S. Rept. 113-135 - 113th Congress (2013-2014)
January 16, 2014, As Reported by the Finance Committee

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Senate Report 113-135 - TO AMEND TITLE XVIII OF THE SOCIAL SECURITY ACT TO REPEAL THE MEDICARE SUSTAINABLE GROWTH RATE FORMULA AND TO IMPROVE BENEFICIARY ACCESS UNDER THE MEDICARE PROGRAM, AND FOR OTHER PURPOSES




[Senate Report 113-135]
[From the U.S. Government Printing Office]


                                                       Calendar No. 280
113th Congress                                                   Report
                                 SENATE
 2d Session                                                     113-135

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

 
TO AMEND TITLE XVIII OF THE SOCIAL SECURITY ACT TO REPEAL THE MEDICARE 
SUSTAINABLE GROWTH RATE FORMULA AND TO IMPROVE BENEFICIARY ACCESS UNDER 
              THE MEDICARE PROGRAM, AND FOR OTHER PURPOSES

                                _______
                                

                January 16, 2014.--Ordered to be printed

                                _______
                                

              Mr. Baucus, from the Committee on Finance, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1871]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Finance, having considered an original 
bill, S. 1871, to amend title XVIII of the Social Security Act 
to repeal the Medicare sustainable growth rate formula and to 
improve beneficiary access under the Medicare program, and for 
other purposes, reports favorably thereon and recommends that 
the bill do pass.

             I. BACKGROUND AND NEED FOR LEGISLATIVE ACTION

    The Sustainable Growth Rate (SGR) formula--the mechanism 
that dictates Medicare payment updates for physicians and other 
practitioners, referred to as professionals--is fundamentally 
broken and must be repealed. Congress has spent nearly $150 
billion since 2003 on short-term overrides of payment cuts 
stipulated by the SGR. These overrides or ``patches'' have 
frustrated providers, threatened access for beneficiaries, and 
created a budgetary dilemma from which Congress has struggled 
to emerge.
    The physician fee schedule can limit the amount Medicare 
pays for each service but it does not directly impact the 
volume of services provided. When the fee schedule was 
implemented in 1992, a Medicare volume performance standard 
(MVPS) was included, but it was not very effective in limiting 
total professional expenditures. The Balanced Budget Act of 
1997 (BBA, P.L. 105-33) established the SGR to replace the MVPS 
and created a target rate of growth for Medicare professional 
expenditures. The intent was to adjust payments under the fee 
schedule according to how overall Medicare professional 
spending compares to an SGR ``target.''
    Generally, under the SGR formula, comparisons of actual 
versus target spending for both the current year as well as 
cumulatively (going back to 1996, the base year) will determine 
the magnitude and direction (positive or negative) of the 
update adjustment factor. For example, if current year 
comparisons as well as cumulative expenditures from the current 
period going back to 1996 are less than the cumulative spending 
target over the same period, the annual update is increased 
according to a statutory formula. If, however, spending exceeds 
the cumulative spending target over the same period, the SGR 
methodology necessitates fee schedule update reductions to 
bring spending back in line with the target growth rate.
    Since 2002, professional spending has routinely exceeded 
the target set by the SGR, resulting in payment cuts under the 
formula. In 2002, Medicare professional payments were cut by 
4.8%. In subsequent years, however, Congress approved overrides 
of the payment reductions required by the SGR without changing 
the underlying formula. The most recent override was approved 
in December of 2013 as part of the Bipartisan Budget Act of 
2013 (BPBA, P.L. 113-67) and replaced the SGR-dictated payment 
reduction with a 0.5 percent update for three months, until 
March 31, 2014. If Congress does not act by this date, Medicare 
professional payment rates will be cut by over 20%.
    Congress has implemented several initiatives to address the 
perverse incentives created by the Medicare fee-for-service 
(FFS) system. The Tax Relief and Health Care Act of 2006 
(TRHCA, P.L. 109-432) established the physician quality 
reporting system (PQRS) that provides incentive payments to 
eligible professionals who report quality data to Medicare. The 
Affordable Care Act (ACA, P.L. 111-148) extended the PQRS 
incentive payment program and created the value-based payment 
modifier (VBM), a separate, budget-neutral payment modifier 
that adjusts payments under the Medicare physician fee schedule 
based on the relative quality and cost of care provided. The 
implementation of the VBM shifted Medicare from paying for 
reporting to paying for value.
    Congress has also advanced the objectives of delivery 
system reform in multiple ways. The American Recovery and 
Reinvestment Act of 2009 (ARRA, P.L. 111-5) authorized 
incentive payments to physicians who are meaningful users of 
certified electronic health record (EHR) technology. Meaningful 
users must demonstrate the ability to exchange electronic 
health information to improve health care quality and use EHR 
technology to report clinical quality measures. Additionally, 
the ACA established the Center for Medicare and Medicaid 
Innovation (CMMI) to test alternative payment models (APMs) 
like accountable care organizations, bundled payments, and 
patient-centered medical homes.
    The Committee Bill would permanently repeal the SGR update 
mechanism and provide zero percent updates until 2023. It also 
would reform the physician fee schedule by consolidating 
existing quality programs to place greater focus on value over 
volume, and encourage participation in APMs being tested by 
CMMI. After 2023, health care professionals in APMs would 
receive an annual payment update of two percent; all other 
professionals would receive an update of one percent.
    The Bill would also consolidate the three existing 
incentive programs into a budget-neutral value-based 
performance (VBP) incentive program. Under this program, 
professionals would receive annual payment increases or 
decreases based on their performance. By combining the existing 
quality incentive programs into a comprehensive VBP program, 
the Committee Bill would further value-based purchasing within 
the Medicare program while maintaining and improving the 
efficiency of the underlying structure with which professionals 
are already familiar.
    Professionals who receive a significant portion of their 
revenue from an APM(s) that involves a quality measurement 
component, use of certified EHR technology and involves either 
two-sided financial risk or is a Medicare or Medicaid medical 
home certified by the Chief Actuary of the Centers for Medicare 
& Medicaid Services (CMS) as reducing Medicare spending would 
receive a bonus payment starting in 2017 and be exempted from 
the VBP program.
    The Committee Bill would fund measure development 
priorities for professionals to address the current gaps in 
quality programs and ensure meaningful measures on which to 
assess professionals. It would also involve the health care 
professional community in furthering the measurement of 
resource use.
    The Committee Bill would encourage care management services 
for individuals with complex chronic care needs through the 
development of new payment codes for such services. It would 
also leverage physician-developed standard of care guidelines 
to avoid the provision of unnecessary services. The Bill would 
also improve the accuracy of the physician fee schedule by 
setting a target for correcting misvalued services.
    Recognizing the role of quality and resource use data in 
helping consumers make informed purchasing decisions and 
helping professionals improve their performance, the Bill would 
expand the data available to qualified entities (QEs) for 
quality improvement activities as well as the information 
available on the Physician Compare website.
    In addition to ending the cycle of temporary SGR patches, 
the Committee Bill addresses so-called health extenders that 
Congress addresses temporarily year after year. The Bill makes 
permanent policies to support rural and small hospitals, the 
floor on geographic adjustments to the component of 
professional payments that reflect the time and intensity 
associated with furnishing a service, the authority for special 
needs plans (SNPs) for patients in institutionalized settings, 
and funding for outreach and assistance to low-income Medicare 
beneficiaries. The Bill also temporarily extends payment 
increases for ground ambulance transportation, the authority 
for SNPs for patients who are eligible for Medicare and 
Medicaid and patients with specific, disabling chronic 
conditions, funding for states to pay Medicare Part B premiums 
for low-income qualifying individuals, additional funding for 
the transitional medical assistance program, a temporary 
extension of ``Express Lane'' eligibility determination, 
redirected funding to temporarily extend pediatric quality 
measures, and funding for the special diabetes programs 
authorized under the BBA. Finally, the Bill replaces some 
existing extender policies with new policies. Medicare cost 
contract plans would be required to convert to Medicare 
Advantage (MA) plans or contracts will be terminated. 
Additionally, the existing cap on therapy services would be 
eliminated and replaced with a medical review program for 
outpatient therapy services.
    The Committee Bill also temporarily extends funding for 
several human services programs including abstinence education 
grants, the personal responsibility education program, family-
to-family health information centers, and the health workforce 
demonstration project for low-income individuals.

                LEGISLATIVE HISTORY AND COMMITTEE ACTION

    The 113th Congress brought renewed commitment by the Senate 
Finance Committee to repeal and replace the flawed SGR update 
mechanism. Two factors reinvigorated the debate on replacing 
the SGR: the significantly reduced Congressional Budget Office 
score for repealing the SGR over ten years ($116.5 billion 
compared to over $300 two years earlier) and a bipartisan 
proposal reported out by the House Energy & Commerce Committee 
in July of 2013.
    The Senate Finance Committee began working on professional 
payment reform in the spring of 2012. The Committee held three 
roundtable discussions to ask three important questions. First, 
the Committee invited former CMS Administrators Gail Wilensky, 
Bruce Vladeck, Thomas Scully, and Mark McClellan to explain the 
history of the SGR and why it did not work as intended. Second, 
the Committee invited senior leaders from commercial insurance 
plans to discuss what professional payment reforms are being 
used in the private sector. Third, the Committee invited 
leaders from the American Medical Association and diverse 
physician specialty groups to ask them what an ideal payment 
system would look like for professionals.
    A key finding of the roundtable discussions was that 
Congress should improve the existing FFS payment system while 
seeking to implement APMs that reward value over volume. To 
this end, the Finance Committee held a hearing in May of 2013 
with the Executive Director of the Medicare Payment Advisory 
Commission (MedPAC) and other experts to discuss possible 
improvements to the FFS professional payment system. Witnesses 
emphasized that, while APMs would provide better incentives to 
help professionals improve quality and contain resource use, 
policies including a focus on care coordination, harmonizing 
current payment adjustments, and providing feedback to 
professionals on resource use would help improve the existing 
FFS system. Two months later, the Committee held a hearing with 
Jon Blum, Deputy Administrator of CMS, to discuss quality 
improvement programs that CMS is already implementing within 
the FFS system and APMs being tested by the CMMI.
    During this time, Chairman Baucus and Ranking Member Hatch 
sent a letter to the professional community. The Senators asked 
for recommendations on policies that would improve the 
valuation of professional services under the physician fee 
schedule, identify and reduce unnecessary utilization to 
improve health and reduce Medicare spending growth, and 
incentivize practices to undertake the structural and 
behavioral changes needed to participate in APMs. Committee 
staff reviewed over 130 responses from stakeholders.
    Building on that effort, the bipartisan, bicameral staffs 
of the House Ways & Means and Senate Finance Committees 
developed a discussion draft of a policy to replace the SGR and 
shared it with stakeholders on October 31, 2013. The Committees 
collected feedback for two weeks; holding town hall meetings 
with stakeholders and reviewing over 200 comment letters. Based 
on this feedback, the Committees made several modifications to 
the policy. These changes adjusted the timeline for 
implementation of several provisions within the legislation to 
reflect professionals' readiness for practice transformation.
    By December, the Finance Committee was ready to act. The 
Chairman's Mark was released on December 10, 2013, two days 
prior to the Executive Session to consider what became the 
Committee Bill.
    During the markup the Committee recognized that market 
consolidation among providers, hospitals, and payers is a 
pressing issue facing the US health care system. Market 
consolidation could, through unintended consequences, raise the 
cost of care and, potentially even decrease access for Medicare 
beneficiaries. Creating a comprehensive, systematic ongoing 
mechanism for collecting information about health care markets 
so that they may be monitored in a timely fashion should be a 
key priority for policymakers. The Committee expressed support 
for efforts by the Government Accountability Office (GAO) to 
analyze market trends in health care consolidation, along with 
any common contributing factors, and evaluate the availability 
and quality of current public and private data sources on 
hospital, physician practice, and health plan ownership, 
transactions, and commercial pricing. The Committee may 
consider the GAO's report in future policy discussions.
    Members submitted 137 amendments to the Mark. A total of 26 
amendments was accepted and incorporated into the Mark before 
the Executive Session began and another seven amendments were 
approved by voice vote during the markup. No roll call votes 
were conducted. The final vote to report the bill was approved 
by voice vote.

                      II. EXPLANATION OF THE BILL


           TITLE I--MEDICARE PAYMENT FOR PHYSICIANS' SERVICES


SEC. 101. REPEALING THE SUSTAINABLE GROWTH RATE AND IMPROVING MEDICARE 
                    PAYMENT FOR PHYSICIANS' SERVICES

Present Law

    Medicare payments for items and services furnished by 
physicians and other professionals are made on the basis of a 
fee schedule. The fee schedule assigns relative value units 
(RVUs) to each of the over 7,000 service codes that reflect 
professional work (i.e., time, skill, and intensity it takes to 
provide the service), practice expenses, and malpractice costs. 
The relative value for a service compares the RVUs for 
professional work, practice expense and malpractice expense 
with the corresponding RVUs for other services. The scale used 
to compare the value of one service with another is known as a 
resource-based relative value scale (RBRVS). These RVUs are 
adjusted for geographic variation in input costs. The adjusted 
relative values are then converted into a dollar payment amount 
by a conversion factor.
    CMS, which is responsible for maintaining and updating the 
fee schedule, continually modifies and refines the methodology 
for estimating RVUs. The American Medical Association/Specialty 
Society Relative Value Scale Update Committee (RUC) has 
historically provided advice and recommendations to CMS to 
assist in the assessments. CMS is required to review the RVUs 
at least every five years.
    In determining adjustments to the RVUs, the Secretary of 
Health and Human Services (herein after ``the Secretary'') has 
authority to adjust the number of RVUs for any service code to 
take into account changes in medical practice, coding changes, 
new data on relative value components, or the addition of new 
procedures. The Secretary is required to publish an explanation 
of the basis for such adjustments. These adjustments are 
subject to budget neutrality. With the exception of certain 
expenditures that are exempt by statute, the adjustments may 
not cause the amount of expenditures made under the Medicare 
physician fee schedule to differ from year to year by more than 
$20,000,000 from the expenditures that would have been incurred 
without such an adjustment.
    The SGR, is a statutory method for determining the annual 
updates to the Medicare physician fee schedule. The SGR 
methodology was established because of the concern that the 
Medicare fee schedule itself would not adequately constrain 
overall increases in spending for physicians' services.
    Generally, under the SGR formula, comparisons of actual 
versus target spending for both the current year as well as 
cumulatively (going back to 1996, the base year) will determine 
the magnitude and direction (positive or negative) of the 
update adjustment factor. For example, if current year 
comparisons as well as cumulative expenditures from the current 
period going back to 1996 are less than the cumulative spending 
target over the same period, the annual update is increased 
according to a statutory formula. If, however, spending exceeds 
the cumulative spending target over the same period, the SGR 
methodology necessitates fee schedule update reductions to 
bring spending back in line with the target growth rate.
    In the first few years of the SGR system, the actual 
expenditures did not exceed the targets and the updates to the 
physician fee schedule were positive. Beginning in 2002, the 
cumulative actual expenditures exceeded allowed targets, 
resulting in SGR--mandated reductions in the update adjustment 
factor, and the discrepancy has grown each year. With the 
exception of 2002, when a 4.8 percent decrease was applied, 
Congress has enacted a series of laws to override the 
reductions.
    Most recently, in December of 2013, the BPBA included a 
Congressional override of the SGR-dictated payment reduction, 
instead providing for a 0.5 percent update for three months, 
until March 31, 2014. If Congress does not act by this date, 
Medicare professional payment rates will be cut by over 20%.
    Over time, Congress has added provisions to the physician 
fee schedule intended to improve the quality of care delivered 
to Medicare beneficiaries and constrain the growth of Medicare 
spending for professional services. The TRHCA required the 
establishment of a PQRS that would include an incentive payment 
to eligible professionals who satisfactorily report data on 
quality measures, based on a percentage of the allowed Medicare 
charges for all such covered professional services. The 
Medicare Improvements for Patients and Providers Act of 2008 
(MIPPA, P.L. 110-275) made this program permanent and extended 
the bonuses through 2010; the incentive payment was increased 
from 1.5 percent of total allowable charges under the physician 
fee schedule in 2007 and 2008, and to two percent in 2009 and 
2010.
    The ACA extended the PQRS incentive payments through 2014 
and put in place a penalty for providers who do not report 
quality measures beginning in 2015. Eligible professionals who 
successfully reported received a one percent bonus in 2011; 
those who successfully reported will receive a 0.5 percent 
bonus in 2012, 2013, and 2014. By contrast, eligible 
professionals who fail to participate successfully in the 
program face a 1.5 percent payment penalty in 2015, and a two 
percent payment penalty in 2016 and subsequent years. The 
incentive payments and penalties are based on the allowed 
charges for all covered services furnished by the eligible 
professional.
    Both MedPAC and the GAO have suggested that CMS provide 
information to physicians on their resource use with the 
expectation that physicians who are outliers would alter their 
practice patterns in response. To that end, section 131 of the 
MIPPA established a physician feedback program. The physician 
feedback program uses Medicare claims data and other data to 
provide confidential feedback reports to physicians (and as 
determined appropriate by the Secretary, to groups of 
physicians) that measure the resources involved in furnishing 
care to Medicare beneficiaries. CMS initially called this 
effort the Physician Resource Use Feedback Program, but has 
renamed this initiative the ``Physician Resource Use 
Measurement and Reporting Program.''
    The ARRA authorized Medicare incentive payments over a 
five-year period to physicians who are determined to be 
``meaningful users'' of certified EHR technology. Meaningful 
use is defined as (1) demonstrating to the satisfaction of the 
Secretary the use of certified EHR technology in a meaningful 
manner (including e-prescribing), including for the purpose of 
exchanging electronic health information to improve health care 
quality; and (2) using such certified EHR technology to report 
clinical quality measures, as selected by the Secretary. The 
incentive payments equal 75 percent of the allowed Part B 
charges during the reporting year. The total amount that a 
physician could receive was capped and decreased over time. 
Beginning in 2011, eligible physicians received up to $15,000 
in the first payment year, $12,000 in the second year, $8,000 
in the third year, $4,000 in the fourth year, and $2,000 in the 
fifth, and final, year. Early EHR adopters whose first payment 
year was 2011 or 2012 received up to $18,000 (instead of 
$15,000) for that year.
    Eligible physicians who become meaningful EHR users for the 
first time after 2013 will receive fewer payments and those who 
do not adopt EHRs until after 2014 will receive no bonus. No 
incentive payments will be made after 2016. Eligible physicians 
who are not meaningful EHR users by 2015 will see their 
Medicare payments reduced by the following amounts: one percent 
in 2015, two percent in 2016, three percent in 2017 and each 
subsequent year. For 2018 and each subsequent year, if the 
proportion of eligible physicians who are meaningful EHR users 
is less than 75 percent, the payment will be further decreased 
by one percentage point from the applicable amount in the 
previous year, though the reduction cannot exceed five percent. 
The Secretary may, on a case-by-case basis, exempt eligible 
physicians (e.g., rural physicians who lack sufficient Internet 
access) from the payment reduction for up to five years if it 
is determined that being a meaningful EHR user would result in 
significant hardship.
    The ACA required the Secretary to establish a VBM, which is 
a budget-neutral payment modifier that adjusts payments under 
the Medicare physician fee schedule based on the relative 
quality and cost of the care provided. Quality of care is to be 
evaluated on a composite of risk-adjusted measures of quality 
established by the Secretary, such as measures that reflect 
health outcomes. Costs, defined as expenditures per individual, 
are to be evaluated based on a composite of appropriate 
measures of costs established by the Secretary that eliminate 
the effect of geographic adjustments in payment rates and take 
into account risk factors (such as socioeconomic and 
demographic characteristics, ethnicity, and the health status 
of individuals) and other factors determined appropriate by the 
Secretary.
    Beginning January 1, 2015, the value-based payment modifier 
will apply for items and services furnished for physicians in 
groups of 100 or more eligible professionals who submit claims 
to Medicare under a single tax identification number (TIN) 
based on performance in CY2013. In CY2015 one percent of 
payment will be at risk. This will increase to two percent in 
CY2016. By 2017, the value-based payment modifier will apply to 
all physicians who participate in FFS Medicare. The Secretary 
is to apply the payment modifier in a manner that promotes 
systems-based care and takes into account the special 
circumstances of physicians or groups of physicians in rural 
areas and other underserved communities.

