[House Report 113-257]
[From the U.S. Government Publishing Office]


113th Congress                                            Rept. 113-257
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================



 
      MEDICARE PATIENT ACCESS AND QUALITY IMPROVEMENT ACT OF 2013

                                _______
                                

               November 12, 2013.--Ordered to be printed

                                _______
                                

  Mr. Upton, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2810]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 2810) to amend title XVIII of the Social 
Security Act to reform the sustainable growth rate and Medicare 
payment for physicians' services, and for other purposes, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................    22
Background and Need for Legislation..............................    23
Hearings.........................................................    26
Committee Consideration..........................................    27
Committee Votes..................................................    27
Committee Oversight Findings.....................................    29
Statement of General Performance Goals and Objectives............    29
New Budget Authority, Entitlement Authority, and Tax Expenditures    31
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......    31
Committee Cost Estimate..........................................    31
Congressional Budget Office Estimate.............................    31
Federal Mandates Statement.......................................    39
Duplication of Federal Programs..................................    39
Disclosure of Directed Rule Makings..............................    39
Advisory Committee Statement.....................................    39
Applicability to Legislative Branch..............................    39
Section-by-Section Analysis of the Legislation...................    39
Changes in Existing Law Made by the Bill, as Reported............    42
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Medicare Patient 
Access and Quality Improvement Act of 2013''.
  (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Reform of sustainable growth rate (SGR) and Medicare payment 
for physicians' services.
Sec. 3. Expanding availability of Medicare data.
Sec. 4. Encouraging care coordination and medical homes.
Sec. 5. Miscellaneous.

SEC. 2. REFORM OF SUSTAINABLE GROWTH RATE (SGR) AND MEDICARE PAYMENT 
                    FOR PHYSICIANS' SERVICES.

  (a) Stabilizing Fee Updates (phase I).--
          (1) Repeal of sgr payment methodology.--Section 1848 of the 
        Social Security Act (42 U.S.C. 1395w-4) is amended--
                  (A) in subsection (d)--
                          (i) in paragraph (1)(A), by inserting ``or a 
                        subsequent paragraph or section 1848A'' after 
                        ``paragraph (4)''; and
                          (ii) in paragraph (4)--
                                  (I) in the heading, by striking 
                                ``years beginning with 2001'' and 
                                inserting ``2001, 2002, and 2003''; and
                                  (II) in subparagraph (A), by striking 
                                ``a year beginning with 2001'' and 
                                inserting ``2001, 2002, and 2003''; and
                  (B) in subsection (f)--
                          (i) in paragraph (1)(B), by inserting 
                        ``through 2013'' after ``of each succeeding 
                        year''; and
                          (ii) in paragraph (2), by inserting ``and 
                        ending with 2013'' after ``beginning with 
                        2000''.
          (2) Update of rates for 2014 through 2018.--Subsection (d) 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:
          ``(15) Update for 2014 through 2018.--The update to the 
        single conversion factor established in paragraph (1)(C) for 
        each of 2014 through 2018 shall be 0.5 percent.''.
  (b) Quality Update Incentive Program (phase II).--
          (1) In general.--Section 1848 of the Social Security Act (42 
        U.S.C. 1395w-4), as amended by subsection (a), is further 
        amended--
                  (A) in subsection (d), by adding at the end the 
                following new paragraph:
          ``(16) Update beginning with 2019.--
                  ``(A) In general.--Subject to subparagraph (B), the 
                update to the single conversion factor established in 
                paragraph (1)(C) for each year beginning with 2019 
                shall be 0.5 percent.
                  ``(B) Adjustment.--In the case of an eligible 
                professional (as defined in subsection (k)(3)) who does 
                not have a payment arrangement described in section 
                1848A(a) in effect, the update under subparagraph (A) 
                for a year beginning with 2019 shall be adjusted by the 
                applicable quality adjustment determined under 
                subsection (q)(3) for the year involved.''; and
                  (B) in subsection (i)(1)--
                          (i) by striking ``and'' at the end of 
                        subparagraph (D);
                          (ii) by striking the period at the end of 
                        subparagraph (E) and inserting ``, and''; and
                          (iii) by adding at the end the following new 
                        subparagraph:
                  ``(F) the implementation of subsection (q).''.
          (2) Enhancing physician quality reporting system to support 
        quality update incentive program.--Section 1848 of the Social 
        Security Act (42 U.S.C. 1395w-4) is amended--
                  (A) in subsection (k)(1), in the first sentence, by 
                inserting ``and, if applicable, clinical practice 
                improvement activities,'' after ``quality measures'';
                  (B) in subsection (k)(2)--
                          (i) in subparagraph (C)--
                                  (I) in the subparagraph heading, by 
                                striking ``and subsequent years'' and 
                                inserting ``through 2018''; and
                                  (II) in clause (i), by inserting 
                                ``(before 2019)'' after ``subsequent 
                                year'';
                          (ii) by redesignating subparagraph (D) as 
                        subparagraph (E);
                          (iii) by inserting after subparagraph (C) the 
                        following new subparagraph:
                  ``(D) For 2019 and subsequent years.--For purposes of 
                reporting data on quality measures and, as applicable 
                clinical practice improvement activities, for covered 
                professional services furnished during the performance 
                period (as defined in subsection (q)(2)(B)) with 
                respect to 2019 and the performance period with respect 
                to each subsequent year, subject to subsection 
                (q)(1)(D), the quality measures and clinical practice 
                improvement activities specified under this paragraph 
                shall be, with respect to an eligible professional, the 
                quality measures and, as applicable, clinical practice 
                improvement activities within the final core measure 
                set under paragraph (9)(F) applicable to the peer 
                cohort of such provider and year involved.''; and
                          (iv) in subparagraph (E), as redesignated by 
                        subparagraph (B)(ii) of this paragraph, by 
                        striking ``and subsequent years'';
                  (C) in subsection (k)(3)--
                          (i) in the paragraph heading, by striking 
                        ``Covered professional services and eligible 
                        professionals defined'' and inserting 
                        ``Definitions''; and
                          (ii) by adding at the end the following new 
                        subparagraphs:
                  ``(C) Clinical practice improvement activities.--The 
                term `clinical practice improvement activity' means an 
                activity that relevant eligible professional 
                organizations and other relevant stakeholders identify 
                as improving clinical practice or care delivery and 
                that the Secretary determines, when effectively 
                executed, is likely to result in improved outcomes.
                  ``(D) Eligible professional organization.--The term 
                `eligible professional organization' means a 
                professional organization as defined by nationally 
                recognized multispecialty boards of certification or 
                equivalent certification boards.
                  ``(E) Peer cohort.--The term `peer cohort' means a 
                peer cohort identified on the list under paragraph 
                (9)(B), as updated under clause (ii) of such 
                paragraph.'';
                  (D) in subsection (k)(7), by striking `` and the 
                application of paragraphs (4) and (5)'' and inserting 
                ``, the application of paragraphs (4) and (5), and the 
                implementation of paragraph (9)'';
                  (E) by adding at the end of subsection (k) the 
                following new paragraph:
          ``(9) Establishment of final core measure sets.--
                  ``(A) In general.--Under the system under this 
                subsection--
                          ``(i) for each peer cohort identified under 
                        subparagraph (B) and in accordance with this 
                        paragraph, there shall be published a final 
                        core measure set under subparagraph (F), which 
                        shall consist of quality measures and may also 
                        consist of clinical practice improvement 
                        activities, with respect to which eligible 
                        professionals shall, subject to subsection 
                        (m)(3)(C), be assessed for purposes of 
                        determining, for years beginning with 2019, the 
                        quality adjustment under subsection (q)(3) 
                        applicable to such professionals; and
                          ``(ii) each eligible professional shall self-
                        identify, in accordance with subparagraph (B), 
                        within such a peer cohort for purposes of such 
                        assessments.
                  ``(B) Peer cohorts.--The Secretary shall identify 
                (and publish a list of) peer cohorts by which eligible 
                professionals shall self-identify for purposes of this 
                subsection and subsection (q) with respect to a 
                performance period (as defined in subsection (q)(2)(B)) 
                for a year beginning with 2019. For purposes of this 
                subsection and subsection (q), the Secretary shall 
                develop one or more peer cohorts for multispecialty 
                groups, each of which shall be included as a peer 
                cohort under this subparagraph. Such self-
                identification will be made through such a process and 
                at such time as specified under the system under this 
                subsection. Such list--
                          ``(i) shall include, as peer cohorts, 
                        provider specialties defined by nationally 
                        recognized multispecialty boards of 
                        certification or equivalent certification 
                        boards and such other cohorts as established 
                        under this section in order to capture 
                        classifications of providers across eligible 
                        professional organizations and other practice 
                        areas, groupings, or categories; and
                          ``(ii) shall be updated from time to time.
                  ``(C) Quality measures for core measure sets.--
                          ``(i) Development.--Under the system under 
                        this subsection there shall be established a 
                        process for the development of quality measures 
                        under this subparagraph for purposes of 
                        potential inclusion of such measures in core 
                        measure sets under this paragraph. Under such 
                        process--
                                  ``(I) there shall be coordination, to 
                                the extent possible, across 
                                organizations developing such measures;
                                  ``(II) eligible professional 
                                organizations and other relevant 
                                stakeholders may submit best practices 
                                and clinical practice guidelines for 
                                the development of quality measures 
                                that address quality domains (as 
                                defined under clause (ii)) for 
                                potential inclusion in such core 
                                measure sets;
                                  ``(III) there is encouraged to be 
                                developed, as appropriate, meaningful 
                                outcome measures (or quality of life 
                                measures in cases for which outcomes 
                                may not be a valid measurement), 
                                functional status measures, and patient 
                                experience measures; and
                                  ``(IV) measures developed under this 
                                clause shall be developed, to the 
                                extent possible, in accordance with 
                                best practices and clinical practice 
                                guidelines.
                          ``(ii) Quality domains.--For purposes of this 
                        paragraph, the term `quality domains' means at 
                        least the following domains:
                                  ``(I) Clinical care.
                                  ``(II) Safety.
                                  ``(III) Care coordination.
                                  ``(IV) Patient and caregiver 
                                experience.
                                  ``(V) Population health and 
                                prevention.
                  ``(D) Process for establishing core measure sets.--
                          ``(i) In general.--Under the system under 
                        this subsection, for purposes of subparagraph 
                        (A), there shall be established a process to 
                        approve final core measure sets under this 
                        paragraph for peer cohorts. Each such final 
                        core measure set shall be composed of quality 
                        measures (and, as applicable, clinical practice 
                        improvement activities) with respect to which 
                        eligible professionals within such peer cohort 
                        shall report under this subsection and be 
                        assessed under subsection (q). Such process 
                        shall provide--
                                  ``(I) for the establishment of 
                                criteria, which shall be made publicly 
                                available before the request is made 
                                under clause (ii), for selecting such 
                                measures and activities for potential 
                                inclusion in such a final core measure 
                                set; and
                                  ``(II) that all peer cohorts, and to 
                                the extent practicable all quality 
                                domains, are addressed by measures and, 
                                as applicable, clinical practice 
                                improvement activities selected to be 
                                included in a core measure set under 
                                this paragraph, which may include 
                                through the use of such a measure or 
                                clinical practice improvement activity 
                                that addresses more than one such 
                                domain or cohort.
                          ``(ii) Solicitation of public input on 
                        quality measures and clinical practice 
                        improvement activities.--Under the process 
                        established under clause (i), relevant eligible 
                        professional organizations and other relevant 
                        stakeholders shall be requested to identify and 
                        submit quality measures and clinical practice 
                        improvement activities (as defined in paragraph 
                        (3)(C)) for selection under this paragraph. For 
                        purposes of the previous sentence, measures and 
                        activities may be submitted regardless of 
                        whether such measures were previously published 
                        in a proposed rule or endorsed by an entity 
                        with a contract under section 1890(a).
                  ``(E) Core measure sets.--
                          ``(i) In general.--Under the process 
                        established under subparagraph (D)(i), the 
                        Secretary--
                                  ``(I) shall select, from quality 
                                measures described in clause (ii) 
                                applicable to a peer cohort, quality 
                                measures to be included in a core 
                                measure set for such cohort;
                                  ``(II) shall, to the extent there are 
                                insufficient quality measures 
                                applicable to a peer cohort to address 
                                one or more applicable quality domains, 
                                select to be included in a core measure 
                                set for such cohort such clinical 
                                practice improvement activities 
                                described in clause (ii)(IV) as are 
                                needed and available to sufficiently 
                                address such an applicable domain with 
                                respect to such peer cohort; and
                                  ``(III) may select, to the extent 
                                determined appropriate, any additional 
                                clinical practice improvement 
                                activities described in clause (ii)(IV) 
                                applicable to a peer cohort to be 
                                included in a core measure set for such 
                                cohort.
                        Activities selected under this paragraph shall 
                        be selected with consideration of best 
                        practices and clinical practice guidelines 
                        identified under subparagraph (C)(i)(II).
                          ``(ii) Sources of quality measures and 
                        clinical practice improvement activities.--A 
                        quality measure or clinical practice 
                        improvement activity selected for inclusion in 
                        a core measure set under the process under 
                        subparagraph (D)(i) shall be--
                                  ``(I) a measure endorsed by a 
                                consensus-based entity;
                                  ``(II) a measure developed under 
                                paragraph (2)(C) or a measure otherwise 
                                applied or developed for a similar 
                                purpose under this section;
                                  ``(III) a measure developed under 
                                subparagraph (C); or
                                  ``(IV) a measure or activity 
                                submitted under subparagraph (D)(ii).
                        A measure or activity may be selected under 
                        this subparagraph, regardless of whether such 
                        measure or activity was previously published in 
                        a proposed rule. A measure so selected shall be 
                        evidence-based but (other than a measure 
                        described in subclause (I)) shall not be 
                        required to be consensus-based.
                          ``(iii) Transparency.--Before publishing in a 
                        final regulation a core measure set under 
                        clause (i) as a final core measure set under 
                        subparagraph (F), the Secretary shall--
                                  ``(I) submit for publication in 
                                applicable specialty-appropriate peer-
                                reviewed journals such core measure set 
                                under clause (i) and the method for 
                                developing and selecting measures 
                                within such set, including clinical and 
                                other data supporting such measures, 
                                and, as applicable, the method for 
                                selecting clinical practice improvement 
                                activities included within such set; 
                                and
                                  ``(II) regardless of whether or not 
                                the core measure set or method is 
                                published in such a journal under 
                                subclause (I), provide for notice of 
                                the proposed regulation in the Federal 
                                Register, including with respect to the 
                                applicable methods and data described 
                                in subclause (I), and a period for 
                                public comment thereon.
                  ``(F) Final core measure sets.--Not later than 
                November 15 of the year prior to the first day of a 
                performance period, the Secretary shall publish a final 
                regulation in the Federal Register that includes a 
                final core measure set (and the applicable methods and 
                data described in subparagraph (E)(iii)(I)) for each 
                peer cohort to be applied for such performance period.
                  ``(G) Periodic review and updates.--
                          ``(i) In general.--In carrying out this 
                        paragraph, under the system under this 
                        subsection, there shall periodically be 
                        reviewed--
                                  ``(I) the quality measures and 
                                clinical practice improvement 
                                activities selected for inclusion in 
                                final core measure sets under this 
                                paragraph for each year such measures 
                                and activities are to be applied under 
                                this subsection or subsection (q) to 
                                ensure that such measures and 
                                activities continue to meet the 
                                conditions applicable to such measures 
                                and activities for such selection; and
                                  ``(II) the final core measure sets 
                                published under subparagraph (F) for 
                                each year such sets are to be applied 
                                to peer cohorts of eligible 
                                professionals to ensure that each 
                                applicable set continues to meet the 
                                conditions applicable to such sets 
                                before being so published.
                          ``(ii) Collaboration with stakeholders.--In 
                        carrying out clause (i), relevant eligible 
                        professional organizations and other relevant 
                        stakeholders may identify and submit updates to 
                        quality measures and clinical practice 
                        improvement activities selected under this 
                        paragraph for inclusion in final core measure 
                        sets as well as any additional quality measures 
                        and clinical practice improvement activities. 
                        Not later than November 15 of the year prior to 
                        the first day of a performance period, 
                        submissions under this clause shall be 
                        reviewed.
                          ``(iii) Additional, and updates to, measures 
                        and activities.--Based on the review conducted 
                        under this subparagraph for a period, as 
                        needed, there shall be--
                                  ``(I) selected additional, and 
                                updates to, quality measures and 
                                clinical practice improvement 
                                activities selected under this 
                                paragraph for potential inclusion in 
                                final core measure sets in the same 
                                manner such quality measures and 
                                clinical practice improvement 
                                activities are selected under this 
                                paragraph for such potential inclusion;
                                  ``(II) removed, from final core 
                                measure sets, quality measures and 
                                clinical practice improvement 
                                activities that are no longer 
                                meaningful; and
                                  ``(III) updated final core measure 
                                sets published under subparagraph (F) 
                                in the same manner as such sets are 
                                approved under such subparagraph.
                         For purposes of this subsection and subsection 
                        (q), a final core measure set, as updated under 
                        this subparagraph, shall be treated in the same 
                        manner as a final core measure set published 
                        under subparagraph (F).
                          ``(iv) Transparency.--
                                  ``(I) Notification required for 
                                certain updates.--In the case of an 
                                update under subclause (II) or (III) of 
                                clause (iii) that adds, materially 
                                changes, or removes a measure or 
                                activity from a measure set, such 
                                update shall not apply under this 
                                subsection or subsection (q) unless 
                                notification of such update is made 
                                available to applicable eligible 
                                professionals.
                                  ``(II) Public availability of updated 
                                final core measure sets.--Subparagraph 
                                (E)(iii) shall apply with respect to 
                                measure sets updated under subclause 
                                (II) or (III) of clause (iii) in the 
                                same manner as such subparagraph 
                                applies to applicable core measure sets 
                                under subparagraph (E).
                  ``(H) Coordination with existing programs.--The 
                development and selection of quality measures and 
                clinical practice improvement activities under this 
                paragraph shall, as appropriate, be coordinated with 
                the development and selection of existing measures and 
                requirements, such as the development of the Physician 
                Compare Website under subsection (m)(5)(G) and the 
                application of resource use management under subsection 
                (n). To the extent feasible, such measures and 
                activities shall align with measures used by other 
                payers and with measures and activities in use under 
                other programs in order to streamline the process of 
                such development and selection under this paragraph. 
                The Secretary shall develop a plan to integrate 
                reporting on quality measures under this subsection 
                with reporting requirements under subsection (o) 
                relating to the meaningful use of certified EHR 
                technology.
                  ``(I) Consultation with relevant eligible 
                professional organizations and other relevant 
                stakeholders.--Relevant eligible professional 
                organizations (as defined in paragraph (3)(D)) and 
                other relevant stakeholders, including State and 
                national medical societies, shall be consulted in 
                carrying out this paragraph.
                  ``(J) Optional application.--The process under 
                section 1890A is not required to apply to the 
                development or selection of measures under this 
                paragraph.''; and
                  (F) in subsection (m)(3)(C)(i), by adding at the end 
                the following new sentence: ``Such process shall, 
                beginning for 2019, treat eligible professionals in 
                such a group practice as reporting on measures for 
                purposes of application of subsections (q) and 
                (a)(8)(A)(iii) if, in lieu of reporting measures under 
                subsection (k)(2)(D), the group practice reports 
                measures determined appropriate by the Secretary.''.
          (3) Establishment of quality update incentive program.--
                  (A) In general.--Section 1848 of the Social Security 
                Act (42 U.S.C. 1395w-4) is amended by adding at the end 
                the following new subsection:
  ``(q) Quality Update Incentive Program.--
          ``(1) Establishment.--
                  ``(A) In general.--The Secretary shall establish an 
                eligible professional quality update incentive program 
                (in this section referred to as the `quality update 
                incentive program') under which--
                          ``(i) there is developed and applied, in 
                        accordance with paragraph (2), appropriate 
                        methodologies for assessing the performance of 
                        eligible professionals with respect to quality 
                        measures and clinical practice improvement 
                        activities included within the final core 
                        measure sets published under subsection 
                        (k)(9)(F) applicable to the peer cohorts of 
                        such providers;
                          ``(ii) there is applied, consistent with the 
                        system under subsection (k), methods for 
                        collecting information needed for such 
                        assessments (which shall involve the minimum 
                        amount of administrative burden required to 
                        ensure reliable results); and
                          ``(iii) the applicable update adjustments 
                        under paragraph (3) are determined by such 
                        assessments.
                  ``(B) Definitions.--
                          ``(i) Eligible professional.--In this 
                        subsection, the term `eligible professional' 
                        has the meaning given such term in subsection 
                        (k)(3), except that such term shall not include 
                        a professional who has a payment arrangement 
                        described in section 1848A(a)(1) in effect.
                          ``(ii)  Peer cohorts; clinical practice 
                        improvement activities; eligible professional 
                        organizations.--In this subsection, the terms 
                        `peer cohort', `clinical practice improvement 
                        activity', and `eligible professional 
                        organization' have the meanings given such 
                        terms in subsection (k)(3).
                  ``(C) Consultation with eligible professional 
                organizations and other relevant stakeholders.--
                Eligible professional organizations and other relevant 
                stakeholders, including State and national medical 
                societies, shall be consulted in carrying out this 
                subsection.
                  ``(D) Application at group practice level.--The 
                Secretary shall establish a process, consistent with 
                subsection (m)(3)(C), under which the provisions of 
                this subsection are applied to eligible professionals 
                in a group practice if the group practice reports 
                measures determined appropriate by the Secretary under 
                such subsection.
                  ``(E) Coordination with existing programs.--The 
                application of measures and clinical practice 
                improvement activities and assessment of performance 
                under this subsection shall, as appropriate, be 
                coordinated with the application of measures and 
                assessment of performance under other provisions of 
                this section.
          ``(2) Assessing performance with respect to final core 
        measure sets for applicable peer cohorts.--
                  ``(A) Establishment of methods for assessment.--
                          ``(i) In general.--Under the quality update 
                        incentive program, the Secretary shall--
                                  ``(I) establish one or more methods, 
                                applicable with respect to a 
                                performance period, to assess (using a 
                                scoring scale of 0 to 100) the 
                                performance of an eligible professional 
                                with respect to, subject to paragraph 
                                (1)(D), quality measures and clinical 
                                practice improvement activities 
                                included within the final core measure 
                                set published under subsection 
                                (k)(9)(F) applicable for the period to 
                                the peer cohort in which the provider 
                                self-identified under subsection 
                                (k)(9)(B) for such period; and
                                  ``(II) subject to paragraph (1)(D), 
                                compute a composite score for such 
                                provider for such performance period 
                                with respect to the measures and 
                                activities included within such final 
                                core measure set.
                          ``(ii) Methods.--Such methods shall, with 
                        respect to an eligible professional, provide 
                        that the performance of such professional 
                        shall, subject to paragraph (1)(D), be assessed 
                        for a performance period with respect to the 
                        quality measures and clinical practice 
                        improvement activities within the final core 
                        measure set for such period for the peer cohort 
                        of such professional and on which information 
                        is collected from such professional.
                          ``(iii) Weighting of measures.--Such a method 
                        may provide for the assignment of different 
                        scoring weights or, as appropriate, other 
                        factors--
                                  ``(I) for quality measures and 
                                clinical practice improvement 
                                activities;
                                  ``(II) based on the type or category 
                                of measure or activity; and
                                  ``(III) based on the extent to which 
                                a quality measure or clinical practice 
                                improvement activity meaningfully 
                                assesses quality.
                          ``(iv) Risk adjustment.--Such a method shall 
                        provide for appropriate risk adjustments.
                          ``(v) Incorporation of other methods of 
                        measuring physician quality.--In establishing 
                        such methods, there shall be, as appropriate, 
                        incorporated comparable methods of measurement 
                        from physician quality incentive programs under 
                        this subsection.
                  ``(B) Performance period.--There shall be established 
                a period (in this subsection referred to as a 
                `performance period'), with respect to a year 
                (beginning with 2019) for which the quality adjustment 
                is applied under paragraph (3), to assess performance 
                on quality measures and clinical practice improvement 
                activities. Each such performance period shall be a 
                period of 12 consecutive months and shall end as close 
                as possible to the beginning of the year for which such 
                adjustment is applied.
          ``(3) Quality adjustment taking into account quality 
        assessments.--
                  ``(A) Quality adjustment.--For purposes of subsection 
                (d)(16), if the composite score computed under 
                paragraph (2)(A) for an eligible professional for a 
                year (beginning with 2019) is--
                          ``(i) a score of 67 or higher, the quality 
                        adjustment under this paragraph for the 
                        eligible professional and year is 1 percentage 
                        point;
                          ``(ii) a score of at least 34, but below 67, 
                        the quality adjustment under this paragraph for 
                        the eligible professional and year is zero; or
                          ``(iii) a score below 34, the quality 
                        adjustment under this paragraph for the 
                        eligible professional and year is -1 percentage 
                        point.
                  ``(B) No effect on subsequent years' quality 
                adjustments.--Each such quality adjustment shall be 
                made each year without regard to the quality adjustment 
                for a previous year under this paragraph.
          ``(4) Transition for new eligible professionals.--In the case 
        of a physician, practitioner, or other supplier that during a 
        performance period, with respect to a year for which a quality 
        adjustment is applied under paragraph (3), first becomes an 
        eligible professional (and had not previously submitted claims 
        under this title as a person, as an entity, or as part of a 
        physician group or under a different billing number or tax 
        identifier), the quality adjustment under this subsection 
        applicable to such physician, practitioner, or supplier--
                  ``(A) for such year, with respect to such first 
                performance period, shall be zero; and
                  ``(B) for a year, with respect to a subsequent 
                performance period, shall be the quality adjustment 
                that would otherwise be applied under this subsection.
          ``(5) Feedback.--
                  ``(A) Feedback.--
                          ``(i) Ongoing feedback.--Under the process 
                        under subsection (m)(5)(H), there shall be 
                        provided, as real time as possible, but at 
                        least quarterly, beginning not later than 6 
                        months after the first day of the first 
                        performance period, to each eligible 
                        professional feedback--
                                  ``(I) on the performance of such 
                                provider with respect to quality 
                                measures and clinical practice 
                                improvement activities within the final 
                                core measure set published under 
                                subsection (k)(9)(F) for the applicable 
                                performance period and the peer cohort 
                                of such professional; and
                                  ``(II) to assess the progress of such 
                                professional under the quality update 
                                incentive program with respect to a 
                                performance period for a year.
                          ``(ii) Use of registries and other 
                        mechanisms.--Feedback under this subparagraph 
                        shall, to the extent an eligible professional 
                        chooses to participate in a data registry for 
                        purposes of this subsection (including 
                        registries under subsections (k) and (m)), be 
                        provided and based on performance received 
                        through the use of such registry, and to the 
                        extent that an eligible professional chooses 
                        not to participate in such a registry for such 
                        purposes, be provided through other similar 
                        mechanisms that allow for the provision of such 
                        feedback and receipt of such performance 
                        information.
                  ``(B) Data mechanism.--Under the quality update 
                incentive program, there shall be developed an 
                electronic interactive eligible professional mechanism 
                through which such a professional may receive 
                performance data, including data with respect to 
                performance on the measures and activities developed 
                and selected under this section. Such mechanism shall 
                be developed in consultation with private payers and 
                health insurance issuers (as defined in section 
                2791(b)(2) of the Public Health Service Act) as 
                appropriate.
                  ``(C) Transfer of funds.--The Secretary shall provide 
                for the transfer of $100,000,000 from the Federal 
                Supplementary Medical Insurance Trust Fund established 
                in section 1841 to the Center for Medicare & Medicaid 
                Services Program Management Account to support such 
                efforts to develop the infrastructure as necessary to 
                carry out subsection (k)(9) and this subsection and for 
                purposes of section 1889(h). Such funds shall be so 
                transferred on the date of the enactment of this 
                subsection and shall remain available until 
                expended.''.
                  (B) Incentive to report under quality update 
                incentive program.--Section 1848(a)(8)(A) of the Social 
                Security Act (42 U.S.C. 1395w-4(a)(8)(A)) is amended--
                          (i) in clause (i), by striking ``With respect 
                        to'' and inserting ``Subject to clause (iii), 
                        with respect to''; and
                          (ii) by adding at the end the following new 
                        clause:
                          ``(iii) Application to eligible professionals 
                        not reporting.--With respect to covered 
                        professional services (as defined in subsection 
                        (k)(3)) furnished by an eligible professional 
                        during 2019 or any subsequent year, if the 
                        eligible professional does not submit data for 
                        the performance period (as defined in 
                        subsection (q)(2)(B)) with respect to such year 
                        on, subject to subsection (q)(1)(D), the 
                        quality measures and, as applicable, clinical 
                        practice improvement activities within the 
                        final core measure set under subsection 
                        (k)(9)(F) applicable to the peer cohort of such 
                        provider, the fee schedule amount for such 
                        services furnished by such professional during 
                        the year (including the fee schedule amount for 
                        purposes of determining a payment based on such 
                        amount) shall be equal to 95 percent (in lieu 
                        of the applicable percent) of the fee schedule 
                        amount that would otherwise apply to such 
                        services under this subsection (determined 
                        after application of paragraphs (3), (5), and 
                        (7), but without regard to this paragraph). The 
                        Secretary shall develop a minimum per year 
                        caseload threshold, with respect to eligible 
                        professionals, and the previous sentence shall 
                        not apply to eligible professionals with a 
                        caseload for a year below such threshold for 
                        such year.''.
                  (C) Education on quality update incentive program.--
                Section 1889 of the Social Security Act (42 U.S.C. 
                1395zz) is amended by adding at the end the following 
                new subsection:
  ``(h) Quality Update Incentive Program.--Under this section, 
information shall be disseminated to educate and assist eligible 
professionals (as defined in section 1848(k)(3)) about the quality 
update incentive program under section 1848(q) and quality measures 
under section 1848(k)(9) through multiple approaches, including a 
national dissemination strategy and outreach by medicare 
contractors.''.
          (4) Conforming amendments.--
                  (A) Treatment of satisfactorily reporting pqrs 
                measures through participation in a qualified clinical 
                data registry.--Section 1848(m)(3)(D) of the Social 
                Security Act (42 U.S.C. 1395w-4(m)(3)(D)) is amended by 
                striking ``For 2014 and subsequent years'' and 
                inserting ``For each of 2014 through 2018''.
                  (B) Coordinating enhanced pqrs reporting with ehr.--
                Section 1848(o)(2)(B)(iii) of the Social Security Act 
                (42 U.S.C. 1395w-4(o)(2)(B)(iii)) is amended by 
                striking ``subsection (k)(2)(C)'' and inserting 
                ``subparagraph (C) or (D) of subsection (k)(2)''.
                  (C) Coordinating pqrs reporting period with quality 
                update incentive program performance period.--Section 
                1848(m)(6)(C) of the Social Security Act (42 U.S.C. 
                1395w-4(m)(6)(C)) is amended--
                          (i) in clause (i), by striking ``and (iii)'' 
                        and inserting ``, (iii), and (iv)''; and
                          (ii) by adding at the end the following new 
                        clause:
                          ``(iv) Coordination with quality update 
                        incentive program.--For 2019 and each 
                        subsequent year the reporting period shall be 
                        coordinated with the performance period under 
                        subsection (q)(2)(B).''.
                  (D) Coordinating ehr reporting with quality update 
                incentive program performance period.--Section 
                1848(o)(5)(B) of the Social Security Act (42 U.S.C. 
                1395w-4(o)(5)(B)) is amended by adding at the end the 
                following: ``Beginning for 2019, the EHR reporting 
                period shall be coordinated with the performance period 
                under subsection (q)(2)(B).''.
  (c) Advancing Alternative Payment Models.--
          (1) In general.--Part B of title XVIII of the Social Security 
        Act (42 U.S.C. 1395w-4 et seq.) is amended by adding at the end 
        the following new section:

