[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3038 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 3038

To amend section 1848 of the Social Security Act to establish standards 
 for growth in Medicare expenditures for physicians' services based on 
                        categories of services.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 12, 2007

 Mr. Sessions 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 section 1848 of the Social Security Act to establish standards 
 for growth in Medicare expenditures for physicians' services based on 
                        categories of services.

    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 Act of 2007''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Reforming standards for growth in Medicare expenditures for 
                            physicians' and related services.
Sec. 3. Establishment of update service categories and expenditure 
                            measurement categories.
Sec. 4. Establishing updates for conversion factors for update service 
                            categories.
Sec. 5. Replacement of sustainable growth rate with service category 
                            growth rates.
Sec. 6. Reports to Congress on excess expenditures for part B drugs and 
                            clinical diagnostic laboratory tests.

SEC. 2. REFORMING STANDARDS FOR GROWTH IN MEDICARE EXPENDITURES FOR 
              PHYSICIANS' AND RELATED SERVICES.

    (a) Providing for Separate Conversion Factors for Service 
Categories.--Subsection (d)(1)(A) of section 1848 of the Social 
Security Act (42 U.S.C. 1395w-4) is amended--
            (1) by designating the sentence beginning ``The conversion 
        factor'' as clause (i) with the heading ``years before 2009'' 
        and with appropriate indentation;
            (2) by inserting ``and ending with 2008'' after ``beginning 
        with 2001''; and
            (3) by adding at the end the following new clause:
                            ``(ii) 2009 and subsequent years.--For 
                        years after 2008, the conversion factor for an 
                        update service category (as defined in 
                        subsection (j)(5)) for a year shall be the 
                        conversion factor established for such category 
                        under this subsection for the previous year (or 
                        in the case of 2009, the single conversion 
                        factor established under this subsection for 
                        2008), multiplied by the update established 
                        under paragraph (8) for such category for the 
                        year involved.''.
    (b) Conforming Amendments.--Such section is further amended--
            (1) in subsection (b)(1)(B), by inserting ``applicable'' 
        before ``conversion factor'';
            (2) in subsection (d)(1)(D)--
                    (A) by inserting ``before 2009'' after ``for a 
                year''; and
                    (B) by adding at the end the following: ``For 2009 
                and subsequent years, the separate conversion factor 
                for anesthesia services shall be determined as follows:
                            ``(i) For 2009, 46 percent of the single 
                        conversion factor established under this 
                        subsection for other physicians' services for 
                        2008, multiplied by the update established 
                        under paragraph (8) for the applicable update 
                        service category for 2009.
                            ``(ii) For a subsequent year, the 
                        conversion factor established under this 
                        subsection for the previous year, multiplied by 
                        the update established under paragraph (8) for 
                        the applicable update service category for the 
                        year involved.'';
            (3) in subsection (d)(1)(E)--
                    (A) in clause (i), by inserting ``(or, for 
                publications beginning with 2009, the applicable 
                conversion factor for each update service category)'' 
                after ``conversion factor'';
                    (B) in clause (i), by striking ``under paragraph 
                (4)'' and inserting ``(for each update service category 
                for publications beginning with 2009)'';
                    (C) in clause (i), by striking ``under such 
                paragraph'' and inserting ``(for each update service 
                category for publications beginning with 2008)''; and
                    (D) in clause (ii), by inserting ``(or, for years 
                beginning with 2008, the service category growth rate 
                and, for years beginning with 2009, the applicable 
                conversion factor, for each update service category)'' 
                after ``sustainable growth rate''; and
            (4) in subsection (d)(4)--
                    (A) in the heading, by inserting ``and ending with 
                2008'' after ``beginning with 2001''; and
                    (B) in subparagraph (A), in the matter preceding 
                clause (i), by inserting ``and ending with 2008'' after 
                ``beginning with 2001''.

SEC. 3. ESTABLISHMENT OF UPDATE SERVICE CATEGORIES AND EXPENDITURE 
              MEASUREMENT CATEGORIES.