Committee Bill

    The Committee Bill would repeal the SGR methodology for 
determining updates to the Medicare physician fee schedule. In 
addition, it would: (1) provide a 10-year period of zero 
percent updates; (2) establish a value-based performance 
program that consolidates and enhances existing incentive 
payment programs; (3) incentivize the development of, and 
participation in, APMs; and (4) make other changes to Medicare 
physician payment policies.
    The update to the conversion factor for the Medicare 
physician fee schedule would be zero percent for each year from 
2014 through 2023. Beginning in 2024 and in subsequent years, 
the update would vary, depending on whether the provider is a 
participant in a qualifying APM. For services furnished by a 
qualifying APM participant, the update would be two percent, 
while the update for all other services provided by all other 
professionals would be one percent.
    By July 1, 2016, MedPAC would be required to submit a 
report to Congress on the relationship between (1) physician 
and other health professional utilization and expenditures, and 
the rate of increase of such utilization and expenditures of 
items and services paid for under Part B of the Medicare 
program, and (2) total utilization and expenditures and their 
rates of increase under Medicare Parts A, B, and D. The report 
would include a methodology to describe this relationship and 
the impact of changes in practice and service ordering patterns 
of physician and other health professionals on total 
utilization and expenditures, of health care services in 
Medicare Parts A, B, and D. Another report, applying the 
methodology developed, would be due to Congress by July 1, 
2020.
    The Committee Bill would create a new incentive payment 
system, which would be called the VBP incentive program. This 
program would extend key components of three existing programs 
and would sunset their payment incentives and separate 
application by consolidating and incorporating them into the 
new VBP program beginning on January 1, 2017 (the payment 
incentives for these programs would continue to be in effect 
for CY2015 and CY2016). These three programs are: (1) the 
Medicare EHR incentive program for meaningful use of certified 
EHR technology, (2) the quality reporting incentive program 
(currently called the PQRS), and (3) the value-based payment 
modifier. The VBP would continue to use the provisions and 
processes of these programs including meaningful use 
determinations already carried out by the Medicare program, 
PQRS quality metrics already being reported by professionals, 
and requirements for quality and resource use measurement under 
the VBM. Adjustments in the application of these provisions 
would be made to ensure consistency with the new VBP program to 
avoid duplicative requirements.
    The VBP program would develop a methodology for assessing 
the total performance of each VBP eligible professional, 
provide for a composite performance score for each eligible 
professional for each performance period; and use the composite 
performance score of the VBP eligible professional to make VBP 
program incentive payments.
    The VBP program would apply to payments for items and 
services furnished on or after January 1, 2017.
    The types of health care professionals eligible for the VBP 
incentive payments would expand over time. Subject to the 
exclusions described below, physicians (as defined under 
section 1861(r) of the Social Security Act (SSA, P.L. 74-271)), 
physician assistants, nurse practitioners, and clinical nurse 
specialists (defined under section 1861(aa)(5) of the SSA), and 
certified clinical nurse specialists (defined under section 
1861(bb)(2) of the SSA), and certified registered nurse 
anesthetists (defined under section 1861(bb)(2) of the SSA) 
would be eligible for the VBP program in 2017 and 2018. The 
Secretary would have the authority to expand the VBP program to 
additional eligible professionals described under section 
1848(k)(3)(B) of the SSA, in 2019 and subsequent years.
    Health care professionals excluded from the VBP program 
would include otherwise eligible professionals who are 
qualifying APM participants, partial qualifying APM 
participants who do not report on the applicable measures and 
activities (partial qualifying APM participants, who chose to 
report under the VBP program despite this exclusion, would be 
eligible for VBP incentive payments) and professionals who do 
not exceed the low-volume threshold.
    The Secretary would select one of three low-volume 
thresholds to determine exclusion from the VBP program: (1) a 
minimum number of Medicare beneficiaries who are treated by the 
eligible professional, (2) a minimum number of items and 
services furnished by the professional to Medicare 
beneficiaries, or (3) a minimum amount of Medicare allowed 
charges billed by the professional. In each case, the minimum 
number would be determined by the Secretary.
    A new VBP-eligible professional who had not previously 
submitted Medicare claims as a person, an entity, or as a part 
of a physician group or under a different billing number or tax 
identifier, would be eligible for the VBP incentive program 
beginning in the subsequent year and performance period for 
such year.
    Payments to professionals who are not VBP eligible 
professionals would not be affected by any reduction in 
payments for establishment of the funding pool for VBP 
incentive payments or by any VBP program incentive payments.
    The Secretary would encourage the use of qualified clinical 
data registries (as specified in current law) in carrying out 
this program.
    The VBP program would be based on measures and activities 
under four categories. A composite performance score would be 
calculated for each VBP eligible professional, which would be 
used to determine the VBP program incentive payment amounts. 
The Secretary would use the following performance categories to 
determine the composite performance score and the measures and 
activities specified for each category:
    1. Quality--The quality performance category would use 
quality measures established under current law for the PQRS 
program and the value--based payment modifier. The Secretary 
would, as feasible, emphasize the application of outcome 
measures, and could use measures used for a payment system 
other than for physicians or use global measures, such as 
global outcome measures, and population-based measures. 
Analysis of measures used under the quality performance 
category could include data submitted by VBP eligible 
professionals from multiple payers.
    2. Resource use--The resource use performance category 
would use measures of resource use established under current 
law for the value--based payment modifier. To the extent 
feasible, resource use measures would account for the cost of 
Part D drugs. As appropriate, the Secretary would employ 
resource use measurements developed through the process for 
collaborating with the physician, practitioner, and other 
stakeholder communities to improve resource use measurement 
described below.
    3. Clinical practice improvement activities--The clinical 
practice improvement activities performance category would use 
activities specified by the Secretary, including at least the 
following subcategories:
          (a) expanded practice access, which would include 
        activities such as same-day appointments for urgent 
        needs and after-hours access to clinician advice;
          (b) population management, which would include 
        activities such as monitoring health conditions of 
        individuals to provide timely health care interventions 
        or participation in a qualified clinical data registry;
          (c) care coordination, which would include activities 
        such as timely communication of test results, timely 
        exchange of clinical information to patients and other 
        providers, and use of remote monitoring or telehealth;
          (d) beneficiary engagement, which would include 
        activities such as the establishment of care plans for 
        individuals with complex care needs, beneficiary self-
        management training, and using shared decision-making 
        mechanisms;
          (e) patient safety and practice assessment, which 
        would include activities such as the use of clinical or 
        surgical checklists and practice assessments related to 
        maintaining certification; and
          (f) participation in an APM, as defined below.
    In establishing the clinical practice improvement 
activities, the Secretary would give consideration to the 
circumstances of small practices consisting of ten or fewer 
professionals and practices located in rural areas and in 
health professional shortage areas (HPSA). The Secretary could 
contract with entities to assist in identifying the activities, 
specifying criteria for such activities, and determining 
whether a VBP eligible professional meets such criteria. 
Additionally, the Secretary would use a request-for-information 
process to solicit recommendations from stakeholders for 
identifying other activities not expressly listed above, and 
specifying criteria for such activities.
    4. Meaningful use of certified EHR technology--The EHR 
Meaningful Use performance category would use requirements 
established for purposes of section 1848(o) of the SSA for 
determining whether an eligible professional is a meaningful 
EHR user for such period.
    The Secretary would establish performance standards with 
respect to the measures and activities under each of the four 
VBP performance categories. The performance standards would 
take into account historical performance standards, improvement 
rates, and the opportunity for continued improvement.
    The Secretary would establish a performance period (or 
periods) for each year in which incentive payments would be 
made under the VBP program, beginning with 2017. The 
performance period would begin and end prior to the beginning 
of the year in which the incentive payments would be paid and 
be as close as possible to the payment year.
    With respect to assessing performance in the quality 
performance category, the Secretary would be required to 
establish and apply a process for applying the VBP program to 
group practices, which would include features of provisions 
that currently apply to group practices in the PQRS. With 
respect to assessing performance of group practices in the 
remaining three performance categories described above, the 
Secretary could also apply such a process for groups. In 
determining these processes, the Secretary would reflect the 
full range of items and services furnished by the VBP eligible 
professionals in the group practice involved, to the extent 
practicable. VBP eligible professionals electing to be a 
virtual group (as described below) would not be considered VBP 
eligible professionals in a group practice.
    The Secretary would develop a methodology for assessing the 
total performance of each VBP eligible professional according 
to the performance standards and the applicable measures and 
activities specified above with respect to each performance 
category applicable to an eligible professional for a 
performance period. Using the methodology developed, the 
Secretary would determine a composite performance score for 
each such professional for each performance period.
    In weighting the performance categories, measures, and 
activities to determine the composite performance score, the 
Secretary may assign different scoring weights (including a 
weight of zero) for each performance category based on the 
extent to which the category is applicable to the type of 
eligible professional involved, and each measure and activity 
based on the extent to which the measure or activity is 
applicable to the type of eligible professional involved. With 
respect to the quality performance category, the Secretary 
would assign a higher scoring weight to outcomes measures than 
to other measures and increase the scoring weight for outcome 
measures over time. The Secretary could also assign a higher 
scoring weight to patient experience measures.
    To incentivize reporting of activities and measures used to 
determine the composite performance score, a VBP eligible 
professional who failed to report on an applicable measure or 
activity that is required for such professional would be 
treated as having achieved the lowest potential score 
applicable. To encourage the use of certified EHR technology 
for reporting quality measures, the Secretary would encourage 
VBP eligible professionals to report on applicable quality 
measures through the use of certified EHR technology, and treat 
any VBP eligible professional who reports the applicable 
quality measures through the use of such EHR technology as 
having satisfied the clinical quality measures reporting 
requirement to be a meaningful EHR user under section 
1848(o)(2)(A)(iii) of the SSA.
    For the performance category of clinical practice 
improvement activities, a VBP eligible professional who is in a 
practice that is certified as a patient--centered medical home 
or comparable specialty practice by an organization that is 
recognized by the Secretary for purposes of certifying medical 
homes and specialty practices would be given the highest 
potential score for the clinical practice improvement 
activities performance subcategory. A VBP eligible professional 
in an APM, as defined below, would earn one--half of the 
highest potential score for the clinical practice improvement 
activity performance category. Such professional could also 
earn more than one-half of the highest potential score for this 
performance period by performing additional activities with 
respect to the same performance category. A VBP eligible 
professional would not be required to perform activities in 
each subcategory of the clinical practice improvement activity 
performance category to achieve the highest potential score for 
this performance category.
    The Secretary would ensure that the application of the 
methodology developed to determine the composite performance 
score would result in a continuous distribution of performance 
scores, which would subsequently result in differential 
incentive payments for VBP eligible professionals.
    Beginning with the second year of the VBP program, in 
addition to the achievement score of a VBP eligible 
professional, the composite score methodology would take into 
account improvement in the quality performance and the resource 
use performance categories, and could take into account 
improvement in the other performance categories. Beginning with 
the fourth year of the VBP program, the composite score 
methodology would assign a higher scoring weight with respect 
to the achievement score than to any improvement score with 
respect to a measure or activity, or a performance category or 
both.
    In general, subject to the adjustment noted below, the 
composite performance score would be determined based on the 
following weights: quality (30 percent), resource use (30 
percent), clinical practice improvement activities (15 
percent), and meaningful use of EHR technology (25 percent). In 
any year in which the Secretary estimates that the proportion 
of eligible professionals who are meaningful EHR users is 75 
percent or greater, the Secretary could reduce the percent 
applicable from 25 percent, but not below 15 percent. If the 
Secretary were to make such a reduction, the weights of the 
other categories would be increased such that the total 
percentage points of the increase would equal the total number 
of percentage points by which the EHR category was to be 
reduced.
    The weights for the quality and resource use performance 
categories would always be equal, even after the application of 
the above EHR adjustment, with the following exception. For the 
first two years of the VBP program, after any EHR adjustment, 
the Secretary could increase the weight for either the quality 
or the resource use performance category, as long as the 
Secretary were to decrease the weight under the other category 
by an equal number of percentage points and so long as neither 
weight is less than 15 percent.
    The Secretary would provide a process to allow an 
individual VBP eligible professional or a group practice 
consisting of not more than ten VBP eligible professionals to 
elect to be a virtual group with at least one other individual 
VBP eligible professional or group of VBP eligible 
professionals. For VBP eligible professionals who elect to be a 
virtual group, the assessment on the quality and resource use 
performance categories applied to each professional in such 
group would be with respect to the combined performance of all 
such professionals in such group, and the composite score under 
the VBP program for each VBP eligible professional in the 
virtual group would be based on the assessment of the combined 
performance for the performance category and performance 
period.
    VBP eligible professionals who elect to become a virtual 
group would be required to do so before the beginning of a 
performance period and would not be allowed to change status 
during the performance period. Each practice and each VBP 
eligible professional in such a practice could elect to be in 
no more than one virtual group for a performance period.
    VBP incentive payments would be distributed in a budget 
neutral manner. The total amount for VBP program incentive 
payments for all VBP eligible professionals for a year would be 
equal to the total amount of the performance funding pool for 
all VBP eligible professionals (described below).
    For items and services furnished by a VBP eligible 
professional, the Secretary would conduct two concurrent 
calculations to determine the amount paid: (1) a reduction of 
the otherwise applicable fee schedule amount for that year (see 
the applicable percent for the performance funding pool 
described below); and (2) a calculation of the VBP incentive 
payment amount (also described below). Eligible professionals 
would be notified of their payment adjustment prior to the year 
in which payments are made. The process to calculate the VBP 
incentive payment amount would not authorize or create an 
upfront withhold of reimbursements to eligible professionals.
    The pool for paying VBP incentive payments would be created 
by reducing the otherwise applicable fee schedule amount, which 
is defined as the fee schedule amount for items and services 
furnished by an eligible professional that would otherwise 
apply. Beginning with 2017, the fee schedule amount for items 
and services provided by a VBP eligible professional would be 
reduced by the specified percentage described below (called the 
`applicable percent'). The cumulative amount of such reductions 
for a year across all VBP eligible professionals would 
constitute the `performance funding pool' for the year. The 
applicable percent reduction would be 4 percent for 2017, 6 
percent for 2018, 8 percent for 2019, 10 percent for 2020, and 
in subsequent years, a percentage to be specified by the 
Secretary, but no less than 10 percent and no more than 12 
percent.
    The Secretary would specify a VBP program incentive payment 
adjustment factor for each VBP eligible professional for a 
year, which would be determined by the composite performance 
score of the eligible professional for the year. The adjustment 
factors would result in differential payments reflecting the 
full range of distribution of composite performance scores of 
VBP eligible professionals with professionals having higher 
composite performance scores receiving higher payments. The 
adjustment factors in a year could not result in a payment 
reduction that exceeds the applicable percent for a year, and 
could not result in a payment increase that exceeds the 
applicable percent for such year.
    The VBP program incentive payment amount for items and 
services furnished by a VBP eligible professional during a year 
would be equal to the difference between:
          1. the product of (a) the VBP program incentive 
        payment adjustment factor and (b) the otherwise 
        applicable fee schedule amount; and
          2. the otherwise applicable fee schedule amount, as 
        reduced by the applicable percent above, with respect 
        to such items and services, eligible professional, and 
        year.
    No later than 60 days prior to the year involved, the 
Secretary would make available to each VBP eligible 
professional the VBP program incentive payment adjustment 
factor and the percentage payment reduction for the performance 
funding pool applicable to the eligible professional for items 
and services furnished by the professional as described above 
for the year. The Secretary could include such information in 
confidential feedback reports.
    The VBP program incentive payment and the payment reduction 
would each apply only with respect to the year involved. The 
Secretary would not take VBP program incentive payments or 
payment reductions into account in making payments to a VBP 
eligible professional in a subsequent year.
    The Secretary would make information regarding the 
performance of VBP eligible professionals under the VBP program 
available to the public, in an easily understandable format on 
the Physician Compare website. This information would include 
the composite score for each VBP eligible professional, the 
performance of each VBP eligible professional with respect to 
each performance category, and the names of eligible 
professionals in qualifying APMs and, to the extent feasible, 
the name of the APM. The information could also include the 
performance of each VBP eligible professional with respect to 
each performance category measure or activity. The Secretary 
would provide an opportunity for an eligible professional to 
review, and submit corrections to, the individual's information 
to be made public prior to such information being made public.
    The Secretary would periodically post aggregate information 
on the VBP program on the Physician Compare website, including 
the range of composite scores for all VBP eligible 
professionals, and the range of the performance of all VBP 
eligible professionals with respect to each performance 
category.
    The Secretary would consult with stakeholders in carrying 
out the VBP program, including for the identification of 
performance category measures and activities and the 
methodologies for developing the composite score and the VBP 
program incentive payment adjustment factors. These 
consultations would include the use of a request for 
information or other mechanisms determined appropriate.
    The Secretary would enter into contracts or agreements with 
appropriate entities (such as quality improvement 
organizations, regional extension centers, or regional health 
collaboratives) to offer guidance and assistance to VBP 
eligible professionals in practices of ten or fewer 
professionals (with priority given to practices in rural areas, 
in HPSAs, in medically underserved areas, or with low composite 
scores). The guidance and assistance would help professionals 
comply with the VBP program, and transition to an APM.
    For purposes of implementing the guidance and assistance 
described above, the Secretary would provide for the transfer 
of $25 million from the Supplementary Medical Insurance (SMI) 
Trust Fund to the CMS Program Management Account for each of 
fiscal years 2014 through 2018. Not less than $10 million would 
be available for technical assistance to practices of ten or 
fewer professionals in HPSAs. These amounts would be available 
until expended.
    Beginning July 1, 2015, the Secretary would make available 
timely (such as quarterly) confidential feedback to each VBP 
eligible professional on the individual's performance with 
respect to the quality and resource use performance categories. 
The Secretary could also make available confidential feedback 
on the individual's performance with respect to the clinical 
practice improvement activities performance category and the 
meaningful use of certified EHR technology category. The 
Secretary could use one or more mechanisms to provide this 
feedback, including use of a web-based portal or other 
mechanisms determined appropriate by the Secretary. The 
Secretary would encourage provision of feedback through 
qualified clinical data registries under the existing PQRS 
program, as implemented by American Taxpayer Relief Act (ATRA, 
P.L. 112-240). The Secretary could also use such mechanisms to 
receive information from professionals.
    To facilitate timely feedback, the Secretary could use 
data, with respect to VBP eligible professionals, from periods 
prior to the current performance period and could use rolling 
periods in order to make illustrative calculations about the 
performance of these professionals. This feedback would be 
exempt from disclosure under the Freedom of Information Act 
(FOIA, P.L. 104-231).
    Beginning July 1, 2016, the Secretary would make available, 
to each VBP eligible professional, information about selected 
items and services (as determined appropriate by the Secretary) 
furnished to the professional's patients by other suppliers and 
providers of services for which Medicare payment is made. 
Information on selected items and services furnished to 
patients of a VBP eligible professional by another supplier or 
provider of services during the most recent period for which 
data are available (such as the most recent three-month 
period), would include the name of such providers furnishing 
items and services to such patients during the period, the 
types of items and services so furnished, and the dates on 
which these items and services were furnished. The Secretary 
would also make available historical averages (and other 
measures of the distribution if appropriate) of the total, and 
components of, allowed charges (and other figures as determined 
appropriate by the Secretary) for care episode codes for such 
period. Such information would be made available to VBP 
eligible professionals by mechanisms determined appropriate by 
the Secretary, which may include use of a web-based portal. 
Such information would be made available on the same or similar 
terms as data are made available to accountable care 
organizations under section 1899 of the SSA, including a 
beneficiary opt-out.
    The Secretary would establish a process under which a VBP 
eligible professional could seek an informal review of the 
calculation of the individual's VBP program incentive payment 
adjustment factor. The results of such a review would not be 
taken into account for purposes of determining the VPB program 
incentive payment adjustment factors with respect to a year 
(other than with respect to the calculation of such eligible 
professional's VBP program incentive payment adjustment factor 
for such year).
    When considering how to implement the Committee Bill, the 
Secretary should consider the administrative impact on eligible 
professionals. Implementation of the Bill should not create any 
undue or complicated administrative burdens for eligible 
professionals.
    There would be no administrative or judicial review of the 
following: (1) the methodology used to determine the amount of 
the VBP program incentive payment adjustment factor and the 
determination of such amount; (2) the determination of the 
amount of funding available for such VBP program incentive 
payments and the payment reduction described above; (3) the 
establishment of the performance standards and the performance 
period; (4) the identification of performance category measures 
and activities and information made public or posted on the 
Physician Compare website; and (5) the methodology developed 
and used to calculate performance scores and the calculation of 
such scores, including the weighting of measures and activities 
under such methodology.
    The GAO would submit two VBP program evaluation reports to 
Congress, due October 1, 2018 and October 1, 2021. These 
reports would include an examination of the distribution of the 
performance and incentive payments for VBP eligible 
professionals and patterns relating to the performance and 
incentive payments, including an analysis based on the type of 
provider, practice size, geographic location, and patient mix. 
The reports would also provide recommendations for improving 