``SEC. 1848A. ADVANCING ALTERNATIVE PAYMENT MODELS.

  ``(a) Payment Model Choice Program.--Payment for covered professional 
services (as defined in section 1848(k)) that are furnished by an 
eligible professional (as defined in such section) under an Alternative 
Payment Model specified on the list under subsection (h) (in this 
section referred to as an `eligible APM') shall be made under this 
title in accordance with the payment arrangement under such model. In 
applying the previous sentence, such a professional with such a payment 
arrangement in effect, shall be deemed for purposes of section 
1848(a)(8) to be satisfactorily submitting data on quality measures for 
such covered professional services.
  ``(b) Process for Implementing Eligible APMs.--
          ``(1) In general.--For purposes of subsection (a) and in 
        accordance with this section, the Secretary shall establish a 
        process under which--
                  ``(A) a contract is entered into, in accordance with 
                paragraph (2);
                  ``(B) proposals for potential Alternative Payment 
                Models are submitted in accordance with subsection (c);
                  ``(C) Alternative Payment Models so proposed are 
                recommended, in accordance with subsection (d), for 
                testing and evaluation, including through the 
                demonstration program under subsection (e), and 
                approval under subsection (f);
                  ``(D) applicable Alternative Payment Models are 
                tested and evaluated under such demonstration program;
                  ``(E) models are implemented as eligible APMs in 
                accordance with subsection (f); and
                  ``(F) a comprehensive list of all eligible APMs is 
                made publicly available, in accordance with subsection 
                (h), for application under subsection (a).
          ``(2) Contract with apm contracting entity.--
                  ``(A) In general.--For purposes of paragraph (1)(A), 
                the Secretary shall identify and have in effect a 
                contract with an independent entity that has 
                appropriate expertise to carry out the functions 
                applicable to such entity under this section. Such 
                entity shall be referred to in this section as the `APM 
                contracting entity'.
                  ``(B) Timing for first contract.--The Secretary shall 
                enter into the first contract under subparagraph (A) to 
                be in effect January 1, 2019.
                  ``(C) Competitive procedures.--Competitive procedures 
                (as defined in section 4(5) of the Office of Federal 
                Procurement Policy Act (41 U.S.C. 403(5)) shall be used 
                to enter into a contract under subparagraph (A).
  ``(c) Submission of Proposed Alternative Payment Models.--Beginning 
not later than 90 days after the date the Secretary enters into a 
contract under subsection (b)(2) with the APM contracting entity, 
physicians, eligible professional organizations, health care provider 
organizations, and other entities may submit to the APM contracting 
entity proposals for Alternative Payment Models for application under 
this section. Such a proposal of a model shall include suggestions for 
measures to be used under subsection (e)(1)(B) for purposes of 
evaluating such model. In reviewing submissions under this subsection 
for purposes of making recommendations under subsection (d)(1), the 
contracting entity shall focus on submissions for such models that are 
intended to improve care coordination and quality for patients through 
modifying the manner in which physicians and other providers are paid 
under this title.
  ``(d) Recommendation by APM Contracting Entity of Proposed Models.--
          ``(1) Recommendation.--
                  ``(A) Recommendations to secretary.--
                          ``(i) In general.--Under the process under 
                        subsection (b), the APM contracting entity 
                        shall at least quarterly recommend, in 
                        accordance with clause (ii), to the Secretary--
                                  ``(I) Alternative Payment Models 
                                submitted under subsection (c) to be 
                                tested and evaluated through a 
                                demonstration program under subsection 
                                (e); and
                                  ``(II) Alternative Payment Models 
                                submitted under subsection (c) to be 
                                implemented under subsection (f) 
                                without testing and evaluation through 
                                such a demonstration program.
                        Such a recommendation under subclause (I) may 
                        be made with respect to a model for which a 
                        waiver would be required under paragraph (2). 
                        Any reference in this subsection to an 
                        Alternative Payment Model under this clause is 
                        a reference to such model as may be modified 
                        under clause (iii).
                          ``(ii) Requirements.--In recommending an 
                        Alternative Payment Model under clause (i), 
                        each of the following shall apply:
                                  ``(I) The APM contracting entity may 
                                recommend an Alternative Payment Model 
                                under clause (i)(I) only if the entity 
                                determines that the model satisfies the 
                                criteria described in subparagraph (B), 
                                including the criteria described in 
                                subparagraph (B)(iv).
                                  ``(II) The APM contracting entity may 
                                recommend an Alternative Payment Model 
                                under clause (i)(II) only if the entity 
                                determines that the model satisfies the 
                                criteria described in subparagraph (C), 
                                including the criteria described in 
                                subparagraph (C)(iii).
                                  ``(III) The APM contracting entity 
                                shall include with the recommended 
                                Alternative Payment Model 
                                recommendations for rules of 
                                coordination described in clause (v).
                          ``(iii) Modifications by apm contracting 
                        entity.--For purposes of this subparagraph, to 
                        the extent necessary to meet the applicable 
                        requirements of clause (ii), the APM 
                        contracting entity may modify an Alternative 
                        Payment Model submitted under subsection (c) to 
                        ensure that the model would--
                                  ``(I) reduce spending under this 
                                title without reducing the quality of 
                                care; or
                                  ``(II) improve the quality of care 
                                without increasing spending under this 
                                title.
                          ``(iv) Forms of modifications.--Such a 
                        modification under clause (iii) may include one 
                        or more of the following:
                                  ``(I) A change to the payment 
                                arrangement under which eligible 
                                professionals participating in such 
                                model would be paid for covered 
                                professional services furnished under 
                                such model.
                                  ``(II) A change to the criteria for 
                                eligible professionals to be eligible 
                                to participate under such model in 
                                order to ensure that the requirement 
                                described in subclause (I) or (II) is 
                                satisfied.
                                  ``(III) A change to the rules of 
                                coordination described in clause (v).
                                  ``(IV) The application of a withhold 
                                mechanism under the payment arrangement 
                                under which the distribution of 
                                withheld amounts is based on the 
                                success of the model in meeting 
                                spending reduction requirements.
                                  ``(V) Such other change as the 
                                contracting entity may specify.
                          ``(v) Rules of coordination for application 
                        of payment arrangements under models.--
                                  ``(I) In general.--Rules of 
                                coordination described in this clause 
                                for an Alternative Payment Model shall 
                                be designed to determine, for purposes 
                                of applying subsection (a) and section 
                                1848(d)(16), under what circumstances 
                                an eligible professional is treated as 
                                having a payment arrangement under a 
                                particular model.
                                  ``(II) Nonduplication of payment.--
                                Such rules of coordination shall ensure 
                                coordination and nonduplication of 
                                payment of services that might be 
                                covered under more than one payment 
                                arrangement or under section 
                                1848(d)(16).
                                  ``(III) Application to non-apm 
                                payment.--In applying such rules of 
                                coordination for purposes of section 
                                1848(d)(16), an eligible professional 
                                shall not be treated as having a 
                                payment arrangement in effect under 
                                such a model for any covered 
                                professional services not treated as 
                                furnished under the model.
                  ``(B) Criteria for recommending models for 
                demonstration.--For purposes of subparagraph 
                (A)(ii)(I), the criteria described in this 
                subparagraph, with respect to an Alternative Payment 
                Model, are each of the following:
                          ``(i) The model has been supported by 
                        meaningful clinical and non-clinical data, with 
                        respect to a sufficient population sample, that 
                        indicates the model would be successful at 
                        addressing each of the abilities described in 
                        clause (iv).
                          ``(ii)(I) In the case of a model that has 
                        already been evaluated and supported by data 
                        with respect to a population of individuals 
                        enrolled under this part, if the model were 
                        evaluated under the demonstration under 
                        subsection (e) such a population would 
                        represent a sufficient number of individuals 
                        enrolled under this part to ensure a meaningful 
                        evaluation of the likely effect of expanding 
                        the demonstration.
                          ``(II) In the case of a model that has not 
                        been so evaluated and supported by data with 
                        respect to such a population, the population 
                        that would be furnished services under such 
                        model if the model were evaluated under the 
                        demonstration under subsection (e) would 
                        represent a sufficient number of individuals 
                        enrolled under this part to ensure a meaningful 
                        evaluation of the likely effect of expanding 
                        the demonstration.
                          ``(iii) Such model, including if tested and 
                        evaluated under the demonstration under 
                        subsection (e), would not deny or limit the 
                        coverage or provision of benefits under this 
                        title for applicable individuals.
                          ``(iv) The proposal for such model 
                        demonstrates--
                                  ``(I) the significant likelihood to 
                                successfully manage the cost of 
                                furnishing items and services under 
                                this title so as to not result in 
                                expenditures under this title being 
                                greater than expenditures under this 
                                title if the APM were not implemented; 
                                and
                                  ``(II) the ability to maintain or 
                                improve the overall quality of patient 
                                care provided to individuals enrolled 
                                under this part.
                          ``(v) The model provides for a payment 
                        arrangement--
                                  ``(I) that specifies the items and 
                                services covered under the arrangement 
                                and specifies rules of coordination 
                                described in subparagraph (A)(v) 
                                between the items and services covered 
                                under the arrangement and other items 
                                and services not covered under the 
                                arrangement;
                                  ``(II) in the case such payment 
                                arrangement does not provide for 
                                payment under the fee schedule under 
                                section 1848 for such items and 
                                services furnished by such eligible 
                                professionals, that provides for a 
                                payment adjustment based on meaningful 
                                EHR use comparable to such adjustment 
                                that would otherwise apply under 
                                section 1848; and
                                  ``(III) that provides for a payment 
                                adjustment based on quality measures 
                                comparable to such adjustment that 
                                would otherwise apply under section 
                                1848.
                  ``(C) Criteria for recommending models for approval 
                without evaluation under demonstration.--For purposes 
                of subparagraph (A)(ii)(II), the criteria described in 
                this subparagraph, with respect to an Alternative 
                Payment Model, is that the model has already been 
                tested and evaluated for a sufficient enough period and 
                through such testing and evaluation the model was 
                shown--
                          ``(i) to have satisfied the criteria 
                        described in each of clauses (i), (ii), (iii), 
                        and (v) of subparagraph (B); and
                          ``(ii)(I) to have reduced spending under this 
                        title without reducing the quality of care; or
                          ``(II) to have improved the quality of 
                        patient care without increasing such spending.
                  ``(D) Transparency and disclosures.--
                          ``(i) Disclosures.--Not later than 90 days 
                        after receipt of a submission of a model under 
                        subsection (c) by the APM contracting entity, 
                        the APM contracting entity shall submit to the 
                        Secretary and the model submitter and make 
                        publicly available a notification on whether or 
                        not, and if so how, the model meets criteria 
                        for recommending such model under subparagraph 
                        (A), including whether or not such model 
                        requires a waiver under paragraph (2). In the 
                        case that the APM contracting entity determines 
                        not to recommend such model under this 
                        paragraph, such notification shall include an 
                        explanation of the reasons for not making such 
                        a recommendation. Any information made publicly 
                        available pursuant to the previous sentence 
                        shall not include proprietary data.
                          ``(ii) Submission of recommended models.--The 
                        APM contracting entity shall at least quarterly 
                        submit to the Secretary, the Medicare Payment 
                        Advisory Commission, and the Chief Actuary of 
                        the Centers for Medicare & Medicaid Services 
                        the following:
                                  ``(I) The models recommended under 
                                subparagraph (A)(i)(I), including any 
                                such models that require a waiver under 
                                paragraph (2), and the data and 
                                analyses on such recommended models 
                                that support the criteria described in 
                                subparagraph (B).
                                  ``(II) The models recommended under 
                                subparagraph (A)(i)(II) and the data 
                                and analyses on such recommended models 
                                that support the criteria described in 
                                subparagraph (C).
                          ``(iii) Explanation for no recommendations.--
                        For any year beginning with 2015 that the APM 
                        contracting entity does not recommend any 
                        models under subparagraph (A)(i), the entity 
                        shall instead satisfy this clause by submitting 
                        to the Secretary and making publicly available 
                        an explanation for not having any such 
                        recommendations.
                          ``(iv) Justifications for recommendations.--
                        In submitting data and analyses under subclause 
                        (I) or (II) of clause (ii) with respect to a 
                        model, the APM contracting entity shall include 
                        a specific explanation of how the model would 
                        (and recommendations for ensuring that the 
                        model will) meet the criteria described in 
                        subparagraph (B) or (C), respectively.
                          ``(v) Confirmation of spending estimates by 
                        cms chief actuary.--For each Alternative 
                        Payment Model described in subclause (I) or 
                        (II) of clause (ii), the Chief Actuary of the 
                        Centers for Medicare & Medicaid Services shall 
                        submit to the Secretary a determination of 
                        whether or not the Chief Actuary confirms that 
                        the model satisfies the criterion described in 
                        subparagraph (B)(iv)(I) or (C)(ii), 
                        respectively.
          ``(2) Models requiring waiver approval.--
                  ``(A) In general.--In the case that an Alternative 
                Payment Model recommended under paragraph (1)(A)(i) 
                would require a waiver from any requirement under this 
                title, in determining approval of such model, the 
                Secretary may make such a waiver solely in order for 
                such model to be tested and evaluated under the 
                demonstration program.
                  ``(B) Approval.--Not later than 180 days after the 
                date of the receipt of such submission for a model, the 
                Secretary shall notify the APM contracting entity and 
                the entity submitting such model under subsection (c) 
                whether or not such a waiver for such model is approved 
                and the reason for any denial of such a waiver.
  ``(e) Demonstration.--
          ``(1) In general.--Subject to paragraphs (5), (6), and (7), 
        the Secretary may conduct a demonstration program, with respect 
        to an Alternative Payment Model approved under paragraph (2), 
        under which participating APM providers shall be paid under 
        this title in accordance with the payment arrangement under 
        such model and such model shall be evaluated by the independent 
        evaluation entity under paragraph (4). The duration of a 
        demonstration program under this subsection, with respect to 
        such a model, shall be 3 years.
          ``(2) Approval by secretary of models for demonstration.--
                  ``(A) In general.--Not later than 180 days after the 
                date of receipt of a submission under subsection 
                (d)(1)(D)(ii), with respect to an Alternative Payment 
                Model recommended under subsection (d)(1)(A)(i)(I), the 
                Secretary shall--
                          ``(i) review the basis for such 
                        recommendation in order to assess, taking into 
                        account the determination of the Chief Actuary 
                        under subsection (d)(1)(D)(v) with respect to 
                        such model, if the model is significantly 
                        likely to--
                                  ``(I) reduce spending under this 
                                title without reducing the quality of 
                                care; or
                                  ``(II) improve the quality of care 
                                without increasing spending under this 
                                title;
                          ``(ii) assess whether the model is 
                        significantly likely to result in participation 
                        under such model of a sufficient number of 
                        those eligible professionals for whom the model 
                        was designed consistent with clause (i) to be 
                        able to evaluate the likely effect of expanding 
                        the demonstration; and
                          ``(iii) approve such model for a 
                        demonstration program under this subsection, 
                        including as modified under subparagraph (B), 
                        only if the Secretary determines--
                                  ``(I) the model is significantly 
                                likely to satisfy the criterion 
                                described in subclause (I) or (II) of 
                                clause (i);
                                  ``(II) the model is significantly 
                                likely to result in the participation 
                                of a sufficient number of eligible 
                                professionals described in clause (ii);
                                  ``(III) the model applies rules of 
                                coordination described in subparagraph 
                                (C) applicable to such model; and
                                  ``(IV) the model satisfies the 
                                criteria described in subsection 
                                (d)(1)(B).
                The Secretary shall periodically make available a list 
                of such models approved under clause (iii).
                  ``(B) Modifications by secretary.--
                          ``(i) Before approval.--For purposes of 
                        subparagraph (A), the Secretary may modify an 
                        Alternative Payment Model recommended under 
                        subsection (d)(1)(A)(i)(I) to ensure that the 
                        model meets the requirements described in 
                        subparagraph (A)(iii). Such a modification may 
                        include one or more of the following:
                                  ``(I) A change to the payment 
                                arrangement under which eligible 
                                professionals participating in such 
                                model would be paid for covered 
                                professional services furnished under 
                                such model.
                                  ``(II) A change to the criteria for 
                                eligible professionals to be eligible 
                                to participate under such model in 
                                order to ensure that such requirements 
                                are satisfied.
                                  ``(III) A change to the rules of 
                                coordination described in subparagraph 
                                (C).
                                  ``(IV) The application of a withhold 
                                mechanism under the payment arrangement 
                                under which the distribution of 
                                withheld amounts is based on the 
                                success of the model in meeting 
                                spending reduction requirements.
                                  ``(V) Such other change as the 
                                Secretary may specify.
                          ``(ii) Termination or modification during 
                        demonstration.--The Secretary shall terminate 
                        or modify the design and implementation of an 
                        Alternative Payment Model approved under 
                        subparagraph (A)(iii) for a demonstration 
                        program, after testing has begun, unless the 
                        Secretary determines (and the Chief Actuary of 
                        the Centers for Medicare & Medicaid Services, 
                        with respect to program spending under this 
                        title, certifies) that the model is expected to 
                        continue to satisfy the requirements described 
                        in such paragraph relating to quality of care 
                        and reduced spending. Such termination may 
                        occur at any time after such testing has begun 
                        and before completion of the testing.
                  ``(C) Rules of coordination for application of 
                payment arrangements under models.--
                          ``(i) In general.--Rules of coordination 
                        described in this subparagraph for an 
                        Alternative Payment Model shall be designed to 
                        determine, for purposes of applying subsection 
                        (a) and section 1848(d)(16), under what 
                        circumstances an eligible professional is 
                        treated as having a payment arrangement under a 
                        particular model.
                          ``(ii) Nonduplication of payment.--Such rules 
                        of coordination shall ensure coordination and 
                        nonduplication of payment of services that 
                        might be covered under more than one payment 
                        arrangement or under section 1848(d)(16).
                          ``(iii) Application to non-apm payment.--In 
                        applying such rules for purposes of section 
                        1848(d)(16), an eligible professional shall not 
                        be treated as having a payment arrangement in 
                        effect under such a model for any covered 
                        professional services not treated as furnished 
                        under the model.
          ``(3) Participating apm providers.--
                  ``(A) In general.--To participate under a 
                demonstration program under this subsection, with 
                respect to an Alternative Payment Model, an eligible 
                professional shall enter into a contract with the 
                Administrator of the Centers for Medicare & Medicaid 
                Services under this subsection. For purposes of this 
                section, such an eligible professional who so 
                participates under such an Alternative Payment Model in 
                this section is referred to as a `participating APM 
                provider'.
                  ``(B) Requirements.--The Secretary shall establish 
                criteria for eligible professionals to enter into 
                contracts under this paragraph for purposes of 
                participation under a demonstration program with 
                respect to an Alternative Payment Model. Such criteria 
                shall ensure participation under such model of a 
                sufficient number of eligible professionals for whom 
                the model was designed in order to satisfy the 
                criterion described in paragraph (2)(A)(iii)(II).
          ``(4) Reporting and evaluation.--
                  ``(A) Independent evaluation entity.--Under this 
                subsection, the Secretary shall enter into a contract 
                with an independent entity to evaluate Alternative 
                Payment Models under demonstration programs under this 
                subsection based on appropriate measures specified 
                under subparagraph (B). In this section, such entity 
                shall be referred to as the `independent evaluation 
                entity'. Such contract shall be entered into in a 
                timely manner so as to ensure evaluation of an 
                Alternative Payment Model under a demonstration program 
                under this subsection may begin as soon as possible 
                after the model is approved under paragraph (2).
                  ``(B) Performance measures.--For purposes of this 
                subsection, the Secretary shall specify--
                          ``(i) measures to evaluate Alternative 
                        Payment Models under demonstration programs 
                        under this subsection, which may include 
                        measures suggested under subsection (c) and 
                        shall be sufficient to allow for a 
                        comprehensive assessment of such a model; and
                          ``(ii) quality measures on which 
                        participating APM providers shall report, which 
                        shall be similar to measures applicable under 
                        section 1848(k).
                  ``(C) Reporting requirements.--A contract entered 
                into with a participating APM provider under paragraph 
                (3) shall require such provider to report on 
