                        meeting performance measures for racial and 
                        ethnic minorities through the operation of this 
                        section.
                The Secretary is authorized to enter into a contract 
                with the Institute of Medicine of the National Academy 
                of Sciences for the conduct of the evaluation under 
                this subparagraph.
                    ``(B) Report.--The Secretary shall submit to 
                Congress a report on such evaluation by not later than 
                September 30, 2012.
            ``(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 measures under paragraphs 
                (1) and (2);
                    ``(B) the development and computation of ratings 
                under paragraph (3)(A), standards and thresholds under 
                paragraph (5)(C), and the application of such standards 
                and thresholds under paragraphs (3)(B) and (5)(B); and
                    ``(C) the definition of peers and new billing units 
                under this subsection.''.
    (b) 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.''.

SEC. 103. REMOVING LIMITATIONS ON BALANCE BILLING WITH BENEFICIARY 
              NOTICE FOR HIGHEST INCOME BENEFICIARIES.

    (a) In General.--Section 1848(g) of the Social Security Act (42 
U.S.C. 1395w-4(g)) is amended--
            (1) in paragraph (1)(A), in the matter before clause (i), 
        by inserting ``, subject to subparagraph (D),'' after 
        ``enrolled under this part'';
            (2) in paragraph (1), by adding at the end the following 
        new subparagraph:
                    ``(D) Exception for highest income beneficiaries.--
                Subparagraph (A) shall not apply with respect to 
                physicians' services furnished in a month to an 
                individual with respect to whom and for such month a 
                reduction in premium subsidy is in effect under section 
                1839(i) if the individual furnishing such services 
                provides the advance notice of such non-participation 
                and non-acceptance of assignment under paragraph (8) 
                and (for services furnished on or after January 1, 
                2008) submits information in accordance with subsection 
                (k)(4).''; and
            (3) by adding at the end the following new paragraph:
            ``(8) Notice of non-participation and non-acceptance of 
        assignment.--For purposes of paragraph (1)(D), the advance 
        notice of non-participation and non-acceptance of assignment 
        shall be, with respect to an item or service furnished under 
        this part by (or under the supervision of) a physician, a 
        notice (that may be in the form of a posting in a conspicuous 
        place in a physician's office or on patient information forms) 
        that is posted or otherwise furnished in a manner so as to 
        inform the individual receiving the item or service that--
                    ``(A) the physician furnishing (or supervising the 
                furnishing of) the items or service is not a 
                participating physician and does not accept assignment 
                with respect to the service; and
                    ``(B) because of such non-acceptance, in the case 
                of physicians' services furnished in a month to an 
                individual with respect to whom and for such month a 
                reduction in premium subsidy is in effect under section 
                1839(i), the charge imposed is not limited and may 
                exceed the limiting charge described in paragraph 
                (2).''.
    (b) Conforming Amendment to Private Contract Provisions.--Section 
1802 of such Act (42 U.S.C. 1395a) is amended by adding at the end the 
following new paragraph:
            ``(6) Exception for highest income beneficiaries.--The 
        previous provisions of this subsection shall not apply to 
        physicians' services furnished in a month to an individual with 
        respect to whom and for such month a reduction in premium 
        subsidy is in effect under section 1839(i) if the advance 
        notice described in section 1848(g)(8) has been provided and 
        (for services furnished on or after January 1, 2008) the 
        physician furnishing the services submits information in 
        accordance with section 1848(k)(4).''.
    (c) Conforming Amendment to Participation Provisions.--Section 
1842(h) of such Act (42 U.S.C. 1395u) is amended by adding at the end 
the following new paragraph:
    ``(8) The previous provisions of this subsection, insofar as they 
limit the charges that a participating physician may impose, shall not 
apply to physicians' services furnished in a month to an individual 
with respect to whom and for such month a reduction in premium subsidy 
is in effect under section 1839(i) if the advance notice described in 
section 1848(g)(8) has been provided and (for services furnished on or 
after January 1, 2008) the physician furnishing the services submits 
information in accordance with section 1848(k)(4).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to services furnished on or after January 1, 2008.
    (e) Review and Report on Impact.--
            (1) Review.--The Secretary of Health and Human Services 
        shall monitor and review the impact of the amendments made by 
        this section on the access of medicare beneficiaries to 
        physicians' services.
            (2) Report.--Not later than January 1, 2009, the Secretary 
        shall submit to Congress a report on such review and shall 
        include such recommendations regarding changes in the 
        amendments made by this section (such as reducing the income 
        threshold applied for purposes of determining applicability of 
        such amendments and thereby expanding the application of such 
        amendments) as the Secretary deems appropriate.