the program. Finally, the reports would evaluate the impact of 
technical assistance funding on the ability of providers 
(especially physicians in rural areas or HPSAs, and physicians 
treating other underserved populations) to improve within the 
VBP or successfully transition to APMs and provide 
recommendations for maximizing use of these technical 
assistance funds.
    The GAO would submit reports to Congress on October 1, 2019 
and October 1, 2021 on the transition of physicians in rural 
areas and HPSAs and physicians treating other underserved 
populations to APMs. The studies would make recommendations on 
changes that could be made to overcome barriers for rural 
providers and those in HPSAs to participate in APMs.
    The GAO would also submit a report to Congress, not later 
than 18 months after enactment, which would compare the 
similarities and differences in the use of quality measures 
under the Medicare FFS program, the MA program, selected state 
Medicaid programs, and private payer arrangements. The report 
would consider those measures applicable to Medicare enrollees 
under the age of 65 and would focus on measures that comprise 
the most significant component of the quality performance 
category of the VBP program. The report would also make 
recommendations on how to reduce the administrative burden 
involved in applying such quality measures.
    For purposes of implementing the VBP program, the Secretary 
would provide for the transfer from the SMI Trust Fund to the 
CMS Program Management Account of $50 million for each fiscal 
year from 2014 through 2017. Amounts transferred would remain 
available until expended.
    The Committee Bill includes several modifications to 
improve quality reporting for the VBP program. The Bill 
clarifies and allows group practices to meet satisfactory 
reporting requirements for group practices by reporting to 
qualified clinical data registries beginning in 2015 and 
subsequent years. Similarly, current requirements for 
satisfactory reporting under the PQRS program are simplified, 
beginning in 2014 and in subsequent years, by allowing (but not 
requiring) the Secretary to establish alternative criteria for 
satisfactorily reporting such as reporting groups of measures 
under the PQRS program and to establish an alternative 
reporting period. The satisfactory reporting of measures for 
group practices would be modified for 2014 and subsequent years 
by allowing for, but not requiring, the use of a statistical 
sampling model to submit data on measures.
    Reports under the physician feedback program would not be 
provided after December 31, 2016 and instead would be provided 
under the requirements of the VBP program (described above).
    The Committee Bill establishes incentive payments for 
eligible professionals who become qualifying participants in an 
eligible APM. For covered professional services furnished by a 
qualifying APM participant from 2017 through 2022, such 
professionals would be paid an amount equal to five percent of 
the payment amount for the Medicare--covered professional 
services for the preceding year (which may be an estimate for 
the full preceding year based on a period that is less than the 
full year). The Secretary would establish policies to implement 
the additional payment in cases where payment for covered 
professional services furnished by a qualifying APM participant 
in an APM is made to an entity participating in the APM rather 
than directly to the participant. Payment would be made in a 
lump sum, on an annual basis, as soon as practicable. APM 
incentive payments would not be taken into account for purposes 
of determining actual expenditures or rebasing any benchmarks 
used under the APM.
    The amount of the additional payment for an item or service 
made to a qualifying APM participant would be determined 
without regard to additional payments for items and services 
furnished to professionals in HPSAs (under section 1833(m) of 
the SSA), additional incentive payments for primary care 
services (under section 1833(x) of the SSA), or additional 
incentive payments for major surgical procedures furnished in 
HPSAs (under section 1833(y) of the SSA).
    The term ``APM'' would be defined to mean any of the 
following:
    (a) A model under the CMMI defined under section 1115A of 
the SSA (other than a health care innovation award).
    (b) A Medicare Shared Savings Program accountable care 
organization (defined under section1899 of the SSA).
    (c) A demonstration under section 1866(C) of the SSA.
    (d) A demonstration required by federal law.
    The term ``eligible APM'' would mean, with respect to a 
year, an APM that uses certified EHR technology (defined under 
section 1848(o)(4) of the SSA), provides for payment for 
covered professional services based on quality measures 
comparable to the VBP quality performance category, and 
satisfies the requirement that the APM (1) bears financial risk 
for monetary losses under such model that are in excess of a 
nominal amount or (2) is a medical home expanded under the CMMI 
(under section 1115A(c) of the SSA).
    The term ``qualifying APM participant'' would mean the 
following:
    (1) in 2017 and 2018, an eligible professional for whom the 
Secretary determines that at least 25 percent of payments for 
Medicare-covered professional services furnished by the 
professional during the most recent period for which data are 
available (which may be less than a year) were attributable to 
services furnished to individuals who receive services under 
Medicare Part B through an entity that participates in an 
eligible APM;
    (2) in 2019 and 2020, an eligible professional for whom the 
Secretary determines that:
          a. Medicare-only revenue threshold option--at least 
        50 percent of payments under Medicare Part B for 
        covered professional services furnished by such 
        professional during the most recent period for which 
        data are available (which may be less than a year) were 
        attributable to services furnished to individuals who 
        receive services under Medicare Part B through an 
        entity that participates in an eligible APM; or
          b. Medicare and all-payer revenue threshold option--
                  i. at least 25 percent of payments under this 
                part were for covered professional services 
                furnished by such professional during the most 
                recent period for which data are available 
                (which may be less than a year) were 
                attributable to service furnished to 
                individuals who receive services under Medicare 
                Part B through an entity that participates in 
                an eligible APM;
                  ii. at least 50 percent of the sum of 
                payments made under Medicare Part B, and all 
                other payments regardless of payer (other than 
                payments made by the Veterans Administration, 
                TRICARE, or payments made under title XIX in 
                the case where no medical home or APM is 
                available under the State program under that 
                title) for items and services furnished by such 
                professional during the most recent period for 
                which data are available (which may be less 
                than a year) were attributable to such items 
                and services for which such professional uses 
                certified EHR technology (as defined under 
                section 1848(o)(4) of the SSA), is paid based 
                on quality measures comparable to the VBP 
                quality performance category, and satisfies the 
                requirement that the APM (1) bears more than 
                nominal financial risk if aggregate 
                expenditures exceeds expected aggregate 
                expenditures or (2) is a title XIX medical home 
                meeting criteria comparable to medical homes 
                expanded under section 1115A(c); and
                  iii. who provides the Secretary such 
                information as is necessary for the Secretary 
                to make a determination regarding the percent 
                of revenue received under (ii) above.
    (3) in 2021 and subsequent years, an eligible professional 
for whom the Secretary determines that:
          a. Medicare only revenue threshold option--at least 
        75 percent of payments under Medicare Part B for 
        covered professional services furnished by such 
        professional during the most recent period for which 
        data are available (which may be less than a year) were 
        attributable to services furnished to individuals who 
        receive services under Medicare Part B through an 
        entity that participates in an eligible APM;
          b. Medicare and all-payer revenue threshold option--
                  i. at least 25 percent of payments under this 
                part were for covered professional services 
                furnished by such professional during the most 
                recent period for which data are available 
                (which may be less than a year) were 
                attributable to items and services furnished to 
                individuals who receive services under Medicare 
                Part B through an entity that participates in 
                an eligible APM;
                  ii. at least 75 percent of the sum of 
                payments made under Medicare Part B, and all 
                other payments regardless of payer (other than 
                payments made by the Veterans Administration, 
                TRICARE, or payments made under title XIX in 
                the case where no medical home or APM is 
                available under the State program under that 
                title) for items and services furnished by such 
                professional during the most recent period for 
                which data are available (which may be less 
                than a year) were attributable to such items 
                and services for which such professional uses 
                certified EHR technology (as defined under 
                section 1848(o)(4) of the SSA), is paid based 
                on quality measures comparable to the VBP 
                quality performance category, and satisfies the 
                requirement that the APM (1) bears more than 
                nominal financial risk if aggregate 
                expenditures exceeds expected aggregate 
                expenditures or (2) is a title XIX medical home 
                meeting criteria comparable to medical homes 
                expanded under section 1115A(c); and
                  iii. who provides the Secretary such 
                information as is necessary for the Secretary 
                to make a determination regarding the percent 
                of revenue received under (ii) above.
    A ``partial qualifying APM participant'' would be defined 
as an eligible professional who would fail to meet the 
appropriate revenue threshold to achieve a bonus payment under 
the qualified APM program but who met the thresholds defined 
below. Although a partial qualifying APM participant could 
choose to participate in the VBP program for a year (and 
receive VBP incentive payments for that year), the eligible 
professional would be held harmless for lack of participation 
in the VBP program if the appropriate revenue thresholds were 
met, as follows:
          1. for 2017 and 2018, the partial qualifying APM 
        threshold would be set at 20 percent of Medicare 
        revenue;
          2. for 2019 and 2020, the partial qualifying APM 
        threshold would be set at 40 percent of Medicare 
        revenue; or 40 percent of all-payer revenue and 20 
        percent of Medicare revenue; and
          3. for 2021 and subsequent years, the partial 
        qualifying APM threshold would be set at 50 percent of 
        Medicare revenue or 50 percent of all-payer revenue and 
        20 percent of Medicare revenue.
    The term ``eligible professional'' would have the same 
meaning as defined for purposes of the PQRS program (under 
section 1848(k)(3)(B) of the SSA).
    There would be no administrative or judicial review of the 
following: (1) the determination that an eligible professional 
is a qualifying APM participant as described above and the 
determination that an APM is an eligible APM; and (2) the 
determination of the amount of the five percent payment 
incentive including any estimation as part of this 
determination.
    The Committee Bill would not prevent an APM or qualifying 
APM participant from furnishing a telehealth service for which 
Medicare payment is not made.
    To encourage the development and testing of additional 
APMs, section 1115A(b)(2) would be amended to encourage CMMI to 
test models focusing primarily on physicians' services (as 
defined under section 1848(j)(3) of the SSA), with particular 
focus on services furnished by physicians who are not primary 
care practitioners, practices of ten or fewer professionals, 
statewide payment models, in addition to other public sector or 
private sector payers, and models that focus primarily on 
Medicaid, working in conjunction with the Center for Medicaid 
and CHIP Services.
    In designing APMs under this section of the Committee Bill, 
to the extent an APM includes a product covered under Medicare 
Part D, the Secretary would take into consideration the 
successful Part D competitive bidding system.
    The Secretary would propose to Congress a plan to integrate 
MA APMs that take into account a budget neutral VBM.
    The Secretary would also conduct a study that examines the 
applicability of the federal fraud prevention laws to items and 
services furnished under the Medicare program for which payment 
is made under an APM. The study would identify aspects of APMs 
that are vulnerable to fraudulent activities and examine the 
implications of waivers of federal fraud prevention laws 
granted by the Secretary in support of APMs (including any 
expansion of APMs).
    Not later than two years after the date of enactment, the 
Secretary would report to Congress on the results of the study. 
The report would be required to include recommendations for 
actions to be taken to reduce vulnerability of APMs to 
fraudulent activities (including, as appropriate, 
recommendations of the Inspector General for changes in federal 
fraud prevention laws).
    The Secretary would also conduct a study that examines the 
effect of individuals' socioeconomic status on quality and 
resource use outcome measures for individuals under the 
Medicare program. The study would collect information on 
factors such as urban and rural location, eligibility for 
Medicaid (recognizing and accounting for varying Medicaid 
eligibility across states), and eligibility for benefits under 
the Supplemental Security Income program. Not later than two 
years after the date of enactment, the Secretary would report 
to Congress on the results of the study.
    The Secretary would also conduct another study examining 
the impact of risk factors described under the VBM established 
under the SSA, as well as other factors such as health 
literacy, limited English proficiency, patient activation, and 
race, on quality and resource use outcome measures under the 
Medicare program. In conducting the study, the Secretary could 
use existing federal data and collect additional data that may 
be necessary to complete the study. Not later than five years 
after the date of enactment, the Secretary would report to 
Congress on the results of the study.
    In conducting the studies, the Secretary would examine 
other useful non-Medicare data sets such as data from the 
American Community Survey. The Secretary would also consider 
how such data sets can be coordinated with Medicare 
administrative data, in order to improve the overall data set 
available to complete the studies and for the administration of 
the Medicare program.
    If the studies find a relationship between the factors 
examined and quality and resource use outcome measures, then 
the Secretary would also provide recommendations on how CMS 
should obtain access to the necessary data (and how to address 
barriers to data collection). The Secretary would also provide 
recommendations on how CMS should account for such factors in 
determining payment adjustments based on quality and resource 
use outcome measures under the VBP program and other similar 
provisions under the Medicare program.
    To conduct these studies, $6 million would be appropriated 
from the SMI Trust Fund to the Secretary. These funds would 
remain available until expended.
    Taking into account the studies conducted and 
recommendations made, the Secretary, on an ongoing basis, would 
estimate how an individual's health status and other risk 
factors affect quality and resource use outcome measures and, 
as feasible, would incorporate information from quality and 
resource use outcome measurement (including care episode and 
patient condition groups) into the VBP program and, as the 
Secretary determines appropriate other similar provisions of 
the Medicare program.
    Taking into account the studies conducted and 
recommendations made, the Secretary would account for factors 
identified with an effect on quality and resource use outcome 
measures when determining payment adjustments under the 
eligible professional VBP program and, as the Secretary 
determines appropriate, other similar Medicare provisions.
    The Secretary would collect or obtain data necessary to 
account for factors besides health status. The Secretary would 
carry out periodic analyses, at least every three years, based 
on factors other than health status so as to monitor possible 
changes in relationships between factors examined and quality 
and resource use outcome measures.
    To conduct these activities, $10 million would be 
appropriated from the SMI Trust Fund to the Secretary. These 
funds would remain available until expended.
    Not later than 18 months after the date of the enactment of 
the Committee Bill, the Secretary would develop and report to 
Congress on a strategic plan for collecting or otherwise 
accessing data on race and ethnicity for purposes of carrying 
out the Medicare program.
    The Secretary would engage in a process, collaborating with 
physician, practitioner, and other stakeholder communities, to 
improve resource use measurement. The Secretary would be 
required to develop a classification system and codes in order 
to classify similar patients into distinct care episode and 
patient condition groups for purposes of measuring resource 
use. No later than 60 days after enactment, the Secretary would 
post a list on the CMS website of the episode groups and a 
related description of the grouping criteria developed pursuant 
to the episode grouper required under section 1848(n)(9)(A) of 
the SSA. The Secretary would accept suggestions from physician 
specialty societies, applicable practitioner organizations, and 
other stakeholders for additional episode groups as well as 
specific clinical criteria and patient characteristics to 
classify similar patients into distinct care episode groups, 
and distinct patient condition groups after the Secretary posts 
the list to the CMS website for 60 days.
    To develop the proposed classification codes, the Secretary 
would establish distinct care episode groups and distinct 
patient condition groups which account for at least an 
estimated two-thirds of expenditures under Medicare Parts A and 
B, and assign codes to these groups.
    In establishing the care episode groups, the Secretary 
would base the groups on the patient's clinical problems at the 
time items and services are furnished during an episode of 
care, such as the clinical conditions or diagnoses, whether or 
not inpatient hospitalization is anticipated or occurs, the 
principal procedures or services planned or furnished, and 
other factors determined appropriate by the Secretary.
    In establishing the patient condition groups, the Secretary 
would base the groups on the patient's clinical history at the 
time of each medical visit, such as the patient's combination 
of chronic conditions, current health status, and recent 
significant history (such as hospitalization and major surgery 
during the previous three months), and other factors determined 
appropriate by the Secretary (such as Medicare eligibility 
status and dual eligibility under Medicare and Medicaid).
    The Secretary would be required to post a draft list of the 
care episode and patient condition codes (and the criteria and 
characteristics assigned to the codes) on the CMS website 
within 120 days after the stakeholder comment deadline. The 
Secretary would then seek comments from physician specialty 
societies, applicable practitioner organizations, and other 
stakeholders regarding the draft list and use one or more 
mechanisms that could include use of open door forums, town 
hall meetings, or other appropriate mechanisms.
    Not later than 120 days after the end of the comment 
period, the Secretary would post an operational list of care 
episode and patient condition codes (and the criteria and 
characteristics assigned to the code) on the CMS website, 
taking into account the comments received.
    Beginning with 2016, the Secretary would formalize the 
update process and make appropriate revisions to the 
operational lists of care episode and patient condition codes 
by November 1 of each year, through rulemaking. Such revisions 
could be based on experience, new information developed 
pursuant to the development of the episode grouper required 
under section 1848(n)(9)(A) of the SSA, and input from 
physician specialty societies, applicable practitioner 
organizations, and other stakeholders.
    To facilitate the attribution of patients and episodes (in 
whole or in part) to one or more physicians or applicable 
practitioners who provided their care, the Secretary would 
undertake the following:
    1. Develop patient relationship categories and codes that 
define and distinguish the relationship and responsibility of a 
physician or applicable practitioner with a patient at the time 
of providing an item or service. These patient relationship 
categories would include different relationships of the 
physician or applicable practitioner to the patient (and the 
codes could reflect combinations of such categories), such as a 
physician or applicable practitioner who:
          a. considers themself to have the primary 
        responsibility for the general and ongoing care for the 
        patient over extended periods of time;
          b. considers themself to be the lead physician or 
        practitioner and who furnishes items and services and 
        coordinates care furnished by other physicians or 
        practitioners for the patient during an acute episode;
          c. furnishes items and services to the patient on a 
        continuing basis during an acute episode of care, but 
        in a supportive rather than a lead role;
          d. furnishes items and services to the patient on an 
        occasional basis, usually at the request of another 
        physician or practitioner; or
          e. furnishes items and services only as ordered by 
        another physician or practitioner.
    2. Post the draft list of patient relationship categories 
and codes on the CMS website within 180 days after the date of 
enactment.
    3. Seek comments, through the date that is 60 days after 
the Secretary posts the list of draft patient relationship 
categories and codes, from physician specialty societies, 
applicable practitioner organizations, and other stakeholders 
regarding the patient relationship categories and codes as 
posted. In seeking such comments, the Secretary would use one 
or more mechanisms that may include open door forums, town hall 
meetings, or other appropriate mechanisms.
    4. Post an operational list of patient relationship 
categories and codes on the CMS website not later than 120 days 
after the end of the comment period, taking into account the 
comments received.
    5. Make revisions to the operational list of patient 
relationship categories and codes as appropriate not later than 
November 1 of each year (beginning with 2016), through 
rulemaking. Such revisions could be based on experience, new 
information developed pursuant to the development of the 
episode grouper required under section 1848(n)(9)(A) of the 
SSA, and input from physician specialty societies, applicable 
practitioner organizations, and other stakeholders.
    Beginning on January 1, 2016, any claim for payment for 
items or services furnished by a physician or applicable 
practitioner would have to include, as determined appropriate 
by the Secretary, care episode and patient condition codes and 
patient relationship codes, and the national provider 
identifier (NPI) of the ordering physician or applicable 
practitioner (if different from the billing physician or 
applicable practitioner).
    In order to evaluate the resources used to treat patients 
with respect to care episode and patient condition groups, the 
Secretary would conduct an analysis using the patient 
relationship codes reported on claims to attribute patients (in 
whole or in part) to one or more physicians and applicable 
practitioners, and using the care episode and patient condition 
codes reported on claims as a basis to compare similar patients 
and care episodes and patient condition groups.
    This resource use analysis would, as feasible, use the 
claims data experience of patients during a common period, such 
as 12 months, for patient condition codes. In addition, the 
analysis would use the claims data experience by care episode 
codes for defined periods of time as determined appropriate by 
the Secretary. For non-hospitalization services, the defined 
period could be the number of days of care, while the period 
for episodes with a hospitalization could be the number of days 
before, during, and after the hospitalization.
    In measuring the resource use, the Secretary would use per 
patient total allowed charges for all services under Medicare 
Part A, Part B and, if the Secretary determines appropriate, 
Part D, for the analysis of patient resource use, by care 
episode codes and by patient condition codes. The Secretary 
could use other measures of allowed charges (such as subtotals 
for categories of items and services) and measures of 
utilization of items and services (such as frequency of 
specific items and services and the ratio of specific items and 
services among attributed patients or episodes), as 
appropriate.
    The Secretary would seek comments from physician specialty 
societies, applicable practitioner organizations, and other 
stakeholders regarding the resource use methodology established 
above. In seeking comments, the Secretary would use one or more 
mechanisms (other than notice and comment rulemaking) that 
could include open door forums, town hall meetings, or other 
appropriate mechanisms.
    There would be no administrative or judicial review of the 
care episode and patient condition groups and codes, patient 
relationship categories and codes, or measurement of, and 
analyses of resource use with respect to, the care episode and 
patient condition codes and patient relationship codes.
    CMS would not penalize any professional who fails to report 
information for the development of care episode, patient 
condition, and patient relationship codes with non-payment of a 
claim.
    Requirements under current law (Chapter 35 of title 44, 
United States Code) regarding coordination of federal 
information, including the Paperwork Reduction Act, would not 
apply to this section.
    For purposes of the resource use program described in this 
section, the term `physician' would have the same meaning as 
under current Medicare law, while the term `applicable 
practitioner' would mean (1) a physician assistant, nurse 
practitioner, or clinical nurse specialist (as such terms are 
defined under current law), and (2) beginning January 1, 2017, 
other eligible professionals as specified by the Secretary.
    The Committee Bill process for collaborating with the 
physician, practitioner, and other stakeholder communities to 
measure resource use falls outside of the process of multi-
stakeholder input for measure development.