    (a) Update Service Categories.--Subsection (j) of section 1848 of 
the Social Security Act (42 U.S.C. 1395w-4) is amended by adding at the 
end the following new paragraph:
            ``(5) Update service categories.--Each of the following 
        categories of physicians' services shall be treated as a 
        separate `update service category':
                    ``(A) Evaluation and management services.
                    ``(B) Radiology services and diagnostic tests 
                (other than clinical diagnostic laboratory tests).
                    ``(C) Procedures that are subject to a 10-day or 
                90-day global period (in this paragraph referred to as 
                `major procedures'), except that the Secretary may 
                reclassify as minor procedures under subparagraph (E) 
                any procedures that would otherwise be included in this 
                category if the Secretary determines that such 
                procedures are not major procedures.
                    ``(D) Anesthesia services that are paid on the 
                basis of the separate conversion factor for anesthesia 
                services determined under subsection (d)(1)(D).
                    ``(E) Minor procedures and any other physicians' 
                services that are not described in a preceding 
                clause.''.
    (b) Expenditure Measurement Category.--Subsection (f)(4) of such 
section is amended by adding at the end the following new subparagraph:
                    ``(D) Expenditure measurement category.--The term 
                `expenditure measurement category' means each of the 
                update service categories described in subparagraphs 
                (A) through (E) of subsection (j)(5) and, only for 
                purposes of reporting, the following additional 
                categories of physicians' services (as defined in 
                subparagraph (A)):
                            ``(i) Clinical diagnostic laboratory tests.
                            ``(ii) Drugs, biologicals, and 
                        radiopharmaceuticals for which payment is made 
                        under this part.''.

SEC. 4. ESTABLISHING UPDATES FOR CONVERSION FACTORS FOR UPDATE SERVICE 
              CATEGORIES.