     TITLE II--QUALITY IMPROVEMENT ORGANIZATION (QIO) MODERNIZATION

SEC. 201. QUALITY IMPROVEMENT ACTIVITIES.

    (a) Inclusion of Quality Improvement Functions.--Section 1154(a) of 
the Social Security Act (42 U.S.C. 1320c-3(a)) is amended by adding at 
the end the following new paragraph: ``
            ``(18) The organization shall offer quality improvement 
        assistance to providers, practitioners, Medicare Advantage 
        organizations offering Medicare Advantage plans under part C of 
        title XVIII, and prescription drug sponsors offering 
        prescription drug plans under part D of such title, including 
        the following:
                    ``(A) Education on quality improvement initiatives, 
                strategies and techniques.
                    ``(B) Instruction on how to collect, submit, 
                aggregate and interpret data on measures that may be 
                used for quality improvement, public reporting and 
                payment.
                    ``(C) Instruction on how to conduct root-cause 
                analyses.
                    ``(D) Technical assistance for providers and 
                practitioners in beneficiary education to facilitate 
                patient self-management.
                    ``(E) Facilitating cooperation among various local 
                stakeholders in quality improvement.
                    ``(F) Facilitating adoption of procedures that 
                encourage timely candid feedback from patients and 
                their families concerning perceived problems.
                    ``(G) Guidance on redesigning clinical processes, 
                including the adoption and effective use of health 
                information technology, to improve the coordination, 
                effectiveness, and safety of care.
                    ``(H) Assistance in improving the quality of care 
                delivered in rural and frontier areas and reducing 
                health care disparities among racial and ethnic 
                minorities, as well as gender disparities.''.
    (b) Medicare Quality Accountability Program.--Paragraph (14) of 
section 1154(a) of such Act (42 U.S.C. 1320c-3(a)) is amended to read 
as follows: ``
            ``(14)(A) The organization shall conduct an appropriate 
        review of all written complaints about the quality of services 
        (for which payment may otherwise be made under title XVIII) not 
        meeting professionally recognized standards of health care, if 
        the complaint is filed with the organization by an individual 
        entitled to benefits for such services under such title (or a 
        person acting on the individual's behalf). Before the 
        organization concludes that the quality of services does not 
        meet professionally recognized standards of health care, the 
        organization must provide the practitioner or person concerned 
        with reasonable notice and opportunity for discussion.
            ``(B) The organization shall establish and operate a 
        Medicare quality accountability program consistent with the 
        following:
                    ``(i) The organization shall actively educate 
                Medicare beneficiaries of their right to bring quality 
                concerns to Quality Improvement Organizations.
                    ``(ii) The organization shall report findings of 
                its investigations to complainants, the beneficiary 
                involved, or their representative, whether the 
                complaint findings involve physicians or institutional 
                providers, practitioners, or Medicare Advantage plans, 
                but such complaint findings may not be used in any form 
                in a medical malpractice action.
                    ``(iii) The organization shall assist providers, 
                practitioners, and plans in adopting best practices for 
                soliciting and welcoming feedback about patient 
                concerns, and assist providers, practitioners, and 
                plans in remedying patient-reported problems that are 
                confirmed by the organization and shall report findings 
                of patient reported problems to the provider, 
                practitioner, or plan involved before disclosing 
                investigation results to the patient or patient's 
                representative.
                    ``(iv) The organization shall determine whether the 
                complaint allegations about clinical quality of care 
                are confirmed and assist provider, practitioners, and 
                plans in remedying confirmed complaints.
                    ``(v) The organization shall respond supportively 
                to quality problems caused by unsafe systems, and refer 
                for enforcement providers who are unwilling or unable 
                to improve.
                    ``(vi) The organization shall publish annual 
                quality reports in each State in which the organization 
                operates, including aggregate complaint data and 
                provider performance on standardized quality measures.
                    ``(vii) The organization shall promote beneficiary 
                awareness of standardized quality measures that may be 
                used for evaluating care and for choosing providers, 
                practitioners and plans
            ``(C) The Secretary shall monitor and report to Congress, 
        regarding--
                    ``(i) the reliability of complaint determinations 
                by Quality Improvement Organizations;
                    ``(ii) the effect of disclosure of complaint 
                findings on the availability of primary- and specialty-
                care physician reviewers;
                    ``(iii) changes resulting from the systems change 
                process described in subparagraph (B)(v); and
                    ``(iv) trends in civil litigation filed by 
                complainants.''.