    SEC. 102. PRIORITIES AND FUNDING FOR QUALITY MEASURE DEVELOPMENT

Present Law

    Currently, measures for physicians and practitioners are 
concentrated in certain specialties and services while other 
services and specialties have few or no measures. In addition, 
many current measures are process measures rather than the 
preferred type of measures such as for outcomes, functional 
status, patient experience, care coordination and measures of 
appropriate use of services.

Committee Bill

    The Committee Bill would amend section 1848 of the SSA to 
add a new subsection (s), ``Priorities and Funding for Quality 
Measure Development.'' The Secretary would be required, not 
later than October 1, 2014, to develop a draft plan for the 
development of professional quality measures for application in 
the quality performance category under the new VBP program and 
comparable quality measures used by an APM. Such plan would be 
required to address how measures used in integrated delivery 
systems and by private payers could be incorporated under this 
subsection. In developing the plan, the Secretary would be 
required to consider gap analyses conducted by the entity with 
a contract under Section 1890(a) of the SSA or other 
contractors or entities and whether measures are applicable 
across health care settings. In addition, the Secretary would 
be required to prioritize, among other things, outcome 
measures, including patient-reported outcome and functional 
status measures, patient experience measures, care coordination 
measures, and measures of appropriate use of services 
(including measures of overuse).
    The Secretary would be required to accept stakeholder 
comments on the draft plan, through December 1, 2014, and would 
be required to, not later than February 1, 2015, post on the 
CMS website an operational plan for the development of quality 
measures for use under the VBP.
    Under the Committee Bill, the Secretary would also be 
required to enter into contracts or other arrangements with 
entities (such as physician specialty societies and other 
practitioner organizations) to develop, improve, update, or 
expand quality measures. In entering into contracts, the 
Secretary would be required to give priority to measures that 
are prioritized in the draft plan. In addition, the Secretary 
must consider whether measures developed would be 
electronically specified.
    The Secretary would be required, not later than February 1, 
2016 and annually thereafter, to post on the CMS website a 
report on the progress made in developing quality measures for 
application as specified. The reports would be required to 
include the following: (1) a description of the Secretary's 
efforts to implement the subsection; (2) for the measures 
developed over the previous year, including information on the 
total and type of measures developed, the name of each measure 
developed, the name of the developer and steward for each 
measure, and an estimate of the total amount expended to 
develop the measures (this information must also be provided 
for measures in development, as well as a timeline for 
development completion); (3) an update on the progress in 
developing measures of outcome, patient experience of care, 
care coordination, and appropriate use; (4) a list of topics 
and concepts that are being considered for development and the 
rationale for the selection of topics and concepts, including 
their relationship to gaps analyses; (5) a description of 
updates to the plan and the inventory of applicable measures 
maintained by CMS; and (6) other information the Secretary 
determines appropriate.
    The Secretary would be required to seek stakeholder input 
with respect to: (1) the identification of gaps where no 
measures exist, and specifically with respect to measures of 
outcomes, patient experience of care, care coordination, and 
appropriate use; (2) prioritization of quality measure 
development to address such gaps; and other quality measure 
development areas, as determined by the Secretary.
    To carry out these activities, the Secretary would provide 
for the transfer of $15 million, for each of FY2014 through 
FY2018, from the SMI Trust Fund to the CMS Program Management 
Account. The funds would remain available through FY2021.

SEC. 103. ENCOURAGING CARE MANAGEMENT FOR INDIVIDUALS WITH CHRONIC CARE 
                                 NEEDS

Present Law

    Physicians are paid under the physician fee schedule for 
services provided to Medicare beneficiaries. The most common 
services are for evaluation and management (E/M), which are 
often associated with a typical physician office visit. 
Generally, to receive payment, there must be a face-to-face 
visit with the patient. Beneficiaries with chronic care needs 
often require care management services. Payments for E/M visits 
are calculated to include some non-face-to-face care 
management. However, these codes do not reflect all of the 
services and resources required to furnish comprehensive 
coordinated care management services for beneficiaries with 
chronic needs.
    In the 2014 Medicare physician fee schedule final rule, CMS 
established a new payment for professionals for managing 
Medicare patients' chronic conditions in addition to payments 
professionals already receive for treating the patient's 
presenting condition. These new payments are separately payable 
for non-face-to-face chronic care management services. The 
chronic care management payment would apply to Medicare FFS 
beneficiaries with multiple chronic conditions expected to 
persist for at least 12 months or until the patient's death. 
The conditions must put patients at significant risk of death, 
acute exacerbation/decomposition, or functional decline. The 
new payment would be for 20-minutes of management services that 
physicians can deliver over a 30-day period.

Committee Bill

    The Committee Bill directs the Secretary to establish one 
or more Healthcare Common Procedure Coding System (HCPCS) codes 
for chronic care management services for individuals with 
chronic care needs. The Secretary would make payment for such 
management services furnished on or after January 1, 2015 by an 
applicable provider.
    The term applicable provider would refer to providers who 
furnish services as part of a patient-centered medical home or 
comparable specialty practice that is certified by an 
organization recognized by the Secretary, or who meet other 
comparable qualifications that the Secretary determines 
appropriate. Applicable providers eligible to receive care 
management payments include a doctor of medicine or osteopathy. 
The Committee Bill also defines an applicable provider as a 
physician assistant or nurse practitioner who performs such 
services as are legally authorized by the state. Finally, the 
Committee Bill recognizes clinical nurse specialists licensed 
to practice nursing in the state in which clinical nurse 
specialist services are performed as an applicable provider.
    In establishing new HCPCS codes for chronic care management 
services, the budget neutrality provision of the physician fee 
schedule would still apply.
    Payment for chronic care management services would only be 
made to one applicable provider during a period on behalf of 
each beneficiary. Payments for such management services could 
not be duplicative of payments for other services, such as 
hospice or home health services. Finally, payments for chronic 
care management would not require that an annual wellness visit 
or an initial preventive physician examination be furnished as 
a condition of payment.
    The Bill directs the Secretary to conduct an education and 
outreach campaign to inform providers and individuals enrolled 
under Medicare Part B of the benefits of chronic care 
management. The campaign would encourage enrollees with chronic 
conditions to receive chronic care management services. The 
Secretary would work through the Office of Rural Health Policy 
of the Department of Health and Human Services and the Office 
of Minority Health of CMS and would focus on encouraging 
participation by underserved rural populations and racial and 
ethnic minority populations. The Secretary would report to 
Congress no later than December 31, 2017 on the use of chronic 
care management services by individuals living in rural areas 
and by racial and ethnic minority populations. The report would 
identify barriers to receiving chronic care management services 
and make recommendations for increasing the appropriate use of 
chronic care management services.

 SEC. 104. ENSURING ACCURATE VALUATION OF SERVICES UNDER THE PHYSICIAN 
                              FEE SCHEDULE

Present Law

    Payment is made under the Medicare physician fee schedule 
for more than 7,000 services. Payment is equal to the sum of 
the RVUs--adjusted for geographic differences in costs--for 
physician work, practice expense, and malpractice for each 
service. A RVU reflects the relative resources of one physician 
fee schedule service compared to another.
    The Secretary is responsible for establishing the fee 
schedule, including the modification and refinement of the 
methodology for establishing RVUs. In establishing RVUs, the 
Secretary receives recommendations from the public including 
the RUC. Modifications to RVUs for a service are done in a 
budget neutral manner. Thus, payment increases from changes to 
the RVUs for some services must be offset by reductions in 
payment for all other physicians' services. The Secretary is 
required to review the RVUs no less than every five years.
    Currently, when the Secretary calculates RVUs, the results 
can be very minor relative value differences that do not 
reflect material differences in the work, practice expense and 
malpractice relative value difference. For example, the 
difference between 18.61 and 18.62 does not reflect a material 
difference between services.
    Section 1848(c)(2)(K) of the SSA requires the Secretary to 
periodically identify physicians' services as being potentially 
misvalued, and to make appropriate adjustments to the RVUs of 
such services under the Medicare physician fee schedule. To 
identify potentially misvalued services, the Secretary is to 
examine codes (and families of codes as appropriate) with the 
fastest growth, that have experienced substantial changes in 
practice expenses, for new technologies or services, that are 
frequently billed in conjunction with furnishing a single 
service, with low relative values, particularly those that are 
often billed multiple times for a single treatment, that have 
not been subject to review since the implementation of the 
RBRVS (the so-called `Harvard-valued codes'), and other codes 
the Secretary determines appropriate.
    In its March 2013 report, MedPAC recommended that Congress 
direct the Secretary to identify over-priced fee-schedule 
services and that the RVU reductions should achieve a target of 
1 percent of fee-schedule spending for each of five consecutive 
years. MedPAC's recommendation stated that the reductions 
should be budget neutral within the fee schedule.

Committee Bill

    Under the Committee Bill, the Secretary could collect 
information on the resources used by an eligible professional 
to provide services that are paid under the Medicare physician 
fee schedule. This information could be collected or obtained 
from any eligible professional or any other source. The 
Secretary could use this information in the determination of 
relative values for physician services paid for under the 
physician fee schedule.
    Under the Committee Bill, the Secretary could collect or 
obtain any or all of the following types of information: (1) 
the time to perform each service; (2) amounts and types of 
practice expense resources needed to perform each service; (3) 
the prices of practice expense resources needed to perform each 
service, which may include paid invoices or other documentation 
or records; (4) overhead and accounting information of 
physicians' practices; or (5) any other element that would 
improve the valuation of physician services.
    The Secretary could use any of the following mechanisms to 
collect or obtain the information listed above: (1) surveys of 
physicians, other suppliers, providers, manufacturers and 
vendors; (2) surgical logs, billing systems, or other practice 
or facility records; (3) EHRs; and (4) other mechanisms 
determined appropriate by the Secretary.
    The Secretary must report the source of information 
collected or obtained in the determination of relative values 
for physician services. The Secretary must also report how such 
information was used in the determination of relative values 
through notice and comment rulemaking. The Secretary may also 
exclude information collected or obtained from physicians who 
use a very high amount of resources to furnish services.
    Information used to determine relative values for services 
that are reported by the Secretary will only be made available 
in aggregate form and will not disclose information that 
identifies an eligible professional or a group practice or 
information collected or obtained pursuant to a nondisclosure 
agreement. The Federal Information Policy (Chapter 35 of Title 
44 of the US Code) will not apply to information collected or 
obtained.
    In order to incentivize physicians to provide information, 
the Secretary could provide for payments to eligible 
professionals who submit information.
    ``Eligible professionals'' are those that meet the 
definition of section 1848(k)(3)(B) of the SSA which includes: 
(1) physicians, (2) physician assistants, (3) nurse 
practitioners, (4) clinical nurse specialists, (5) certified 
registered nurse anesthetists, (6) certified nurse midwives, 
(7) clinical social workers, (8) clinical psychologists, (9) 
registered dietitian or nutrition professionals, (10) physical 
or occupational therapists, (11) qualified speech-language 
pathologists, and (12) qualified audiologists.
    In addition to funds otherwise appropriated, the Secretary 
will provide for the transfer of $2 million from the SMI Trust 
Fund to the CMS Program Management Account for each fiscal year 
beginning with FY 2014. Amounts transferred for a fiscal year 
will be available until expended.
    There would be no administrative or judicial review of the 
collection and use of information in the determination of 
relative values.
    The Secretary could use cost, charge, and other information 
collected or obtained from suppliers and providers to determine 
the practice expense relative values for physician services, 
including the new information collected under this provision.
    The Committee Bill expands the criteria the Secretary must 
use for identifying potentially misvalued codes to (1) codes 
that account for the majority of spending under the physician 
fee schedule; (2) codes for services that have experienced a 
substantial change in the hospital length of stay or procedure 
time; (3) codes for which there may be a change in the typical 
site of service since the code was last valued; (4) codes for 
which there is a significant difference in payment for the same 
service between different sites of service; (5) codes for which 
there may be anomalies in relative values within a family of 
codes; (6) codes for services where there may be efficiencies 
when a service is furnished at the same time as other services; 
(7) codes with high intra-service work per unit of time; (8) 
codes with high practice expense RVUs; and (9) codes with high 
cost supplies.
    With respect to fee schedules established for each year of 
2015 through 2018, the Secretary must determine the estimated 
net reduction in expenditures under the fee schedule for a year 
as a result of adjustments to the relative values for misvalued 
codes. The Committee Bill sets a target of 0.5 percent of the 
estimated amount of expenditures under the fee schedule for 
each year of 2015 through 2018 for such reductions.
    If the estimated net reduction in expenditures for the year 
is equal to or greater than the 0.5 percent target for the 
year, reduced expenditures attributable to such adjustments 
will be redistributed in a budget neutral manner within the 
physician fee schedule. Any reductions in excess of the target 
will be treated as a reduction in expenditures for purposes of 
meeting the target for the following year.
    If the estimated net reduction in expenditures for the year 
is less than the 0.5 percent target, the difference between the 
target and the estimated net reduction in expenditures will not 
be subject to budget neutrality and fee schedule payments will 
be reduced by that difference.
    Beginning in 2015, if the total reduction of the RVUs 
(including work, practice expense, and malpractice) for a 
service for a year is more than 20 percent of the total value 
of the RVUs for the previous year, the applicable reductions in 
work, practice expense, and malpractice RVUs will be phased in 
over a two-year period.
    The Committee Bill would give the Secretary authority to 
smooth minor differences in relative values for families or 
groups of procedures.
    Not later than one year after enactment, the GAO will 
conduct a study of the processes used by the RUC to provide 
recommendations to the Secretary regarding the relative values 
for specific services under the physician fee schedule.

                SEC. 105. PROMOTING EVIDENCE-BASED CARE

Present Law

    Medicare pays for outpatient imaging services through the 
physician fee schedule. Following findings from MedPAC, GAO, 
and others that the rate of growth in Medicare outpatient 
imaging services was greater than for most other Medicare 
covered services, Congress and CMS have initiated a number of 
policies to address the issue. The Deficit Reduction Act (DRA, 
P.L. 109-171) modified the payment rules for certain imaging 
services by capping the technical component of the payment for 
services paid under the physician fee schedule at the level 
paid under the hospital outpatient prospective payment system 
(OPPS) effective January 1, 2007. Services subject to the cap 
are: X-rays, ultrasound (including echocardiography), nuclear 
medicine (including positron emission tomography), magnetic 
resonance imaging, computed tomography, and fluoroscopy.
    CMS, in the November 2005 physician fee schedule 
regulations, extended the multiple procedure payment reduction 
policy to certain imaging services. The payment reduction was 
25 percent of the technical component of certain imaging 
procedures performed on contiguous body areas. Under section 
1848(c)(2)(b)(vi) of the SSA the reduction is increased to 50 
percent effective July 2010. CMS expanded the application of 
the payment reduction to studies on noncontiguous body areas 
and the professional component for the second and subsequent 
services to the same patient, in the same session, on the same 
day.
    CMS's method for calculating the Medicare fee schedule 
reimbursement rate for advanced imaging services originally 
assumed that imaging machines are operated 25 hours per week, 
or 50 percent of the time that practices are open for business. 
Setting the equipment use factor at a lower rate has led to 
higher payment for these services. Citing evidence showing that 
the utilization rate is 90 percent, rather than the 50 percent 
previously assumed, MedPAC urged CMS to use the higher 
utilization rate in the calculation of fee schedule payments 
for advanced imaging services. The ACA changed the utilization 
rate assumption for calculating the payment for advanced 
imaging equipment from 50 percent, as assumed in prior years, 
to 75 percent for 2011 and subsequent years. The ATRA requires 
the Secretary to apply a 75 percent use rate in calculating 
payment rates for advanced imaging services through 2013, and a 
90 percent use rate for 2014 and subsequent years.
    To further address the rapid growth in advanced imaging 
services, MedPAC recommended, in its June 2011 report, that 
Congress direct the Secretary to establish a prior 
authorization program for practitioners who order substantially 
more advanced diagnostic imaging services than their peers.