                appropriate measures specified under subparagraph (B).
                  ``(D) Periodic review.--The independent evaluation 
                entity shall periodically review and analyze and submit 
                such analysis to the Secretary and the participating 
                APM providers involved data reported under subparagraph 
                (C) and such other data as deemed necessary to evaluate 
                the model.
                  ``(E) Final evaluation.--Not later than 6 months 
                after the date of completion of a demonstration 
                program, the independent evaluation entity shall submit 
                to the Secretary, the Medicare Payment Advisory 
                Commission, and the Chief Actuary of the Centers for 
                Medicare & Medicaid Services (and make publicly 
                available) a report on each model evaluated under such 
                program. Such report shall include--
                          ``(i) outcomes on the clinical and claims 
                        data received through such program with respect 
                        to such model;
                          ``(ii) recommendations on--
                                  ``(I) whether or not such model 
                                should be implemented as an eligible 
                                APM under this section; or
                                  ``(II) whether or not the evaluation 
                                of such model under the demonstration 
                                program should be extended or expanded;
                          ``(iii) the justification for each such 
                        recommendation described in clause (ii); and
                          ``(iv) in the case of a recommendation to 
                        implement such model as an eligible APM, 
                        recommendations on standardized rules for 
                        purposes of such implementation.
          ``(5) Approval of extending evaluation under demonstration.--
        Not later than 90 days after the date of receipt of a 
        submission under paragraph (4)(E), the Secretary shall, 
        including based on a recommendation submitted under such 
        paragraph, determine whether an Alternative Payment Model may 
        be extended or expanded under the demonstration program.
          ``(6) Termination.--The Secretary shall terminate a 
        demonstration program for a model under this subsection unless 
        the Secretary determines (and the Chief Actuary of the Centers 
        for Medicare & Medicaid Services, with respect to spending 
        under this title, certifies), after testing has begun, that the 
        model is expected to--
                  ``(A) improve the quality of care (as determined by 
                the Administrator of the Centers for Medicare & 
                Medicaid Services) without increasing spending under 
                this title;
                  ``(B) reduce spending under this title without 
                reducing the quality of care; or
                  ``(C) improve the quality of care and reduce 
                spending.
        Such termination may occur at any time after such testing has 
        begun and before completion of the testing.
          ``(7) Funding.--
                  ``(A) In general.--There are appropriated, from 
                amounts in the Federal Supplementary Medical Insurance 
                Trust Fund under section 1841 not otherwise 
                appropriated and as of the date of the enactment of 
                this section, $2,000,000,000 for the purposes described 
                in subparagraph (B), of which no more than 2.5 percent 
                may be used for the purpose described in clause (iii) 
                of such subparagraph. Amounts appropriated under this 
                subparagraph shall be available until expended.
                  ``(B) Purposes.--Amounts appropriated under 
                subparagraph (A) shall be used for--
                          ``(i) payments for items and services 
                        furnished by participating APM providers under 
                        an Alternative Payment Model under a 
                        demonstration program under this subsection 
                        that--
                                  ``(I) would not otherwise be eligible 
                                for payment under this title; or
                                  ``(II) exceed the amount of payment 
                                that would otherwise be made for such 
                                items and services under this title if 
                                such items and services were not 
                                furnished under such demonstration 
                                program;
                          ``(ii) the evaluations provided for under 
                        this section of models under such a 
                        demonstration program;
                          ``(iii) payment to the APM contracting entity 
                        for carrying out its duties under this section; 
                        and
                          ``(iv) for otherwise carrying out this 
                        subsection.
                  ``(C) Limitation.--The amounts appropriated under 
                subparagraph (A) are the only amounts authorized or 
                appropriated to carry out the purposes described in 
                subparagraph (B).
  ``(f) Implementation of Recommended Models as Eligible APMs.--
          ``(1) Assessment.--With respect to each Alternative Payment 
        Model recommended under subsection (d)(1)(A)(i)(II) or 
        (e)(4)(E)(ii)(I), the Secretary shall review the basis for such 
        recommendation and assess and determine, in consultation with 
        the Chief Actuary of the Centers for Medicare & Medicaid 
        Services, whether the model is significantly likely to continue 
        to result in meeting the criterion described in subsection 
        (e)(2)(A)(iii)(I), with or without a modification described in 
        paragraph (5).
          ``(2) Implementation through rulemaking.--
                  ``(A) Publication of nprm.--If the Secretary 
                determines that such a model is significantly likely to 
                meet such criterion, the Secretary shall publish as 
                part of the applicable physician fee schedule 
                rulemaking process (specified in paragraph (3)) a 
                notice of proposed rulemaking to implement such model, 
                including as modified under paragraph (5).
                  ``(B) Comments by medpac.--Not later than 90 days 
                after the date of issuance of such notice with respect 
                to a model, the Medicare Payment Advisory Commission 
                shall submit comments on the proposed rule for such 
                model to Congress and to the Secretary. Such comments 
                shall include an evaluation of the reports from the 
                contracting entity and independent evaluation entity on 
                such model regarding the model's impact on expenditures 
                and quality of care under this title.
                  ``(C) Final rule and conditions.--The Secretary shall 
                publish as part of the applicable physician fee 
                schedule rulemaking process (specified in paragraph 
                (3)) a final notice implementing such proposed rule, 
                including as modified under paragraph (5), as an 
                eligible APM only if--
                          ``(i) the Secretary determines that such 
                        model is expected to--
                                  ``(I) reduce spending under this 
                                title without reducing the quality of 
                                care; or
                                  ``(II) improve the quality of patient 
                                care without increasing spending;
                          ``(ii) the Chief Actuary of the Centers for 
                        Medicare & Medicaid Services certifies that 
                        such model would reduce (or would not result in 
                        any increase in) spending under this title;
                          ``(iii) the Secretary determines that such 
                        model would not deny or limit the coverage or 
                        provision of benefits under this title for 
                        applicable individuals;
                          ``(iv) the Secretary determines that the 
                        model is significantly likely to result in the 
                        participation of a sufficient number of 
                        appropriate eligible professionals for whom the 
                        model was designed in order to satisfy the 
                        criterion described in subsection 
                        (d)(2)(A)(iii)(II);
                          ``(v) the Secretary determines that the model 
                        applies rules of coordination described in 
                        paragraph (6); and
                          ``(vi) the Secretary determines that model 
                        meets such other criteria as the Secretary may 
                        determine.
          ``(3) Applicable physician fee schedule rulemaking process.--
        For purposes of paragraph (2), in the case of an Alternative 
        Payment Model recommended under subsection (d)(1)(A)(ii) or 
        (e)(4)(E)(ii)(I)--
                  ``(A) on or before April 1 of a year, the applicable 
                physician fee schedule rulemaking process is the 
                process for publication by November 1 of that year of 
                the fee schedule amounts under this section for the 
                succeeding year; or
                  ``(B) after April 1 of a year, the applicable 
                physician fee schedule rulemaking process is the 
                process for publication by November 1 of the following 
                year of the fee schedule amounts under this section for 
                the second succeeding year.
          ``(4) Justification for disapprovals.--In the case that an 
        Alternative Payment Model recommended under subsection 
        (d)(1)(A)(ii) or (e)(4)(E)(ii)(I) is not implemented as an 
        eligible APM under this subsection, the Secretary shall make 
        publicly available the rational, in detail, for such decision.
          ``(5) Modifications by secretary.--For purposes of this 
        subsection, the Secretary may modify an Alternative Payment 
        Model recommended under subsection (d)(1)(A)(i)(II) or 
        (e)(4)(E)(ii)(I) to ensure that the model meets the 
        requirements under paragraph (1)(B). Such a modification may 
        include one or more of the following:
                  ``(A) A change to the payment arrangement under which 
                eligible professionals participating in such model 
                would be paid for covered professional services 
                furnished under such model.
                  ``(B) A change to the criteria for eligible 
                professionals to be eligible to participate under such 
                model in order to ensure that such requirements are 
                satisfied.
                  ``(C) A change to the rules of coordination described 
                in paragraph (6).
                  ``(D) The application of a withhold mechanism under 
                the payment arrangement under which the distribution of 
                withheld amounts is based on the success of the model 
                in meeting spending reduction requirements.
                  ``(E) Such other change as the Secretary may specify.
          ``(6) Rules of coordination for application of payment 
        arrangements under models.--
                  ``(A) In general.--Rules of coordination described in 
                this paragraph for an Alternative Payment Model shall 
                be designed to determine, for purposes of applying 
                subsection (a) and section 1848(d)(16), under what 
                circumstances an eligible professional is treated as 
                having a payment arrangement under a particular model.
                  ``(B) Nonduplication of payment.--Such rules of 
                coordination shall ensure coordination and 
                nonduplication of payment of services that might be 
                covered under more than one payment arrangement or 
                under section 1848(d)(16).
                  ``(C) Application to non-apm payment.--In applying 
                such rules for purposes of section 1848(d)(16), an 
                eligible professional shall not be treated as having a 
                payment arrangement in effect under such a model for 
                any covered professional services not treated as 
                furnished under the model.
  ``(g) Periodic Review and Termination.--
          ``(1) Periodic review.--In the case of an Alternative Payment 
        Model that has been implemented, the Secretary and the Chief 
        Actuary of the Centers for Medicare & Medicaid Services shall 
        review such model every 3 years to determine (and certify, in 
        the case of the Chief Actuary and spending under this title), 
        for the previous 3 years, whether the model has--
                  ``(A) reduced the quality of care, or
                  ``(B) increased spending under this title,
        compared to the quality of care or spending that would have 
        resulted if the model had not been implemented.
          ``(2) Termination.--
                  ``(A) Quality of care reduction termination.--If 
                based upon such review the Secretary determines under 
                paragraph (1)(A) that the model has reduced the quality 
                of care, the Secretary may terminate such model.
                  ``(B) Spending increase termination.--Unless such 
                Chief Actuary certifies under paragraph (1)(B) that the 
                expenditures under this title under the model do not 
                exceed the expenditures that would otherwise have been 
                made if the model had not been implemented for the 
                period involved, the Secretary shall terminate such 
                model.
  ``(h) Dissemination of Eligible APMs.--Under this section there shall 
be established a process for specifying, and making publicly available 
a list of, all eligible APMs, which shall include at least those 
implemented under subsection (f) and demonstrations carried out with 
respect to payments under section 1848 through authority in existence 
as of the day before the date of the enactment of this section. Under 
such process such list shall be periodically updated and, beginning 
with January 1, 2015, and annually thereafter, such list shall be 
published in the Federal Register.''.
          (2) Conforming amendment.--Section 1848(a)(1) of the Social 
        Security Act (42 U.S.C. 1395w-4(a)(1)) is amended by striking 
        ``shall instead'' and inserting ``shall, subject to section 
        1848A, instead''.
  (d) Adjustment to Medicare Payment Localities.--
          (1) In general.--Section 1848(e) of the Social Security Act 
        (42 U.S.C. 1395w-4(e)) is amended by adding at the end the 
        following new paragraph:
          ``(6) Use of msas as fee schedule areas in california.--
                  ``(A) In general.--Subject to the succeeding 
                provisions of this paragraph and notwithstanding the 
                previous provisions of this subsection, for services 
                furnished on or after January 1, 2017, the fee schedule 
                areas used for payment under this section applicable to 
                California shall be the following:
                          ``(i) Each Metropolitan Statistical Area 
                        (each in this paragraph referred to as an 
                        `MSA'), as defined by the Director of the 
                        Office of Management and Budget as of December 
                        31 of the previous year, shall be a fee 
                        schedule area.
                          ``(ii) All areas not included in an MSA shall 
                        be treated as a single rest-of-State fee 
                        schedule area.
                  ``(B) Transition for msas previously in rest-of-state 
                payment locality or in locality 3.--
                          ``(i) In general.--For services furnished in 
                        California during a year beginning with 2017 
                        and ending with 2021 in an MSA in a transition 
                        area (as defined in subparagraph (D)), subject 
                        to subparagraph (C), the geographic index 
                        values to be applied under this subsection for 
                        such year shall be equal to the sum of the 
                        following:
                                  ``(I) Current law component.--The old 
                                weighting factor (described in clause 
                                (ii)) for such year multiplied by the 
                                geographic index values under this 
                                subsection for the fee schedule area 
                                that included such MSA that would have 
                                applied in such area (as estimated by 
                                the Secretary) if this paragraph did 
                                not apply.
                                  ``(II) MSA-based component.--The MSA-
                                based weighting factor (described in 
                                clause (iii)) for such year multiplied 
                                by the geographic index values computed 
                                for the fee schedule area under 
                                subparagraph (A) for the year 
                                (determined without regard to this 
                                subparagraph).
                          ``(ii) Old weighting factor.--The old 
                        weighting factor described in this clause--
                                  ``(I) for 2017, is \5/6\; and
                                  ``(II) for each succeeding year, is 
                                the old weighting factor described in 
                                this clause for the previous year minus 
                                \1/6\.
                          ``(iii) MSA-based weighting factor.--The MSA-
                        based weighting factor described in this clause 
                        for a year is 1 minus the old weighting factor 
                        under clause (ii) for that year.
                  ``(C) Hold harmless.--For services furnished in a 
                transition area in California during a year beginning 
                with 2017, the geographic index values to be applied 
                under this subsection for such year shall not be less 
                than the corresponding geographic index values that 
                would have applied in such transition area (as 
                estimated by the Secretary) if this paragraph did not 
                apply.
                  ``(D) Transition area defined.--In this paragraph, 
                the term `transition area' means each of the following 
                fee schedule areas for 2013:
                          ``(i) The rest-of-State payment locality.
                          ``(ii) Payment locality 3.
                  ``(E) References to fee schedule areas.--Effective 
                for services furnished on or after January 1, 2017, for 
                California, any reference in this section to a fee 
                schedule area shall be deemed a reference to a fee 
                schedule area established in accordance with this 
                paragraph.''.
          (2) Conforming amendment to definition of fee schedule 
        area.--Section 1848(j)(2) of the Social Security Act (42 U.S.C. 
        1395w-4(j)(2)) is amended by striking ``The term'' and 
        inserting ``Except as provided in subsection (e)(6)(D), the 
        term''.
  (e) Relative Values Under the Medicare Physician Fee Schedule.--
          (1) Eligible physicians reporting system to improve accuracy 
        of relative values.--Section 1848(c) of the Social Security Act 
        (42 U.S.C. 1395w-4(c)) is amended by adding at the end the 
        following new paragraph:
          ``(8) Physician reporting system to improve accuracy of 
        relative values.--
                  ``(A) In general.--The Secretary shall implement a 
                system for the periodic reporting by physicians of data 
                on the accuracy of relative values under this 
                subsection, such as data relating to service volume and 
                time. Such data shall be submitted in a form and manner 
                specified by the Secretary and shall, as appropriate, 
                incorporate data from existing sources of data, patient 
                scheduling systems, cost accounting systems, and other 
                similar systems.
                  ``(B) Identification of reporting cohort.--Not later 
                than January 1, 2015, the Secretary shall establish a 
                mechanism for physicians to participate under the 
                reporting system under this paragraph, all of whom 
                shall collectively be referred to under this paragraph 
                as the `reporting group'. The reporting group shall 
                include physicians across settings that collectively 
                represent a range of specialties and practitioner 
                types, furnish a range of physicians' services, and 
                serve a range of patient populations.
                  ``(C) Incentive to report.--Under the system under 
                this paragraph, the Secretary may provide for such 
                payments under this part to physicians included in the 
                reporting group as the Secretary determines appropriate 
                to compensate such physicians for reporting data under 
                the system. Such payments shall be provided in such 
                form and manner as specified by the Secretary. In 
                carrying out this subparagraph, reporting by such a 
                physician under this paragraph shall not be treated as 
                the furnishing of physicians' services for purposes of 
                applying this section.
                  ``(D) Funding.--To carry out this paragraph (other 
                than with respect to payments made under subparagraph 
                (C)), in addition to funds otherwise appropriated, the 
                Secretary shall provide for the transfer from the 
                Federal Supplementary Medical Insurance Trust Fund 
                under section 1841 of $1,000,000 to the Centers for 
                Medicare & Medicaid Services Program Management Account 
                for each fiscal year beginning with fiscal year 2014. 
                Amounts transferred under this subparagraph for a 
                fiscal year shall be available until expended.''.
          (2) Relative value adjustments for misvalued physicians' 
        services.--
                  (A) In general.--Section 1848(c)(2) of the Social 
                Security Act (42 U.S.C. 1395w-4(c)(2)) is amended by 
                adding at the end the following new subparagraph:
                  ``(M) Adjustments for misvalued physicians' 
                services.--
                          ``(i) In general.--Only with respect to fee 
                        schedules established for 2016, 2017, and 2018 
                        (and not for subsequent years), the Secretary 
                        shall--
                                  ``(I) identify, based on the data 
                                reported under paragraph (8) and other 
                                relevant data, misvalued services for 
                                which adjustments to the relative 
                                values established under this paragraph 
                                would result in a reduction in 
                                expenditures under the fee schedule 
                                under this section, with respect to 
                                such year, of not more than 1 percent 
                                of the projected amount of expenditures 
                                under such fee schedule for such year; 
                                and
                                  ``(II) make such adjustments for each 
                                such year so as only to result in such 
                                a reduction for such year.
                          ``(ii) No effect on subsequent years.--A 
                        reduction under this subparagraph for a year 
                        shall not affect any reduction for any 
                        subsequent year.
                          ``(iii) Rule of construction relating to 
                        undervalued codes.--Nothing in this 
                        subparagraph shall be construed as preventing 
                        the Secretary from increasing the relative 
                        values for codes that are undervalued.''.
                  (B) Budget neutrality.--Section 1848(c)(2)(B)(v) of 
                the Social Security Act (42 U.S.C. 1395w-4(c)(2)(B)(v)) 
                is amended by adding at the end the following new 
                subclause:
                                  ``(VIII) Reductions for misvalued 
                                physicians' services.--Reduced 
                                expenditures attributable to 
                                subparagraph (M) for fiscal years 2016, 
                                2017, and 2018.''.
          (3) Disclosure of data used to establish multiple procedure 
        payment reduction policy.--The Secretary of Health and Human 
        Services shall make publicly available the data used to 
        establish the multiple procedure payment reduction policy to 
        the professional component of imaging services in the final 
        rule published in the Federal Register, v. 77, n. 222, November 
        16, 2012, pages 68891-69380 under the physician fee schedule 
        under section 1848 of the Social Security Act (42 U.S.C. 1395w-
        4).

SEC. 3. EXPANDING AVAILABILITY OF MEDICARE DATA.

  (a) Expanding Uses of Medicare Data by Qualified Entities.--
          (1) In general.--To the extent consistent with applicable 
        information, privacy, security, and disclosure laws, beginning 
        with 2014, notwithstanding paragraph (4)(B) of section 1874(e) 
        of the Social Security Act (42 U.S.C. 1395kk(e)) and the second 
        sentence of paragraph (4)(D) of such section, a qualified 
        entity may use data received by such entity under such section, 
        and information derived from the evaluation described in such 
        paragraph (4)(D), for additional non-public analyses (as 
        determined appropriate by the Secretary of Health and Human 
        Services) or provide or sell such data to registered or 
        authorized users and subscribers, including to providers of 
        services and suppliers, for non-public use (including for the 
        purposes of assisting providers of services and suppliers to 
        develop and participate in quality and patient care improvement 
        activities, including developing new models of care).
          (2) Definitions.--In this section:
                  (A) The term ``qualified entity'' has the meaning 
                given such term in section 1874(e)(2) of the Social 
                Security Act (42 U.S.C. 1395kk(e)).
                  (B) The terms ``supplier'' and ``provider of 
                services'' have the meanings given such terms in 
                subsections (d) and (u), respectively, of section 1861 
                of the Social Security Act (42 U.S.C. 1395x).
  (b) Access to Medicare Data to Providers of Services and Suppliers to 
Facilitate Development of Alternative Payment Models and to Qualified 
Clinical Data Registries to Facilitate Quality Improvement.--Consistent 
with applicable laws and regulations with respect to privacy and other 
relevant matters, the Secretary shall provide Medicare claims data (in 
a form and manner determined to be appropriate) to--
          (1) qualified entities, that may share with providers of 
        services and suppliers that are registered or authorized users 
        or subscribers, for non-public use including to facilitate the 
        development of new models of care (including development of 
        Alternate Payment Models under section 1848A of the Social 
        Security Act, models for small group specialty practices, and 
        care coordination models); and
          (2) qualified clinical data registries under section 
        1848(m)(3)(E)) of the Social Security Act (42 U.S.C. 1395w-
        4(m)(3)(E)) for purposes of linking such data with clinical 
        outcomes data and performing and disseminating risk-adjusted, 
        scientifically valid analysis and research to support quality 
        improvement or patient safety, provided that any public 
        reporting of identifiable provider data shall only be conducted 
        with prior consent of such provider.

SEC. 4. ENCOURAGING CARE COORDINATION AND MEDICAL HOMES.

   Section 1848(b) of the Social Security Act (42 U.S.C. 1395w-4(b)) is 
amended by adding at the end the following new paragraph:
          ``(8) Encouraging care coordination and medical homes.--
                  ``(A) In general.--In order to promote the 
                coordination of care by an applicable provider (as 
                defined in subparagraph (B)) for individuals with 
                complex chronic care needs who are furnished items and 
                services by multiple physicians and other suppliers and 
                providers of services, the Secretary shall--
                          ``(i) develop one or more HCPCS codes for 
                        complex chronic care management services for 
                        individuals with complex chronic care needs; 
                        and
                          ``(ii) for such services furnished on or 
                        after January 1, 2015, by an applicable 
                        provider, make payment (as the Secretary 
                        determines to be appropriate) under the fee 
                        schedule under this section using such HCPCS 
                        codes.
                  ``(B) Applicable provider defined.--For purposes of 
                this paragraph, the term `applicable provider' means a 
                physician (as defined in section 1861(r)(1)) or a 
                physician assistant or nurse practitioner (as defined 
                in section 1861(aa)(5)(A)) who--
                          ``(i) is certified as a medical home (by 
                        achieving an accreditation status of level 3 by 
                        the National Committee for Quality Assurance);
                          ``(ii) is recognized as a patient-centered 
                        specialty practice by the National Committee 
                        for Quality Assurance;
                          ``(iii) has received equivalent certification 
                        (as determined by the Secretary); or
                          ``(iv) meets such other comparable 
                        qualifications as the Secretary determines to 
                        be appropriate.
                  ``(C) Budget neutrality.--The budget neutrality 
                provision under subsection (c)(2)(B)(ii)(II) shall 
                apply in establishing the payment under subparagraph 
                (A)(ii).
                  ``(D) Single applicable provider payment.--In 
                carrying out this paragraph, the Secretary shall only 
                make payment to a single applicable provider for 
                complex chronic care management services furnished to 
                an individual.''.

SEC. 5. MISCELLANEOUS.