SEC. 202. IMPROVED PROGRAM ADMINISTRATION.

    Part B of title XI of the Social Security Act is amended by adding 
at the end the following new section:

                        ``program administration

    ``Sec. 1164.  (a) Improved Program Management.--
            ``(1) Report on management of the qio program.--The 
        Comptroller General of the United States shall submit to 
        Congress, no later than March 31, 2010, a report on the 
        implementation by the Secretary and the Director of the Office 
        of Management and Budget of this part and their overall 
        management of the program under this part.
            ``(2) Program management.--The report under paragraph (1) 
        shall include a review of all of the following:
                    ``(A) Implementation of the priorities, 
                recommendations, and strategies of the strategic 
                advisory committee under subsection (c)(1).
                    ``(B) Implementation of appropriate program and 
                contractor evaluation.
                    ``(C) Ensuring timely issuance of statements of 
                work.
                    ``(D) Ensuring timely and priority QIO access to 
                Medicare data for quality improvement purposes.
                    ``(E) Ensuring timely apportionment of funding.
                    ``(F) Ensuring funding levels for new work are 
                added to the QIO contract, as described in the second 
                sentence of section 1159(b)(1).
                    ``(G) The process of developing the apportionment 
                request and determining the funding allocation to QIOs.
                    ``(H) The identification of and progress towards 
                measures of effective management by the Secretary of 
                the QIO program.
                    ``(I) A review of the experience and qualifications 
                of staff of the Centers for Medicare & Medicaid 
                Services in overseeing the program.
            ``(3) Innovation.--The Secretary shall ensure that such 
        staff Quality Improvement Organizations are provided maximum 
        freedom in designing and applying intervention strategies for 
        local quality improvement.
    ``(b) Assuring Data Access.--The Secretary shall ensure that 
Quality Improvement Organizations have timely, top priority access to 
Medicare data for all parts of Medicare pertinent to the contract 
activities, in a form allowing the data to be integrated and analyzed 
by such organizations according to the needs of partners and 
beneficiaries in each jurisdiction.
    ``(c) Setting Strategic Priorities.--
            ``(1) Appointment of strategic advisory committee.--The 
        Secretary shall appoint an independent strategic advisory 
        committee, composed of national quality measurement and 
        improvement experts, representatives of beneficiaries, health 
        care providers, and practitioners, and organizations holding 
        contracts under this part.
            ``(2) Duties of committee.--Such committee shall set 
        national strategic priorities for improvement in the quality of 
        care, consistent with the Institute of Medicine's six aims for 
        health care improvement, including safety, effectiveness, 
        patient centeredness, timeliness, efficiency and equity, and 
        update these in time to permit preparation of a draft statement 
        of work and funding request for each program cycle under this 
        part.
            ``(3) Independent evaluation.--The committee should ensure 
        that the Quality Improvement Organization program is evaluated 
        by an independent entity using a study design, such as to a 
        crossover design, to allow for a reliable assessment of program 
        performance in a way that does not have an adverse impact on 
        providers, practitioners, and plans that may work with the 
        Organization.
            ``(4) Funding.--The Secretary shall allocate funds for the 
        strategic advisory committee from the portion of the additional 
        funding provided under the second sentence of section 
        1159(b)(1).
    ``(d) Taking Into Account Recommendations From Stakeholders in 
Statements of Work.--Each statement of work under this part for a 
contract period beginning on or after August 1, 2008, shall include a 
task for the contracting Quality Improvement Organization to convene 
stakeholders to identify high priority quality problems for work in the 
contract period that are relevant to Medicare beneficiaries in the 
State. Each such organization shall propose, as part of such statement, 
one or more projects to the Secretary taking into consideration the 
recommendations of such stakeholders recommendations, along with 
suggested performance measures to evaluate progress on such item.
    ``(e) Allocation of Resources to Priority Areas.--The Secretary 
shall allocate at least 20 percent of the additional funding that is 
provided under the second sentence of section 1159(b)(1) to promote 
improvement in one or more locally defined priority areas identified 
under subsection (d).''.