Committee Bill

    The Committee Bill would promote the use of evidence-based 
medical care. Specifically, it would create a program to 
promote utilization of appropriate use criteria by ordering 
professionals for certain imaging services in designated 
settings. Appropriate use criteria would be defined as criteria 
used to assist ordering professionals in making the most 
appropriate treatment decision for a specific clinical 
condition. The Committee Bill would require professionals to 
consult appropriate use criteria as a prerequisite to Medicare 
payment for the applicable imaging service.
    The following professionals would be subject to these 
requirements: (1) medical doctors and osteopaths, (2) dentists, 
(3) podiatrists, (4) optometrists, (5) chiropractors, (6) 
physician assistants, (7) nurse practitioners, (8) clinical 
nurse specialists, (9) certified nurse anesthetists, (10) 
certified nurse-midwifes, (11) clinical social workers, (12) 
clinical psychologists, and (13) registered dietitians or 
nutritional professionals. Ordering professionals would be 
defined as professionals who order an applicable imaging 
service for an individual. Furnishing professionals would be 
defined as professionals who furnish an applicable imaging 
service for an individual.
    Applicable imaging services would be defined as those 
advanced diagnostic imaging services defined in section 
1834(e)(1)(B) of the SSA for which there are one or more 
appropriate use criteria specified by the Secretary through 
rulemaking and at least one or more qualified clinical decision 
support mechanisms that are free of charge.
    These requirements would apply for diagnostic imaging 
services furnished in the following settings: (1) physicians' 
offices, (2) hospital outpatient departments (HOPD), (3) 
ambulatory surgical centers, (4) and any other provider-led 
outpatient setting determined appropriate by the Secretary. The 
Secretary could only choose appropriate use criteria developed 
or endorsed by national professional medical specialty 
societies or other provider-led entities. Applicable payment 
systems would be defined as the physician fee schedule, the 
OPPS, and the ambulatory surgical center payment system.
    The Secretary would required to specify appropriate use 
criteria by November 15, 2015 only from among appropriate use 
criteria developed or endorsed by national professional medical 
specialty societies or other provider-led entities. This would 
be accomplished through rulemaking and in consultation with 
physicians, practitioners, and other stakeholders. In 
specifying these criteria, the Secretary would consider whether 
the criteria have achieved stakeholder consensus, are 
scientifically valid and evidenced-based, and are based on 
studies that are published and reviewable by stakeholders. The 
Secretary would periodically update and revise (as appropriate) 
the appropriate use criteria. In cases where more than one 
appropriate use criteria applies, the Secretary would specify 
one or more criteria that would be applicable.
    In addition to these criteria, the Secretary would 
specify--in consultation with physicians, practitioners, and 
other stakeholders--one or more qualified clinical decision 
support mechanisms that could be used by ordering professionals 
to consult appropriate use criteria for the applicable imaging 
services. These mechanisms could include certified EHR clinical 
decision support modules, private sector clinical support tools 
that are independent from certified EHR technology, including 
clinical decision support mechanisms available from medical 
specialty organizations, and other clinical decision support 
mechanisms established by the Secretary.
    To be qualified, the clinical decision support mechanism 
would have to be able to make available to the ordering 
physician the applicable appropriate use criteria and 
supporting documentation, and also be able to determine the 
extent to which the ordering of an applicable image complies 
with the criteria. In the case where there are more than one 
applicable appropriate use criteria specified for an applicable 
imaging service, the mechanism must be able to indicate which 
criteria it uses for the service. The mechanism would also be 
able to generate and provide to the ordering physician a 
certification or documentation that the criteria was consulted 
by the ordering physician. It would be updated on a regular 
basis to reflect revisions to the criteria, comply with all 
applicable privacy and security standards, and be able to 
perform other functions specified by the Secretary, which may 
include a requirement to provide aggregate feedback to the 
ordering physician. The Secretary would provide a list of 
qualifying mechanisms by April 1, 2016 and update it 
periodically.
    Beginning on January 1, 2017, an ordering professional in 
an applicable setting would consult appropriate use criteria 
via qualified clinical decision support mechanisms for 
applicable imaging services and provide the furnishing 
professional with the following: (1) information about which 
decision support mechanism was consulted by the ordering 
professional; (2) whether the ordered imaging service adhered 
to the applicable appropriate use criteria, did not adhere, or 
the criteria were not applicable to the service ordered; and 
(3) the NPI of the ordering professional (if different from the 
furnishing professional). Payment for the imaging service would 
only be made if the claim includes this information.
    The appropriate use requirement would not apply to 
applicable imaging services ordered: (1) for individuals with 
an emergency medical condition, (2) for hospital inpatients, 
(3) by professionals in an APM, as defined under section 102 of 
the Committee Bill, and (4) by professionals who would face 
significant hardship consulting with appropriate use criteria, 
such as professionals whose practices are in a rural area 
without sufficient Internet access.
    Using data from January 1, 2017 onward, the Secretary would 
periodically determine ordering professionals who are outliers 
based on their low adherence to applicable appropriate use 
criteria, which may be based on comparisons to other ordering 
professionals. The Secretary's determination would also include 
data for professionals who are subject to prior authorization. 
In making these determinations, the Secretary would use two 
years of data and consult with physicians, practitioners, and 
other stakeholders in developing methods to identify outlier 
professionals.
    The Committee intends that the prior authorization program 
would reduce inappropriate use of applicable imaging services 
by professionals with a recent history of low adherence to 
applicable appropriate use criteria.
    In developing this program, the Secretary should include a 
mechanism to support professionals who are outliers based on 
their low adherence to applicable appropriate use criteria to 
remove the outlier designation after demonstrating sufficient 
adherence to applicable appropriate use criteria.
    The Committee intends the outlier provisions to apply to a 
small minority of total professionals.
    Beginning on January 1, 2020, all applicable imaging 
services ordered by an outlier ordering professional would be 
subject to prior authorization. To fund this prior 
authorization program, $5 million per year would be provided to 
CMS from the SMI Trust Fund from 2019 through 2021. Amounts 
transferred from the SMI Trust Fund would remain available 
until expended.
    The Secretary could establish an appropriate use program 
for other services under Part B. Such process would replicate 
the provider-developed or provider-endorsed framework for 
appropriate use criteria for applicable imaging services 
described above. In determining whether to establish any 
additional programs, the Secretary would also take into 
consideration the results of a GAO study--conducted 18 months 
after enactment--on the extent to which appropriate use 
criteria could be used for other services, such as radiation 
therapy and clinical diagnostic laboratory services. In 
addition, before issuing a proposed rule expanding appropriate 
use criteria to other Part B services, the Secretary would seek 
comments from stakeholders through an advance notice of 
proposed rulemaking.
    The Committee Bill would not authorize the Secretary to 
initiate the development of clinical practice guidelines. The 
intent of the Committee Bill is to empower physicians and other 
professionals to lead and disseminate best practices that have 
been developed and accepted by the physician and professional 
stakeholder community.

SEC. 106. EMPOWERING BENEFICIARY CHOICES THROUGH ACCESS TO INFORMATION 
                        ON PHYSICIANS' SERVICES

Present Law

    Section 10331 of the ACA required the Secretary to develop, 
not later than January 1, 2011, a Physician Compare website 
with information about physicians enrolled in Medicare and 
other eligible professionals who participate in the Physician 
Quality Reporting Initiative (now the PQRS). The Secretary was 
required, by January 1, 2013, to implement a plan to make 
publicly available comparative information on physician 
performance on quality and patient experience measures 
(consistent with privacy protections codified at 5 U.S.C. 
Sec. 552 and Sec. 552a).
    The information on Physician Compare is required to 
include, among other things, measures collected under PQRS, and 
an assessment of efficiency, safety, patient health outcomes, 
and patient experience. In developing and implementing this 
plan, the Secretary was required to consider a number of 
factors, including among others, processes to ensure 
appropriate attribution and processes to ensure that data made 
publicly available is statistically valid and reliable.
    The Secretary is required to consider the feedback from the 
multi-stakeholder groups (consistent with sections 1890(b)(7) 
and 1890A of the SSA) when selecting measures for use under 
this section, and must consider the plan to transition to a 
value-based purchasing program for physicians (under section 
131 of the MIPPA) when developing and implementing the plan 
under this section. The Secretary is required to report to 
Congress, not later than January 1, 2015, on the Physician 
Compare website. At any time before the submission of this 
report, the Secretary is authorized to expand the information 
available on the Physician Compare website to other types of 
Medicare providers, and is authorized to establish, at any time 
not later than January 1, 2019, a demonstration program to 
provide financial incentives to Medicare beneficiaries who 
utilize high quality physicians (as determined by the Secretary 
based on information included on the Physician Compare 
website).

Committee Bill

    The Committee Bill would codify section 10331 of the ACA 
into the SSA by creating a new section 1848(t). It would also 
direct the Secretary to post additional information on 
Physician Compare on eligible professionals.
    The Secretary would include the following information on 
Physician Compare: (1) information on the number of services 
provided by each eligible professional, which could include 
information on the most frequent services furnished or 
groupings of services, (2) information on submitted charges and 
payments for services under Medicare Part B, and (3) a publicly 
available and unique identifier, such as a national provider 
identifier, for each eligible professional.
    Physician Compare would be searchable by at least (1) the 
specialty or type of eligible professional, (2) the 
characteristics of the services furnished, such as the volume 
or groupings of services, and (3) the location of the eligible 
professional.
    Physician Compare would also indicate, where appropriate, 
that the publicized information may not be representative of 
the eligible professional's entire patient population, the 
variety of services provided by the eligible professional, or 
the health conditions of individuals treated.
    The Secretary would make this information available on 
Physician Compare by July 1, 2015 for physicians and by July 1, 
2016 for other eligible professionals. The Secretary would also 
update Physician Compare on at least an annual basis.

      SEC. 107. EXPANDING CLAIMS DATA AVAILABILITY TO IMPROVE CARE

Present Law

    Section 1874(e) of the SSA requires the Secretary to make 
claims data available that could be used to measure health care 
provider and supplier performance. This section enables QEs to 
obtain standardized extracts, as determined by the Secretary, 
of Medicare Parts A, B, and D claims data for one or more 
specified geographic areas and time periods. The fees for 
making Medicare data available for performance measurement are 
to be equal to the cost of providing the data. The Secretary 
must take those actions necessary to protect the identity of 
individuals entitled to or enrolled for benefits under such 
parts. CMS created the QE Certification for Medicare Data 
Program and published a final rule that established regulations 
governing the program.
    To be certified as a QE, entities must be qualified (as 
determined by the Secretary) to use claims data to evaluate the 
performance of providers of services and suppliers on measures 
of quality, efficiency, effectiveness, and resource use. They 
also must agree to requirements governing the use of the data.
    QEs are only permitted to use the Medicare data for 
publishing public performance reports on providers and 
suppliers. When requesting the Medicare data, a QE must submit 
to the Secretary a description of the methodologies that will 
be used to evaluate provider performance. They must also 
combine the CMS-provided data with claims data from another 
source. When creating reports, they must use standard measures 
if available. However, if necessary, they may use alternative 
measures in consultation with appropriate stakeholders. 
Additionally, the reports can only include information on a 
provider of services or supplier in an aggregate form as 
determined appropriate by the Secretary.
    QE's public reports must include an understandable 
description of the measures, which include standard quality 
measures and the rationale for use of alternative measures, 
risk adjustment methods, physician attribution methods, other 
applicable methods, data specifications and limitations, and 
the sponsors, so that consumers, providers of services and 
suppliers, health plans, researchers, and other stakeholders 
can assess such reports. Prior to their public release, these 
reports must be made available confidentially to any provider 
of services or supplier to be identified in such report, and 
provide them with an opportunity to appeal and correct errors. 
Prior their public release, the QEs must also make the format 
of the reports available to the Secretary.
    Data released to a QE is not subject to discovery or 
admission as evidence in judicial or administrative proceedings 
without consent of the applicable provider of services or 
supplier.

Committee Bill

    The Committee Bill would expand the availability of CMS 
claims data to QEs and the ability of QEs to provide non-public 
analyses and access to their CMS data combined with their other 
data. The Committee Bill also would provide qualified clinical 
data registries with access to the same CMS claims data as QEs.
    Beginning July 1, 2014, to the extent consistent with 
applicable information, privacy, security, and disclosure laws, 
a QE would, as determined appropriate by the Secretary, be able 
to use its CMS data combined with its other data to conduct 
analyses for non-public uses. The QE could provide or sell 
these non-public analyses to any of the following entities: (1) 
a provider of services or a supplier, (2) a medical society or 
hospital association, (3) a health insurance issuer providing 
claims data to the QE, (4) an employer, as defined under 
Section 3(5) of the Employee Retirement Insurance Security Act 
of 1974 (ERISA, P.L. 93-406), but only for the purpose of 
providing health insurance to its employees and retirees, or 
(5) other entities approved by the Secretary. However, the 
Secretary could not grant access to analyses to an employer 
(under the ERISA) for purposes other than providing health 
insurance to its employees and retirees or to a health 
insurance insurer that does not provide claims data to the QE.
    QEs would be able to perform these non-public analyses for 
the following purposes: (1) helping providers develop and 
participate in quality and patient care improvement activities 
(including developing new models of care), (2) population 
health management, (3) disease monitoring, (4) assisting 
employers with providing health insurance to their employees, 
and (5) other purposes approved by the Secretary.
    A QE analysis for a provider could include information 
individually identifying the provider's patients but only for 
services performed by the provider to the identified patients. 
In all other instances, QE analyses could not include any 
information that individually identifies a patient. An entity 
receiving an analysis from a QE could not redisclose or make 
the analysis public.
    If a non-public analysis were to individually identify a 
provider that is not being provided or sold the analysis, the 
QE would have to provide the identified provider with an 
opportunity to review and submit corrections to the analysis.
    A QE would also be able to provide or sell access to its 
CMS data combined with its other data through a qualified data 
enclave, defined as a web-based portal (or comparable 
mechanism) that is capable of providing access to the combined 
data maintained by the QE. The QE could provide or sell access 
to the enclave to any of the following entities: (1) a provider 
of services, (2) a supplier (3) a medical society or hospital 
association, and (4) other entities approved by the Secretary. 
However, the Secretary could not grant access to the data 
through a qualified data enclave to an employer (under the 
ERISA) or to a health insurance insurer.
    These entities would only be permitted to use the data for 
the purposes of (1) assisting providers in developing and 
participating in quality and patient care improvement 
activities (including developing new models of care), (2) 
population health management, (3) disease monitoring, and (4) 
other purposes approved by the Secretary.
    A data enclave would have to block entities accessing the 
data enclave from removing or extracting data from the enclave. 
The enclave would also have to block access to data that 
individually identifies a patient, including data on the 
patient's name and date of birth as well as other data 
specified by the Secretary. The data enclave could grant a 
provider or supplier with access to identified patient data, 
but only on services the provider or supplier performs for 
their patients. QEs cannot grant access to the data enclave to 
an entity (provider, medical society, etc.) unless the QE and 
the entity have entered into a data use agreement.
    Any QE that would provide or sell non-public analyses or 
access to a qualified data enclave would have to submit to the 
Secretary an annual report that includes the following 
information: (1) a summary of the analyses provided or sold, 
including the number of analyses, the number of purchasers, and 
the total amount of fees received for the analyses; (2) a 
description of the topics and purposes of the analyses; (3) 
information on the entities who obtained access to the 
qualified data enclave, the uses of the data, and the total 
amount of fees received for providing access; and (4) other 
information determined appropriate by the Secretary.
    Beginning July 1, 2014, if the Secretary determines 
appropriate, the Secretary could provide to QEs standardized 
extracts (as the Secretary determines appropriate) of claims 
data under Medicaid and the Children's Health Insurance Program 
for assistance providing for one or more specified geographic 
areas and time periods requested by a QE. When issuing the data 
to QEs, the Secretary must take the appropriate actions needed 
to protect the identity of individuals entitled to or enrolled 
for these programs' benefits.
    Beginning on July 1, 2014, QE fees paid to the Secretary 
for providing data extracts would be deposited in the CMS 
Program Management Account instead of the Federal SMI Trust 
Fund.
    To the extent consistent with applicable information, 
privacy, security, and disclosure laws, and subject to other 
requirements as the Secretary may specify, beginning July 1, 
2014, qualified clinical data registries would be able to 
purchase the same CMS claims data (in a form and manner 
determined appropriate by the Secretary) as QEs in order to 
link the data with clinical data and perform analyses and 
research to support quality improvement or patient safety.
    Effective July 1, 2014, if the Secretary determines 
appropriate, the Secretary may make available to qualified 
clinical data registries standardized extracts under Medicaid 
and the Children's Health Insurance Program. Any fees the 
Secretary was to collect by making such data available would be 
deposited in the CMS Program Management Account.
    A qualified clinical data registry could not publicly 
report any research, analyses, or CMS data that individually 
identifies a provider, supplier or individual unless the 
registry was to obtain the consent of the provider, supplier or 
individual prior to reporting.

               TITLE II--EXTENSIONS AND OTHER PROVISIONS


                    Subtitle A--Medicare Extensions


                  SEC. 201. WORK GEOGRAPHIC ADJUSTMENT

Present Law

    The Medicare physician fee schedule is adjusted 
geographically for three factors to reflect differences in the 
cost of resources needed to provide physician services: 
physician work, practice expense, and medical malpractice 
insurance. These geographic adjustments are an index--known as 
Geographic Practice Cost Index (GPCI)--that reflect how each 
area compares to the national average. A value of 1.00 
represents the average across all areas. This index is used in 
the calculation of the payment rate under the Medicare 
physician fee schedule. A series of bills set a temporary floor 
value of 1.00 on the physician work GPCI beginning January 2004 
and continuing through December 31, 2013.

Committee Bill

    The floor on the work geographic index would be set 
permanently at 1.0.

            SEC. 202. MEDICARE PAYMENT FOR THERAPY SERVICES

Present Law

    The BBA established two annual per beneficiary payment caps 
for all Medicare-covered outpatient therapy services furnished 
by non-hospital providers, one for physical therapy services 
and speech-language pathology services, the other for 
occupational therapy services. Initially set at $1,500 to apply 
beginning in 1999, these caps were suspended from 2000-2005. 
With the application of the caps beginning in 2006, the DRA 
required the Secretary to implement an exceptions process 
throughout 2006 for services meeting specified criteria for 
medically necessary services. Subsequent legislation has 
extended the exceptions process and increased the caps each 
year since then.
    The Middle Class Tax Relief and Job Creation Act of 2012 
(MCTRJCA, P.L. 112-96) established, in addition to the caps, an 
annual threshold at $3,700 to be applied separately for the two 
categories of therapy services effective October 1, 2012. 
Medical review was required for services furnished above the 
threshold. In addition, therapy services furnished in HOPDs 
were included in the caps for the first time. The ATRA extended 
the exceptions process through December 31, 2013, extended the 
application of the cap and threshold to therapy services 
furnished in a HOPD and requires outpatient therapy services 
furnished in a Critical Access Hospital (CAH) to count towards 
the cap and threshold. The ATRA also extended the medical 
review requirement for therapy services furnished through 
December 31, 2013.
    MCTRJCA also directed the Secretary, in consultation with 
relevant stakeholders, to implement a claims-based data 
strategy designed to collect data on patient function during 
the course of outpatient therapy services beginning January 1, 
2013. The data will assist in reforming the Medicare payment 
system for outpatient therapy services.