  (a) Solicitations, Recommendations, and Reports.--
          (1) Solicitation for recommendations on episodes of care 
        definition.--The Administrator of the Centers for Medicare & 
        Medicaid Services shall request eligible professional 
        organizations (as defined in section 1848(k)(3) of the Social 
        Security Act (42 U.S.C. 1395w-4(k)(3))) and other relevant 
        stakeholders to submit recommendations for defining non-acute 
        related episodes of care for purposes of applying such 
        definition under subsections (k) and (q) of section 1848 of the 
        Social Security Act (42 U.S.C. 1395w-4) and section 1848A of 
        such Act, as added by subsections (b) and (c) of section 2.
          (2) Solicitation for recommendations on provider fee schedule 
        payment bundles.--
                  (A) In general.--The Administrator of the Centers for 
                Medicare & Medicaid Services shall solicit from 
                eligible professional organizations (as defined in 
                section 1848(k)(3) of the Social Security Act (42 
                U.S.C. 1395w-4(k)(3))) recommendations for payment 
                bundles for chronic conditions and expensive, high 
                volume services for which payment is made under title 
                XVIII of such Act.
                  (B) Report to congress.--Not later than 24 months 
                after the date of the enactment of this Act, the 
                Administrator shall submit to Congress a report on 
                proposals for such payment bundles.
          (3) Reports on modified pfs system and payment system 
        alternatives.--
                  (A) Biannual progress reports.--Not later than 
                January 15, 2016, and annually thereafter, the 
                Secretary of Health and Human Services shall submit to 
                Congress and post on the public Internet website of the 
                Centers for Medicare & Medicaid Services a biannual 
                progress report--
                          (i) on the implementation of paragraph (9) of 
                        section 1848(k) of the Social Security Act (42 
                        U.S.C. 1395w-4(k)), as added by section 
                        2(b)(2), and the quality update incentive 
                        program under subsection (q) of section 1848 of 
                        the Social Security Act (42 U.S.C. 1395w-4), as 
                        added by section 2(b)(3);
                          (ii) that includes an evaluation of such 
                        paragraph and such quality update incentive 
                        program and recommendations with respect to 
                        such program and appropriate update mechanisms; 
                        and
                          (iii) on the actions taken to promote and 
                        fulfill the identification of eligible APMs 
                        under section 1848A of the Social Security Act, 
                        as added by section 2(c), for application under 
                        such section 1848A.
                  (B) GAO and medpac reports.--
                          (i) GAO report on initial stages of 
                        program.--The Comptroller General of the United 
                        States shall submit to Congress a report for 
                        2019 and each subsequent year analyzing the 
                        extent to which the system under section 
                        1848(k)(9) of the Social Security Act (42 
                        U.S.C. 1395w-4(k)(9)) and such quality update 
                        incentive program under section 1848(q) of the 
                        Social Security Act, as added by section 2(b) 
                        is successfully satisfying performance 
                        objectives, including with respect to--
                                  (I) the process for developing and 
                                selecting measures and activities under 
                                subsection (k)(9) of section 1848 of 
                                such Act (42 U.S.C. 1395w-4);
                                  (II) the process for assessing 
                                performance against such measures and 
                                activities under subsection (q) of such 
                                section; and
                                  (III) the adequacy of the measures 
                                and activities so selected.
                          (ii) Evaluation by gao and medpac on 
                        implementation of quality update incentive 
                        program.--
                                  (I) GAO.--The Comptroller General of 
                                the United States shall evaluate the 
                                initial phase of the quality update 
                                incentive program under subsection (q) 
                                of section 1848 of the Social Security 
                                Act (42 U.S.C. 1395w-4) and shall 
                                submit to Congress, not later than 
                                2019, a report with recommendations for 
                                improving such quality update incentive 
                                program.
                                  (II) MedPAC.--In the course of its 
                                March Report to Congress on Medicare 
                                payment policy, MedPAC shall analyze 
                                the initial phase of such quality 
                                update incentive program and make 
                                recommendations, as appropriate, for 
                                improving such quality update incentive 
                                program.
                          (iii) MedPAC report on payment system 
                        alternatives.--
                                  (I) In general.--Not later than June 
                                15, 2016, the Medicare Payment Advisory 
                                Commission shall submit to Congress a 
                                report that analyzes multiple options 
                                for alternative payment models in lieu 
                                of section 1848 of the Social Security 
                                Act (42 U.S.C. 1395w-4). In analyzing 
                                such models, the Medicare Payment 
                                Advisory Commission shall examine at 
                                least the following models:
                                          (aa) Accountable care 
                                        organization payment models.
                                          (bb) Primary care medical 
                                        home payment models.
                                          (cc) Bundled or episodic 
                                        payments for certain conditions 
                                        and services.
                                          (dd) Gainsharing arrangements
                                  (II) Items to be included.--Such 
                                report shall include information on how 
                                each recommended new payment model will 
                                achieve maximum flexibility to reward 
                                high quality, efficient care.
                  (C) Tracking expenditure growth and access.--
                Beginning in 2015, the Chief Actuary of the Centers for 
                Medicare & Medicaid Services shall track expenditure 
                growth and beneficiary access to physicians' services 
                under section 1848 of the Social Security Act (42 
                U.S.C. 1395w-4) and shall post on the public Internet 
                website of the Centers for Medicare & Medicaid Services 
                annual reports on such topics.
          (4) Report on clinical decision support mechanisms.--Not 
        later than one year after the date of the enactment of this 
        Act, the Secretary of Health and Human Services shall submit to 
        Congress a report on the extent to which clinical decision 
        support mechanisms and other provider support tools could be 
        used to further program objectives under section 1848 of the 
        Social Security Act (42 U.S.C. 1395w-4)) and recommendation for 
        how such mechanisms and tools should be so used.
  (b) Rule of Construction Regarding Health Care Provider Standards of 
Care.--
          (1) In general.--The development, recognition, or 
        implementation of any guideline or other standard under any 
        Federal health care provision shall not be construed to 
        establish the standard of care or duty of care owed by a health 
        care provider to a patient in any medical malpractice or 
        medical product liability action or claim.
          (2) Definitions.--For purposes of this subsection:
                  (A) The term ``Federal health care provision'' means 
                any provision of the Patient Protection and Affordable 
                Care Act (Public Law 111-148), title I and subtitle B 
                of title III of the Health Care and Education 
                Reconciliation Act of 2010 (Public Law 111-152), and 
                titles XVIII and XIX of the Social Security Act.
                  (B) The term ``health care provider'' means any 
                individual or entity--
                          (i) licensed, registered, or certified under 
                        Federal or State laws or regulations to provide 
                        health care services; or
                          (ii) required to be so licensed, registered, 
                        or certified but that is exempted by other 
                        statute or regulation.
                  (C) The term ``medical malpractice or medical 
                liability action or claim'' means a medical malpractice 
                action or claim (as defined in section 431(7) of the 
                Health Care Quality Improvement Act of 1986 (42 U.S.C. 
                11151(7))) and includes a liability action or claim 
                relating to a health care provider's prescription or 
                provision of a drug, device, or biological product (as 
                such terms are defined in section 201 of the Federal 
                Food, Drug, and Cosmetic Act or section 351 of the 
                Public Health Service Act).
                  (D) The term ``State'' includes the District of 
                Columbia, Puerto Rico, and any other commonwealth, 
                possession, or territory of the United States.
          (3) No preemption.--No provision of the Patient Protection 
        and Affordable Care Act (Public Law 111-148), title I or 
        subtitle B of title III of the Health Care and Education 
        Reconciliation Act of 2010 (Public Law 111-152), or title XVIII 
        or XIX of the Social Security Act shall be construed to preempt 
        any State or common law governing medical professional or 
        medical product liability actions or claims.

                          Purpose and Summary

    H.R. 2810, the ``Medicare Patient Access and Quality 
Improvement Act of 2013,'' was introduced on July 24, 2013, by 
Rep. Michael Burgess (R-TX), and referred to the Committee on 
Energy and Commerce.
    The legislation would repeal the sustainable growth rate 
(SGR) and reform Medicare payments for physicians' services. 
Additionally, H.R. 2810 further would improve the quality of 
care in the Medicare program by allowing de-identified data to 
be used by medical providers to improve the delivery of care, 
would ensure that payments by Federal programs for the 
provision of care could not be used to establish the standard 
of care in a medical liability case, and for other purposes.

                  Background and Need for Legislation

    When Medicare was implemented in 1966, providers were paid 
according to the Customary, Prevailing, and Reasonable (CPR) 
system.\1\ However, incentives inherent in this system led to 
rapid increases in both the price and volume of services under 
the program, and by the mid-1970s, prevailing fees under the 
program were linked to the Medicare Economic Index (MEI). This 
change was intended to limit charge inflation for physician 
services and was largely successful in that regard, but it 
placed no controls on the volume of services that physicians 
were paid for under the program.
---------------------------------------------------------------------------
    \1\In the CPR system, physicians were paid the lowest of three 
possible fees, (1) the actual charge submitted, (2) the fee customarily 
charged by a particular physician, or (3) the prevailing fee charged by 
physicians in a given locality.
---------------------------------------------------------------------------
    In the Omnibus Budget Reconciliation Act (OBRA, P.L. 101-
239) of 1989, Congress created a new system of physician 
payments based on the resource-based relative value scale 
(RBRVS). The RBRVS system attempted to link physician payment 
to the resources, or ``inputs,'' that were used in providing 
medical services. In an attempt to control total spending for 
physicians' services driven by volume increases, OBRA also tied 
the annual update of the fee schedule to the trend in total 
spending for physicians' services relative to a target that was 
based on historical trends in volume. This method, effective in 
1992, became known as the Medicare Volume Performance Standard 
(VPS), which would be replaced because there was concern that 
it did sufficiently constrain the growth in volume of services 
in the Medicare program and the instability of its update 
formula.
    In 1997, the Balanced Budget Act (BBA, P.L. 105-33) 
replaced VPS with the SGR system. Unlike the VPS, the SGR 
target is tied to growth in the nation's gross domestic product 
per capita and adjusts physician payments by a factor that 
reflects cumulative spending relative to the target. While the 
SGR targets are not limits on expenditures, they represent a 
predictable and, what was intended to be, a sustainable 
trajectory for cumulative spending on Medicare physician 
services from April 1996 forward. However, much like the MEI 
before it, the system did not account for the volume of 
services provided and quickly led to a series of required 
annual cuts.
    Medicare payments for services of physicians and certain 
non-physician practitioners are made on the basis of a fee 
schedule. Created after enactment of the OBRA, the fee schedule 
assigns relative values to services that reflect physician work 
(i.e., time, skill, and intensity necessary to provide the 
service), practice expenses, and malpractice costs (the RBRVS). 
The relative values are adjusted for geographic variation in 
costs. The adjusted relative values then are converted into a 
dollar payment amount by a conversion factor.
    The conversion factor calculation for physician fees is 
updated annually based on (1) the Medicare Economic Index 
(MEI), which measures the weighted average annual price changes 
to the inputs needed to produce physician services, (2) the 
Update Adjustment Factor (UAF), used to equate actual and 
target (allowed) expenditures, and (3) allowed expenditures, 
equal to the actual expenditures updated by the SGR.
    The SGR sets both the cumulative and allowed expenditures 
under the UAF formula and consists of the following components: 
(1) the estimated percentage changes in physician fees, (2) the 
estimated percentage changes in the number of fee-for-service 
beneficiaries, (3) the estimated percentage growth in real 
gross domestic product (GDP) (10-year moving average), (4) the 
estimated percentage changes resulting from changes in laws and 
regulations.\2\
---------------------------------------------------------------------------
    \2\Medicare Physician Payment Updates and The Sustainable Growth 
Rate (SGR) System, The Congressional Research Service, February 2013.
---------------------------------------------------------------------------
    Under the SGR, physician fees are adjusted up or down to 
meet the targeted spending levels. Actual expenditures are 
compared to targets, starting with the base year of 1996. After 
the base year, expenditure targets are calculated for each year 
based on increases in population, input prices, GDP, and 
changes in law and regulation. Actual expenditures are compared 
to both cumulative and annual expenditure targets, and the 
difference between targeted and actual spending is converted 
into updates to physician fees. If cumulative physician 
expenditures are below the expenditure target, then an annual 
update is calculated based on several variables including the 
Medicare Economic Index (MEI).\3\ However, when cumulative 
physician expenditures exceed the expenditure target, the SGR 
system reduces the annual update factor (and therefore, all 
physician reimbursements under the fee schedule) to attempt to 
bring cumulative expenditures in line with the target.\4\
---------------------------------------------------------------------------
    \3\Created in 1975, the MEI is an inflation index similar to the 
Consumer Price Index that includes the prices of inputs required for 
the production of physician services including the physician's time, 
the cost of hiring employees such as technicians and clerical staff, 
rent, medical equipment, supplies, and drugs.
    \4\For a detailed discussion of the workings of the sustainable 
growth rate mechanism, see The Sustainable Growth Rate Formula for 
Setting Medicare's Physician Payment Rates, Congressional Budget 
Office, September 2006, (online at http://www.cbo.gov/ftpdocs/75xx/
doc7542/09-07-SGR-brief.pdf).
---------------------------------------------------------------------------
    Each year since 2002, the statutory method for determining 
the annual updates to the Medicare physician fee schedule, the 
SGR, has resulted in a reduction in the reimbursement rates (or 
a ``negative update''). With the exception of 2002, when a 4.8% 
decrease was applied, Congress has passed a series of bills to 
override the reductions.\5\ However, these legislative 
overrides specified that annual increases in the payment rates 
should not be considered a change in law or regulation for 
purposes of determining the expenditure target, and the gap 
between cumulative spending and the cumulative target became 
larger than it would have been otherwise. If the SGR is not 
reformed or overridden, physicians face a 24.4% reduction in 
the conversion factor for the fee schedule update on January 1, 
2014.\6\ Overriding the expected cuts will cost $131.9 billion.
---------------------------------------------------------------------------
    \5\Medicare Physician Payment Updates and The Sustainable Growth 
Rate (SGR) System, The Congressional Research Service, February 2013.
    \6\MedPAC June 2013: Report to the Congress: Medicare and the 
Health Care Delivery System. 
---------------------------------------------------------------------------
    There are several flaws with the existing approach to 
payments for physicians' services in Medicare.
    By design, the SGR treats all spending on physicians' 
services the same--excesses beyond the target result in 
reductions in future fees, and surpluses below the targets 
result in increases in future fees. Those calculations are done 
on a national basis, so individual physicians and practitioners 
are actually rewarded for increasing the volume of services 
they provide even as their actions contribute to future SGR 
cuts. MedPAC notes ``a main flaw of the current SGR system is 
its inability to differentiate by individual provider; it 
neither rewards physicians who restrain unnecessary volume 
growth nor penalizes those who contribute most to inappropriate 
volume increases.''\7\ MedPAC also noted that ``the Commission 
determined that the SGR system is fundamentally flawed and is 
creating instability in the Medicare program for providers and 
beneficiaries. This system, which links annual updates to 
cumulative expenditures since 1996, has failed to restrain 
volume growth and, in fact, may have exacerbated it.''\8\
---------------------------------------------------------------------------
    \7\Medicare Payment Advisory Commission, Report to the Congress: 
Medicare Payment Policy, Chapter 2, page 74, March 2011, (online at 
http://www.medpac.gov/documents/Mar11_ EntireReport.pdf).
    \8\MedPAC Report To Congress March 2012, page 89.
---------------------------------------------------------------------------
    The SGR targets apply to the total nationwide physician 
costs and not individual actions. Therefore, the reductions 
required if total spending exceeds the target spending amount 
apply equally to high quality providers as low quality 
providers. Those who are efficient are penalized the same as 
those who order excessive services.
    The SGR targets are indifferent to appropriate increases in 
utilization of services. From 2000 to 2012, MedPAC found that 
Medicare spending for physician services increased by 72%--much 
more rapidly than payment rate updates and the MEI over the 
same period, and MedPAC noted that the ``[g]rowth in the volume 
of services contributed much more to the rapid increase in 
Medicare spending than payment rate updates.''\9\ Yet, the SGR 
targets did not appropriately take into account the potential 
for volume growth. With an emphasis on total spending, such a 
system is indifferent to the needs of patients and has the 
potential to reduce physician payment rates due to the overall 
health care needs of Medicare seniors. Such a system has the 
potential to erode the rate of physician reimbursement to such 
an extent that it could encourage some physicians to limit the 
number of Medicare beneficiaries they treat or exit the program 
altogether.
---------------------------------------------------------------------------
    \9\Medicare Payment Advisory Commission, Data Book: Health Care 
Spending and the Medicare Program, June 2013.
---------------------------------------------------------------------------
    The past three years have seen a dramatic slowing in the 
rate of increase of Medicare per beneficiary costs, estimated 
at 0.4% in 2012 and an average of 1.9% over the past three 
years.\10\ Despite this recent slowing in cost growth and the 
Congressional Budget Office's (CBO) revised 2013 Medicare 
baseline projections, changing demographics and aging of the 
population, projected to increase the number of Medicare 
beneficiaries from 50 million today to almost 90 million by 
2040, necessitate strategies to control costs while not 
compromising patient outcomes or shifting additional burdens to 
beneficiaries. Even if per-capita beneficiary costs remain 
stable relative to GDP, the increase in the number of 
beneficiaries will drive cost growth. Based on CBO estimates, 
the aging of the population is expected to account for 60% of 
the growth in Federal health expenditures over the next 25 
years.\11\
---------------------------------------------------------------------------
    \10\R. Kronick and R. Po, Growth in Medicare Spending Per 
Beneficiary Continues to Hit Historic Lows, U.S. Department of Health 
and Human Services, Office of the Assistant Secretary for Planning and 
Evaluation (Jan. 7, 2013) (online at http://aspe.hhs.gov/health/
reports/2013/medicarespendinggrowth/ib.pdf).
    \11\Congressional Budget Office, The 2012 Long-Term Budget Outlook 
(June 5, 2012) (online at http://www.cbo.gov/sites/default/files/
cbofiles/attachments/06-05-Long-Term_Budget _Outlook_2.pdf).
---------------------------------------------------------------------------
    Some have pointed to the SGR as one tool to constrain the 
cost of the program. On this point the Committee disagrees. The 
SGR has only been allowed to reduce the required provider rates 
once, in 2002. Ever since, even proposed cuts would have been 
offset with new spending, which has nullified the SGR's 
effectiveness as a cost containment tool.
    Further, the Committee finds that the continued presence of 
the SGR has forestalled other reforms that might improve the 
quality and value of the Medicare physician benefit for 
beneficiaries, physicians, and CMS. A number of recent reports 
have documented the challenges and opportunities provided by a 
transformed health care delivery system. The Institute of 
Medicine's (IOM) recent report, Best Care at Lower Cost,\12\ 
acknowledges that our current system is falling short with 
regard to quality, outcomes, costs, and equity. Payment 
policies have a strong influence on how care is delivered and 
how well new knowledge and models of care are accepted. 
Implementing and ensuring high value care ``requires 
restructuring incentives to reward the best outcomes for 
patients.''\13\ The IOM estimates that poor quality and care 
inefficiencies account for 75,000 lost lives and $750 billion 
(30% of 2009 total health care costs) in wasted expenditures 
annually. Therefore, the Committee believes that the time to 
repeal the SGR and move to a new payment system that rewards 
quality is now.
---------------------------------------------------------------------------
    \12\Institute of Medicine, Best Care at Lower Cost: The Path to 
Continuously Learning Health Care in America (Sept. 6, 2012) (online at 
http://www.iom.edu//media/Files/Report%20Files/2012/Best-Care/
Best%20Care%20at%20Lower%20Cost_Recs.pdf).
    \13\Id.
---------------------------------------------------------------------------

                                Hearings

    On May 5, 2011, the Subcommittee on Health held a hearing 
entitled ``The Need to Move Beyond the SGR.'' This hearing 
examined specific options for moving beyond SGR and included 
testimony on what a new system of payment should resemble, how 
quality should be measured, and paying for value over volume. 
The Subcommittee received testimony from Dr. Mark B. McClellan, 
Director of the Engelberg Center at the Brookings Institution; 
Dr. M. Todd Williamson, President of the Coalition of State 
Medical and National Specialty Societies; Harold Miller, 
Executive Director of the Center for Healthcare Quality and 
Payment Reform; Dr. Cecil B. Wilson, President of the American 
Medical Association; Dr. David Hoyt, Executive Director of the 
American College of Surgeons; Dr. Roland Goertz, President of 
the American Academy of Family Physicians; and Dr. Michael 
Chernew, Professor of Health Policy at Harvard Medical School.
    On July 18, 2012, the Committee held a hearing entitled 
``Using Innovation to Reform Medicare Physician Payment.'' This 
hearing examined proposals on how Medicare can use innovative 
ideas and payment/delivery models from the private sector to 
reform the current physician payment system. The Subcommittee 
received testimony from Mr. Scott Serota, President and Chief 
Executive Officer for Blue Cross and Blue Shield Association; 
Dr. Bruce Nash, Senior VP and CMO for Capital District 
Physicians' Health Plan; Dr. David L. Bronson, President of the 
American College of Surgeons; Dr. David Hoyt, Executive 
Director of the American College of Surgeons; and Dr. Kavita 
Patel, Managing Director for Clinical Transformation and 
Delivery at the Brookings Institution.
    On February 4, 2013, the Committee held a hearing entitled 
``SGR: Data, Measures and Models; Building a Future Medicare 
Physician Payment System.'' The hearing explored the following 
issues: the flaws of the current volume based physician payment 
system as described by the Medicare Payment Advisory Committee 
Director Glenn Hackbarth; how to improve health through 
regional cooperatives and population based models; and how to 
measure quality and pay for value. The Subcommittee received 
testimony from Glenn Hackbarth, Chairman of MedPAC; Harold 
Miller, Executive Director of the Center for Healthcare Quality 
and Payment Reform; Elizabeth Mitchell, CEO of the Maine Health 
Management Coalition; Dr. Robert Berenson, Institute Fellow at 
the Urban Institute; and Dr. Cheryl Damberg, Senior Policy 
Researcher and Professor at Pardee RAND Graduate School.

                        Committee Consideration

    On July 22 and 23, 2013, the Subcommittee on Health met in 
open markup session and approved a Committee Print entitled 
``Medicare Patient Access and Quality Improvement Act of 
2013,'' as amended, for full Committee consideration by a voice 
vote.
    On July 24, 2013, Rep. Michael C. Burgess (TX) introduced 
H.R. 2810, the ``Medicare Patient Access and Quality 
Improvement Act of 2013,'' which was substantially similar to 
the Committee Print approved by the Subcommittee on Health.
    On July 30 and 31, 2013, the full Committee on Energy and 
Commerce met in open markup session and considered H.R. 2810. 
During the markup, the Committee considered an amendment 
offered by Mr. Burgess, which was adopted by voice vote. On 
July 31, 2013, the Committee ordered H.R. 2810 favorably 
reported to the House, as amended, by a record vote of 51 ayes 
and 0 nays.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mr. Upton to order H.R. 2810 reported to the House, 
as amended, was agreed to by a record vote of 51 ayes and 0 
nays. The following reflects the recorded votes taken during 
the Committee consideration:


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held hearings and made 
findings that are reflected in this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the performance goals and 
objectives of the Committee are reflected in the descriptive 
portions of this report, including the goal that the flawed SGR 
payment formula should be repealed. However, in its efforts, 
the Committee would like to call attention to a few items of 
importance with regards to the Committee's intent behind H.R. 
2810.
    The Committee wishes to clarify that it does not intend to 
compromise patient access to innovative medical technologies or 
treatments, such as wound care, with either its new Quality 
Update Incentive Program or the Payment Model Choice Program. 
The Committee recognizes that medical progress is dependent 
upon providers willingness to adopt new and better treatments 
and cures, whether the improvement is a new surgical technique, 
a better drug or vaccine, or a new medical device or diagnostic 
test. It is physicians' willingness to incorporate innovative 
treatments into decision-making about appropriate treatment 
options for patients that will determine whether an innovative 
technology or treatment will define a new standard of care.
    The Committee is concerned that few physicians will want to 
risk receiving a low quality label or face financial penalties 
as a result of using an innovative treatment or technology that 
is too new to have been recognized as the standard of care at a 
given point in time, even when the new treatment could provide 
significant clinical benefits.
    The Committee also recognizes that there is frequently a 
lag between the availability of an innovative technology or 
treatment and quality measurement development reflecting the 
new treatment. In implementing the provisions of the bill, the 
Committee expects the Secretary to establish a framework for 
accommodating new treatments through technical adjustments to 
quality scores that would apply to both the Quality Update 
Incentive Program and the Payment Model Choice Program.
    This framework should include a process by which either a 
developer of an innovative medical technology, treatment, or 
diagnostic test, or an individual provider or alternative 
payment model may apply to the Secretary for adjustments to a 
quality measure score if this innovative treatment or 
technology meets certain criteria. In the case of an 
alternative payment model or any efficiency measure applied to 
eligible professionals under the Quality Update Incentive 
Program (QUIP), the Secretary should avoid penalizing eligible 
professionals for using innovative treatments or technologies 
that could improve quality of care and care outcomes, but would 
cost more than existing treatment options. In such cases, the 
Committee expects that the Secretary would establish a similar 
framework for making technical adjustments to the calculation 
of the efficiency score or of a calculation of shared savings.
    In both instances, the Secretary should consider making 
adjustments to quality scores and benchmarks for new technology 
if (1) the new technology provides substantial clinical 
improvements in the diagnosis or treatment of a medical 
condition than the use of current therapies, and (2) lack of an 
adjustment would result in lower quality scores or penalize 
early adopters of new treatments or technologies without cause.
    The Committee has concerns that some provider groups might 
be asked to perform and report on measures for which they have 
no control, or that reporting requirements promulgated by CMS 
might not allow their health information technology (HIT) 
systems to participate with those within CMS. Specifically, the 
Committee recognizes that pathologists are among a select group 
of providers that do not have frequent, or potentially any, 
direct contact with patients. Further, some have suggested that 
pathologists use HIT platforms that are different from those 
commonly used by other provider groups or commonly recognized 
by CMS. The Committee would like to stress its intent that all 
eligible individuals who would be subject to the QUIP should be 
allowed to perform and report upon quality measures and 
clinical improvement activities relevant to their practice. 
Clinical improvement activities and quality measures, such as 
patient experience, should take into account the 
appropriateness of measuring the activity against the ability 
of a provider to impact the outcome of the activity being 
measured. In addition, the ability to transmit reported data to 
CMS for the purposes of performance under QUIP is essential to 
improving the provision of care under the Medicare program, and 
CMS should strive to ensure that all providers are able to do 
so electronically.
    Health information technology will play a central role in 
the transformation of the American healthcare system by 
allowing the real time availability of information at the point 
of care and in managing patient health and wellness. Access to 
this information will not only reduce unnecessary and often 
dangerous medical duplication, but also ensure that the most 
appropriate and cost effective treatment is being delivered to 
the patient. While technology has begun to change the way 
doctors provide care and patients engage in their health, we 
must recognize that these technologies will be unable to truly 
transform our health system unless they can easily locate and 
exchange health information.
    Interoperability, or the ability for health technologies to 
exchange information and use information that has been 
exchanged, is central to the success of the alternative payment 
models laid out in this Committee's bipartisan effort to 
restructure the Medicare physician payment system. For this 
effort to be successful, however, more must be done to bolster 
interoperability. The Administration, acting through the Office 
of the National Coordinator for Health IT (ONC), must provide 
appropriate guidance to providers and to industry on its vision 
for interoperability and work to engage all stakeholders in 
adoption of those systems.
    The Committee recognizes that, in order to empower 
providers to be successful in reporting and performing on the 
quality measures they develop, the Administration must adopt 
interoperability standards that allow every health care 
provider to access and use longitudinal data on the patients 
they treat to make evidence-based decisions, coordinate care, 
and improve health outcomes as quickly as possible. The 
Committee believes adopting these standards by 2018 is 
reasonable and should be the highest priority for ONC in order 
to enable health care providers to measure, report, track, and 
perform on the quality measures and payment updates required by 
this legislation.
    Finally, the Committee finds that this legislation leaves 
unanswered many questions concerning the provision of health 
care provider care in this country. The Committee believes that 
removing the looming threat of the SGR--when most in Congress 
see it as a broken policy--will support further reforms in the 
future.
    It is the Committee's view that problems related to work 
force shortages, both among provider specialties and across the 
entire workforce, can be solved by supporting policies that are 
agnostic to the question of the provider specialty, but 
incentivize the desired practice itself. The Committee sought 
to demonstrate this through the creation of new codes for 
complex care management for providers certified as medical 
homes, whether they are primary or specialty in practice. If 
the Congress is going to succeed in its efforts to deliver on 
the Medicare promise to its seniors, it is important that 
Congress recognize and support the delivery of clinical care by 
well trained and qualified professionals, regardless of their 
role in the health care continuum.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
2810, the ``Medicare Patient Access and Quality Improvement Act 
of 2013,'' would result in increased expenditures of $175 
billion over the 2014-2023 budget window.