SEC. 203. DATA DISCLOSURE.

    Section 1160 of the Social Security Act (42 U.S.C. 1320c-9) is 
amended--
            (1) in subsection (a)(3), by striking ``subsection (b)'' 
        and inserting ``subsections (b) and (f)''; and
            (2) by adding at the end the following new subsection:
    ``(f)(1) An organization with a contract with the Secretary under 
this part may share individual-specific data with a physician treating 
the individual, for quality improvement and patient safety purposes.
    ``(2) The Secretary shall promulgate, not later than 30 days after 
the date of the enactment of this subsection, a regulation that permits 
the sharing of data under paragraph (1).
    ``(3) Nothing in this subsection shall be construed to limit, 
alter, or affect the requirements imposed the regulations promulgated 
under section 264(c) of the Health Insurance Portability and 
Accountability Act of 1996.''.

SEC. 204. USE OF EVALUATION AND COMPETITION.

    Section 1153 of the Social Security Act (42 U.S.C. 1320c-2) is 
amended--
            (1) by amending paragraph (3) of subsection (c) to read as 
        follows:
            ``(3) subject to subsection (k), the contract shall be for 
        an initial term of five years and shall be renewable for each 5 
        years thereafter;''; and
            (2) by adding at the end the following new subsection:
    ``(k)(1) Subject to the succeeding provisions of this subsection, 
at the end of each contract period under subsection (c)(3), the 
contract shall be subject to open competition.
    ``(2) Before publishing a request for proposal for a contract 
period, the Secretary shall, in consultation with the strategic 
advisory committee appointed under section 1164(c)(1), establish 
measurable goals for each task to be included in such proposal. The 
contract shall include a performance threshold by which an organization 
holding a contract under this section may demonstrate excellent 
performance. The Secretary may not establish such performance 
thresholds in such a way as to predetermine or limit either the number 
or percentage of organizations which may demonstrate excellent 
performance.
    ``(3) The Secretary shall publish the request for proposals no 
later than four months prior to the beginning of such contract period.
    ``(4) The Secretary shall utilize the strategic advisory committee 
appointed under section 1164(c)(1) to qualify the validity, 
reliability, and feasibility of measures to be used in evaluating the 
performance of organizations holding a contract under this section. 
Before any performance measure may be used for such purpose, it must 
have been designated by such committee to be valid, reliable, and 
feasible for use under similar circumstances, as demonstrated in at 
least one reliable and valid study.
    ``(5) In the case of an open competition for a contract under this 
section, if an organization bidding for the contract demonstrates 
excellent performance in fulfilling the terms of such a contract during 
the previous contract period, the Secretary shall award the bidder a 
bonus equivalent to ten percent of the total possible score for the 
proposal.
    ``(6) The Secretary may not reduce the amount of a contract award 
below the amount proposed by the bidder prevailing in a competitive 
bidding process.
    ``(7) The Secretary shall design the process for performance 
evaluation of contracts under this section--
            ``(A) to avoid interfering with the work of contractors 
        with plans, providers, and practitioners;
            ``(B) to hold harmless and not penalize contractors when 
        performance is impaired or delayed by failures of the 
        Secretary, personnel of the Department of Health and Human 
        Services, or contractors of the Secretary to provide timely 
        deliverables by other entities;
            ``(C) to use a continuous measurement strategy with 
        provision for frequent performance updates for evaluating 
        interim progress; and
            ``(D) to require that evaluation metrics be monitored and 
        adjusted based on experience or evolving science over the 
        course of a contract cycle.
    ``(8) At the end of each 5-year contract term, the Secretary may, 
without full and open competition, extend the term for an additional 
period of 5 years if the Secretary determines that the organization 
holding the contract has achieved excellent performance during the 
previous 5-year term. But in no case shall an organization be allowed 
to maintain such a contract for a period of longer than 10 years 
without being subject to full and open competition.''.