Committee Bill

    The therapy cap would be repealed upon enactment. The 
$3,700 threshold would be extended for one year, through the 
end of 2014, after which it would be repealed. Beginning 
January 1, 2015, a new medical review program for outpatient 
therapy services would be established as defined below. The 
Secretary would identify the services for medical review, using 
appropriate factors, which could include the following:
    (a) Services furnished by a therapy provider whose pattern 
of billing is higher compared to peers.
    (b) Services furnished by a therapy provider who, in a 
prior period, has a high claims denial percentage or is least 
compliant with other applicable requirements under this title.
    (c) Services furnished by a therapy provider who is newly 
enrolled in the Medicare program.
    (d) Services furnished by a therapy provider who has 
questionable billing practices, such as billing medically 
unlikely units of services in a day.
    (e) Services furnished to treat a type of medical 
condition.
    (f) Services identified by use of the standardized data 
elements required to be reported.
    (g) Services furnished by a single therapy provider or a 
group that includes such providers.
    (h) Other services as determined appropriate by the 
Secretary.
    The Secretary would use prior authorization medical review 
for the identified outpatient therapy services furnished to a 
beneficiary above certain thresholds established by the 
Secretary, such as a dollar threshold or by type of outpatient 
therapy service or setting.
    The Secretary would end the application of prior 
authorization medical review if the provider has a low denial 
rate under prior authorization. The Secretary could 
subsequently reapply prior authorization medical review to the 
therapy provider if this were determined to be appropriate. The 
Secretary would, where practicable, provide for prior 
authorization medical review for multiple services at a single 
time, such as services in a therapy plan of care.
    The Secretary could use pre-payment review or post-payment 
review for services that are not subject to prior authorization 
medical review, including those services falling below the 
established thresholds. So as to not interfere with an ongoing 
investigation, the Secretary could determine that medical 
review does not apply in the case where fraud may be involved. 
The Secretary would conduct the prior authorization medical 
review of outpatient therapy services using Medicare 
administrative contractors (MACs) or other review contractors.
    No Medicare payment would be made for outpatient therapy 
services subject to this review unless a prior authorization 
determination were made in advance that the services met the 
Medicare reasonable and necessary requirements. A therapy 
provider could submit the information necessary for medical 
review by fax, by mail, or by electronic means. As soon as 
practicable, but not later than 24 months after the date of 
enactment, the Secretary would have to make available the 
electronic means necessary to receive information.
    The Secretary would make a prior authorization 
determination within ten business days of receipt of the 
necessary medical documentation or be deemed to have found the 
services to meet the applicable requirements for Medicare 
coverage. The Committee Bill would not preclude subsequent 
payment denial for an outpatient therapy service that had been 
affirmed by medical review but did not meet other applicable 
Medicare requirements.
    For outpatient therapy services furnished on or after 
January 1, 2015, when payment may not be made due to medical 
review, the current law limiting beneficiary liability when 
Medicare claims are disallowed would apply in the same manner 
as a claims denial when a service is not reasonable and 
necessary.
    The Secretary could implement this medical review program 
by interim final rule with comment period. Requirements under 
current law (44 U.S.C. Sec. Sec. 3501-3521) regarding 
coordination of federal information under the Paperwork 
Reduction Act would not apply to this medical review program.
    For purposes of this subsection the following definitions 
would apply. The term `outpatient therapy services' would mean 
therapy services for which Medicare payment is made under the 
physician fee schedule, under the fee schedule for outpatient 
therapy services and comprehensive outpatient rehabilitation 
services, and under the payment system for outpatient CAH 
services. The term `therapy provider' would mean a provider of 
services (as defined under current law section 1861(u) of the 
SSA) or a supplier (as defined under current law section 
1861(d)) who furnishes outpatient therapy services.
    To implement this subsection, the Secretary would provide 
for the transfer of $35,000,000 from the SMI Trust Fund to the 
CMS Program Management Account for each fiscal year, beginning 
with fiscal year 2014. These amounts would remain available 
until expended.
    Beginning with 2017 and then every two years, the Secretary 
would have to determine and publicly report the improper 
payment rate for outpatient therapy services for a 12-month 
period. If the improper payment rate is 50 percent or less of 
the Medicare FFS improper payment rate for the same period, the 
Secretary would have to reduce the amount of medical review 
conducted for a prospective year and return an appropriate 
portion of the funding provided for that year.
    The GAO would conduct a study on the effectiveness of 
medical review of outpatient therapy. The study would include 
an analysis of aggregate data on the number of individuals, 
therapy providers, and claims subject to review; the number of 
reviews conducted; and the outcomes of such reviews. Not later 
than three years after the date of enactment, the GAO would 
submit a report to Congress including recommendations for 
legislation and administrative action.
    The Committee Bill would establish the collection of 
standardized data elements for outpatient therapy services. Not 
later than six months after enactment, the Secretary would post 
a draft list of standardized data elements on the CMS website. 
The standardized data elements would include information with 
respect to the following domains, as determined appropriate by 
the Secretary: (1) demographic information, (2) diagnosis, (3) 
severity, (4) affected body structures and functions, (5) 
limitations with activities of daily living and participation, 
(6) functional status, and (7) other domains determined 
appropriate by the Secretary.
    The Secretary would accept comments from stakeholders for 
60 days after the posting date of the draft standardized data 
elements. In seeking such comments, the Secretary would use one 
or more mechanisms to solicit input from stakeholders that 
could include use of open door forums, town hall meetings, 
requests for information, or other mechanisms as determined 
appropriate by the Secretary.
    No later than 120 days after the end of the comment period, 
the Secretary would post an operational list of standardized 
data elements on the CMS website, taking into account such 
comments. Subsequent revisions to the operational list of 
standardized data elements would be made through rulemaking and 
could be based on experience and input from stakeholders. No 
later than 18 months after posting the operational list of 
standardized data elements, the Secretary would develop and 
implement a system, which may be a web portal, for therapy 
providers to report the standardized data elements for 
individuals receiving outpatient therapy services. The 
Secretary would seek comments from stakeholders regarding the 
best way to report the standardized data elements.
    The Secretary would specify the frequency of reporting 
standardized data elements and seek comments from stakeholders 
regarding the frequency of the reporting. Beginning on the 
operational date of the reporting system, no Medicare payment 
would be made for outpatient therapy services furnished to a 
beneficiary unless a therapy provider were to report the 
standardized data elements for the beneficiary.
    No later than 18 months after the date the data reporting 
system is operational, the Secretary would submit a report to 
Congress on the design of a new payment system for outpatient 
therapy services. The report would include an analysis of the 
standardized data elements collected and other appropriate data 
and information. It would consider (1) appropriate adjustments 
to payment (such as case mix and outliers), (2) payments on an 
episode of care basis, and (3) reduced payment for multiple 
episodes. The Secretary would consult with stakeholders 
regarding design of such a new payment system.
    To implement the data collection effort and develop the 
report on a new outpatient therapy payment system, the 
Secretary would provide for the transfer of $7,000,000 from the 
SMI Trust Fund to the CMS Program Management Account for each 
fiscal year from 2014 through 2018. The amounts transferred 
would remain available until expended.
    Requirements under current law (44 U.S.C. Sec. Sec. 3501-
3521) regarding coordination of federal information, including 
the Paperwork Reduction Act, would not apply to the 
specification of the standardized data elements and 
implementation of the reporting system. There would be no 
administrative or judicial review of the specification of 
standardized data elements required under this subsection or 
the reporting system. For purposes of the specification of 
standardized data elements and the implementation of the 
reporting system, the terms `outpatient therapy services' and 
`therapy provider' have the meaning given those terms for the 
new medical review program.
    The current claims-based data collection strategy designed 
to assist in reforming the Medicare payment system for 
outpatient therapy services, which was mandated by the MCTRJCA, 
would sunset effective the date of implementation of the data 
collection effort established above.
    The Committee Bill would require that each request for 
payment, or bill submitted on or after January 1, 2015, by a 
therapy provider for an outpatient therapy service furnished by 
a therapy assistant include an indication that the service was 
furnished by a therapy assistant (in a form and manner 
specified by the Secretary).

                 SEC. 203. MEDICARE AMBULANCE SERVICES

Present Law

    The Medicare Prescription Drug, Improvement and 
Modernization Act (MMA, P.L. 108-173) established temporary 
bonus payments for ground ambulance services that originate in 
a qualified rural area furnished on or after July 1, 2004 and 
before January 1, 2010. Qualified rural (also referred to as 
``super rural'') areas are those where the ambulance transport 
originates in a rural area determined by the Secretary to be in 
the lowest 25th percentile in terms of population density of 
all rural county populations. The bonus payment is a 22.6 
percent increase. Subsequent legislation has extended the bonus 
payments for super rural ambulance services until December 31, 
2013.
    The MMA also provided temporary increases to ground 
ambulance services that originate in rural and urban areas. The 
MIPPA extended the ground ambulance add-on policy in July 2008 
after a short lapse. The MIPPA also increased the level of the 
add-on payment from one percent to two percent for urban 
ambulance services and from two percent to three percent for 
rural ambulance services. Subsequent legislation has extended 
the temporary add-on payments until December 31, 2013.

Committee Bill

    The Committee Bill would extend all of the current 
temporary ambulance payments an additional five years for 
services furnished before January 1, 2019.
    Additionally, the Committee Bill would require the 
Secretary to develop a data collection system for ambulance 
providers and suppliers in consultation with stakeholders. The 
data collection system for ambulance services would include 
cost, revenue, utilization, and other information to evaluate 
appropriate payment rates, the utilization of capital equipment 
and ambulance capacity, and the different types of ambulance 
services furnished in different geographic regions. No later 
than January 1, 2015, the Secretary would be required to 
specify the data collection methodology and to identify a 
sample of providers and suppliers required to submit such data. 
Beginning July 1, 2015, identified providers and suppliers who 
fail to submit such data would receive a five percent reduction 
in Medicare ambulance payments for a one-year period.
    Under the Committee Bill, the Secretary would be permitted 
to revise the data collection system as appropriate, after 
consultation with providers and suppliers of ambulance 
services. Such consultation would include the use of requests 
for information and other appropriate mechanisms. In order to 
continue to evaluate the appropriateness of payment rates, 
ambulance providers and suppliers would be required to submit 
such information no less than once every three years. 
Requirements under current law (44 U.S.C. Sec. Sec. 3501-3521) 
regarding coordination of federal information, including the 
Paperwork Reduction Act, would not apply to the collection of 
this information. There would be no administrative or judicial 
review of the data collection system or those identified as 
required to submit such information.
    For purposes of developing this data collection system, the 
Secretary would provide for the transfer of $1 million from the 
SMI Trust Fund to the CMS Program Management Account for fiscal 
year 2014.

                 SEC. 204. MEDICARE DEPENDENT HOSPITALS

Present Law

    The Omnibus Budget Reconciliation Act of 1989 (OBRA89, P.L. 
101-239) created a new Medicare Dependent Hospitals (MDHs) 
program that made small, rural hospitals eligible for 
additional payments. The MDH program lapsed in 1994 but was 
reinstated by the BBA. The program has been extended 
periodically and changed by subsequent legislation. The MDH 
special payment status expired on September 30, 2013.
    MDHs are small rural hospitals with a high proportion of 
patients who are Medicare beneficiaries. MDHs have no more than 
100 beds and at least 60 percent of acute inpatient days or 
discharges attributable to Medicare in FY1987 or in two of the 
three most recently audited cost reporting periods. 
Specifically, an MDH hospital will be paid the inpatient 
prospective payment system (IPPS) rate plus a percentage 
difference between that amount and a hospital-specific cost per 
discharge amount from a given year. Before October 1, 2006 an 
MDH received 50% of the difference between the base rate and 
its adjusted hospital-specific costs. Since October 1, 2006, a 
MDH has received 75% of the difference between the base rate 
and its adjusted hospital-specific costs.

Committee Bill

    The Committee Bill would make the MDH program permanent.

                     SEC. 205. LOW VOLUME HOSPITALS

Present Law

    Under the Medicare IPPS, certain low-volume hospitals 
receive a higher payment amount to account for their higher 
costs per discharge in 2012 and 2013. The adjustment operates 
on a sliding scale with hospitals having fewer than 200 
Medicare discharges receiving a 25% payment increase, 
decreasing on a sliding scale to 0% for hospitals with more 
than 1,600 Medicare discharges. These hospitals must be located 
15 miles or more from another comparable hospital. This 
adjustment expired on September 30, 2013.
    The low-volume adjustment is based on the concept that 
large hospitals benefit from certain economies of scale that 
are not available to small hospitals with limited discharges. 
MedPAC has reported that this adjustment is not well targeted 
because hospitals may have a small number of Medicare patients 
while also treating a large number of non-Medicare patients. In 
MedPAC's view, Congress may wish to consider changing the low 
volume formula to reflect total discharges rather than Medicare 
discharges.

Committee Bill

    The Committee Bill would make the low-volume hospital 
policy permanent.

                 SEC. 206. MEDICARE SPECIAL NEEDS PLANS

Present Law

    Section 231 of the MMA established a new type of MA 
coordinated care plan to focus on individuals with special 
needs. SNPs are allowed to target enrollment to one or more 
types of special needs individuals including (1) 
institutionalized (I-SNPs), (2) dually eligible (D-SNPs), and/
or (3) individuals with severe or disabling chronic conditions 
(C-SNPs). Fully Integrated Dual Eligible SNPs (FIDE-SNPs) are a 
subset of D-SNPs that must fully integrate Medicare and 
Medicaid benefits, including long-term care services and 
supports, and have a contract with the state Medicaid program 
among other requirements.
    In general, SNPs are required to meet all applicable 
statutory and regulatory requirements that apply to MA plans, 
including: state licensure as a risk-bearing entity; MA 
reporting requirements that are applicable depending on plan 
size; and Part D prescription drug benefit requirements. SNP 
payment procedures mirror CMS's procedures for MA plans. SNPs 
prepare and submit a bid like other MA plans, and are paid in 
the same manner as other MA plans based on the plan's 
enrollment and risk adjustment payment methodology.
    Among other changes, the MIPPA required that all SNPs have 
evidenced-based models of care (MOC). An MA organization must 
design separate MOCs to meet the special needs of the target 
population for each SNP it offers. MOCs must have goals and 
objectives for the targeted population, a specialized provider 
network, use nationally-recognized clinical practice 
guidelines, conduct health risk assessments to identify the 
special needs of beneficiaries, and add services for the most 
vulnerable beneficiaries including, but not limited to those 
beneficiaries who are frail, disabled, or near the end-of-life.
    The ACA extended SNP authority through December 31, 2013 
and temporarily extended authority through the end of 2012 for 
SNPs that do not have contracts with state Medicaid programs to 
continue to operate, but not to expand their service areas. 
Other ACA changes applicable to SNPs included the following: 
(1) required all SNPs to comply with an approval process that 
will be based on CMS standards and executed by the National 
Committee for Quality Assurance (NCQA) beginning January 1, 
2012. NCQA rating is based on scores for each of eleven 
clinical and non-clinical elements in each SNPs MOC; (2) 
authorized CMS to pay a frailty adjustment payment to FIDE-
SNPs; (3) established new cost-sharing requirements for SNPs; 
and (4) required CMS to implement new quality-based payment 
procedures for all MA plans by 2012.
    In addition, the ACA required the Secretary to establish 
the Federal Office of Coordinated Health Care (MMCO) within CMS 
to facilitate Medicare and Medicaid coordination for dually 
eligible beneficiaries.
    The ATRA extended SNP authority through December 31, 2014, 
and also temporarily extended authority for SNPs that do not 
have contracts with state Medicaid programs to continue to 
operate, but not to expand their service areas. Beginning 
January 1, 2015, SNP enrollment will not be restricted only to 
special needs individuals.

Committee Bill

    The Committee Bill would permanently authorize I-SNPs, re-
authorize D-SNPs through December 31, 2020, and re-authorize C-
SNPs through December 31, 2017.
    The Committee Bill would require the Secretary to establish 
by, April 1, 2015, procedures that would unify the Medicare and 
Medicaid appeals procedures applicable to D-SNPs. In 
establishing unified Medicare-Medicaid appeals procedures, the 
Secretary would be required to solicit comments from states, 
plans, beneficiary representatives, and other relevant 
stakeholders. To the extent compatible with the process for 
unifying Medicare and Medicaid appeals procedures, the 
Secretary would ensure that the following requirements were 
included: (1) adoption of the most protective provisions for D-
SNP enrollees under current law, including continuation of 
benefits under Medicaid pending timely filed appeals; (2) 
differences in Medicaid state plans are taken into account; and 
(3) be easily navigable by D-SNP enrollees.
    The unified procedures must also include: (1) a single 
notification of all applicable Medicare and Medicaid appeal 
rights; (2) appeals notices written in plain language and 
available in a language and format that is accessible to 
enrollees; (3) unified Medicare and Medicaid timeframes for 
internal (plan) and external (Medicare and Medicaid) appeals, 
such as the enrollee's filing of appeals, plan acknowledgement, 
and appeal resolution and notification of appeal decisions; and 
(4) mechanisms to allow D-SNP plans to track and resolve 
grievances. The Committee Bill would require that, beginning 
January 1, 2016, D-SNP plan contracts use the unified Medicare-
Medicaid appeals procedures.
    The Committee Bill would require that, beginning January 1, 
2018, most D-SNPs would be required to integrate all Medicare 
and Medicaid benefits and meet the requirements for a FIDE-SNP, 
including, to the extent current state law under the state's 
Medicaid plan permitted capitated payments for long-term care 
services or behavioral health services. However, for purposes 
of the integration requirements beginning in 2018, the 
definition of a FIDE-SNP does not include the requirement that 
the D-SNP's enrollment have similar average levels of frailty 
as the Programs of All-Inclusive Care for the Elderly (PACE) 
program. If the Secretary determines that D-SNPs failed to meet 
contract requirements for full integration of all Medicare and 
Medicaid benefits for 2018 or 2019, the Secretary is authorized 
to impose one of the following sanctions: (1) reduce MA 
payments; (2) close enrollment to new plan enrollees; (3) apply 
MA sanctions, including civil money penalties and suspension; 
and (4) other reasonable actions as determined by the Secretary 
(except deeming that the plan no longer meets the definition of 
a D-SNP). Finally, the Committee Bill requires that in order to 
meet the definition of a D-SNP for 2020 and subsequent years, 
D-SNPs must fully integrate Medicare and Medicaid benefits and 
meet the current law definition of a FIDE-SNP.
    D-SNPs that only enroll Medicare beneficiaries for whom the 
only Medicaid benefit to which the individuals are entitled is 
Medicare cost-sharing assistance would not be required to fully 
integrate Medicare and Medicaid benefits in their contracts 
effective January 1, 2018.
    The Committee Bill would designate the MMCO as the 
dedicated CMS contact to assist states in addressing D-SNP 
Medicare-Medicaid misalignments. In this role, MMCO would be 
required to establish a uniform process for disseminating 
Medicare contract information to state Medicaid agencies as 
well as to D-SNPs. MMCO would also be required to establish 
basic resources for states that are interested in exploring D-
SNPs as a platform for integrating Medicare-Medicaid services 
for dual eligible beneficiaries.
    The Committee Bill would add the following requirements for 
C-SNP care management plans beginning with contracts effective 
January 1, 2016: (1) the interdisciplinary provider team that 
C-SNPs are required to have would include providers with 
training in an applicable specialty and demonstrated expertise 
in treating individuals with the chronic conditions the C-SNP 
would target; (2) requirements developed by the Secretary to 
provide face-to-face encounters with the C-SNP's enrollees; (3) 
a requirement that MOC include the results of the initial 
assessment and each annual reassessment are addressed in the 
enrollee's required individualized care plan; (4) the Secretary 
would be required to ensure that as part of the annual MOC 
evaluation that whether or not the plan fulfilled the goals 
identified would be taken into account; and (5) the Secretary 
would be required to establish a minimum benchmark for each MOC 
element and to only approve a C-SNPs MOC if each element met 
those minimum benchmarks.
    The Committee Bill would make changes to the SNP quality 
ratings and measurement and publication. Beginning with 
contracts effective January 1, 2016, the Secretary would be 
required to increase emphasis on SNPs' performance improvement 
or decline when determining a plan's annual star ratings. 
Specifically, the Secretary would be required to ensure that at 
least 25 percent but not more than 33 percent of the annual 
star rating is based on the SNP's performance improvement or 
decline. The Secretary would be required to measure the SNP 
performance improvement or decline based on the net change in 
the SNP plan's individual star rating measures. In order to 
ensure that plans are not punished in cases where it is 
impossible to improve, the Secretary would be authorized to 
appropriately adjust SNP plan improvement ratings when plans 
have achieved a 5-Star rating or the highest overall rating 
possible for individual measures. This increased emphasis on 
improvement would not apply to SNPs with an overall star rating 
of not more than 2.5 stars.
    The Committee Bill would allow the Secretary to report and 
apply quality ratings of SNPs at the plan level instead of the 
contract level, as it is under current law. In requiring 
reporting and applying quality ratings at the plan level, the 
Secretary would be required to take into consideration the 
minimum enrollment that would be necessary to enable valid 
quality measurement at the plan level. In the instance the 
Secretary reports quality measures at the plan level, the 
quality measurement must include the Medicare Health Outcomes 
Survey, Healthcare Effectiveness Data Information Set, and 
Consumer Assessment of Healthcare Providers and Systems 
measures. Also, if the Secretary uses the option to require 
quality reporting and the application of ratings at the plan 
level, then payment and other administrative actions linked to 
qualify measurement would be applied at the plan level.
    The Committee Bill would require that GAO conduct a study 
to determine how the Secretary could change the MA SNP quality 
measurement system to allow an accurate comparison of the care 
quality provided by SNPs for individual plans as well as for 
SNPs overall, to the care quality delivered under Medicare FFS 
and other MA plans for similar populations. GAO would be 
required to submit the report on SNP quality compared to other 
Medicare delivery sources by July 1, 2016. GAO's report would 
be required to contain recommendations for legislative and 
administrative action as determined appropriate by GAO.