       Earmark, Limited Tax Benefits, and Limited Tariff Benefits

    In compliance with clause 9(e), 9(f), and 9(g) of rule XXI 
of the Rules of the House of Representatives, the Committee 
finds that H.R. 2810 contains no earmarks, limited tax 
benefits, or limited tariff benefits.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:
                                                September 13, 2013.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2810, the Medicare 
Patient Access and Quality Improvement Act of 2013.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Lori Housman.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 2810--Medicare Patient Access and Quality Improvement Act of 2013

    Summary: H.R. 2810 would replace the Sustainable Growth 
Rate (SGR) formula, which determines the annual updates to 
Medicare's payment rates for physician services, with new 
systems for establishing those payment rates. CBO estimates 
that enacting H.R. 2810 would increase direct spending by about 
$175 billion over the 2014-2023 period. Pay-as-you-go 
procedures apply to this legislation because it would affect 
direct spending. (The legislation would not affect federal 
revenues.)
    H.R. 2810 would impose an intergovernmental mandate as 
defined in the Unfunded Mandates Reform Act (UMRA) by 
preempting state laws governing the evidentiary rules and 
practices of medical malpractice claims. CBO estimates that the 
costs of the intergovernmental mandate would be small and would 
not exceed the threshold established in UMRA ($75 million in 
2013, adjusted annually for inflation). The bill contains no 
private-sector mandates as defined in UMRA.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 2810 is shown in the following table. 
The costs of this legislation fall within budget functions 570 
(Medicare) and 550 (health).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in billions of dollars--
                                                   -----------------------------------------------------------------------------------------------------
                                                     2014    2015    2016    2017    2018    2019    2020    2021    2022    2023   2014-2018  2014-2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Estimated Budget Authority........................     9.0    13.5    13.5    13.5    14.0    16.5    19.5    22.0    25.5    28.5      63.5      175.5
Estimated Outlays.................................     9.0    13.5    13.5    13.5    14.0    16.5    19.5    22.0    25.5    28.5      63.5      175.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

Background and major provisions

    Under current law, Medicare's payment rates for physicians' 
services are slated to drop by about 24 percent in January 
2014. CBO projects those payment rates will increase by small 
amounts in most subsequent years, but will remain below 2013 
levels through the 2014-2023 period.
    Medicare compensates physicians for services they provide 
on the basis of a fee schedule that specifies payment rates for 
each type of covered service. Payment rates are based on a 
measure of the resources required to provide a given service 
(measured in relative value units or RVUs), adjusted to account 
for geographical differences in input prices, and translated 
into a dollar amount by applying a ``conversion factor.'' The 
SGR formula determines the annual update to the conversion 
factor.
    Current law includes the opportunity for physicians to earn 
incentive payments for satisfactorily reporting quality data 
through the Physician Quality Reporting System (PQRS). H.R. 
2810 would build upon this reporting system in replacing the 
SGR formula.
    H.R. 2810 would replace the SGR formula with new payment 
systems over the next several years, phased in as follows:
      Between 2014 and 2018, the annual update to 
Medicare's payment rates for services on the physician fee 
schedule would equal 0.5 percent.
      Beginning in 2019, Medicare's payment rates for 
services on the physician fee schedule would be determined in 
two broad ways:
          Payment rates would be based on a 
        physician's performance in the Quality Update Incentive 
        Program (QUIP), or
          Physicians could choose to be paid for 
        some or all of their Medicare services under an 
        Alternative Payment Model (APM).
    The bill also would modify payment rates in certain 
California counties, adjust relative value units for certain 
physicians' services, and require the development of payment 
codes that would encourage care coordination and the use of 
medical homes.

Quality Update Incentive Program

    Under the QUIP, Medicare would continue to compensate 
physicians for services they provide on the basis of a fee 
schedule that specifies payment rates for each type of covered 
service. However, beginning in 2019, the annual update to the 
conversion factor would be 0.5 percent and the payment amount 
would be adjusted by a bonus or penalty based on how well a 
provider performed on certain quality measures and clinical 
practice improvement activities relative to thresholds stated 
in the bill. The legislation would establish a process to 
determine annual payment amounts as follows:
      Prior to 2019, professional societies and other 
stakeholders could submit to the Secretary of Health and Human 
Services (HHS) quality measures and clinical practice 
improvement activities that apply to a specific peer group 
(generally, a medical or surgical specialty or subspecialty).
      The Secretary would solicit public input, select 
measures and activities for each peer group from those that 
were submitted, and publish the final set prior to the 
``performance period.''
      The Secretary would determine a performance 
period (probably a one-year period ending 6 to 12 months before 
the start of a calendar year) that would be used to measure 
provider performance for the purpose of determining the 
adjustment to the conversion factor for the next calendar year.
      Each provider would choose the appropriate peer 
group for his or her services and would submit data on the 
measures and activities selected by the Secretary for that peer 
group to the Centers for Medicare and Medicaid Services (CMS).
      Payment rates for providers would be determined 
based on their performance relative to thresholds stated in the 
bill. In addition to the 0.5 percent annual update to the 
conversion factor:
          Providers exceeding the top threshold 
        would get a positive 1 percent adjustment;
          Providers not meeting the lower threshold 
        would get a negative 1 percent adjustment; and
          Providers between the two thresholds 
        would not be adjusted.
          Additionally, providers who did not 
        submit data on the quality measures would get a 
        negative 5 percent adjustment.
    Those adjustments to the updates would be determined 
separately for each provider, but the Secretary could also 
establish a process that would apply to groups of providers 
practicing together. The reporting requirements and payment 
adjustments under the QUIP would be in addition to the existing 
reporting requirements and payment adjustments under the PQRS.

Alternative payment model

    Beginning in 2019, the legislation also would allow 
providers to choose to participate in and be paid under 
alternative payment models. H.R. 2810 does not describe a 
specific payment model; rather, it would establish processes 
for developing and implementing such models.
    The legislation would require the Secretary of HHS to enter 
into a contract with a private-sector organization referred to 
as the APM contracting entity. Provider organizations or other 
entities would submit proposed models to the contracting 
entity. The contracting entity would then recommend models to 
the Secretary that it concludes meet specified criteria, 
including that a given model would probably reduce Medicare 
spending without reducing the quality of care, or improve the 
quality of care without increasing spending. In developing 
those recommendations, the contracting entity would be 
authorized to modify a proposal to increase the likelihood that 
it would reduce Medicare spending or improve the quality of 
care. Depending on the contracting entity's assessment of the 
strength of the evidence that a particular model would reduce 
spending or improve the quality of care, the recommendation 
would specify that a model be either tested and evaluated in a 
demonstration project or incorporated directly into the 
Medicare program without such testing.
    For models recommended for testing and evaluation through 
demonstration programs, the Secretary and the Chief Actuary of 
CMS would review the contracting entity's recommendations and 
analyses. The Secretary would be authorized to modify 
recommended models to increase the likelihood that they would 
reduce spending or improve the quality of care. The Secretary 
also would be authorized to waive requirements of title 18 of 
the Social Security Act, as needed, solely for testing and 
evaluating models under the demonstration program.
    Models that undergo demonstration programs would operate 
for three years and would include evaluation by an independent 
evaluation entity. The legislation would allow the Secretary to 
modify or terminate during testing any demonstrations that were 
not meeting or expected to meet the specified criteria; 
demonstrations could also be extended by the Secretary. If a 
particular demonstration model proves successful, is 
recommended by the independent evaluation entity, and is 
certified by the Chief Actuary as meeting specified spending 
criteria, it would go through a process for final approval and 
implementation as a new payment model within the Medicare 
program.
    The legislation specifies similar criteria and processes 
for models that the contracting entity recommends implementing 
without testing and evaluation. The independent evaluation 
entity would not be involved with such models. However, before 
such a model can be implemented, the Chief Actuary would have 
to certify that a model is expected not to increase program 
spending (a stricter criterion than would be applied for 
demonstration programs).
    Under either APM track, providers would enter into a 
contract with the Secretary to participate in a specific model. 
Because such models could apply only to portions of a medical 
practice (such as models addressing particular medical 
conditions), providers could participate in more than one 
model, as well as the QUIP.
    Separately, the bill would appropriate $2 billion for items 
and services not eligible for Medicare payment under current 
law, payments for services that exceed current Medicare fee 
schedule amounts, and the administrative costs for the APM 
contracting entity and the independent evaluation entity.
    Basis of estimate: Assuming enactment late in calendar year 
2013, CBO estimates that enacting H.R. 2810 would increase 
federal direct spending by $175.5 billion over the 2014-2023 
period. The bill would eliminate the cuts in payment rates that 
will occur under current law for services on the physician fee 
schedule and instead set updates to payment rates for services 
on the physician fee schedule at 0.5 percent a year. CBO 
estimates those automatic updates would increase direct 
spending by $63.5 billion through 2018, relative to the level 
of spending that CBO projects based on the payment rates under 
current law.
    As described above, beginning in 2019, physicians would be 
able to choose between the QUIP and APM mechanisms and among 
APM options. The budgetary effects of the legislation would 
depend, therefore, on how the QUIP and APM mechanisms operate 
and on the proportion of spending affected by each of those 
mechanisms.
    CBO considered a number of plausible outcomes in terms of 
both the share of Medicare spending for physicians' services 
that would be subject to payment under the QUIP and APM 
options, the relative cost of possible alternative payment 
models, and the savings that could accrue to the Medicare 
program through the use of APMs. Taking into account the effect 
of the automatic 0.5 percent annual update that would begin in 
2014, CBO estimates that enacting the QUIP and APM mechanisms 
specified in H.R. 2810 would increase direct spending by about 
$112 billion over the 2019-2023 period. That increase, in 
combination with the $63.5 billion cost of the automatic 
updates during the 2014-2018 period, would result in a total 
increase in direct spending of $175.5 billion over the 2014-
2023 period.
    CBO expects that physicians would generally choose to 
participate in the payment options that offer the largest 
payments for the services they provide. Their choices would 
depend, therefore, on the alternative payment models that 
become available. The legislation specifies processes and 
safeguards for APMs, but it does not provide any details about 
how payment rates would be determined for services furnished by 
providers participating in an APM. Thus, there is significant 
uncertainty about the alternative payment arrangements that 
would be offered, how rates would be set, how many models would 
be adopted, how many providers would participate, how 
beneficiaries would be assigned, and other issues.
    CBO expects that the process specified in the legislation 
would result in the development and adoption of multiple APMs. 
During the 2019-2023 period, CBO anticipates that most spending 
through the APM mechanism would involve models being tested 
through demonstrations, because relatively few models would be 
likely to meet the criteria for operation without first being 
tested in demonstration programs.
    CBO expects that most of the alternative payment models 
that would be adopted under this legislation would increase 
Medicare spending. That judgment is based both on the outcomes 
of previous demonstration projects in Medicare and on a 
comparison of the process specified in this legislation for 
identifying and adopting APMs with the process in current law 
for designing, testing, and adopting innovative payment 
systems.
    CBO's review of numerous Medicare demonstration projects 
found that very few succeeded in reducing Medicare spending. 
Those demonstrations, which often tested approaches that had 
been applied previously to privately insured populations, 
generally involved providers whose characteristics made them 
particularly likely to be successful at controlling spending. 
However, despite those relatively favorable conditions, most of 
those demonstrations either increased spending or had no 
significant effect on spending.
    Based on the lessons of prior demonstrations, Congress 
enacted legislation that established the Center for Medicare & 
Medicaid Innovation (CMMI). Two elements that distinguish the 
process of developing new approaches under CMMI from prior 
demonstrations are:
      CMMI has enhanced authority to end unsuccessful 
demonstrations. (Ending unsuccessful demonstrations in the past 
was often difficult because some constituencies benefitted from 
increased spending. Now, the costs of unsuccessful 
demonstrations come out of CMMI's budget, which provides a 
further incentive to end unsuccessful demonstrations.)
      CMMI has the authority to expand innovations that 
prove to be successful at reducing costs, improving the quality 
of care, or both.
    The structure specified by H.R. 2810 would replicate the 
process being followed by CMMI in many ways. Although CMMI 
would continue to operate under the legislation, it is likely 
that some models that would, under current law, be developed by 
CMS (with input from providers) and then tested by CMMI would, 
under the bill, be developed by providers (with input from CMS) 
and then tested or implemented as APMs. CBO expects that the 
greater influence of providers within the design process 
specified in H.R. 2810 would lead to smaller savings than would 
arise from the development and adoption of new approaches 
through the CMMI process.
    In addition, CBO expects that providers would tend to 
choose to participate in APMs that would increase their 
payments from Medicare. For example, those providers whose 
current practice style results in Medicare spending per patient 
that is below the average level of spending would tend to 
participate in APMs that would share some of the savings 
relative to that average level with those providers. More 
generally, different APMs would tend to use different measures 
of success. As various APMs were developed over time, it is 
likely that most physicians would be able to find and 
participate in an alternative payment model or set of models 
under which the physicians would appear to be better than 
average.
    The CMS chief actuary must concur with the judgment of the 
APM contracting entity that a model recommended for testing and 
evaluation in a demonstration program has a potential for 
savings. CBO anticipates that some APMs would, in fact, result 
in savings. On balance, however, CBO expects that the use of 
the APM mechanism would tend to provide physicians with rewards 
for good performance even when there was no change in their 
performance relative to current law; that effect would tend to 
generate higher Medicare spending than under current law.
    Payments to physicians who do not participate in an APM, 
and payment for services provided by a physician that are not 
encompassed by an APM, would be made under the QUIP. Because 
physicians would be able to select the set of measures that 
would be used to determine their eligibility for the additional 
payment adjustment of 1 percent, CBO expects that nearly all 
services furnished under the QUIP beginning in 2019 would be 
paid at 101 percent of the amount specified on the fee 
schedule. To be sure, some physicians would be subject to 
reductions of 1 percent or 5 percent for failure to meet the 
performance or reporting requirements, but CBO expects most 
such physicians would tend to be those for whom Medicare 
patients make up a small share of their practices. As a result, 
CBO anticipates that a very small share of Medicare spending 
for physicians' services would be subject to those reductions.
    CBO's estimate of the budgetary effects of H.R. 2810 also 
includes the effects of several other changes to Medicare's 
physician payment system specified in the legislation; those 
other changes would have relatively small budgetary effects. In 
particular, the legislation would modify payment rates in 
certain California counties, adjust relative value units for 
certain physicians' services, and require the development of 
payment codes that would encourage care coordination and the 
use of medical homes. CBO estimates those provisions would cost 
$0.3 billion over the 2014-2023 period.
    CBO's estimate of the budgetary effects of the legislation 
incorporates the effects of changes in Medicare spending for 
services furnished in the fee-for-service sector on payments to 
Medicare Advantage (MA) plans and on receipts from Part B 
premiums paid by beneficiaries. In addition, the legislation 
includes the effects of changes in Medicare payment rates on 
spending by the Department of Defense's TRICARE program. The MA 
and TRICARE effects account for about $68 billion of the total 
estimated increase in direct spending from the legislation over 
the 2014-2023 period:
      Medicare spending for the MA program would rise 
because the ``benchmarks'' that Medicare uses to determine how 
much the program pays for MA enrollees are adjusted for changes 
in Medicare spending per beneficiary in the fee-for-service 
sector. The benchmarks have already been set for 2014 and would 
not be changed under the legislation, so there would be no 
impact on MA spending under H.R. 2810 until 2015.
      The TRICARE program pays Medicare coinsurance and 
deductibles for military retirees. Those coinsurance and 
deductible payments would be higher under the legislation 
because the prices of physicians' services in Medicare would be 
higher.
      Beneficiaries enrolled in Part B of Medicare pay 
premiums that offset about 25 percent of the costs of those 
benefits. Such premium collections are recorded as offsetting 
receipts (a credit against direct spending). Therefore, about 
one-quarter of the increase in Medicare spending would be 
offset by changes in those premium receipts. However, because 
CBO's estimate of H.R. 2810 assumes enactment late in calendar 
year 2013, the 2014 costs would not be included in the premium 
established for calendar year 2014, but would affect premiums 
in several subsequent years. Over the 2015-2023 period, CBO 
estimates that aggregate Part B premiums receipts would rise by 
about $53 billion.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in the following table.

         CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 2810, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON ENERGY AND COMMERCE ON JULY 31, 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in billions of dollars--
                                                   -----------------------------------------------------------------------------------------------------
                                                     2014    2015    2016    2017    2018    2019    2020    2021    2022    2023   2014-2018  2014-2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               NET INCREASE IN THE DEFICIT
Statutory Pay-As-You-Go Impact....................     9.0    13.5    13.5    13.5    14.0    16.5    19.5    22.0    25.5    28.5      63.5      175.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Estimated impact on state, local, and tribal governments: 
H.R. 2810 would shield health care providers from liability 
claims based on any federal guidelines or standards developed, 
recognized, or implemented under any health care provision of 
the Affordable Care Act. That provision would impose an 
intergovernmental mandate as defined in UMRA because it would 
preempt state laws that allow for the use of such guidelines or 
standards in medical malpractice claims. While the preemption 
would limit the application of state laws, CBO estimates that 
it would not impose significant costs and would fall well below 
the threshold established in UMRA for intergovernmental 
mandates ($75 million in 2013, adjusted annually for 
inflation).
    Estimated impact on the private sector: This bill contains 
no new private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal costs: Lori Housman; Impact 
on state, local, and tribal governments: Lisa Ramirez-Branum; 
Impact on the private sector: Alexia Diorio.
    Estimate approved by: Holly Harvey, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                    Duplication of Federal Programs

    No provision of H.R. 2810 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting H.R. 2810 
specifically directs to be completed 6 specific rule makings 
within the meaning of 5 U.S.C. 551.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This Act may be cited as the ``Medicare Patient Access and 
Quality Improvement Act of 2013.''

Section 2. Reform of Sustainable Growth Rate (SGR) and Medicare payment 
        for physicians' services

    Section 2 amends section 1848 of the Social Security Act 
(SSA) to repeal the SGR and create a 5-year period of stable 
payments while development of an improved FFS physician payment 
system is undertaken. The annual update for participating 
physicians during this period will be .5%.
    As part of the period of transition, the Secretary will be 
required to create peer cohorts that eligible professionals may 
use to select the measure sets they will use to determine their 
annual update under the QUIP beginning in year 6. These sets 
can be made up of quality measures or clinical improvement 
activities, where appropriate. All measures and clinical 
improvement activities must conform to the best practices of 
medicine and be made public, including all clinical data and 
information related to the measures development. It is the 
Committee's intent that the clinical practice improvement 
activities are identified by professional organizations 
recognized by multispecialty boards of certification or 
equivalent certification boards, such as the American Board of 
Medical Specialties or American Osteopathic Association. Moving 
forward, the Secretary is charged with continually updating the 
measure sets to ensure they remain meaningful over time.
    Beginning in year 6, physician payment updates will be 
determined by performance against quality measures and clinical 
improvement activities contained in the QUIP. Measurement 
periods will be 12 consecutive months in length (as close to 
the payment consequence year as possible) with performance in 1 
year impacting payment updates for the following year. Timely 
performance feedback will be provided at least quarterly to 
eligible professionals and should reflect data that is as real-
time as possible (no older than 6 months). The development of 
the QUIP is required to be streamlined with existing programs 
to reduce the regulatory burden on physicians and other 
eligible professionals. Similarly, it is the Committee's intent 
that implementation of all program provisions within this 
section should follow a transparent, expedient, and least 
administratively burdensome procedures.
    There also is a new Section 1848A of the SSA creating a 
pathway for the testing and implementation of alternative 
payment models. The goal of this new pathway is to support 
eligible professional's additional payment options under the 
Payment Model Choice Program that support higher quality care 
and allow greater flexibility for both patients and providers. 
Such a pathway is not designed to recreate the Center for 
Medicare and Medicaid Innovation (CMMI), but to present 
opportunities for the broad adoption of models not allowed 
under CMMI or other venues. This pathway would rest upon CMS 
contracting with outside entities to accept and evaluate 
submissions and test/oversee performance demonstrations for 
appropriate model options. Only those that are deemed to be 
cost effective and high in quality would be allowed to move 
from the testing phase to the Secretary for possible inclusion 
in a list of payment options for all fee schedule providers 
under Medicare Part B.
    Beginning in 2017, this section also improves the 
geographic adjustment method used to calculate provider 
payments in California. Currently, Medicare providers' payments 
are adjusted for geographic costs variations as determined by 
the fee schedule area in which a provider operates. To more 
accurately account for locality cost differences in California, 
this legislation requires the use of Metropolitan Statistical 
Areas (MSAs), as determined by the Office of Management and 
Budget, as the new fee schedule areas and establishes a single 
rest-of-State fee schedule area for those providers outside of 
the MSAs. From 2017 to 2021, the legislation provides for a 5-
year transition for those providers included in the rest-of-
State payment locality by progressively placing higher weight 
on the new system calculation over the previous system 
calculation. This provision also allows for hold harmless 
protections, which prevents any provider from receiving a lower 
geographic payment adjustment under the new system than they 
would under the previous system.
    Section 2 also provides for greater payment accuracy under 
the Medicare Part B fee schedule by which providers are 
currently paid. A lack of accurate and meaningful data on costs 
has hampered the ability of Medicare to review the accuracy of 
payments for services and identify what services are improperly 
valued. Section 5 would ensure that providers could be 
compensated for the cost of submitting such data and directs 
Medicare to identify improperly valued services under the fee 
schedule that would result in a net reduction of 1% of the 
projected amount of expenditures for a year during 2016 through 
2018.
    Finally, section 2 provides for greater transparency in 
determining recent provider payment reductions by requiring the 
Secretary to make publicly available the data used to establish 
multiple procedure payment reductions for imaging services.
    Relating to demonstration programs, the Committee supports 
the development of new and innovative modalities of treatment, 
which show promise for either improved outcomes or lower costs. 
An estimated 6.5 million Americans suffer from chronic, hard-
to-heal wounds each year. In that regard, CMS should consider 
initiating a pilot study on the health outcomes of new medical 
technologies for treating hard-to-heal wounds, including an 
examination of medical technologies that are not currently 
eligible for reimbursement in CMS programs.