    Section 1848(d) of the Social Security Act (42 U.S.C. 1395w-4(d)) 
is amended--
            (1) in paragraph (4)(C)(iii), by inserting ``and ending 
        with 2008'' and ``and ending with 2008'' after ``beginning with 
        2000'' and after ``beginning with 2000'', respectively; and
            (2) by adding at the end the following new paragraph:
            ``(8) Updates for update service categories for years after 
        2008.--
                    ``(A) In general.--Unless otherwise provided by 
                law, subject to the budget neutrality factor determined 
                by the Secretary under subsection (c)(2)(B)(ii), the 
                update to the conversion factor for an update service 
                category (as defined in subsection (j)(5)) for a year 
                beginning with 2009 is equal to the product of--
                            ``(i) 1 plus the Secretary's estimate of 
                        the percentage increase in the MEI (as defined 
                        in section 1842(i)(3)) for the year; and
                            ``(ii) 1 plus the Secretary's estimate of 
                        the update adjustment factor for the update 
                        service category for the year.
                    ``(B) Update adjustment factors.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(ii), subject to clause (iv), 
                        the `update adjustment factor' for an update 
                        service category for a year is equal (as 
                        estimated by the Secretary) to the sum of--
                                    ``(I) the prior year adjustment 
                                component under clause (ii) for the 
                                category and year; and
                                    ``(II) the cumulative adjustment 
                                component under clause (iii) for the 
                                category and year.
                            ``(ii) Prior year adjustment component.--
                        The prior year adjustment component under this 
                        clause for an update service category for a 
                        year is determined by--
                                    ``(I) computing the difference 
                                (which may be positive or negative) 
                                between the amount of allowed 
                                expenditures (as determined under 
                                subparagraph (C)) for the corresponding 
                                expenditure measurement category for 
                                the preceding year (beginning with 
                                2008), as determined under clause (v), 
                                and the amount of actual expenditures 
                                for such corresponding expenditure 
                                measurement category for that year;
                                    ``(II) dividing that difference by 
                                the amount of actual expenditures for 
                                such expenditure measurement category 
                                for that year; and
                                    ``(III) multiplying that quotient 
                                by 0.75.
                            ``(iii) Cumulative adjustment component.--
                        The cumulative adjustment component under this 
                        clause for an update service category for a 
                        year is determined by--
                                    ``(I) computing the difference 
                                (which may be positive or negative) 
                                between the amount of allowed 
                                expenditures for the corresponding 
                                expenditure measurement category from 
                                January 1, 2008, through the end of for 
                                the preceding year, as determined under 
                                clause (iv), and the amount of actual 
                                expenditures for such expenditure 
                                measurement category for such period;
                                    ``(II) dividing that difference by 
                                the amount of actual expenditures for 
                                such expenditure measurement category 
                                for such preceding year as increased by 
                                the service category growth rate under 
                                subsection (f) for the year for which 
                                the update adjustment factor is to be 
                                determined; and
                                    ``(III) multiplying that quotient 
                                by 0.33.
                            ``(iv) Restriction on update adjustment 
                        factors.--An update adjustment factor 
                        determined under subparagraph (B) for an update 
                        service category for a year--
                                    ``(I) may not reduce the update by 
                                more than 0.03 or, if greater, the 
                                percentage increase in the MEI (as 
                                defined in section 1842(i)(3)) for the 
                                year (divided by 100); and
                                    ``(II) may not increase the update 
                                by more than 0.01.
                            ``(v) Corresponding expenditure measurement 
                        category.--For purposes of this subparagraph, 
                        the term `corresponding expenditure measurement 
                        category' means, with respect to an update 
                        service category, the expenditure measurement 
                        category (as defined in subsection (f)(4)(D)) 
                        that includes the services that are included in 
                        the update measurement category.
                    ``(C) Determination of allowed expenditures.--
                            ``(i) In general.--Subject to clause (ii), 
                        the allowed expenditures for an expenditure 
                        measurement category (as defined in subsection 
                        (f)(4)(D)) for a year (beginning with 2008) is 
                        equal to--
                                    ``(I) for 2008, the actual 
                                expenditures for services in such 
                                category for 2007, increased by the 
                                service category growth rate for such 
                                category under subsection (f) for 2008; 
                                and
                                    ``(II) for a year after 2008, the 
                                amount of allowed expenditures for such 
                                category for the preceding year, 
                                increased by the service category 
                                growth rate determined under subsection 
                                (f) for the year involved.
                            ``(ii) Adjustments to allowed 
                        expenditures.--The Secretary shall, as a part 
                        of the annual rule making process for making 
                        changes in the fee schedule established under 
                        this section, propose and implement adjustments 
                        to allowed expenditures by expenditure 
                        measurement category to take into account 
                        changes in technology and practice patterns, 
                        such as changes in the site of service.
                            ``(iii) Recalculation of allowed 
                        expenditures.--For purposes of determining the 
                        update adjustment factor for an update service 
                        category for a year (beginning with 2009), the 
                        Secretary shall recompute the allowed 
                        expenditures for previous periods beginning on 
                        or after January 1, 2008, consistent with 
                        subsection (f)(3)(D).''.

SEC. 5. REPLACEMENT OF SUSTAINABLE GROWTH RATE WITH SERVICE CATEGORY 
              GROWTH RATES.