                   SEC. 207. MEDICARE COST CONTRACTS

Present Law

    Medicare cost contracts are contracts with private health 
plans where plan payment is based on the reasonable costs 
actually incurred to provide Medicare covered benefits to 
enrollees. Cost contracts were first authorized by the Social 
Security Amendments of 1972 (P.L. 92-603), as were contracts 
that paid private health plans a modified per capita (risk-
based) monthly payment. The BBA prohibited the Secretary from 
extending or renewing cost contracts beyond December 31, 2002, 
while also transitioning the risk-based contracts to the new 
Medicare+Choice program, later to become the MA program. Seven 
subsequent pieces of legislation extended the Secretary's 
authority to enter into cost contracts, as follows:
    (1) The Balanced Budget Refinement Act of 1999 (BBRA, P.L. 
106-113) extended the authority through 2004.
    (2) The Medicare, Medicaid, and SCHIP Benefits Improvement 
and Protection Act of 2000 (BIPA, P.L. 106-554) allowed cost 
contracts to expand their service areas if the request was 
submitted to the Secretary before September 1, 2003.
    (3) The MMA allowed cost contracts to be extended or 
renewed indefinitely. However, beginning in 2008, these 
contracts could not be extended or renewed for a service area 
that during the previous year had two or more MA regional plans 
or two or more MA local (formerly Medicare+Choice) plans.
    (4) The Medicare, Medicaid, and SCHIP Extensions Act of 
2007 (MMSEA, P.L. 110-173) extended by one year--from January 
1, 2008, to January 1, 2009--the length of time a cost plan 
could continue to operate in an area previously served by two 
or more local MA plans or two or more regional MA plans.
    (5) The MIPPA extended by one year--from January 1, 2009, 
to January 1, 2010--the length of time a cost plan could 
continue to operate in an area previously served by two or more 
local or two or more regional plans. To prohibit a cost plan 
from participating after January 1, 2010, the two or more plans 
in the service area were required to be offered by different 
organizations, and meet minimum enrollment requirements.
    (6) The ACA extended by three years--from January 1, 2010 
to January 1, 2013--the length of time a cost plan could 
continue to operate in an area previously served by two or more 
local or two or more regional plans that met minimum enrollment 
requirements.
    (7) The ATRA extended by one year--from January 1, 2013 to 
January 1, 2014--the length of time a cost plan can continue to 
operate in an area previously served by two or more local or 
two or more regional plans that meet minimum enrollment 
requirements.
    Under current law, Medicare cost contracts can be extended 
or renewed indefinitely, except that, under current authority, 
beginning on or after January 1, 2014, these contracts may not 
be extended or renewed in areas that during the entire previous 
year (2013) had two or more MA regional plans or two or more MA 
local plans offered by different organizations, with a minimum 
enrollment. These cost contracts will not be renewed at the end 
of 2014, based on minimum enrollment data for the 2013 contract 
year, and will cease to operate after 2014.

Committee Bill

    Effective for plan year 2015, the Committee Bill would 
allow the Secretary to extend or renew cost contracts that had 
served an area where two or more local or regional MA plans 
with minimum enrollment had served in 2013, but would prohibit 
new enrollment into those cost contract plans for 2015.
    Cost contract plans with restricted enrollment in 2015 
would be able to apply to convert to a new (MA) plan under Part 
C in 2016 (if they were to notify the Secretary of their intent 
to do so by a date specified by the Secretary), or have their 
contract terminated effective 2016.
    The Secretary would be required to establish a process 
whereby the enrollees of the cost contract plans that were to 
convert to MA plans for 2016 would be automatically enrolled 
into a new MA plan. The automatic enrollment into the newly 
converted MA plans would also apply to the cost plan's 
enrollees with End Stage Renal Disease. Cost plans that 
included a drug benefit would be required to retain drug 
coverage as part of their new MA plan. Similarly, cost plans 
that did not include a drug benefit would not be allowed to add 
one when applying to convert to MA plans. The MA monthly 
beneficiary premium for a converted plan would not be allowed 
to exceed the monthly premium under the previous cost contract 
by more than ten percent. The converted plan would be required 
to provide benefits, premiums, and access to providers 
comparable to what was available under the cost plan the 
previous year. To ensure continuity of care, the converted MA 
plan would be required to maintain current providers and 
courses of treatment for enrollees at the time of enrollment 
for at least 90 days after enrollment. During this 90-day 
period, the converted plan would be required to pay non-
contracted providers for items and services furnished to 
enrollees at amounts not less than amounts paid under original 
FFS Medicare.
    The Secretary would be required to identify the affected 
enrollees of plan conversions by no later than 30 days prior to 
the start of the annual coordinated election period (which 
begins on October 15th). Enrollees subject to the automatic 
enrollment would be able to change their enrollment during the 
annual, coordinated election period to a different MA plan or 
to Medicare fee-for-service and could also change their 
enrollment one additional time during a period starting after 
the last day of the annual, coordinated election period 
(December 7th) and ending on the last day of February of the 
following year.
    Prior to the start of the annual coordinated election 
period, the Secretary would be required to send affected 
enrollees a notification of their automatic enrollment into the 
new MA plan and information about their options to make a 
different election during the annual coordinated election 
period and/or their additional special election period. The 
Secretary would also be required to provide affected enrollees 
with a description of the differences in benefits, cost-
sharing, premiums, drug coverage, and provider networks between 
their former cost plan and the new MA plan.
    The Secretary would be required to adjust the star quality 
rating used to set the maximum payment rate for MA plans so 
that the star rating for the newly converted MA plan for its 
first two plan years would be equal to the star rating assigned 
to the cost plan in the last year before it was converted to a 
new MA plan.

          SEC. 208. QUALITY MEASURE ENDORSEMENT AND SELECTION

Present Law

    As required by section 1890 of the SSA, the Secretary 
identifies and contracts with a consensus-based entity, such as 
the National Quality Forum, that makes recommendations on an 
integrated national strategy and priorities for health care 
performance measurement. The entity is required to carry out 
specified duties related to performance improvement and 
measurement. These duties include, among others, priority 
setting; measure endorsement; measure maintenance; convening 
multi-stakeholder groups to provide input on the selection of 
quality measures and national priorities; and annual reporting 
to Congress. The MIPPA (which added section 1890 of the SSA) 
appropriated $10 million for each of the FY2009 through FY2012; 
subsequent legislation extended this funding through FY2013.
    Under current law, the Secretary is required to establish a 
pre-rulemaking process to select quality measures for use by 
Medicare. This process includes gathering multi-stakeholder 
input; making measures under consideration available to the 
public; transmission to, and consideration by, the Secretary of 
the input of multi-stakeholder groups; and the publication of 
the rationale for the use of any quality measure in the Federal 
Register; among others. The Secretary is also required to 
establish a process for disseminating quality measures used and 
to periodically review quality measures and determine whether 
to maintain the use of a measure or to phase it out.

Committee Bill

    Generally, the Committee Bill would modify the duties for 
the consensus-based entity, create a new entity to carry out 
duties related to the selection of quality measures, and modify 
the duties for the Secretary in a new section of the SSA. The 
changes under this section would be effective as of October 1, 
2014, and would apply to contract periods that begin on or 
after October 1, 2014. Specifically, the Committee Bill would 
re-designate existing SSA section 1890A as section 1890B, and 
would add a new section1890A titled ``Contract with an Entity 
Regarding Input on the Selection of Measures.''
    The Committee Bill creates a new entity to carry out duties 
related to the selection of quality measures in order to allow 
more entities to bid for the contract and enhance the 
competitiveness of the process. The new entity must meet a 
number of requirements to qualify for becoming the measure 
selection entity. Specifically, an entity must meet the 
following requirements to qualify for becoming the new entity 
under section 1890A: (1) be a private nonprofit entity; (2) be 
governed by a board including representatives of health plans, 
health care providers and practitioners, health care consumers, 
purchasers, and employers; (3) have at least four years of 
experience working with measures; (4) have no membership fees 
or fees that are reasonable and adjusted based on the capacity 
of a potential member to pay. Membership fees would not be 
allowed to pose a barrier to the participation of individuals 
or groups with low or nominal resources in the entity's 
functions; and (5) not be a measure developer.
    The Committee Bill would transfer to the measure selection 
entity the following duties currently under the consensus-based 
entity: (1) priority setting, (2) the convening of multi-
stakeholder groups, and (3) the transmission of multi-
stakeholder input. The Committee Bill would also create 
additional duties for the new measure selection entity. The 
entity would facilitate increased coordination and alignment 
between the public and private sectors with respect to quality 
and efficiency measures. The entity would have to conduct an 
ongoing analysis of gaps in endorsed quality and efficiency 
measures. By March 1st of each year, the new entity would have 
to issue a report on (1) the performance of its duties, (2) the 
recommendations of the entity's priority setting process, (3) 
the multi-stakeholder groups' input on the selection of quality 
and efficiency measures, (4) the findings of its gap analysis, 
and (5) any other items determined appropriate by the 
Secretary. The contract must be awarded beginning in FY2015; 
continue for a period of three years; and adhere to competitive 
bidding procedures.
    The Committee Bill would require the Secretary to provide 
for the transfer of $7 million for FY2014, from the Hospital 
Insurance (HI) and SMI Trust Funds to the CMS Program 
Management Account, to carry out the activities in existing 
section 1890 and section 1890A(a)-(d). These amounts would 
remain available until expended. The Committee Bill would also 
require the Secretary to provide for the transfer of $25 
million for each of fiscal years 2015 through 2017, from the HI 
and SMI Trust Funds to the CMS Program Management Account, to 
carry out section 1890; section 1890A; and section 1890B 
(excluding sections 1890B(e) and (f)).
    While acknowledging that it can be difficult to recruit all 
appropriate stakeholders, the measure selection entity, to the 
extent feasible, would make every effort to ensure its multi-
stakeholders groups are balanced across stakeholders. The 
Committee Bill would also require the multi-stakeholder groups' 
input to include a detailed description of the rationale for 
each recommendation made. Such rationales could include (1) the 
expected impact of the measure on individuals, (2) the burden 
on providers and suppliers, (3) the expected influence over the 
behavior of providers and suppliers, (4) applicability of a 
measure for more than one setting or program, and (5) other 
areas determined in consultation with the Secretary. In 
providing the input, the entity could consider whether it is 
appropriate to provide separate recommendations with respect to 
measures for the internal use of a provider or supplier, 
quality reporting, public reporting, and payment provisions. 
The Committee Bill would also direct the multi-stakeholder 
group to provide input on the selection of quality and 
efficiency measures for use in other SSA health care programs 
other than Medicare.
    In order to make the contracting process more competitive, 
the Committee Bill would modify the process for the consensus-
based entity, requiring the Secretary to rebid the contract for 
the entity at least every three years, instead of every four 
years. It would strike the statutory reference to the National 
Quality Forum as an example of a possible consensus-based 
entity. In order to avoid potential conflicts of interest, it 
would also require that the entity not be a measure developer.
    The Committee Bill would strike the existing requirement 
that the consensus based entity review and endorse episode 
groupers. The consensus based entity would also facilitate 
increased coordination and alignment between the public and 
private sector with respect to quality and efficiency measures.
    In order to provide flexibility and facilitate management 
of the measures workload, the Committee Bill would require the 
Secretary to make its list of measures available to the public 
and the measure selection entity for pre-rulemaking input by no 
later than October 1st or December 31st of each year. The 
Committee Bill directs the Secretary to provide for an 
appropriate balance of the number of measures to be made 
available by each of the two dates in a year. This change would 
space out the measure selection entity's receipt of measures 
and ensure that the entity has enough time to review the 
measures. For measures received on October 1st, the entity 
would have to transmit the input by February 1st. For measures 
received on December 31st, the entity would have to transmit 
the input by April 1st. However, the Secretary could make 
available to the public a limited number of measures apart from 
the dates above. In turn, the entity with a contract under 
section 1890A would transmit to the Secretary the multi-
stakeholder group's input on a timely basis.
    The Committee Bill would also require the Secretary to 
consider the benefits of the alignment of measures between the 
public and private sector when periodically reviewing quality 
and efficiency measures.
    The Secretary would also be required to publish a list of 
concordance rates for each type of provider or supplier. Each 
annual final rule would contain the concordance rate for the 
applicable type or types of providers and suppliers. The 
Secretary would also have to publish in the Federal Register 
the rationale for the use of any quality and efficiency measure 
that has not been recommended by the multi-stakeholder group.

       SEC. 209. OUTREACH AND ASSISTANCE FOR LOW-INCOME PROGRAMS

Present Law

    Section 119 of the MIPPA appropriated $25 million for 
FY2008 and FY2009 for low-income Medicare beneficiary outreach 
and education activities through the following programs: State 
Health Insurance Counseling and Assistance Programs (SHIPs), 
Area Agencies on Aging (AAAs), Aging and Disability Resource 
Centers (ADRCs), and the Administration on Aging (AoA). Section 
3306 of the ACA extended authority for the low-income outreach 
activities and appropriated $45 million for these programs. The 
appropriations authorized by the ACA were available for 
obligation through FY2012. Section 610 of the ATRA extended 
these appropriations through FY2013 and appropriated the 
following amounts for low-income Medicare beneficiary outreach 
and assistance activities: SHIPs, $7.5 million; AAAs, $7.5 
million; ADRCs, $5 million; and the Contract with the National 
Center for Benefits and Outreach Enrollment, $5 million.
    Outreach activities include counseling, education, 
enrollment assistance, health promotion, and other activities 
to help low-income Medicare beneficiaries understand their 
health insurance choices so they can make informed decisions. 
In addition to providing Medicare beneficiaries with counseling 
and education about their health insurance choices, outreach 
activities are intended to help low-income Medicare 
beneficiaries enroll in the Medicare Savings Program (MSP). MSP 
helps pay Medicare premiums and cost-sharing for beneficiaries 
who, due to their low income and assets, are eligible for both 
Medicare and Medicaid. MSP enrollment historically has been 
low, so outreach activities have been used to identify 
individuals who qualify for assistance.

Committee Bill

    The Committee Bill would permanently appropriate current 
level funding ($25 million each fiscal year) for low-income 
outreach and assistance activities. These funds would be 
allocated to the following programs in the same amounts as they 
are under current law: SHIPs, $7.5 million; AAAs, $7.5 million; 
ADRCs, $5 million; and the Contract with the National Center 
for Benefits and Outreach Enrollment, $5 million.

               Subtitle B--Medicaid and Other Extensions


                SEC. 211. QUALIFYING INDIVIDUAL PROGRAM

Present Law

    The Qualifying Individual (QI) program requires states, 
through their Medicaid programs, to pay Medicare Part B 
premiums for Medicare beneficiaries with incomes between 120 
and 135 percent of the Federal Poverty Limit (FPL). Medicaid 
payment for the QI program is transferred annually from the SMI 
Trust Fund to the Treasury account that funds medical 
assistance payments to states and the District of Columbia. 
Congress appropriates annual funding amounts for all states and 
CMS allocates the funding to state Medicaid programs. States 
receive 100 percent federal funding to pay program 
participant's Medicare Part B premiums up to the maximum number 
of beneficiaries whose Part B premiums can be paid from their 
federal allocation, but no additional matching beyond this 
annual allocation is available. The QI program has been 
reauthorized and funded a number of times since it was 
originally authorized. In December 2012, there were 
approximately 480,300 low-income Medicare beneficiaries who 
received financial assistance from state Medicaid programs to 
pay their Part B premiums.

Committee Bill

    The Committee Bill would amend the SSA to authorize and 
fund the QI program by annually transferring funds from the SMI 
Trust Fund to the Treasury account that funds medical 
assistance payments to states and the District of Columbia for 
calendar years 2014 through 2018. The Committee Bill also would 
remove restrictions on the number of beneficiaries who may 
receive QI assistance due to the capped allocation that states 
were required to use in determining which eligible 
beneficiaries would receive assistance.

               SEC. 212. TRANSITIONAL MEDICAL ASSISTANCE

Present Law

    Federal law requires states to continue Medicaid benefits 
for certain low-income families who would otherwise lose 
coverage because of changes in their income under section 
1902(e), of the SSA. This continuation of benefits is known as 
transitional medical assistance (TMA). Federal law permanently 
requires states to provide four months of TMA for families who 
lose Medicaid eligibility due to increased child or spousal 
support collections. Federal law also permanently requires four 
months of TMA for families who lose Medicaid eligibility due to 
an increase in earned income or hours of employment. Congress 
expanded work-related TMA benefits under section 1925 of the 
SSA as part of the Family Support Act of 1988 (FSA, P.L. 100-
485), requiring states to provide at least six, and up to 12, 
months of TMA coverage to families losing Medicaid eligibility 
due to increased hours of work or income from employment, as 
well as to families who lose eligibility due to the loss of a 
time-limited earned income disregard. FSA originally authorized 
section 1925 of the SSA to replace the four-month requirement 
in section 1902(e)(1) of the SSA through FY1998. However, the 
provision has continued to exist under a series of extensions 
since its inception.

Committee Bill

    The Committee Bill would extend section 1925 TMA through 
December 31, 2018. The Committee Bill would also permit states 
and the District of Columbia that: (1) take up the ACA Medicaid 
expansion and (2) take up a new continuous eligibility option 
to seek CMS approval to opt out of sections 1902(e) and 1925 
TMA-related requirements. Such an opt out would not violate the 
ACA child maintenance of effort provision which requires states 
to maintain their Medicaid programs with the same eligibility 
standards, methodologies and procedures for children up to age 
19 until September 30, 2019.
    The Committee Bill also modifies the TMA-related 
requirements under Medicaid and Temporary Assistance for Needy 
Families (TANF) to consider only increases in income due to 
spousal support collections as a trigger for TMA eligibility. 
This change would conform the income counting rules for TMA to 
the new Modified Adjusted Gross Income counting rules that will 
be used to determine Medicaid income eligibility for most 
Medicaid-eligible populations beginning January 1, 2014.

                   SEC. 213. EXPRESS LANE ELIGIBILITY

Present Law

    The Children's Health Insurance Program Reauthorization Act 
of 2009 (CHIPRA, P.L. 111-3) created a state plan option for 
``Express Lane'' eligibility whereby states are permitted to 
rely on a finding from specified ``Express Lane'' agencies 
(e.g., those that administer programs such as TANF, Medicaid, 
CHIP, and Supplemental Nutrition Assistance Program) for: (1) 
determinations of whether a child has met one or more of the 
eligibility requirements necessary to determine his or her 
initial eligibility or (2) eligibility redeterminations. 
Authority for ``Express Lane'' eligibility determinations will 
sunset on September 30, 2014.

Committee Bill

    The Committee Bill would extend the authority for ``Express 
Lane'' eligibility determinations until September 30, 2015.

                  SEC. 214. PEDIATRIC QUALITY MEASURES

Present Law

    Section 401 of CHIPRA required the Secretary to: identify 
and publish an initial core set of pediatric quality measures; 
submit a report to Congress on the quality of children's health 
care under Medicaid and CHIP; and to establish a Pediatric 
Quality Measures Program to identify pediatric measure gaps and 
development priorities, award grants and contracts to develop 
measures, and revise and strengthen the core measure set. 
States are required to submit reports to the Secretary annually 
to include information about state-specific child health 
quality measures applied by the state. The Secretary is 
required to collect, analyze, and make publicly available the 
information reported by states annually. Section 401 also 
included funding for ten grants to states for demonstration 
projects to evaluate ideas to improve the quality of children's 
health care. Funding for these activities was appropriated in 
the amount of $45 million for each of FY2009 through FY2013.

Committee Bill

    The Committee Bill would modify the funding for adult 
quality measure development in SSA section 1139B to require the 
Secretary to spend at least $15 million of the $60 million 
appropriated on pediatric quality measure development under SSA 
section 1139A instead. This would provide the Secretary with 
the funding needed to continue the development of pediatric 
quality measures established under CHIPRA section 401(b) 
through September 30, 2015.
    The Committee Bill would also eliminate a requirement that 
limits the aggregate amount the Secretary could award for 
grants and contracts for the development, testing, and 
validation of emerging and innovative evidence-based adult 
quality measures.

                   SEC. 215. SPECIAL DIABETES PROGRAM

Present Law

    The BBA authorized two diabetes-related programs within the 
Public Health Service Act. The first, authorized in section 
330B, provides funding for the National Institutes of Health to 
award grants for research into the prevention and cure of Type 
I diabetes. The second, authorized in Section 330C, provides 
funding for the Indian Health Service (IHS) to award grants for 
services related to the prevention and treatment of diabetes 
for American Indians and Alaska Natives who receive services at 
IHS-funded facilities. Since the BBA, additional funding for 
this program has been appropriated in a series of laws, most 
recently in section 625 of the ATRA which extended funding for 
these programs through FY2014.