SEC. 205. QUALITY IMPROVEMENT FUNDING.

    Section 1159 of the Social Security Act (42 U.S.C. 1320c-8) is 
amended--
            (1) by inserting ``(a)'' before ``Expenses incurred''; and
            (2) by adding at the end the following new subsection:
    ``(b)(1) The aggregate annual funding under contracts under this 
part for fiscal year 2007 and each subsequent fiscal year shall not be 
less than $421,666,000. In addition, there are authorized to be 
appropriated for contract periods in subsequent fiscal years such 
additional amounts funds as may be necessary to adequately fund any 
resource needs over the amount provided under the previous sentence.
    ``(2) At least 80 percent of the funding under this part in a 
contract period shall be expended in support of core contracts held by 
organizations under this part.
    ``(3) The Secretary shall determine the resource needs for a 
contract period in consultation with representatives from existing 
contractors. The determination shall take into account factors 
including any new work added via contract modification during the 
course of the contract period or added from one contract cycle to the 
next cycle. New work includes--
            ``(A) additional core contract tasks, requirements, 
        deliverables, and performance thresholds;
            ``(B) technical assistance for additional providers, 
        practitioners, and health plans and additional provider 
        settings;
            ``(C) increased outreach and communications to Medicare 
        beneficiaries, providers, practitioners, and plans; and
            ``(D) increased volume of medical reviews.
    ``(4) With respect to the apportionment of funds under this part 
for a contract period--
            ``(A) the Secretary shall submit a proposed apportionment 
        to the Director of the Office of Management and Budget no later 
        than 1 year before the first date of the contract period;
            ``(B) such Director shall approve or deny the proposed 
        apportionment no later than 9 months before the first date of 
        such contract period;
            ``(C) for tasks the Secretary proposes to continue from the 
        previous contract period, if the apportionment is not 
        authorized by the deadline specified in subparagraph (B), 
        funding shall continue for the next contract period at a level 
        no less than the level for the previous contract period, 
        increased by the percentage increase in the consumer price 
        index for all urban consumers during the preceding 12-month 
        period.
    ``(5) Organizations with a contract under this part may enter into 
contracts with public or private entities including providers, 
practitioners, and payers other than Secretary, to provide quality 
improvement or other forms of technical assistance if there were 
arrangements made to avoid potential conflicts of interest.
    ``(6) Such organizations shall have the ability to meet the terms 
of a contract by allocating funds to functions established by the 
Secretary at its discretion. The Secretary shall review the allocation 
of these funds and whether the organization met the functions and goals 
set out for the organization, regardless of allocation of funds at the 
initial acceptance of the contract.''.

SEC. 206. QUALIFICATIONS FOR QIOS.

    (a) In General.--Section 1153(b) of the Social Security Act (42 
U.S.C. 1320c-2(b)) is amended by adding at the end the following new 
paragraph:
    ``(4) The Secretary shall not enter into or renew a contract under 
this section with an entity unless the following requirements are met:
            ``(A) The entity's governing body must reflect 
        representation of consumers and other stakeholders.
            ``(B) The entity must have demonstrated success in 
        facilitating clinical and administrative system redesign to 
        improve the coordination, effectiveness, and safety of health 
        care, and in facilitating cooperation among stakeholders in 
        quality improvement.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to contract periods beginning after the date of the enactment of 
this Act.

