1.This Act may be cited as the Medicare Payment Fairness Act of 2009
.
2.Value index under the Medicare physician hospital service
(a)Section 1848(e)(5) of the Social Security Act (42 U.S.C. 1395w–4(e)) is amended by adding at the end the following new paragraph:
(6)
(A)The Secretary shall determine a value index for each fee schedule area. The value index shall be the ratio of the quality component under subparagraph (B) to the cost component under subparagraph (C) for that fee schedule area.
(B)
(i)The quality component shall be based on a composite score that reflects quality measures available on a State or fee schedule area basis. The measures shall reflect health outcomes and health status for the Medicare population, patient safety, and patient satisfaction. The Secretary shall use the best data available, after consultation with the Agency for Healthcare Research and Quality and with private entities that compile quality data.
(ii)In establishing the quality component under this subparagraph, the Secretary shall take into account the following:
(I)Hospital readmission rates.
(II)Hospital emergency department utilization for ambulatory care-sensitive conditions.
(III)Hospital admissions for ambulatory care-sensitive conditions.
(IV)Mortality amenable to health care.
(V)Other items determined appropriate by the Secretary.
(iii)The quality component for each fee schedule area shall be the ratio of the quality score for such area to the national average quality score.
(iv)In the case of a fee schedule area that is less than an entire State, if available quality data is not sufficient to measure quality at the sub-State level, the quality component for a sub-State fee schedule area shall be the quality component for the entire State.
(C)
(i)The cost component shall be total annual per beneficiary Medicare expenditures under part A and this part for the fee schedule area. The Secretary may use total per beneficiary expenditures under such parts in the last two years of life as an alternative measure if the Secretary determines that such measure better takes into account severity differences among fee schedule areas.
(ii)The cost component for a fee schedule area shall be the ratio of the cost per beneficiary for such area to the national average cost per beneficiary..
(b)Section 1848 of the Social Security Act (42 U.S.C. 1395w–4) is amended—
(1)in subparagraph (b)(1)(C), by striking geographic
and inserting geographic and value
; and
(2)in subsection (e)—
(A)in paragraph (1)—
(i)in the heading, by inserting and value
after geographic
;
(ii)in subparagraph (A), by striking clause (iii) and inserting the following new clause:
(iii)a value index (as defined in paragraph (6)) applicable to physician work.;
(iii)in subparagraph (C), by inserting and value
after geographic
in the first sentence;
(iv)in subparagraph (D), by striking physician work effort
and inserting value
;
(v)by striking subparagraph (E); and
(vi)by striking subparagraph (G);
(B)by striking paragraph (2) and inserting the following new paragraph:
(2)Computation of geographic and value adjustment factorFor purposes of subsection (b)(1)(C), for all physicians’ services for each fee schedule area the Secretary shall establish a geographic and value adjustment factor equal to the sum of the geographic cost-of-practice adjustment factor (specified in paragraph (3)), the geographic malpractice adjustment factor (specified in paragraph (4)), and the value adjustment factor (specified in paragraph (5)) for the service and the area.; and
(C)by striking paragraph (5) and inserting the following new paragraph:
(5)Physician work value adjustment factorFor purposes of paragraph (2), the physician work value adjustment factor
for a service for a fee schedule area, is the product of—
(A)the proportion of the total relative value for the service that reflects the relative value units for the work component; and
(B)the value index score for the area, based on the value index established under paragraph (6)..
(c)Availability of quality component prior to implementationThe Secretary of Health and Human Services shall make the quality component described in section 1848(c)(6)(B) of the Social Security Act, as added by subsection (a), for each fee schedule area available to the public by not later than January 1, 2011.
(d)The amendments made by this section shall apply to the Medicare physician hospital service for 2012 and each subsequent year.
3.Value index under the inpatient hospital prospective payment system
(a)Section 1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)) is amended by adding at the end the following new paragraph:
(14)
(A)The Secretary shall determine a value index for each hospital service area. The value index shall be the ratio of the quality component under subparagraph (C) to the cost component under subparagraph (D) for that hospital service area.
(B)Notwithstanding any other provision of this title, the payment amount made to a subsection (d) hospital under this subsection or section 1814(b)(3) for discharges during a fiscal year, after all other adjustments and add-ons effected under this title, shall be adjusted by multiplying such amount by the value index determined under subparagraph (A) for the hospital service area in which the discharges occur.
(C)
(i)The quality component shall be based on a composite score that reflects quality measures available on a State or hospital service area basis. The measures shall reflect health outcomes and health status for the Medicare population, patient safety, and patient satisfaction. The Secretary shall use the best data available, after consultation with the Agency for Healthcare Research and Quality and with private entities that compile quality data.
(ii)In establishing the quality component under this subparagraph, the Secretary shall take into account quality measures reported by hospitals under subsection (b)(3)(B)(viii)(III) and shall, to the extent feasible, add additional measures relating to outcomes in hospitals.
(iii)The quality component for each hospital service area shall be the ratio of the quality score for such area to the national average quality score.
(iv)In the case of a hospital service area that is less than an entire State, if available quality data is not sufficient to measure quality at the sub-State level, the quality component for a sub-State hospital service area shall be the quality component for the entire State.
(D)
(i)The cost component shall be total annual per beneficiary Medicare expenditures under parts A and B for the hospital service area. The Secretary may use total per beneficiary expenditures under such parts in the last two years of life as an alternative measure if the Secretary determines that such measure better takes into account severity differences among hospital service areas.
(ii)The cost component for a hospital service area shall be the ratio of the cost per beneficiary for such area to the national average cost per beneficiary.
(E)In this paragraph, the term hospital service area means such an area as the Secretary shall define. In defining such areas, the Secretary shall use a methodology similar to that used in the establishment of the Dartmouth Atlas of Health Care..
(b)Availability of quality component prior to implementationThe Secretary of Health and Human Services shall make the quality component described in section 1886(d)(14)(B) of the Social Security Act, as added by subsection (a), for each hospital service area available to the public by not later than January 1, 2011.
(c)The amendments made by this section shall apply to the discharges occurring on or after October 1, 2012.