Section 3. Expanding availability of Medicare data

    Section 3 amends section 1874(e) of the SSA to allow 
qualified entities to use and disseminate de-identified 
Medicare claims data to authorized users for the purpose of 
improving the quality or provision of health care, or to 
support the building and testing of new models of payment under 
the Medicare program.

Section 4. Encouraging care coordination and medical homes

    Section 4 amends 1848(b) of the SSA to require the 
Secretary of Health and Human Services to develop one or more 
codes (HCPCS) for complex chronic care management for use in 
caring for patients with complex chronic care needs. Providers 
of services under Medicare Part B must be certified as a 
patient-centered medical home or have received equivalent 
status.

Section 5. Miscellaneous

    Section 5 would require a number of reports from various 
entities, including a report on the viability of transforming 
fee-for-service Medicare Part B payment into a system of 
bundled payments. Other reports include, a report from the 
Secretary, who is required to solicit feedback from provider 
organizations on defining non-acute care linked episodes of 
care, reports by GAO evaluating the QUIP and Payment Model 
Choice Program, and a report by the Secretary on the potential 
to include clinical decision support mechanisms into Medicare.
    Lastly, Section 5 would create standard of care protections 
for patients and providers by ensuring that quality 
determinations for the purpose of payment by the Federal 
government shall not be deemed to represent the standard of 
care in a medical liability case.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

SOCIAL SECURITY ACT

           *       *       *       *       *       *       *


TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED

           *       *       *       *       *       *       *


   Part B--Supplementary Medical Insurance Benefits for the Aged and 
Disabled

           *       *       *       *       *       *       *


                    PAYMENT FOR PHYSICIANS' SERVICES

  Sec. 1848. (a) Payment Based on Fee Schedule.--
          (1) In general.--Effective for all physicians' 
        services (as defined in subsection (j)(3)) furnished 
        under this part during a year (beginning with 1992) for 
        which payment is otherwise made on the basis of a 
        reasonable charge or on the basis of a fee schedule 
        under section 1834(b), payment under this part [shall 
        instead] shall, subject to section 1848A, instead be 
        based on the lesser of--
                  (A) * * *

           *       *       *       *       *       *       *

          (8) Incentives for quality reporting.--
                  (A) Adjustment.--
                          (i) In general.--[With respect to] 
                        Subject to clause (iii), with respect 
                        to covered professional services 
                        furnished by an eligible professional 
                        during 2015 or any subsequent year, if 
                        the eligible professional does not 
                        satisfactorily submit data on quality 
                        measures for covered professional 
                        services for the quality reporting 
                        period for the year (as determined 
                        under subsection (m)(3)(A)), the fee 
                        schedule amount for such services 
                        furnished by such professional during 
                        the year (including the fee schedule 
                        amount for purposes of determining a 
                        payment based on such amount) shall be 
                        equal to the applicable percent of the 
                        fee schedule amount that would 
                        otherwise apply to such services under 
                        this subsection (determined after 
                        application of paragraphs (3), (5), and 
                        (7), but without regard to this 
                        paragraph).

           *       *       *       *       *       *       *

                          (iii) Application to eligible 
                        professionals not reporting.--With 
                        respect to covered professional 
                        services (as defined in subsection 
                        (k)(3)) furnished by an eligible 
                        professional during 2019 or any 
                        subsequent year, if the eligible 
                        professional does not submit data for 
                        the performance period (as defined in 
                        subsection (q)(2)(B)) with respect to 
                        such year on, subject to subsection 
                        (q)(1)(D), the quality measures and, as 
                        applicable, clinical practice 
                        improvement activities within the final 
                        core measure set under subsection 
                        (k)(9)(F) applicable to the peer cohort 
                        of such provider, the fee schedule 
                        amount for such services furnished by 
                        such professional during the year 
                        (including the fee schedule amount for 
                        purposes of determining a payment based 
                        on such amount) shall be equal to 95 
                        percent (in lieu of the applicable 
                        percent) of the fee schedule amount 
                        that would otherwise apply to such 
                        services under this subsection 
                        (determined after application of 
                        paragraphs (3), (5), and (7), but 
                        without regard to this paragraph). The 
                        Secretary shall develop a minimum per 
                        year caseload threshold, with respect 
                        to eligible professionals, and the 
                        previous sentence shall not apply to 
                        eligible professionals with a caseload 
                        for a year below such threshold for 
                        such year.

           *       *       *       *       *       *       *

  (b) Establishment of Fee Schedules.--
          (1) * * *

           *       *       *       *       *       *       *

          (8) Encouraging care coordination and medical 
        homes.--
                  (A) In general.--In order to promote the 
                coordination of care by an applicable provider 
                (as defined in subparagraph (B)) for 
                individuals with complex chronic care needs who 
                are furnished items and services by multiple 
                physicians and other suppliers and providers of 
                services, the Secretary shall--
                          (i) develop one or more HCPCS codes 
                        for complex chronic care management 
                        services for individuals with complex 
                        chronic care needs; and
                          (ii) for such services furnished on 
                        or after January 1, 2015, by an 
                        applicable provider, make payment (as 
                        the Secretary determines to be 
                        appropriate) under the fee schedule 
                        under this section using such HCPCS 
                        codes.
                  (B) Applicable provider defined.--For 
                purposes of this paragraph, the term 
                ``applicable provider'' means a physician (as 
                defined in section 1861(r)(1)) or a physician 
                assistant or nurse practitioner (as defined in 
                section 1861(aa)(5)(A)) who--
                          (i) is certified as a medical home 
                        (by achieving an accreditation status 
                        of level 3 by the National Committee 
                        for Quality Assurance);
                          (ii) is recognized as a patient-
                        centered specialty practice by the 
                        National Committee for Quality 
                        Assurance;
                          (iii) has received equivalent 
                        certification (as determined by the 
                        Secretary); or
                          (iv) meets such other comparable 
                        qualifications as the Secretary 
                        determines to be appropriate.
                  (C) Budget neutrality.--The budget neutrality 
                provision under subsection (c)(2)(B)(ii)(II) 
                shall apply in establishing the payment under 
                subparagraph (A)(ii).
                  (D) Single applicable provider payment.--In 
                carrying out this paragraph, the Secretary 
                shall only make payment to a single applicable 
                provider for complex chronic care management 
                services furnished to an individual.
  (c) Determination of Relative Values for Physicians' 
Services.--
          (1) * * *
          (2) Determination of relative values.--
                  (A) * * *
                  (B) Periodic review and adjustments in 
                relative values.--
                          (i) * * *

           *       *       *       *       *       *       *

                          (v) Exemption of certain reduced 
                        expenditures from budget-neutrality 
                        calculation.--The following reduced 
                        expenditures, as estimated by the 
                        Secretary, shall not be taken into 
                        account in applying clause (ii)(II):
                                  (I) * * *

           *       *       *       *       *       *       *

                                  (VIII) Reductions for 
                                misvalued physicians' 
                                services.--Reduced expenditures 
                                attributable to subparagraph 
                                (M) for fiscal years 2016, 
                                2017, and 2018.

           *       *       *       *       *       *       *

                  (M) Adjustments for misvalued physicians' 
                services.--
                          (i) In general.--Only with respect to 
                        fee schedules established for 2016, 
                        2017, and 2018 (and not for subsequent 
                        years), the Secretary shall--
                                  (I) identify, based on the 
                                data reported under paragraph 
                                (8) and other relevant data, 
                                misvalued services for which 
                                adjustments to the relative 
                                values established under this 
                                paragraph would result in a 
                                reduction in expenditures under 
                                the fee schedule under this 
                                section, with respect to such 
                                year, of not more than 1 
                                percent of the projected amount 
                                of expenditures under such fee 
                                schedule for such year; and
                                  (II) make such adjustments 
                                for each such year so as only 
                                to result in such a reduction 
                                for such year.
                          (ii) No effect on subsequent years.--
                        A reduction under this subparagraph for 
                        a year shall not affect any reduction 
                        for any subsequent year.
                          (iii) Rule of construction relating 
                        to undervalued codes.--Nothing in this 
                        subparagraph shall be construed as 
                        preventing the Secretary from 
                        increasing the relative values for 
                        codes that are undervalued.

           *       *       *       *       *       *       *

          (7) Physician reporting system to improve accuracy of 
        relative values.--
                  (A) In general.--The Secretary shall 
                implement a system for the periodic reporting 
                by physicians of data on the accuracy of 
                relative values under this subsection, such as 
                data relating to service volume and time. Such 
                data shall be submitted in a form and manner 
                specified by the Secretary and shall, as 
                appropriate, incorporate data from existing 
                sources of data, patient scheduling systems, 
                cost accounting systems, and other similar 
                systems.
                  (B) Identification of reporting cohort.--Not 
                later than January 1, 2015, the Secretary shall 
                establish a mechanism for physicians to 
                participate under the reporting system under 
                this paragraph, all of whom shall collectively 
                be referred to under this paragraph as the 
                ``reporting group''. The reporting group shall 
                include physicians across settings that 
                collectively represent a range of specialties 
                and practitioner types, furnish a range of 
                physicians' services, and serve a range of 
                patient populations.
                  (C) Incentive to report.--Under the system 
                under this paragraph, the Secretary may provide 
                for such payments under this part to physicians 
                included in the reporting group as the 
                Secretary determines appropriate to compensate 
                such physicians for reporting data under the 
                system. Such payments shall be provided in such 
                form and manner as specified by the Secretary. 
                In carrying out this subparagraph, reporting by 
                such a physician under this paragraph shall not 
                be treated as the furnishing of physicians' 
                services for purposes of applying this section.
                  (D) Funding.--To carry out this paragraph 
                (other than with respect to payments made under 
                subparagraph (C)), in addition to funds 
                otherwise appropriated, the Secretary shall 
                provide for the transfer from the Federal 
                Supplementary Medical Insurance Trust Fund 
                under section 1841 of $1,000,000 to the Centers 
                for Medicare & Medicaid Services Program 
                Management Account for each fiscal year 
                beginning with fiscal year 2014. Amounts 
                transferred under this subparagraph for a 
                fiscal year shall be available until expended.
  (d) Conversion Factors.--
          (1) Establishment.--
                  (A) In general.--The conversion factor for 
                each year shall be the conversion factor 
                established under this subsection for the 
                previous year (or, in the case of 1992, 
                specified in subparagraph (B)) adjusted by the 
                update (established under paragraph (3)) for 
                the year involved (for years before 2001) and, 
                for years beginning with 2001, multiplied by 
                the update (established under paragraph (4) or 
                a subsequent paragraph or section 1848A) for 
                the year involved.

           *       *       *       *       *       *       *

          (4) Update for [years beginning with 2001] 2001, 
        2002, and 2003.--
                  (A) In general.--Unless otherwise provided by 
                law, subject to the budget-neutrality factor 
                determined by the Secretary under subsection 
                (c)(2)(B)(ii) and subject to adjustment under 
                subparagraph (F), the update to the single 
                conversion factor established in paragraph 
                (1)(C) for [a year beginning with 2001] 2001, 
                2002, and 2003 is equal to the product of--
                          (i) * * *

           *       *       *       *       *       *       *

          (15) Update for 2014 through 2018.--The update to the 
        single conversion factor established in paragraph 
        (1)(C) for each of 2014 through 2018 shall be 0.5 
        percent.
          (16) Update beginning with 2019.--
                  (A) In general.--Subject to subparagraph (B), 
                the update to the single conversion factor 
                established in paragraph (1)(C) for each year 
                beginning with 2019 shall be 0.5 percent.
                  (B) Adjustment.--In the case of an eligible 
                professional (as defined in subsection (k)(3)) 
                who does not have a payment arrangement 
                described in section 1848A(a) in effect, the 
                update under subparagraph (A) for a year 
                beginning with 2019 shall be adjusted by the 
                applicable quality adjustment determined under 
                subsection (q)(3) for the year involved.
  (e) Geographic Adjustment Factors.--
          (1) * * *

           *       *       *       *       *       *       *

          (6) Use of msas as fee schedule areas in 
        california.--
                  (A) In general.--Subject to the succeeding 
                provisions of this paragraph and 
                notwithstanding the previous provisions of this 
                subsection, for services furnished on or after 
                January 1, 2017, the fee schedule areas used 
                for payment under this section applicable to 
                California shall be the following:
                          (i) Each Metropolitan Statistical 
                        Area (each in this paragraph referred 
                        to as an ``MSA''), as defined by the 
                        Director of the Office of Management 
                        and Budget as of December 31 of the 
                        previous year, shall be a fee schedule 
                        area.
                          (ii) All areas not included in an MSA 
                        shall be treated as a single rest-of-
                        State fee schedule area.
                  (B) Transition for msas previously in rest-
                of-state payment locality or in locality 3.--
                          (i) In general.--For services 
                        furnished in California during a year 
                        beginning with 2017 and ending with 
                        2021 in an MSA in a transition area (as 
                        defined in subparagraph (D)), subject 
                        to subparagraph (C), the geographic 
                        index values to be applied under this 
                        subsection for such year shall be equal 
                        to the sum of the following:
                                  (I) Current law component.--
                                The old weighting factor 
                                (described in clause (ii)) for 
                                such year multiplied by the 
                                geographic index values under 
                                this subsection for the fee 
                                schedule area that included 
                                such MSA that would have 
                                applied in such area (as 
                                estimated by the Secretary) if 
                                this paragraph did not apply.
                                  (II) MSA-based component.--
                                The MSA-based weighting factor 
                                (described in clause (iii)) for 
                                such year multiplied by the 
                                geographic index values 
                                computed for the fee schedule 
                                area under subparagraph (A) for 
                                the year (determined without 
                                regard to this subparagraph).
                          (ii) Old weighting factor.--The old 
                        weighting factor described in this 
                        clause--
                                  (I) for 2017, is \5/6\; and
                                  (II) for each succeeding 
                                year, is the old weighting 
                                factor described in this clause 
                                for the previous year minus \1/
                                6\.
                          (iii) MSA-based weighting factor.--
                        The MSA-based weighting factor 
                        described in this clause for a year is 
                        1 minus the old weighting factor under 
                        clause (ii) for that year.
                  (C) Hold harmless.--For services furnished in 
                a transition area in California during a year 
                beginning with 2017, the geographic index 
                values to be applied under this subsection for 
                such year shall not be less than the 
                corresponding geographic index values that 
                would have applied in such transition area (as 
                estimated by the Secretary) if this paragraph 
                did not apply.
                  (D) Transition area defined.--In this 
                paragraph, the term ``transition area'' means 
                each of the following fee schedule areas for 
                2013:
                          (i) The rest-of-State payment 
                        locality.
                          (ii) Payment locality 3.
                  (E) References to fee schedule areas.--
                Effective for services furnished on or after 
                January 1, 2017, for California, any reference 
                in this section to a fee schedule area shall be 
                deemed a reference to a fee schedule area 
                established in accordance with this paragraph.
  (f) Sustainable Growth Rate.--
          (1) Publication.--The Secretary shall cause to have 
        published in the Federal Register not later than--
                  (A) * * *
                  (B) November 1 of each succeeding year 
                through 2013 the sustainable growth rate for 
                such succeeding year and each of the preceding 
                2 years.
          (2) Specification of growth rate.--The sustainable 
        growth rate for all physicians' services for a fiscal 
        year (beginning with fiscal year 1998 and ending with 
        fiscal year 2000) and a year beginning with 2000 and 
        ending with 2013 shall be equal to the product of--
                  (A) * * *

           *       *       *       *       *       *       *

  (i) Miscellaneous Provisions.--
          (1) Restriction on administrative and judicial 
        review.--There shall be no administrative or judicial 
        review under section 1869 or otherwise of--
                  (A) * * *

           *       *       *       *       *       *       *

                  (D) the establishment of geographic 
                adjustment factors under subsection (e), [and]
                  (E) the establishment of the system for the 
                coding of physicians' services under this 
                section[.], and
                  (F) the implementation of subsection (q).

           *       *       *       *       *       *       *

  (j) Definitions.--In this section:
          (1) * * *
          (2) Fee schedule area.--[The term] Except as provided 
        in subsection (e)(6)(D), the term ``fee schedule area'' 
        means a locality used under section 1842(b) for 
        purposes of computing payment amounts for physicians' 
        services.

           *       *       *       *       *       *       *

  (k) Quality Reporting System.--
          (1) In general.--The Secretary shall implement a 
        system for the reporting by eligible professionals of 
        data on quality measures and, if applicable, clinical 
        practice improvement activities, specified under 
        paragraph (2). Such data shall be submitted in a form 
        and manner specified by the Secretary (by program 
        instruction or otherwise), which may include submission 
        of such data on claims under this part.
          (2) Use of consensus-based quality measures.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) For 2010 [and subsequent years] through 
                2018.--
                          (i) In general.--Subject to clause 
                        (ii), for purposes of reporting data on 
                        quality measures for covered 
                        professional services furnished during 
                        2010 and each subsequent year (before 
                        2019), subject to subsection (m)(3)(C), 
                        the quality measures (including 
                        electronic prescribing quality 
                        measures) specified under this 
                        paragraph shall be such measures 
                        selected by the Secretary from measures 
                        that have been endorsed by the entity 
                        with a contract with the Secretary 
                        under section 1890(a).

           *       *       *       *       *       *       *

                  (D) For 2019 and subsequent years.--For 
                purposes of reporting data on quality measures 
                and, as applicable clinical practice 
                improvement activities, for covered 
                professional services furnished during the 
                performance period (as defined in subsection 
                (q)(2)(B)) with respect to 2019 and the 
                performance period with respect to each 
                subsequent year, subject to subsection 
                (q)(1)(D), the quality measures and clinical 
                practice improvement activities specified under 
                this paragraph shall be, with respect to an 
                eligible professional, the quality measures 
                and, as applicable, clinical practice 
                improvement activities within the final core 
                measure set under paragraph (9)(F) applicable 
                to the peer cohort of such provider and year 
                involved.
                  [(D)] (E) Opportunity to provide input on 
                measures for 2009 [and subsequent years].--For 
                each quality measure (including an electronic 
                prescribing quality measure) adopted by the 
                Secretary under subparagraph (B) (with respect 
                to 2009) or subparagraph (C), the Secretary 
                shall ensure that eligible professionals have 
                the opportunity to provide input during the 
                development, endorsement, or selection of 
                measures applicable to services they furnish.
          (3) [Covered professional services and eligible 
        professionals defined] Definitions.--For purposes of 
        this subsection:
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) Clinical practice improvement 
                activities.--The term ``clinical practice 
                improvement activity'' means an activity that 
                relevant eligible professional organizations 
                and other relevant stakeholders identify as 
                improving clinical practice or care delivery 
                and that the Secretary determines, when 
                effectively executed, is likely to result in 
                improved outcomes.
                  (D) Eligible professional organization.--The 
                term ``eligible professional organization'' 
                means a professional organization as defined by 
                nationally recognized multispecialty boards of 
                certification or equivalent certification 
                boards.
                  (E) Peer cohort.--The term ``peer cohort'' 
                means a peer cohort identified on the list 
                under paragraph (9)(B), as updated under clause 
                (ii) of such paragraph.

           *       *       *       *       *       *       *

          (7) Limitations on review.--There shall be no 
        administrative or judicial review under section 1869, 
        section 1878, or otherwise, of the development and 
        implementation of the reporting system under paragraph 
        (1), including identification of quality measures under 
        paragraph (2) [and the application of paragraphs (4) 
        and (5)], the application of paragraphs (4) and (5), 
        and the implementation of paragraph (9).