SEC. 207. COORDINATION WITH MEDICAID.

    (a) Permitting Alternative Quality Improvement Program.--Section 
1902(a)(30) of the Social Security Act (42 U.S.C. 1396a(a)(30)) is 
amended by striking ``and'' at the end of subparagraph (A), by adding 
``and'' and the end of subparagraph (B), and by adding at the end the 
following new subparagraph:
                    ``(C) provide, at the discretion of the State plan, 
                for a quality improvement program in place of the 
                program described in subparagraph (A), in whole or in 
                part, that--
                            ``(i) establishes priorities for achieving 
                        significant measurable improvement in the 
                        quality of health care services provided to 
                        individuals eligible under this title, and 
                        reviews such priorities at least every five 
                        years for the purpose of making appropriate 
                        revisions;
                            ``(ii) provides quality improvement 
                        assistance to providers and practitioners 
                        consistent with such priorities; and
                            ``(iii) provides for an annual report to 
                        the Secretary on quality performance under such 
                        plan of providers and practitioners using 
                        nationally standardized quality measures;''.
    (b) Role of QIOs.--Section 1902(d) of such Act (42 U.S.C. 1396a(d)) 
is amended--
            (1) by inserting ``(1)'' after ``(d)''; and
            (2) by adding at the end the following new paragraph:
    ``(2) If a State contracts with a Quality Improvement Organization 
having a contract with the Secretary under part B of title XI for the 
performance of quality improvement program activities required by 
subsection (a)(30)(C), such requirements shall be deemed to be met for 
those activities by delegation to such an Organization if the contract 
provides for the performance of activities not inconsistent with part B 
of title XI and provides for such assurances of satisfactory 
performance by such an entity or organization as the Secretary may 
prescribe.''.
    (c) Funding.--Section 1903(a)(3)(C) of such Act (42 U.S.C. 
1396b(a)(3)(C)) is amended--
            (1) in clause (i), by striking ``1902(d)'' and inserting 
        ``1902(d)(1)''; and
            (2) by adding at the end the following new clause:
                            ``(iii) 75 percent of the sums expended 
                        with respect to costs incurred during such 
                        quarter (as found necessary by the Secretary 
                        for the proper and efficient administration of 
                        the State plan) as are attributable to the 
                        performance of quality improvement program 
                        activities by a Quality Improvement 
                        Organization under a contract entered into 
                        under section 1902(d)(2); and''.
    (d) Effective Date.--The amendments made by this section shall 
apply to contract periods beginning after the date of the enactment of 
this Act

            TITLE III--MEDICARE SAVINGS AND OTHER PROVISIONS

SEC. 301. ELIMINATION OF STABILIZATION FUND FOR REGIONAL PPOS.

    (a) In General.--Except as provided in subsection (b), no funds 
shall be available for obligation, on or after the date of the 
enactment of this Act, from the MA Regional Plan Stabilization Fund 
(under section 1858(e) of the Social Security Act).
    (b) Availability of Freed up Funds.--Amounts in such MA Regional 
Plan Stabilization Fund that are not otherwise obligated shall be 
transferred and deposited into the Medicare Supplementary Medical 
Insurance Trust Fund under section 1841 of the Social Security Act (42 
U.S.C. 1395t) without additional appropriation to cover additional 
expenditures resulting from the amendments made by section title I of 
this Act.

SEC. 302. ONGOING EXAMINATION OF MEDICARE FUNDING.

