110 HR 3038 IH: To amend section 1848 of the Social Security Act to U.S. House of Representatives 2007-07-12 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 110th CONGRESS 1st Session H. R. 3038 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.

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.

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)— •I26↑↑(i) cause to have published in the Federal Register not later than November 1 of each year (beginning with 2000) the applicable conversion factor which will apply to physicians' services for the succeeding year, the update determined UNDER PARAGRAPH (4) for such succeeding year, and the allowed expenditures UNDER SUCH PARAGRAPH for such succeeding year; and← •I26↑↑(ii) make available to the Medicare Payment Advisory Commission and the public by March 1 of each year (beginning with 2000) an estimate of the sustainable growth rate AND OF THE CONVERSION FACTOR which will apply to physicians' services for the succeeding year and data used in making such estimate.← (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.

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. .

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). .

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.

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.