           *       *       *       *       *       *       *

          (9) Establishment of final core measure sets.--
                  (A) In general.--Under the system under this 
                subsection--
                          (i) for each peer cohort identified 
                        under subparagraph (B) and in 
                        accordance with this paragraph, there 
                        shall be published a final core measure 
                        set under subparagraph (F), which shall 
                        consist of quality measures and may 
                        also consist of clinical practice 
                        improvement activities, with respect to 
                        which eligible professionals shall, 
                        subject to subsection (m)(3)(C), be 
                        assessed for purposes of determining, 
                        for years beginning with 2019, the 
                        quality adjustment under subsection 
                        (q)(3) applicable to such 
                        professionals; and
                          (ii) each eligible professional shall 
                        self-identify, in accordance with 
                        subparagraph (B), within such a peer 
                        cohort for purposes of such 
                        assessments.
                  (B) Peer cohorts.--The Secretary shall 
                identify (and publish a list of) peer cohorts 
                by which eligible professionals shall self-
                identify for purposes of this subsection and 
                subsection (q) with respect to a performance 
                period (as defined in subsection (q)(2)(B)) for 
                a year beginning with 2019. For purposes of 
                this subsection and subsection (q), the 
                Secretary shall develop one or more peer 
                cohorts for multispecialty groups, each of 
                which shall be included as a peer cohort under 
                this subparagraph. Such self-identification 
                will be made through such a process and at such 
                time as specified under the system under this 
                subsection. Such list--
                          (i) shall include, as peer cohorts, 
                        provider specialties defined by 
                        nationally recognized multispecialty 
                        boards of certification or equivalent 
                        certification boards and such other 
                        cohorts as established under this 
                        section in order to capture 
                        classifications of providers across 
                        eligible professional organizations and 
                        other practice areas, groupings, or 
                        categories; and
                          (ii) shall be updated from time to 
                        time.
                  (C) Quality measures for core measure sets.--
                          (i) Development.--Under the system 
                        under this subsection there shall be 
                        established a process for the 
                        development of quality measures under 
                        this subparagraph for purposes of 
                        potential inclusion of such measures in 
                        core measure sets under this paragraph. 
                        Under such process--
                                  (I) there shall be 
                                coordination, to the extent 
                                possible, across organizations 
                                developing such measures;
                                  (II) eligible professional 
                                organizations and other 
                                relevant stakeholders may 
                                submit best practices and 
                                clinical practice guidelines 
                                for the development of quality 
                                measures that address quality 
                                domains (as defined under 
                                clause (ii)) for potential 
                                inclusion in such core measure 
                                sets;
                                  (III) there is encouraged to 
                                be developed, as appropriate, 
                                meaningful outcome measures (or 
                                quality of life measures in 
                                cases for which outcomes may 
                                not be a valid measurement), 
                                functional status measures, and 
                                patient experience measures; 
                                and
                                  (IV) measures developed under 
                                this clause shall be developed, 
                                to the extent possible, in 
                                accordance with best practices 
                                and clinical practice 
                                guidelines.
                          (ii) Quality domains.--For purposes 
                        of this paragraph, the term ``quality 
                        domains'' means at least the following 
                        domains:
                                  (I) Clinical care.
                                  (II) Safety.
                                  (III) Care coordination.
                                  (IV) Patient and caregiver 
                                experience.
                                  (V) Population health and 
                                prevention.
                  (D) Process for establishing core measure 
                sets.--
                          (i) In general.--Under the system 
                        under this subsection, for purposes of 
                        subparagraph (A), there shall be 
                        established a process to approve final 
                        core measure sets under this paragraph 
                        for peer cohorts. Each such final core 
                        measure set shall be composed of 
                        quality measures (and, as applicable, 
                        clinical practice improvement 
                        activities) with respect to which 
                        eligible professionals within such peer 
                        cohort shall report under this 
                        subsection and be assessed under 
                        subsection (q). Such process shall 
                        provide--
                                  (I) for the establishment of 
                                criteria, which shall be made 
                                publicly available before the 
                                request is made under clause 
                                (ii), for selecting such 
                                measures and activities for 
                                potential inclusion in such a 
                                final core measure set; and
                                  (II) that all peer cohorts, 
                                and to the extent practicable 
                                all quality domains, are 
                                addressed by measures and, as 
                                applicable, clinical practice 
                                improvement activities selected 
                                to be included in a core 
                                measure set under this 
                                paragraph, which may include 
                                through the use of such a 
                                measure or clinical practice 
                                improvement activity that 
                                addresses more than one such 
                                domain or cohort.
                          (ii) Solicitation of public input on 
                        quality measures and clinical practice 
                        improvement activities.--Under the 
                        process established under clause (i), 
                        relevant eligible professional 
                        organizations and other relevant 
                        stakeholders shall be requested to 
                        identify and submit quality measures 
                        and clinical practice improvement 
                        activities (as defined in paragraph 
                        (3)(C)) for selection under this 
                        paragraph. For purposes of the previous 
                        sentence, measures and activities may 
                        be submitted regardless of whether such 
                        measures were previously published in a 
                        proposed rule or endorsed by an entity 
                        with a contract under section 1890(a).
                  (E) Core measure sets.--
                          (i) In general.--Under the process 
                        established under subparagraph (D)(i), 
                        the Secretary--
                                  (I) shall select, from 
                                quality measures described in 
                                clause (ii) applicable to a 
                                peer cohort, quality measures 
                                to be included in a core 
                                measure set for such cohort;
                                  (II) shall, to the extent 
                                there are insufficient quality 
                                measures applicable to a peer 
                                cohort to address one or more 
                                applicable quality domains, 
                                select to be included in a core 
                                measure set for such cohort 
                                such clinical practice 
                                improvement activities 
                                described in clause (ii)(IV) as 
                                are needed and available to 
                                sufficiently address such an 
                                applicable domain with respect 
                                to such peer cohort; and
                                  (III) may select, to the 
                                extent determined appropriate, 
                                any additional clinical 
                                practice improvement activities 
                                described in clause (ii)(IV) 
                                applicable to a peer cohort to 
                                be included in a core measure 
                                set for such cohort.
                        Activities selected under this 
                        paragraph shall be selected with 
                        consideration of best practices and 
                        clinical practice guidelines identified 
                        under subparagraph (C)(i)(II).
                          (ii) Sources of quality measures and 
                        clinical practice improvement 
                        activities.--A quality measure or 
                        clinical practice improvement activity 
                        selected for inclusion in a core 
                        measure set under the process under 
                        subparagraph (D)(i) shall be--
                                  (I) a measure endorsed by a 
                                consensus-based entity;
                                  (II) a measure developed 
                                under paragraph (2)(C) or a 
                                measure otherwise applied or 
                                developed for a similar purpose 
                                under this section;
                                  (III) a measure developed 
                                under subparagraph (C); or
                                  (IV) a measure or activity 
                                submitted under subparagraph 
                                (D)(ii).
                        A measure or activity may be selected 
                        under this subparagraph, regardless of 
                        whether such measure or activity was 
                        previously published in a proposed 
                        rule. A measure so selected shall be 
                        evidence-based but (other than a 
                        measure described in subclause (I)) 
                        shall not be required to be consensus-
                        based.
                          (iii) Transparency.--Before 
                        publishing in a final regulation a core 
                        measure set under clause (i) as a final 
                        core measure set under subparagraph 
                        (F), the Secretary shall--
                                  (I) submit for publication in 
                                applicable specialty-
                                appropriate peer-reviewed 
                                journals such core measure set 
                                under clause (i) and the method 
                                for developing and selecting 
                                measures within such set, 
                                including clinical and other 
                                data supporting such measures, 
                                and, as applicable, the method 
                                for selecting clinical practice 
                                improvement activities included 
                                within such set; and
                                  (II) regardless of whether or 
                                not the core measure set or 
                                method is published in such a 
                                journal under subclause (I), 
                                provide for notice of the 
                                proposed regulation in the 
                                Federal Register, including 
                                with respect to the applicable 
                                methods and data described in 
                                subclause (I), and a period for 
                                public comment thereon.
                  (F) Final core measure sets.--Not later than 
                November 15 of the year prior to the first day 
                of a performance period, the Secretary shall 
                publish a final regulation in the Federal 
                Register that includes a final core measure set 
                (and the applicable methods and data described 
                in subparagraph (E)(iii)(I)) for each peer 
                cohort to be applied for such performance 
                period.
                  (G) Periodic review and updates.--
                          (i) In general.--In carrying out this 
                        paragraph, under the system under this 
                        subsection, there shall periodically be 
                        reviewed--
                                  (I) the quality measures and 
                                clinical practice improvement 
                                activities selected for 
                                inclusion in final core measure 
                                sets under this paragraph for 
                                each year such measures and 
                                activities are to be applied 
                                under this subsection or 
                                subsection (q) to ensure that 
                                such measures and activities 
                                continue to meet the conditions 
                                applicable to such measures and 
                                activities for such selection; 
                                and
                                  (II) the final core measure 
                                sets published under 
                                subparagraph (F) for each year 
                                such sets are to be applied to 
                                peer cohorts of eligible 
                                professionals to ensure that 
                                each applicable set continues 
                                to meet the conditions 
                                applicable to such sets before 
                                being so published.
                          (ii) Collaboration with 
                        stakeholders.--In carrying out clause 
                        (i), relevant eligible professional 
                        organizations and other relevant 
                        stakeholders may identify and submit 
                        updates to quality measures and 
                        clinical practice improvement 
                        activities selected under this 
                        paragraph for inclusion in final core 
                        measure sets as well as any additional 
                        quality measures and clinical practice 
                        improvement activities. Not later than 
                        November 15 of the year prior to the 
                        first day of a performance period, 
                        submissions under this clause shall be 
                        reviewed.
                          (iii) Additional, and updates to, 
                        measures and activities.--Based on the 
                        review conducted under this 
                        subparagraph for a period, as needed, 
                        there shall be--
                                  (I) selected additional, and 
                                updates to, quality measures 
                                and clinical practice 
                                improvement activities selected 
                                under this paragraph for 
                                potential inclusion in final 
                                core measure sets in the same 
                                manner such quality measures 
                                and clinical practice 
                                improvement activities are 
                                selected under this paragraph 
                                for such potential inclusion;
                                  (II) removed, from final core 
                                measure sets, quality measures 
                                and clinical practice 
                                improvement activities that are 
                                no longer meaningful; and
                                  (III) updated final core 
                                measure sets published under 
                                subparagraph (F) in the same 
                                manner as such sets are 
                                approved under such 
                                subparagraph.
                         For purposes of this subsection and 
                        subsection (q), a final core measure 
                        set, as updated under this 
                        subparagraph, shall be treated in the 
                        same manner as a final core measure set 
                        published under subparagraph (F).
                          (iv) Transparency.--
                                  (I) Notification required for 
                                certain updates.--In the case 
                                of an update under subclause 
                                (II) or (III) of clause (iii) 
                                that adds, materially changes, 
                                or removes a measure or 
                                activity from a measure set, 
                                such update shall not apply 
                                under this subsection or 
                                subsection (q) unless 
                                notification of such update is 
                                made available to applicable 
                                eligible professionals.
                                  (II) Public availability of 
                                updated final core measure 
                                sets.--Subparagraph (E)(iii) 
                                shall apply with respect to 
                                measure sets updated under 
                                subclause (II) or (III) of 
                                clause (iii) in the same manner 
                                as such subparagraph applies to 
                                applicable core measure sets 
                                under subparagraph (E).
                  (H) Coordination with existing programs.--The 
                development and selection of quality measures 
                and clinical practice improvement activities 
                under this paragraph shall, as appropriate, be 
                coordinated with the development and selection 
                of existing measures and requirements, such as 
                the development of the Physician Compare 
                Website under subsection (m)(5)(G) and the 
                application of resource use management under 
                subsection (n). To the extent feasible, such 
                measures and activities shall align with 
                measures used by other payers and with measures 
                and activities in use under other programs in 
                order to streamline the process of such 
                development and selection under this paragraph. 
                The Secretary shall develop a plan to integrate 
                reporting on quality measures under this 
                subsection with reporting requirements under 
                subsection (o) relating to the meaningful use 
                of certified EHR technology.
                  (I) Consultation with relevant eligible 
                professional organizations and other relevant 
                stakeholders.--Relevant eligible professional 
                organizations (as defined in paragraph (3)(D)) 
                and other relevant stakeholders, including 
                State and national medical societies, shall be 
                consulted in carrying out this paragraph.
                  (J) Optional application.--The process under 
                section 1890A is not required to apply to the 
                development or selection of measures under this 
                paragraph.

           *       *       *       *       *       *       *

  (m) Incentive Payments for Quality Reporting.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Satisfactory reporting and successful electronic 
        prescriber and described.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) Satisfactory reporting measures for group 
                practices.--
                          (i) In general.--By January 1, 2010, 
                        the Secretary shall establish and have 
                        in place a process under which eligible 
                        professionals in a group practice (as 
                        defined by the Secretary) shall be 
                        treated as satisfactorily submitting 
                        data on quality measures under 
                        subparagraph (A) and as meeting the 
                        requirement described in subparagraph 
                        (B)(ii) for covered professional 
                        services for a reporting period (or, 
                        for purposes of subsection (a)(5), for 
                        a reporting period for a year, or, for 
                        purposes of subsection (a)(8), for a 
                        quality reporting period for the year) 
                        if, in lieu of reporting measures under 
                        subsection (k)(2)(C), the group 
                        practice reports measures determined 
                        appropriate by the Secretary, such as 
                        measures that target high-cost chronic 
                        conditions and preventive care, in a 
                        form and manner, and at a time, 
                        specified by the Secretary. Such 
                        process shall, beginning for 2019, 
                        treat eligible professionals in such a 
                        group practice as reporting on measures 
                        for purposes of application of 
                        subsections (q) and (a)(8)(A)(iii) if, 
                        in lieu of reporting measures under 
                        subsection (k)(2)(D), the group 
                        practice reports measures determined 
                        appropriate by the Secretary.

           *       *       *       *       *       *       *

                  (D) Satisfactory reporting measures through 
                participation in a qualified clinical data 
                registry.--[For 2014 and subsequent years] For 
                each of 2014 through 2018, the Secretary shall 
                treat an eligible professional as 
                satisfactorily submitting data on quality 
                measures under subparagraph (A) if, in lieu of 
                reporting measures under subsection (k)(2)(C), 
                the eligible professional is satisfactorily 
                participating, as determined by the Secretary, 
                in a qualified clinical data registry (as 
                described in subparagraph (E)) for the year.

           *       *       *       *       *       *       *

          (6) Definitions.--For purposes of this subsection:
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) Reporting period.--
                          (i) In general.--Subject to clauses 
                        (ii) [and (iii)], (iii), and (iv), the 
                        term ``reporting period'' means--
                                  (I) * * *

           *       *       *       *       *       *       *

                          (iv) Coordination with quality update 
                        incentive program.--For 2019 and each 
                        subsequent year the reporting period 
                        shall be coordinated with the 
                        performance period under subsection 
                        (q)(2)(B).

           *       *       *       *       *       *       *

  (o) Incentives for Adoption and Meaningful Use of Certified 
EHR Technology.--
          (1) * * *
          (2) Meaningful ehr user.--
                  (A) * * *
                  (B) Reporting on measures.--
                          (i) * * *

           *       *       *       *       *       *       *

                          (iii) Coordination of reporting of 
                        information.--In selecting such 
                        measures, and in establishing the form 
                        and manner for reporting measures under 
                        subparagraph (A)(iii), the Secretary 
                        shall seek to avoid redundant or 
                        duplicative reporting otherwise 
                        required, including reporting under 
                        [subsection (k)(2)(C)] subparagraph (C) 
                        or (D) of subsection (k)(2).

           *       *       *       *       *       *       *

          (5) Definitions.--For purposes of this subsection:
                  (A) * * *
                  (B) EHR reporting period.--The term ``EHR 
                reporting period'' means, with respect to a 
                payment year, any period (or periods) as 
                specified by the Secretary. Beginning for 2019, 
                the EHR reporting period shall be coordinated 
                with the performance period under subsection 
                (q)(2)(B).

           *       *       *       *       *       *       *

  (q) Quality Update Incentive Program.--
          (1) Establishment.--
                  (A) In general.--The Secretary shall 
                establish an eligible professional quality 
                update incentive program (in this section 
                referred to as the ``quality update incentive 
                program'') under which--
                          (i) there is developed and applied, 
                        in accordance with paragraph (2), 
                        appropriate methodologies for assessing 
                        the performance of eligible 
                        professionals with respect to quality 
                        measures and clinical practice 
                        improvement activities included within 
                        the final core measure sets published 
                        under subsection (k)(9)(F) applicable 
                        to the peer cohorts of such providers;
                          (ii) there is applied, consistent 
                        with the system under subsection (k), 
                        methods for collecting information 
                        needed for such assessments (which 
                        shall involve the minimum amount of 
                        administrative burden required to 
                        ensure reliable results); and
                          (iii) the applicable update 
                        adjustments under paragraph (3) are 
                        determined by such assessments.
                  (B) Definitions.--
                          (i) Eligible professional.--In this 
                        subsection, the term ``eligible 
                        professional'' has the meaning given 
                        such term in subsection (k)(3), except 
                        that such term shall not include a 
                        professional who has a payment 
                        arrangement described in section 
                        1848A(a)(1) in effect.
                          (ii)  Peer cohorts; clinical practice 
                        improvement activities; eligible 
                        professional organizations.--In this 
                        subsection, the terms ``peer cohort'', 
                        ``clinical practice improvement 
                        activity'', and ``eligible professional 
                        organization'' have the meanings given 
                        such terms in subsection (k)(3).
                  (C) Consultation with eligible professional 
                organizations and other relevant 
                stakeholders.--Eligible professional 
                organizations and other relevant stakeholders, 
                including State and national medical societies, 
                shall be consulted in carrying out this 
                subsection.
                  (D) Application at group practice level.--The 
                Secretary shall establish a process, consistent 
                with subsection (m)(3)(C), under which the 
                provisions of this subsection are applied to 
                eligible professionals in a group practice if 
                the group practice reports measures determined 
                appropriate by the Secretary under such 
                subsection.
                  (E) Coordination with existing programs.--The 
                application of measures and clinical practice 
                improvement activities and assessment of 
                performance under this subsection shall, as 
                appropriate, be coordinated with the 
                application of measures and assessment of 
                performance under other provisions of this 
                section.
          (2) Assessing performance with respect to final core 
        measure sets for applicable peer cohorts.--
                  (A) Establishment of methods for 
                assessment.--
                          (i) In general.--Under the quality 
                        update incentive program, the Secretary 
                        shall--
                                  (I) establish one or more 
                                methods, applicable with 
                                respect to a performance 
                                period, to assess (using a 
                                scoring scale of 0 to 100) the 
                                performance of an eligible 
                                professional with respect to, 
                                subject to paragraph (1)(D), 
                                quality measures and clinical 
                                practice improvement activities 
                                included within the final core 
                                measure set published under 
                                subsection (k)(9)(F) applicable 
                                for the period to the peer 
                                cohort in which the provider 
                                self-identified under 
                                subsection (k)(9)(B) for such 
                                period; and
                                  (II) subject to paragraph 
                                (1)(D), compute a composite 
                                score for such provider for 
                                such performance period with 
                                respect to the measures and 
                                activities included within such 
                                final core measure set.
                          (ii) Methods.--Such methods shall, 
                        with respect to an eligible 
                        professional, provide that the 
                        performance of such professional shall, 
                        subject to paragraph (1)(D), be 
                        assessed for a performance period with 
                        respect to the quality measures and 
                        clinical practice improvement 
                        activities within the final core 
                        measure set for such period for the 
                        peer cohort of such professional and on 
                        which information is collected from 
                        such professional.
                          (iii) Weighting of measures.--Such a 
                        method may provide for the assignment 
                        of different scoring weights or, as 
                        appropriate, other factors--
                                  (I) for quality measures and 
                                clinical practice improvement 
                                activities;
                                  (II) based on the type or 
                                category of measure or 
                                activity; and
                                  (III) based on the extent to 
                                which a quality measure or 
                                clinical practice improvement 
                                activity meaningfully assesses 
                                quality.
                          (iv) Risk adjustment.--Such a method 
                        shall provide for appropriate risk 
                        adjustments.
                          (v) Incorporation of other methods of 
                        measuring physician quality.--In 
                        establishing such methods, there shall 
                        be, as appropriate, incorporated 
                        comparable methods of measurement from 
                        physician quality incentive programs 
                        under this subsection.
                  (B) Performance period.--There shall be 
                established a period (in this subsection 
                referred to as a ``performance period''), with 
                respect to a year (beginning with 2019) for 
                which the quality adjustment is applied under 
                paragraph (3), to assess performance on quality 
                measures and clinical practice improvement 
                activities. Each such performance period shall 
                be a period of 12 consecutive months and shall 
                end as close as possible to the beginning of 
                the year for which such adjustment is applied.
          (3) Quality adjustment taking into account quality 
        assessments.--
                  (A) Quality adjustment.--For purposes of 
                subsection (d)(16), if the composite score 
                computed under paragraph (2)(A) for an eligible 
                professional for a year (beginning with 2019) 
                is--
                          (i) a score of 67 or higher, the 
                        quality adjustment under this paragraph 
                        for the eligible professional and year 
                        is 1 percentage point;
                          (ii) a score of at least 34, but 
                        below 67, the quality adjustment under 
                        this paragraph for the eligible 
                        professional and year is zero; or
                          (iii) a score below 34, the quality 
                        adjustment under this paragraph for the 
                        eligible professional and year is -1 
                        percentage point.
                  (B) No effect on subsequent years' quality 
                adjustments.--Each such quality adjustment 
                shall be made each year without regard to the 
                quality adjustment for a previous year under 
                this paragraph.
          (4) Transition for new eligible professionals.--In 
        the case of a physician, practitioner, or other 
        supplier that during a performance period, with respect 
        to a year for which a quality adjustment is applied 
        under paragraph (3), first becomes an eligible 
        professional (and had not previously submitted claims 
        under this title as a person, as an entity, or as part 
        of a physician group or under a different billing 
        number or tax identifier), the quality adjustment under 
        this subsection applicable to such physician, 
        practitioner, or supplier--
                  (A) for such year, with respect to such first 
                performance period, shall be zero; and
                  (B) for a year, with respect to a subsequent 
                performance period, shall be the quality 
                adjustment that would otherwise be applied 
                under this subsection.
          (5) Feedback.--
                  (A) Feedback.--
                          (i) Ongoing feedback.--Under the 
                        process under subsection (m)(5)(H), 
                        there shall be provided, as real time 
                        as possible, but at least quarterly, 
                        beginning not later than 6 months after 
                        the first day of the first performance 
                        period, to each eligible professional 
                        feedback--
                                  (I) on the performance of 
                                such provider with respect to 
                                quality measures and clinical 
                                practice improvement activities 
                                within the final core measure 
                                set published under subsection 
                                (k)(9)(F) for the applicable 
                                performance period and the peer 
                                cohort of such professional; 
                                and
                                  (II) to assess the progress 
                                of such professional under the 
                                quality update incentive 
                                program with respect to a 
                                performance period for a year.
                          (ii) Use of registries and other 
                        mechanisms.--Feedback under this 
                        subparagraph shall, to the extent an 
                        eligible professional chooses to 
                        participate in a data registry for 
                        purposes of this subsection (including 
                        registries under subsections (k) and 
                        (m)), be provided and based on 
                        performance received through the use of 
                        such registry, and to the extent that 
                        an eligible professional chooses not to 
                        participate in such a registry for such 
                        purposes, be provided through other 
                        similar mechanisms that allow for the 
                        provision of such feedback and receipt 
                        of such performance information.
                  (B) Data mechanism.--Under the quality update 
                incentive program, there shall be developed an 
                electronic interactive eligible professional 
                mechanism through which such a professional may 
                receive performance data, including data with 
                respect to performance on the measures and 
                activities developed and selected under this 
                section. Such mechanism shall be developed in 
                consultation with private payers and health 
                insurance issuers (as defined in section 
                2791(b)(2) of the Public Health Service Act) as 
                appropriate.
                  (C) Transfer of funds.--The Secretary shall 
                provide for the transfer of $100,000,000 from 
                the Federal Supplementary Medical Insurance 
                Trust Fund established in section 1841 to the 
                Center for Medicare & Medicaid Services Program 
                Management Account to support such efforts to 
                develop the infrastructure as necessary to 
                carry out subsection (k)(9) and this subsection 
                and for purposes of section 1889(h). Such funds 
                shall be so transferred on the date of the 
                enactment of this subsection and shall remain 
                available until expended.

SEC. 1848A. ADVANCING ALTERNATIVE PAYMENT MODELS.