    (a) Examination by Board of Trustees.--The Board of Trustees of the 
Federal Hospital Insurance Trust Fund and of the Federal Supplementary 
Medical Insurance Trust Fund shall monitor and examine the extent to 
which the different funding mechanisms under parts A, B, and D of title 
XVIII of the Social Security Act provide an appropriate alignment with 
the program goals of the respective parts. Such examination shall 
include an examination of each of the following:
            (1) The extent to which, as volume of services increases in 
        physician settings under such part B, there is a corresponding 
        reduction in similar services provided in a hospital setting 
        under such part A.
            (2) The extent to which, as a result of increased 
        coordination between physicians and the delivery of 
        prescription drugs under such part D, particularly with respect 
        to individuals with chronic conditions, there will there be a 
        decrease in hospitalizations under such part A.
            (3) The extent to which other changes in physician or other 
        health care practice results in a shifting of expenditures 
        among the various parts.
    (b) Inclusion in Annual Reports.--In each annual report submitted 
to the Congress after the date of the enactment of this Act under 
section 1817(b)(2) or section 1841(b)(2) of the Social Security Act (42 
U.S.C. 1395i(b)(2), 1395t(b)(2)), such Board of Trustees shall include 
information on the matters described in subsection (a).

SEC. 303. ONE-YEAR DELAY IN MEDICARE ADJUSTMENTS IN PAYMENTS FOR 
              IMAGING SERVICES; IOM STUDY ON UTILIZATION AND 
              APPROPRIATENESS OF IMAGING SERVICES.

    (a) Delay.--Subsections (b)(4)(A), (c)(2)(B)(v)(I), and 
(c)(2)(B)(v)(II) of section 1848 of the Social Security Act (42 U.S.C. 
1395w-4), as amended by section 5102 of the Deficit Reduction Act of 
2005 (Public Law 109-171) are each amended by striking ``2007'' and 
inserting ``2008''.
    (b) Study and Report on Utilization and Appropriateness of Imaging 
Services.--
            (1) In general.--The Secretary of Health and Human Services 
        shall request (and shall enter into a contract with) the 
        Institute of Medicine to conduct a study of the utilization and 
        appropriateness of imaging services described in section 
        1848(b)(4)(B) of the Social Security Act (42 U.S.C. 1395w-
        4(b)(4)(B)) under the Medicare program and to submit to the 
        Secretary, not later than April 1, 2007, a report on such 
        study, including recommendations regarding changes in medicare 
        payment for such services. Such study shall include an 
        examination of--
                    (A) the role of medical malpractice in the 
                utilization of such services;
                    (B) the impact of utilization of such services in 
                reducing or increasing the subsequent delivery of 
                services;
                    (C) the impact of increased disease as a factor  in  
                utilization of such services; and
                    (D) a delineation of factors in utilization and 
                appropriateness by site of service, by modality, and by 
                specialty.
            (2) Report.--The Secretary shall submit to Congress the 
        report submitted under paragraph (1).

SEC. 304. ELIMINATING PHASE-IN FOR IMPLEMENTATION OF REDUCTION IN PART 
              B PREMIUM SUBSIDY FOR HIGHER INCOME BENEFICIARIES.

    Section 1839(i)(3) of the Social Security Act (42 U.S.C. 
1395r(i)(3)) is amended--
            (1) in subparagraph (A), by striking ``Subject to 
        subparagraph (B), the'' and inserting ``The'';
            (2) in subparagraph (A)(i), by striking ``subparagraph 
        (C)'' and inserting ``subparagraph (B)'';
            (3) by striking subparagraph (B); and
            (4) by redesignating subparagraph (C) as subparagraph (B).

SEC. 305. EXCLUSION OF INDIRECT GRADUATE MEDICAL EDUCATION PAYMENT IN 
              COMPUTATION OF PAYMENTS TO MEDICARE ADVANTAGE 
              ORGANIZATIONS.

    (a) In General.--Section 1853(c)(1)(D)(i) of the Social Security 
Act (42 U.S.C. 1395w-23(c)(1)(D)(i)) is amended by inserting ``or under 
section 1886(d)(5)(B)'' after ``1886(h)''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to payment for years beginning with 2007 and the Secretary of 
Health and Human Services shall provide for the application of clause 
(i) of section 1853(c)(1)(D) of the Social Security Act, as so amended, 
for 2007.
                                 <all>