    (a) In General.--Section 1848(f) of the Social Security Act (42 
U.S.C. 1395w-4(f)) is amended--
            (1) in the heading, by inserting ``and Service Category 
        Growth Rates'' after ``Sustainable Growth Rate'';
            (2) in paragraph (1)--
                    (A) in subparagraph (A), by striking ``and'' at the 
                end;
                    (B) in subparagraph (B)--
                            (i) by inserting ``before 2008'' after 
                        ``each succeeding year'', and
                            (ii) by striking the period at the end and 
                        inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(C) November 1 of each succeeding year after 2007 
                the growth rate (in this subsection referred to as 
                `service category growth rate') for each expenditure 
                measurement category for such succeeding year and each 
                of the preceding 2 years (or in the case of 2009, the 
                preceding year).'';
            (3) in paragraph (2)--
                    (A) in the heading, by striking ``rate'' and 
                inserting ``rates'';
                    (B) by redesignating subparagraphs (A) through (E) 
                and as clauses (i) through (v), respectively, and by 
                designating the sentence beginning ``The sustainable 
                growth rate'' as a subparagraph (A) with the heading 
                ``Sustainable growth rate for periods before 2008'' and 
                with appropriate indentation for the subparagraph and 
                its redesignated clauses;
                    (C) by inserting ``and before 2008'' after 
                ``beginning with 2000''; and
                    (D) by adding at the end the following new 
                subparagraph:
                    ``(B) Service category growth rates for years 
                beginning with 2008.--The service category growth rate 
                for an expenditure measurement category for a year 
                beginning with 2008 shall be equal to the product of--
                            ``(i) 1 plus the Secretary's estimate of 
                        the weighted average percentage increase 
                        (divided by 100) in the fees for services in 
                        the category for the applicable period 
                        involved;
                            ``(ii) 1 plus the Secretary's estimate of 
                        the percentage change (divided by 100) in the 
                        average number of individuals enrolled under 
                        this part (other than Medicare Advantage plan 
                        enrollees) from the previous fiscal year to the 
                        applicable period involved;
                            ``(iii) 1 plus--
                                    ``(I) 5.1 percentage points 
                                (divided by 100) in the case of the 
                                service category specified in 
                                subsection (j)(5)(A); and
                                    ``(II) 2.1 percentage points 
                                (divided by 100) in the case of all 
                                other categories; and
                            ``(iv) 1 plus the Secretary's estimate of 
                        the percentage change (divided by 100) in 
                        expenditures for services in the category in 
                        the fiscal year (compared with the previous 
                        fiscal year) which will result from changes in 
                        law and regulations, taking into account all 
                        national coverage determinations (as defined in 
                        section 1869(f)(1)(B)) and any local coverage 
                        determinations (as defined in section 
                        1869(f)(2)(B)) with a significant impact on 
                        expenditures for physicians' services, but 
                        without taking into account estimated changes 
                        in expenditures resulting from the update 
                        adjustment factor determined under subsection 
                        (d)(8)(B),
                minus 1 and multiplied by 100.''; and
            (4) in paragraph (3)--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``the sustainable growth rates'' and inserting 
                ``and ending with 2008 and under subsection (d)(8)(B) 
                beginning with 2009, the growth rates'';
                    (B) in subparagraph (C)--
                            (i) in the heading, by inserting ``and 
                        before 2009'' after ``succeeding years''; and
                            (ii) in the matter before clause (i), by 
                        inserting ``and before 2009'' after ``after 
                        2002''; and
                    (C) by inserting after subparagraph (C) the 
                following new subparagraph:
                    ``(D) For 2009 and succeeding years.--For purposes 
                of calculations for a year after 2008--
                            ``(i) the service category growth rates for 
                        that year and the preceding 2 years (or in the 
                        case of 2009, the preceding year) shall be 
                        determined on the basis of the best data 
                        available to the Secretary as of September 1 of 
                        the year preceding the year for which the 
                        calculation is made; and
                            ``(ii) the service category growth rates 
                        for any year before a year described in clause 
                        (i) shall be the rates most recently determined 
                        for that year under this subsection.''.
    (b) Conforming Change; No Administrative or Judicial Review.--
Section 1848(i)(1)(C) of such Act (42 U.S.C. 1395w-4(i)(1)(C)) is 
amended by inserting ``or service category growth rates'' after 
``sustainable growth rates''.

SEC. 6. REPORTS TO CONGRESS ON EXCESS EXPENDITURES FOR PART B DRUGS AND 
              CLINICAL DIAGNOSTIC LABORATORY TESTS.

    (a) Reporting Requirement.--The Secretary of Health and Human 
Services shall report to the appropriate committees of the Congress not 
later than 3 months after the end of any year in which the Secretary 
determines that actual expenditures exceeded allowed expenditures for 
such year and the preceding year for either of the expenditure 
measurement categories described in clause (i) or (ii) of section 
1848(f)(4)(D) of the Social Security Act, as added by section 3(b).
    (b) Recommendations.--The report submitted under subsection (a) 
shall include an analysis of the reasons for such excess expenditures 
and recommendations for addressing them in the future.
                                 <all>