  (a) Payment Model Choice Program.--Payment for covered 
professional services (as defined in section 1848(k)) that are 
furnished by an eligible professional (as defined in such 
section) under an Alternative Payment Model specified on the 
list under subsection (h) (in this section referred to as an 
``eligible APM'') shall be made under this title in accordance 
with the payment arrangement under such model. In applying the 
previous sentence, such a professional with such a payment 
arrangement in effect, shall be deemed for purposes of section 
1848(a)(8) to be satisfactorily submitting data on quality 
measures for such covered professional services.
  (b) Process for Implementing Eligible APMs.--
          (1) In general.--For purposes of subsection (a) and 
        in accordance with this section, the Secretary shall 
        establish a process under which--
                  (A) a contract is entered into, in accordance 
                with paragraph (2);
                  (B) proposals for potential Alternative 
                Payment Models are submitted in accordance with 
                subsection (c);
                  (C) Alternative Payment Models so proposed 
                are recommended, in accordance with subsection 
                (d), for testing and evaluation, including 
                through the demonstration program under 
                subsection (e), and approval under subsection 
                (f);
                  (D) applicable Alternative Payment Models are 
                tested and evaluated under such demonstration 
                program;
                  (E) models are implemented as eligible APMs 
                in accordance with subsection (f); and
                  (F) a comprehensive list of all eligible APMs 
                is made publicly available, in accordance with 
                subsection (h), for application under 
                subsection (a).
          (2) Contract with apm contracting entity.--
                  (A) In general.--For purposes of paragraph 
                (1)(A), the Secretary shall identify and have 
                in effect a contract with an independent entity 
                that has appropriate expertise to carry out the 
                functions applicable to such entity under this 
                section. Such entity shall be referred to in 
                this section as the ``APM contracting entity''.
                  (B) Timing for first contract.--The Secretary 
                shall enter into the first contract under 
                subparagraph (A) to be in effect January 1, 
                2019.
                  (C) Competitive procedures.--Competitive 
                procedures (as defined in section 4(5) of the 
                Office of Federal Procurement Policy Act (41 
                U.S.C. 403(5)) shall be used to enter into a 
                contract under subparagraph (A).
  (c) Submission of Proposed Alternative Payment Models.--
Beginning not later than 90 days after the date the Secretary 
enters into a contract under subsection (b)(2) with the APM 
contracting entity, physicians, eligible professional 
organizations, health care provider organizations, and other 
entities may submit to the APM contracting entity proposals for 
Alternative Payment Models for application under this section. 
Such a proposal of a model shall include suggestions for 
measures to be used under subsection (e)(1)(B) for purposes of 
evaluating such model. In reviewing submissions under this 
subsection for purposes of making recommendations under 
subsection (d)(1), the contracting entity shall focus on 
submissions for such models that are intended to improve care 
coordination and quality for patients through modifying the 
manner in which physicians and other providers are paid under 
this title.
  (d) Recommendation by APM Contracting Entity of Proposed 
Models.--
          (1) Recommendation.--
                  (A) Recommendations to secretary.--
                          (i) In general.--Under the process 
                        under subsection (b), the APM 
                        contracting entity shall at least 
                        quarterly recommend, in accordance with 
                        clause (ii), to the Secretary--
                                  (I) Alternative Payment 
                                Models submitted under 
                                subsection (c) to be tested and 
                                evaluated through a 
                                demonstration program under 
                                subsection (e); and
                                  (II) Alternative Payment 
                                Models submitted under 
                                subsection (c) to be 
                                implemented under subsection 
                                (f) without testing and 
                                evaluation through such a 
                                demonstration program.
                        Such a recommendation under subclause 
                        (I) may be made with respect to a model 
                        for which a waiver would be required 
                        under paragraph (2). Any reference in 
                        this subsection to an Alternative 
                        Payment Model under this clause is a 
                        reference to such model as may be 
                        modified under clause (iii).
                          (ii) Requirements.--In recommending 
                        an Alternative Payment Model under 
                        clause (i), each of the following shall 
                        apply:
                                  (I) The APM contracting 
                                entity may recommend an 
                                Alternative Payment Model under 
                                clause (i)(I) only if the 
                                entity determines that the 
                                model satisfies the criteria 
                                described in subparagraph (B), 
                                including the criteria 
                                described in subparagraph 
                                (B)(iv).
                                  (II) The APM contracting 
                                entity may recommend an 
                                Alternative Payment Model under 
                                clause (i)(II) only if the 
                                entity determines that the 
                                model satisfies the criteria 
                                described in subparagraph (C), 
                                including the criteria 
                                described in subparagraph 
                                (C)(iii).
                                  (III) The APM contracting 
                                entity shall include with the 
                                recommended Alternative Payment 
                                Model recommendations for rules 
                                of coordination described in 
                                clause (v).
                          (iii) Modifications by apm 
                        contracting entity.--For purposes of 
                        this subparagraph, to the extent 
                        necessary to meet the applicable 
                        requirements of clause (ii), the APM 
                        contracting entity may modify an 
                        Alternative Payment Model submitted 
                        under subsection (c) to ensure that the 
                        model would--
                                  (I) reduce spending under 
                                this title without reducing the 
                                quality of care; or
                                  (II) improve the quality of 
                                care without increasing 
                                spending under this title.
                          (iv) Forms of modifications.--Such a 
                        modification under clause (iii) may 
                        include one or more of the following:
                                  (I) A change to the payment 
                                arrangement under which 
                                eligible professionals 
                                participating in such model 
                                would be paid for covered 
                                professional services furnished 
                                under such model.
                                  (II) A change to the criteria 
                                for eligible professionals to 
                                be eligible to participate 
                                under such model in order to 
                                ensure that the requirement 
                                described in subclause (I) or 
                                (II) is satisfied.
                                  (III) A change to the rules 
                                of coordination described in 
                                clause (v).
                                  (IV) The application of a 
                                withhold mechanism under the 
                                payment arrangement under which 
                                the distribution of withheld 
                                amounts is based on the success 
                                of the model in meeting 
                                spending reduction 
                                requirements.
                                  (V) Such other change as the 
                                contracting entity may specify.
                          (v) Rules of coordination for 
                        application of payment arrangements 
                        under models.--
                                  (I) In general.--Rules of 
                                coordination described in this 
                                clause for an Alternative 
                                Payment Model shall be designed 
                                to determine, for purposes of 
                                applying subsection (a) and 
                                section 1848(d)(16), under what 
                                circumstances an eligible 
                                professional is treated as 
                                having a payment arrangement 
                                under a particular model.
                                  (II) Nonduplication of 
                                payment.--Such rules of 
                                coordination shall ensure 
                                coordination and nonduplication 
                                of payment of services that 
                                might be covered under more 
                                than one payment arrangement or 
                                under section 1848(d)(16).
                                  (III) Application to non-apm 
                                payment.--In applying such 
                                rules of coordination for 
                                purposes of section 
                                1848(d)(16), an eligible 
                                professional shall not be 
                                treated as having a payment 
                                arrangement in effect under 
                                such a model for any covered 
                                professional services not 
                                treated as furnished under the 
                                model.
                  (B) Criteria for recommending models for 
                demonstration.--For purposes of subparagraph 
                (A)(ii)(I), the criteria described in this 
                subparagraph, with respect to an Alternative 
                Payment Model, are each of the following:
                          (i) The model has been supported by 
                        meaningful clinical and non-clinical 
                        data, with respect to a sufficient 
                        population sample, that indicates the 
                        model would be successful at addressing 
                        each of the abilities described in 
                        clause (iv).
                          (ii)(I) In the case of a model that 
                        has already been evaluated and 
                        supported by data with respect to a 
                        population of individuals enrolled 
                        under this part, if the model were 
                        evaluated under the demonstration under 
                        subsection (e) such a population would 
                        represent a sufficient number of 
                        individuals enrolled under this part to 
                        ensure a meaningful evaluation of the 
                        likely effect of expanding the 
                        demonstration.
                          (II) In the case of a model that has 
                        not been so evaluated and supported by 
                        data with respect to such a population, 
                        the population that would be furnished 
                        services under such model if the model 
                        were evaluated under the demonstration 
                        under subsection (e) would represent a 
                        sufficient number of individuals 
                        enrolled under this part to ensure a 
                        meaningful evaluation of the likely 
                        effect of expanding the demonstration.
                          (iii) Such model, including if tested 
                        and evaluated under the demonstration 
                        under subsection (e), would not deny or 
                        limit the coverage or provision of 
                        benefits under this title for 
                        applicable individuals.
                          (iv) The proposal for such model 
                        demonstrates--
                                  (I) the significant 
                                likelihood to successfully 
                                manage the cost of furnishing 
                                items and services under this 
                                title so as to not result in 
                                expenditures under this title 
                                being greater than expenditures 
                                under this title if the APM 
                                were not implemented; and
                                  (II) the ability to maintain 
                                or improve the overall quality 
                                of patient care provided to 
                                individuals enrolled under this 
                                part.
                          (v) The model provides for a payment 
                        arrangement--
                                  (I) that specifies the items 
                                and services covered under the 
                                arrangement and specifies rules 
                                of coordination described in 
                                subparagraph (A)(v) between the 
                                items and services covered 
                                under the arrangement and other 
                                items and services not covered 
                                under the arrangement;
                                  (II) in the case such payment 
                                arrangement does not provide 
                                for payment under the fee 
                                schedule under section 1848 for 
                                such items and services 
                                furnished by such eligible 
                                professionals, that provides 
                                for a payment adjustment based 
                                on meaningful EHR use 
                                comparable to such adjustment 
                                that would otherwise apply 
                                under section 1848; and
                                  (III) that provides for a 
                                payment adjustment based on 
                                quality measures comparable to 
                                such adjustment that would 
                                otherwise apply under section 
                                1848.
                  (C) Criteria for recommending models for 
                approval without evaluation under 
                demonstration.--For purposes of subparagraph 
                (A)(ii)(II), the criteria described in this 
                subparagraph, with respect to an Alternative 
                Payment Model, is that the model has already 
                been tested and evaluated for a sufficient 
                enough period and through such testing and 
                evaluation the model was shown--
                          (i) to have satisfied the criteria 
                        described in each of clauses (i), (ii), 
                        (iii), and (v) of subparagraph (B); and
                          (ii)(I) to have reduced spending 
                        under this title without reducing the 
                        quality of care; or
                          (II) to have improved the quality of 
                        patient care without increasing such 
                        spending.
                  (D) Transparency and disclosures.--
                          (i) Disclosures.--Not later than 90 
                        days after receipt of a submission of a 
                        model under subsection (c) by the APM 
                        contracting entity, the APM contracting 
                        entity shall submit to the Secretary 
                        and the model submitter and make 
                        publicly available a notification on 
                        whether or not, and if so how, the 
                        model meets criteria for recommending 
                        such model under subparagraph (A), 
                        including whether or not such model 
                        requires a waiver under paragraph (2). 
                        In the case that the APM contracting 
                        entity determines not to recommend such 
                        model under this paragraph, such 
                        notification shall include an 
                        explanation of the reasons for not 
                        making such a recommendation. Any 
                        information made publicly available 
                        pursuant to the previous sentence shall 
                        not include proprietary data.
                          (ii) Submission of recommended 
                        models.--The APM contracting entity 
                        shall at least quarterly submit to the 
                        Secretary, the Medicare Payment 
                        Advisory Commission, and the Chief 
                        Actuary of the Centers for Medicare & 
                        Medicaid Services the following:
                                  (I) The models recommended 
                                under subparagraph (A)(i)(I), 
                                including any such models that 
                                require a waiver under 
                                paragraph (2), and the data and 
                                analyses on such recommended 
                                models that support the 
                                criteria described in 
                                subparagraph (B).
                                  (II) The models recommended 
                                under subparagraph (A)(i)(II) 
                                and the data and analyses on 
                                such recommended models that 
                                support the criteria described 
                                in subparagraph (C).
                          (iii) Explanation for no 
                        recommendations.--For any year 
                        beginning with 2015 that the APM 
                        contracting entity does not recommend 
                        any models under subparagraph (A)(i), 
                        the entity shall instead satisfy this 
                        clause by submitting to the Secretary 
                        and making publicly available an 
                        explanation for not having any such 
                        recommendations.
                          (iv) Justifications for 
                        recommendations.--In submitting data 
                        and analyses under subclause (I) or 
                        (II) of clause (ii) with respect to a 
                        model, the APM contracting entity shall 
                        include a specific explanation of how 
                        the model would (and recommendations 
                        for ensuring that the model will) meet 
                        the criteria described in subparagraph 
                        (B) or (C), respectively.
                          (v) Confirmation of spending 
                        estimates by cms chief actuary.--For 
                        each Alternative Payment Model 
                        described in subclause (I) or (II) of 
                        clause (ii), the Chief Actuary of the 
                        Centers for Medicare & Medicaid 
                        Services shall submit to the Secretary 
                        a determination of whether or not the 
                        Chief Actuary confirms that the model 
                        satisfies the criterion described in 
                        subparagraph (B)(iv)(I) or (C)(ii), 
                        respectively.
          (2) Models requiring waiver approval.--
                  (A) In general.--In the case that an 
                Alternative Payment Model recommended under 
                paragraph (1)(A)(i) would require a waiver from 
                any requirement under this title, in 
                determining approval of such model, the 
                Secretary may make such a waiver solely in 
                order for such model to be tested and evaluated 
                under the demonstration program.
                  (B) Approval.--Not later than 180 days after 
                the date of the receipt of such submission for 
                a model, the Secretary shall notify the APM 
                contracting entity and the entity submitting 
                such model under subsection (c) whether or not 
                such a waiver for such model is approved and 
                the reason for any denial of such a waiver.
  (e) Demonstration.--
          (1) In general.--Subject to paragraphs (5), (6), and 
        (7), the Secretary may conduct a demonstration program, 
        with respect to an Alternative Payment Model approved 
        under paragraph (2), under which participating APM 
        providers shall be paid under this title in accordance 
        with the payment arrangement under such model and such 
        model shall be evaluated by the independent evaluation 
        entity under paragraph (4). The duration of a 
        demonstration program under this subsection, with 
        respect to such a model, shall be 3 years.
          (2) Approval by secretary of models for 
        demonstration.--
                  (A) In general.--Not later than 180 days 
                after the date of receipt of a submission under 
                subsection (d)(1)(D)(ii), with respect to an 
                Alternative Payment Model recommended under 
                subsection (d)(1)(A)(i)(I), the Secretary 
                shall--
                          (i) review the basis for such 
                        recommendation in order to assess, 
                        taking into account the determination 
                        of the Chief Actuary under subsection 
                        (d)(1)(D)(v) with respect to such 
                        model, if the model is significantly 
                        likely to--
                                  (I) reduce spending under 
                                this title without reducing the 
                                quality of care; or
                                  (II) improve the quality of 
                                care without increasing 
                                spending under this title;
                          (ii) assess whether the model is 
                        significantly likely to result in 
                        participation under such model of a 
                        sufficient number of those eligible 
                        professionals for whom the model was 
                        designed consistent with clause (i) to 
                        be able to evaluate the likely effect 
                        of expanding the demonstration; and
                          (iii) approve such model for a 
                        demonstration program under this 
                        subsection, including as modified under 
                        subparagraph (B), only if the Secretary 
                        determines--
                                  (I) the model is 
                                significantly likely to satisfy 
                                the criterion described in 
                                subclause (I) or (II) of clause 
                                (i);
                                  (II) the model is 
                                significantly likely to result 
                                in the participation of a 
                                sufficient number of eligible 
                                professionals described in 
                                clause (ii);
                                  (III) the model applies rules 
                                of coordination described in 
                                subparagraph (C) applicable to 
                                such model; and
                                  (IV) the model satisfies the 
                                criteria described in 
                                subsection (d)(1)(B).
                The Secretary shall periodically make available 
                a list of such models approved under clause 
                (iii).
                  (B) Modifications by secretary.--
                          (i) Before approval.--For purposes of 
                        subparagraph (A), the Secretary may 
                        modify an Alternative Payment Model 
                        recommended under subsection 
                        (d)(1)(A)(i)(I) to ensure that the 
                        model meets the requirements described 
                        in subparagraph (A)(iii). Such a 
                        modification may include one or more of 
                        the following:
                                  (I) A change to the payment 
                                arrangement under which 
                                eligible professionals 
                                participating in such model 
                                would be paid for covered 
                                professional services furnished 
                                under such model.
                                  (II) A change to the criteria 
                                for eligible professionals to 
                                be eligible to participate 
                                under such model in order to 
                                ensure that such requirements 
                                are satisfied.
                                  (III) A change to the rules 
                                of coordination described in 
                                subparagraph (C).
                                  (IV) The application of a 
                                withhold mechanism under the 
                                payment arrangement under which 
                                the distribution of withheld 
                                amounts is based on the success 
                                of the model in meeting 
                                spending reduction 
                                requirements.
                                  (V) Such other change as the 
                                Secretary may specify.
                          (ii) Termination or modification 
                        during demonstration.--The Secretary 
                        shall terminate or modify the design 
                        and implementation of an Alternative 
                        Payment Model approved under 
                        subparagraph (A)(iii) for a 
                        demonstration program, after testing 
                        has begun, unless the Secretary 
                        determines (and the Chief Actuary of 
                        the Centers for Medicare & Medicaid 
                        Services, with respect to program 
                        spending under this title, certifies) 
                        that the model is expected to continue 
                        to satisfy the requirements described 
                        in such paragraph relating to quality 
                        of care and reduced spending. Such 
                        termination may occur at any time after 
                        such testing has begun and before 
                        completion of the testing.
                  (C) Rules of coordination for application of 
                payment arrangements under models.--
                          (i) In general.--Rules of 
                        coordination described in this 
                        subparagraph for an Alternative Payment 
                        Model shall be designed to determine, 
                        for purposes of applying subsection (a) 
                        and section 1848(d)(16), under what 
                        circumstances an eligible professional 
                        is treated as having a payment 
                        arrangement under a particular model.
                          (ii) Nonduplication of payment.--Such 
                        rules of coordination shall ensure 
                        coordination and nonduplication of 
                        payment of services that might be 
                        covered under more than one payment 
                        arrangement or under section 
                        1848(d)(16).
                          (iii) Application to non-apm 
                        payment.--In applying such rules for 
                        purposes of section 1848(d)(16), an 
                        eligible professional shall not be 
                        treated as having a payment arrangement 
                        in effect under such a model for any 
                        covered professional services not 
                        treated as furnished under the model.
          (3) Participating apm providers.--
                  (A) In general.--To participate under a 
                demonstration program under this subsection, 
                with respect to an Alternative Payment Model, 
                an eligible professional shall enter into a 
                contract with the Administrator of the Centers 
                for Medicare & Medicaid Services under this 
                subsection. For purposes of this section, such 
                an eligible professional who so participates 
                under such an Alternative Payment Model in this 
                section is referred to as a ``participating APM 
                provider''.
                  (B) Requirements.--The Secretary shall 
                establish criteria for eligible professionals 
                to enter into contracts under this paragraph 
                for purposes of participation under a 
                demonstration program with respect to an 
                Alternative Payment Model. Such criteria shall 
                ensure participation under such model of a 
                sufficient number of eligible professionals for 
                whom the model was designed in order to satisfy 
                the criterion described in paragraph 
                (2)(A)(iii)(II).
          (4) Reporting and evaluation.--
                  (A) Independent evaluation entity.--Under 
                this subsection, the Secretary shall enter into 
                a contract with an independent entity to 
                evaluate Alternative Payment Models under 
                demonstration programs under this subsection 
                based on appropriate measures specified under 
                subparagraph (B). In this section, such entity 
                shall be referred to as the ``independent 
                evaluation entity''. Such contract shall be 
                entered into in a timely manner so as to ensure 
                evaluation of an Alternative Payment Model 
                under a demonstration program under this 
                subsection may begin as soon as possible after 
                the model is approved under paragraph (2).
                  (B) Performance measures.--For purposes of 
                this subsection, the Secretary shall specify--
                          (i) measures to evaluate Alternative 
                        Payment Models under demonstration 
                        programs under this subsection, which 
                        may include measures suggested under 
                        subsection (c) and shall be sufficient 
                        to allow for a comprehensive assessment 
                        of such a model; and
                          (ii) quality measures on which 
                        participating APM providers shall 
                        report, which shall be similar to 
                        measures applicable under section 
                        1848(k).
                  (C) Reporting requirements.--A contract 
                entered into with a participating APM provider 
                under paragraph (3) shall require such provider 
                to report on appropriate measures specified 
                under subparagraph (B).
                  (D) Periodic review.--The independent 
                evaluation entity shall periodically review and 
                analyze and submit such analysis to the 
                Secretary and the participating APM providers 
                involved data reported under subparagraph (C) 
                and such other data as deemed necessary to 
                evaluate the model.
                  (E) Final evaluation.--Not later than 6 
                months after the date of completion of a 
                demonstration program, the independent 
                evaluation entity shall submit to the 
                Secretary, the Medicare Payment Advisory 
                Commission, and the Chief Actuary of the 
                Centers for Medicare & Medicaid Services (and 
                make publicly available) a report on each model 
                evaluated under such program. Such report shall 
                include--
                          (i) outcomes on the clinical and 
                        claims data received through such 
                        program with respect to such model;
                          (ii) recommendations on--
                                  (I) whether or not such model 
                                should be implemented as an 
                                eligible APM under this 
                                section; or
                                  (II) whether or not the 
                                evaluation of such model under 
                                the demonstration program 
                                should be extended or expanded;
                          (iii) the justification for each such 
                        recommendation described in clause 
                        (ii); and
                          (iv) in the case of a recommendation 
                        to implement such model as an eligible 
                        APM, recommendations on standardized 
                        rules for purposes of such 
                        implementation.
          (5) Approval of extending evaluation under 
        demonstration.--Not later than 90 days after the date 
        of receipt of a submission under paragraph (4)(E), the 
        Secretary shall, including based on a recommendation 
        submitted under such paragraph, determine whether an 
        Alternative Payment Model may be extended or expanded 
        under the demonstration program.
          (6) Termination.--The Secretary shall terminate a 
        demonstration program for a model under this subsection 
        unless the Secretary determines (and the Chief Actuary 
        of the Centers for Medicare & Medicaid Services, with 
        respect to spending under this title, certifies), after 
        testing has begun, that the model is expected to--
                  (A) improve the quality of care (as 
                determined by the Administrator of the Centers 
                for Medicare & Medicaid Services) without 
                increasing spending under this title;
                  (B) reduce spending under this title without 
                reducing the quality of care; or
                  (C) improve the quality of care and reduce 
                spending.
        Such termination may occur at any time after such 
        testing has begun and before completion of the testing.
          (7) Funding.--
                  (A) In general.--There are appropriated, from 
                amounts in the Federal Supplementary Medical 
                Insurance Trust Fund under section 1841 not 
                otherwise appropriated and as of the date of 
                the enactment of this section, $2,000,000,000 
                for the purposes described in subparagraph (B), 
                of which no more than 2.5 percent may be used 
                for the purpose described in clause (iii) of 
                such subparagraph. Amounts appropriated under 
                this subparagraph shall be available until 
                expended.
                  (B) Purposes.--Amounts appropriated under 
                subparagraph (A) shall be used for--
                          (i) payments for items and services 
                        furnished by participating APM 
                        providers under an Alternative Payment 
                        Model under a demonstration program 
                        under this subsection that--
                                  (I) would not otherwise be 
                                eligible for payment under this 
                                title; or
                                  (II) exceed the amount of 
                                payment that would otherwise be 
                                made for such items and 
                                services under this title if 
                                such items and services were 
                                not furnished under such 
                                demonstration program;
                          (ii) the evaluations provided for 
                        under this section of models under such 
                        a demonstration program;
                          (iii) payment to the APM contracting 
                        entity for carrying out its duties 
                        under this section; and
                          (iv) for otherwise carrying out this 
                        subsection.
                  (C) Limitation.--The amounts appropriated 
                under subparagraph (A) are the only amounts 
                authorized or appropriated to carry out the 
                purposes described in subparagraph (B).
  (f) Implementation of Recommended Models as Eligible APMs.--
          (1) Assessment.--With respect to each Alternative 
        Payment Model recommended under subsection 
        (d)(1)(A)(i)(II) or (e)(4)(E)(ii)(I), the Secretary 
        shall review the basis for such recommendation and 
        assess and determine, in consultation with the Chief 
        Actuary of the Centers for Medicare & Medicaid 
        Services, whether the model is significantly likely to 
        continue to result in meeting the criterion described 
        in subsection (e)(2)(A)(iii)(I), with or without a 
        modification described in paragraph (5).
          (2) Implementation through rulemaking.--
                  (A) Publication of nprm.--If the Secretary 
                determines that such a model is significantly 
                likely to meet such criterion, the Secretary 
                shall publish as part of the applicable 
                physician fee schedule rulemaking process 
                (specified in paragraph (3)) a notice of 
                proposed rulemaking to implement such model, 
                including as modified under paragraph (5).
                  (B) Comments by medpac.--Not later than 90 
                days after the date of issuance of such notice 
                with respect to a model, the Medicare Payment 
                Advisory Commission shall submit comments on 
                the proposed rule for such model to Congress 
                and to the Secretary. Such comments shall 
                include an evaluation of the reports from the 
                contracting entity and independent evaluation 
                entity on such model regarding the model's 
                impact on expenditures and quality of care 
                under this title.
                  (C) Final rule and conditions.--The Secretary 
                shall publish as part of the applicable 
                physician fee schedule rulemaking process 
                (specified in paragraph (3)) a final notice 
                implementing such proposed rule, including as 
                modified under paragraph (5), as an eligible 
                APM only if--
                          (i) the Secretary determines that 
                        such model is expected to--
                                  (I) reduce spending under 
                                this title without reducing the 
                                quality of care; or
                                  (II) improve the quality of 
                                patient care without increasing 
                                spending;
                          (ii) the Chief Actuary of the Centers 
                        for Medicare & Medicaid Services 
                        certifies that such model would reduce 
                        (or would not result in any increase 
                        in) spending under this title;
                          (iii) the Secretary determines that 
                        such model would not deny or limit the 
                        coverage or provision of benefits under 
                        this title for applicable individuals;
                          (iv) the Secretary determines that 
                        the model is significantly likely to 
                        result in the participation of a 
                        sufficient number of appropriate 
                        eligible professionals for whom the 
                        model was designed in order to satisfy 
                        the criterion described in subsection 
                        (d)(2)(A)(iii)(II);
                          (v) the Secretary determines that the 
                        model applies rules of coordination 
                        described in paragraph (6); and
                          (vi) the Secretary determines that 
                        model meets such other criteria as the 
                        Secretary may determine.
          (3) Applicable physician fee schedule rulemaking 
        process.--For purposes of paragraph (2), in the case of 
        an Alternative Payment Model recommended under 
        subsection (d)(1)(A)(ii) or (e)(4)(E)(ii)(I)--
                  (A) on or before April 1 of a year, the 
                applicable physician fee schedule rulemaking 
                process is the process for publication by 
                November 1 of that year of the fee schedule 
                amounts under this section for the succeeding 
                year; or
                  (B) after April 1 of a year, the applicable 
                physician fee schedule rulemaking process is 
                the process for publication by November 1 of 
                the following year of the fee schedule amounts 
                under this section for the second succeeding 
                year.
          (4) Justification for disapprovals.--In the case that 
        an Alternative Payment Model recommended under 
        subsection (d)(1)(A)(ii) or (e)(4)(E)(ii)(I) is not 
        implemented as an eligible APM under this subsection, 
        the Secretary shall make publicly available the 
        rational, in detail, for such decision.
          (5) Modifications by secretary.--For purposes of this 
        subsection, the Secretary may modify an Alternative 
        Payment Model recommended under subsection 
        (d)(1)(A)(i)(II) or (e)(4)(E)(ii)(I) to ensure that the 
        model meets the requirements under paragraph (1)(B). 
        Such a modification may include one or more of the 
        following:
                  (A) A change to the payment arrangement under 
                which eligible professionals participating in 
                such model would be paid for covered 
                professional services furnished under such 
                model.
                  (B) A change to the criteria for eligible 
                professionals to be eligible to participate 
                under such model in order to ensure that such 
                requirements are satisfied.
                  (C) A change to the rules of coordination 
                described in paragraph (6).
                  (D) The application of a withhold mechanism 
                under the payment arrangement under which the 
                distribution of withheld amounts is based on 
                the success of the model in meeting spending 
                reduction requirements.
                  (E) Such other change as the Secretary may 
                specify.
          (6) Rules of coordination for application of payment 
        arrangements under models.--
                  (A) In general.--Rules of coordination 
                described in this paragraph for an Alternative 
                Payment Model shall be designed to determine, 
                for purposes of applying subsection (a) and 
                section 1848(d)(16), under what circumstances 
                an eligible professional is treated as having a 
                payment arrangement under a particular model.
                  (B) Nonduplication of payment.--Such rules of 
                coordination shall ensure coordination and 
                nonduplication of payment of services that 
                might be covered under more than one payment 
                arrangement or under section 1848(d)(16).
                  (C) Application to non-apm payment.--In 
                applying such rules for purposes of section 
                1848(d)(16), an eligible professional shall not 
                be treated as having a payment arrangement in 
                effect under such a model for any covered 
                professional services not treated as furnished 
                under the model.
  (g) Periodic Review and Termination.--
          (1) Periodic review.--In the case of an Alternative 
        Payment Model that has been implemented, the Secretary 
        and the Chief Actuary of the Centers for Medicare & 
        Medicaid Services shall review such model every 3 years 
        to determine (and certify, in the case of the Chief 
        Actuary and spending under this title), for the 
        previous 3 years, whether the model has--
                  (A) reduced the quality of care, or
                  (B) increased spending under this title,
        compared to the quality of care or spending that would 
        have resulted if the model had not been implemented.
          (2) Termination.--
                  (A) Quality of care reduction termination.--
                If based upon such review the Secretary 
                determines under paragraph (1)(A) that the 
                model has reduced the quality of care, the 
                Secretary may terminate such model.
                  (B) Spending increase termination.--Unless 
                such Chief Actuary certifies under paragraph 
                (1)(B) that the expenditures under this title 
                under the model do not exceed the expenditures 
                that would otherwise have been made if the 
                model had not been implemented for the period 
                involved, the Secretary shall terminate such 
                model.
  (h) Dissemination of Eligible APMs.--Under this section there 
shall be established a process for specifying, and making 
publicly available a list of, all eligible APMs, which shall 
include at least those implemented under subsection (f) and 
demonstrations carried out with respect to payments under 
section 1848 through authority in existence as of the day 
before the date of the enactment of this section. Under such 
process such list shall be periodically updated and, beginning 
with January 1, 2015, and annually thereafter, such list shall 
be published in the Federal Register.

           *       *       *       *       *       *       *


Part E--Miscellaneous Provisions

           *       *       *       *       *       *       *


              PROVIDER EDUCATION AND TECHNICAL ASSISTANCE

  Sec. 1889. (a) * * *

           *       *       *       *       *       *       *

  (h) Quality Update Incentive Program.--Under this section, 
information shall be disseminated to educate and assist 
eligible professionals (as defined in section 1848(k)(3)) about 
the quality update incentive program under section 1848(q) and 
quality measures under section 1848(k)(9) through multiple 
approaches, including a national dissemination strategy and 
outreach by medicare contractors.

           *       *       *       *       *       *       *


                                  