Committee Bill

    The Committee Bill would extend funding for both programs 
through FY2019. Specifically, it would appropriate $150 million 
for each program annually.

                 Subtitle C--Human Services Extensions


                 SEC. 221. ABSTINENCE EDUCATION GRANTS

Present Law

    Section 912 of The Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996 (PRWORA, P.L. 104-193) 
authorized abstinence education formula grants in SSA section 
510. To receive these formula grants, states must request 
funding when applying for Maternal and Child Health Block Grant 
funds authorized in SSA section 501. Funds provided under SSA 
section 510 must be used exclusively for teaching abstinence 
from sexual activity outside of marriage. PRWORA authorized and 
appropriated $50 million for each of FY1998 through FY2002 for 
abstinence education. Subsequently, funding for this program 
was extended through June 30, 2009, by a series of legislation. 
Most recently, section 2954 of the ACA appropriated $50 million 
for each of FY2010 through FY2014 for this program. In 
addition, $5 million was added to be used to award competitive 
grants for FY2012 by the Consolidated Appropriations Act of 
2012 (P.L. 112-74) and the Consolidated and Further Continuing 
Appropriations Act of 2013 (P.L. 113-6). FY2014 is the final 
year of funding for this program.

Committee Bill

    The Committee Bill would extend authorization and funding 
for the SSA section 510 Abstinence Education program for five 
years, from FY2015 through FY2019, at $50 million for each 
year.

          SEC. 222. PERSONAL RESPONSIBILITY EDUCATION PROGRAM

Present Law

    Section 2953 of the ACA established the Personal 
Responsibility Education Program (PREP) in section 513 of the 
SSA. PREP is a state formula grant program to support evidence-
based programs designed to educate adolescents about 
abstinence, contraception, and adulthood. The ACA also required 
the Secretary to award grants to implement innovative youth 
pregnancy prevention strategies and to target services to high-
risk populations. The ACA appropriated $75 million for each of 
FY2010 through FY2014. The ACA required that $10 million each 
year be reserved for the youth pregnancy prevention grants. The 
funds are available until expended. FY2014 is the final year of 
funding for this program.

Committee Bill

    The Committee Bill would extend authorization and funding 
for PREP for five years, from FY2015 through FY2019, at $75 
million for each year. The target population of the formula 
grant portion of the program would be expanded to include youth 
at risk for being a victim of sex trafficking or a victim of a 
severe form of trafficking in persons. The target population of 
the innovative strategies portion of the program would be 
expanded to include youth at risk for being a victim of sex 
trafficking or a victim of a severe form of trafficking in 
persons. The dates in the provision related to the mandatory 
use of unexpended allotments would be modified to conform to 
the five year extension of PREP. The base year for the 
maintenance-of-effort for non-federal funding would be changed 
from FY2009 to FY2014.

         SEC. 223. FAMILY-TO-FAMILY HEALTH INFORMATION CENTERS

Present Law

    Section 6064 of the DRA established the Family-to-Family 
Health Information Centers program in SSA section 501(c). The 
program provides grants to family-staffed organizations that 
provide health care information and resources to families of 
children with special health care needs. The DRA appropriated 
$12 million for FY2007 through FY2009 for Family-to-Family 
Health Information Centers; section 5507(b) of the ACA 
appropriated $5 million for each of FY2009 through FY2012, with 
funding to remain available until expended. An additional $5 
million for FY2013 was included in section 624 of the ATRA. 
FY2013 was the final year of funding for this program.

Committee Bill

    The Committee Bill would amend SSA section 501(c) to 
appropriate $6 million for each of FY2014 through FY2018. The 
Bill would also add territories as eligible for the program by 
eliminating language in the subsection which defines ``states'' 
as the 50 states and the District of Columbia. This provision 
would be effective as if enacted on October 1, 2013.

    SEC. 224. HEALTH WORKFORCE DEMONSTRATION PROJECT FOR LOW-INCOME 
                              INDIVIDUALS

Present Law

    Section 5507(a) of the ACA requires the Secretary to 
establish a demonstration project under SSA section 2008(a) 
that award funds to states, Indian tribes, institutions of 
higher education, and local workforce investment boards for 
health profession opportunity grants (HPOG). These grants are 
designed to help provide low-income individuals--including 
individuals receiving assistance from the TANF program--to 
obtain education and training in health care jobs that pay well 
and are in high demand. Funds are also used to provide 
financial aid and other supportive services. The ACA 
appropriated $85 million for each of FY2010 through FY2014 to 
carry out this demonstration project and another demonstration 
project established by the ACA, under SSA section 2008(b), to 
develop training and certification programs for long-term care 
workers. FY2014 is the final year of funding for this program.

Committee Bill

    The Committee Bill would amend section 2008(c) of the SSA 
to extend funding of $85 million for the HPOG demonstration 
under section 2008(a) of the SSA, for each of FY2015 and 
FY2016. In addition, the funding would continue to be 
streamlined and does not apply to the certification of home 
health aides for FY2013 through FY2016.

                     Subtitle D--Program Integrity


             SEC. 231. REDUCING IMPROPER MEDICARE PAYMENTS

Present Law

    CMS relies on a variety of contractors to help administer 
the Medicare program, including MACs for FFS Medicare. Section 
911 of the MMA required the Secretary to implement Medicare 
contracting reform, which was intended to improve Medicare's 
administrative services through the use of competition and 
performance incentives. MACs process Medicare claims, and serve 
as the primary operational contact between the FFS program, and 
Medicare's approximate 1.5 million health care providers and 
suppliers. MACs enroll providers and suppliers in Medicare and 
educate providers on Medicare billing requirements, as well as 
answering provider and beneficiary inquiries.
    MACs are required to educate providers about the 
fundamentals of the program, policies and procedures, new 
initiatives, and other significant changes. MACs also identify 
potential improper payment issues through analyses of provider 
inquiries, claim submission errors, medical review data, 
Comprehensive Error Rate Testing data, and the Recovery Audit 
Program data.
    In addition to MACs, CMS also relies on other contractors 
that support program integrity activities such as Recovery 
Audit Contractors (RACs). Unlike other Medicare contractors, 
RACs are compensated on a contingency fee basis--their only 
payment is a percentage of the amount of each improper payment 
they identify, regardless of whether the claim was an 
overpayment or underpayment. RAC contingency fees vary 
depending on the contractor, the type of claim, and the part of 
Medicare. RACs must return contingency fees when overpayments 
are overturned on appeals filed by the Medicare providers and 
suppliers. Overpayments identified by RACs are recouped by MACs 
and the amount of recouped funds less contingency fees paid to 
RACs and expenses for administering the RAC program are 
returned to the Medicare Trust Funds. RAC overpayment decisions 
that are appealed by providers affect the overpayment amount 
identified by RACs and the amount returned to the Medicare 
Trust Funds. The Medicare FFS appeals process has five levels: 
(1) the MACs, (2) Qualified Independent Contractors, (3) an 
Administrative Law Judge, (4) the Medicare Appeals Council, and 
(5) a federal court.

Committee Bill

    The Committee Bill would require the Secretary to implement 
the following three initiatives: an improper payment outreach 
and education program; enhanced RAC transparency, and a RAC 
demonstration project.
    The Committee Bill would require MACs to implement an 
improper payment outreach and education (OE) program. Each MAC 
would be required to have an improper payment OE program to 
provide outreach, education, training, and technical assistance 
activities to providers and suppliers in their geographic 
service areas. The improper payment OE would be conducted 
through the following: emails and other electronic 
communications, webinars, telephone calls, in-person training, 
and other forms of communications the Secretary deems 
appropriate. The information that would be conveyed through the 
improper payment OE program would include all of the following: 
(1) a list of each provider's and supplier's most frequent and 
expensive payment errors over the last quarter; (2) specific 
instructions on how to correct or avoid these errors in the 
future; (3) notice of all new procedures that the Secretary has 
approved for RACs; (4) specific instructions to prevent future 
issues related to new RAC procedures approved by the Secretary; 
and (5) other information the Secretary determines appropriate.
    MACs would be required to ensure that all providers and 
suppliers in their geographic area are invited to participate 
(either in person or online) in an annual improper payment 
error rate reduction training.
    The MAC OE program also would be required to include annual 
error rate reduction training. This training would give 
priority to reduce Medicare improper payments that: have the 
highest rate of improper payment; have the greatest total 
dollar amount of improper payments; are due to clear 
misapplication or misinterpretation of Medicare policies; are 
clearly due to common and inadvertent clerical or 
administrative errors; or are due to other error types the 
Secretary determined could be prevented by the error training 
rate reduction program.
    To assist MACs in conducting the improper payment error 
reduction training program, the Secretary would be required to 
supply MACs on a quarterly basis with a complete list of 
improper payments identified by RACs for the providers and 
suppliers in the MACs region. The quarterly list of improper 
payments identified by RACs that the Secretary would be 
required to supply would include the following information: (1) 
the providers and suppliers that have the highest improper 
payment rates; (2) the providers and suppliers that have the 
greatest improper payment amounts; (3) the items and services 
furnished in each MAC's geographic region that have the highest 
improper payment error rates; (4) the items and services in 
each MAC's geographic region that are responsible for the 
greatest improper payment amounts; and (5) other information 
the Secretary determines would be helpful to MACs in conducting 
the improper payment error reduction training program.
    In providing information to assist MACs in conducting the 
improper payment error reduction training, the Secretary would 
be required to transmit that information so that it would be 
easy for MACs to identify the improper payment issues where 
outreach, education, training, and technical assistance would 
be most effective. The Secretary would ensure that information 
supplied to MACs was in an electronic and easily searchable 
format as well as that it clearly displayed the name and 
address of the provider or supplier, the amount of improper 
payment, and any other information the Secretary determines 
appropriate.
    The Secretary would be authorized to retain up to 25 
percent of the amounts recovered by the RAC program to 
implement the MAC OE program and to implement corrective 
actions to help reduce Medicare's error rate. The OE program 
requirements would be effective beginning on January 1, 2015.
    The Committee Bill would add to the reporting requirements 
of the annual RAC report to Congress that is required under 
current law. Specifically, the Committee Bill would require 
information on the results of appeals at each appeal level for 
the following RAC review types: (1) automated, (2) complex, (3) 
medical necessity, (4) Part A, (5) Part B, and (6) durable 
medical equipment.
    The Committee Bill would require the Secretary to conduct a 
three-year Medicare demonstration project to better target RAC 
audits. The demonstration would begin January 1, 2015. The 
Secretary would be required to consider the following in 
determining the demonstration's geographic area: a region's 
total number of providers and suppliers, the diversity of the 
region's providers and supplier types, the region's improper 
payment rate variation among individual providers and 
suppliers, and a mix of urban and rural providers and 
suppliers.
    In conducting the demonstration, the Secretary would be 
required to identify the following two groups of providers and 
suppliers: (1) providers with low improper payment error rates, 
and (2) providers with high improper payment error rates. To 
assign a select group of providers and suppliers in the 
geographic region to one of these groups, the Secretary would 
be required to analyze the following as they relate to the 
total number and dollar amount of claims submitted: (1) the 
improper payment rates of individual providers of services and 
suppliers; (2) the amount of improper payments made to 
individual providers of services and suppliers; (3) the 
frequency of errors made by the provider of services or 
supplier over time; and (4) other information determined 
appropriate by the Secretary.
    Only a small proportion of the total number of providers 
and suppliers in the demonstration's geographic area would be 
assigned to either the low error rate or the high error rate 
group. Providers and suppliers with high, expensive, and 
frequent improper payment errors would be identified as high-
error providers and suppliers. Providers and suppliers with 
few, inexpensive, and infrequent errors would be identified as 
low error rate providers and suppliers.
    Under the demonstration, the Secretary would be required to 
adjust the number of records that could be requested from 
providers and suppliers by RACs. The Secretary would be 
required to increase the maximum number of records that could 
be requested by RACs from providers and suppliers identified as 
having high error rates and decrease the maximum number of 
records that could be requested by RACs from providers and 
suppliers identified by composite scores as having low error 
rates.
    The Secretary would have further authority under the 
demonstration to make additional adjustments to RAC 
requirements to offer incentives to reduce improper payment 
error rates for providers and suppliers assigned to either the 
low error rate group or the high error rate group. However, the 
Secretary would be prohibited from exempting any provider from 
being subject to RAC audits under the demonstration project.
    The HHS Office of Inspector General (OIG) would be required 
to evaluate the RAC demonstration and submit a report to 
Congress within 12 months of completion of the RAC 
demonstration.
    To implement the RAC incentive demonstration project, the 
Secretary would provide for the transfer of $10 million to 
CMS's Program Management Account from the HI and the SMI Trust 
Funds in a proportion to be determined by the Secretary. These 
funds would be available until expended. In addition, the 
Secretary would be authorized to transfer to the OIG $245,000 
from the HI and SMI Trust Funds in a proportion to be 
determined by the Secretary.

SEC. 232. AUTHORITY FOR MEDICAID FRAUD CONTROL UNITS TO INVESTIGATE AND 
PROSECUTE COMPLAINTS OF ABUSE AND NEGLECT OF MEDICAID PATIENTS IN HOME 
                      AND COMMUNITY-BASED SETTINGS

Present Law

    Medicaid Fraud Control Units (MFCUs) act upon complaints of 
abuse or neglect occurring in one of two settings: (1) 
Medicaid-funded ``health care facilities'' or (2) ``board and 
care'' facilities that receive payment from the Medicaid 
program.
    Medicaid regulations (42 C.F.R. Sec. 447.10(b)) define a 
``facility'' as ``an institution that furnishes health care 
services to inpatients'' and separate regulations (42 CFR 
Sec. 435.1010) define an ``institution'' as, ``an establishment 
that furnishes (in single or multiple facilities) food, 
shelter, and some treatment or services to four or more persons 
unrelated to the proprietor.''
    Section 1903(q)(4)(B) of the SSA defines ``board and care 
facility'' to mean ``a residential setting which receives 
payment (regardless of whether such payment is made under the 
State plan under [Medicaid]) from or on behalf of two or more 
unrelated adults who reside in such facility, and for whom one 
or both of the following is provided: (i) Nursing care services 
. . . [and] (ii) A substantial amount of personal care 
services. . . .'' Such facilities are typically identified as 
``assisted living facilities.''
    Section 1903(q) of the SSA does not permit payment for a 
MFCU's investigation or prosecution of abuse and neglect in a 
variety of settings outside of an institution or facility. The 
statute's limitation was logical when the MFCU program was 
established in 1978, at a time when Medicaid services were 
typically provided in an institutional setting, but has become 
outdated as the delivery and payment for health services has 
shifted to in-home and community-based settings.

Committee Bill

    The Committee Bill allows payment to a MFCU that chooses to 
investigate and prosecute (or refer for prosecution) complaints 
of abuse or neglect of individuals in connection with any 
aspect of benefits or services provided by the state Medicaid 
program and for activities of providers of such benefits or 
services in a home or community based setting that is paid for 
under the state Medicaid program. The Committee Bill also 
allows payment to a MFCU that chooses to investigate and 
prosecute (or refer for prosecution) of complaints of abuse or 
neglect of patients residing in board and care facilities.

 SEC. 233. IMPROVED USE OF FUNDS RECEIVED BY THE HHS INSPECTOR GENERAL 
              FROM OVERSIGHT AND INVESTIGATIVE ACTIVITIES

Present Law

    The Health Insurance Portability and Accountability Act of 
1996 (HIPAA, P.L. 104-191) established the Health Care Fraud 
and Abuse Control Program (HCFAC). Funds from the HI Trust Fund 
are used to finance anti-fraud activities. These funds are 
shared by the Secretary, acting through the HHS OIG, and the 
Attorney General.
    The TRHCA amended HIPAA so that the HCFAC funds may be 
available until expended and allowed for increases in the 
amount of funding for HCFAC annually, based on the change in 
the consumer price index. The ACA extended these increases 
permanently. The HCFAC funds typically constitute approximately 
three-fourths of the budget of the HHS OIG.
    The HHS OIG conducts investigations, inquiries and utilizes 
other tools in order to combat fraud in health care. In 
furtherance of this goal, the HHS OIG staff and support the 
Medicare Strike Force, in conjunction with the Department of 
Justice, the FBI, and state and local enforcement agencies. The 
Strike Force focuses its efforts on investigating and 
prosecuting entities that defraud Medicare and other government 
health care programs. Other tools utilized by the HHS OIG 
include excluding providers and suppliers who have engaged in 
fraud from Medicare and Medicaid. HHS OIG also may impose civil 
monetary penalties for false claims against the government, 
audit and evaluate questionable conduct by providers, oversee 
the activities of all Medicaid Fraud Control Units, operate the 
HEAT Provider Compliance Training Initiative (which provides 
compliance training for providers), and offer advisory 
opinions.

Committee Bill

    The Committee Bill allows the HHS OIG to receive and retain 
three percent of funds collected as a result of civil debt 
collect actions related to false claims or fraud under Medicare 
and Medicaid. The Committee Bill would require this funding to 
be designated for oversight and enforcement activities 
conducted by the HHS OIG.

   SEC. 234. PREVENTING AND REDUCING IMPROPER MEDICARE AND MEDICAID 
                              EXPENDITURES

Present Law

    Program integrity (PI) initiatives are designed to combat 
fraud, waste, and abuse. This includes processes directed at 
reducing improper payments, as well as activities to prevent, 
detect, investigate, and ultimately prosecute health care fraud 
and abuse. PI encompasses a broad range of activities intended 
to ensure proper payments are made. These activities can 
include post-payment claim reviews as well as pre-payment 
claims monitoring. PI emphasis has shifted from post-payment to 
pre-payment review to replace costly and time-consuming pay-
and-chase methods with processes to prevent improper payments 
from being made. One of the most important prevention 
activities is to carefully scrutinize and block or otherwise 
restrict participation by providers that are at higher risk of 
committing fraud.
    CMS shares responsibility for combating health care fraud 
with the HHS OIG, the Department of Justice, and the Federal 
Bureau of Investigation. Initially, Medicare contractors, 
called fiscal intermediaries (Part A) and carriers (Part B) 
were responsible for all PI activities. As the Secretary and 
government oversight entities recognized risks to the program, 
CMS tightened PI requirements on fiscal intermediaries and 
carriers.
    CMS relies on a variety of contractors to help administer 
the Medicare program, including MACs for FFS Medicare. Section 
911 of the MMA required the Secretary to implement Medicare 
contracting reform which was intended to improve Medicare's 
administrative services through the use of competition and 
performance incentives. MACs process Medicare claims, and serve 
as the primary operational contact between the FFS program, and 
Medicare's approximately 1.5 million health care providers and 
suppliers. MACs enroll providers and suppliers in Medicare and 
educate providers on Medicare billing requirements, in addition 
to answering provider and beneficiary inquiries.
    MACs are required to educate providers and their staffs 
about the fundamentals of the program, policies and procedures, 
new initiatives, and other significant changes. MACs also 
identify potential improper payment issues through analyses of 
provider inquiries, claim submission errors, medical review 
data, Comprehensive Error Rate Testing data, and the Recovery 
Audit Program data.
    In addition to MACs, CMS also relies on other contractors 
that support program integrity activities such as RACs. In FFS 
Medicare, RACs focus primarily on post-payment claim review and 
identification of overpayments to be recouped by MACs, although 
they also indirectly provide insight to CMS and other Medicare 
contractors on topics for provider education and outreach and 
identification of fraud and abuse vulnerabilities. In a March 
2010 report, GAO indicated that CMS had not established 
processes to ensure that vulnerabilities identified by RACs 
were effectively communicated to other Medicare entities and 
that there was limited follow-up to ensure that these 
contractors implemented measures to reduce these 
vulnerabilities.
    In general, under MMA, Part D prescription drug plan 
sponsors must comply with certain requirements to assist CMS in 
administering and monitoring the program, including effective 
program integrity safeguards. Part D plans must submit to CMS 
an electronic prescription drug event (PDE) record for each 
covered prescription the plan fills for their enrollees. PDEs 
are similar to other health claim forms and contain a number of 
fields that enable CMS to determine plan payments and oversee 
the benefit. CMS requires that most PDEs contain a drug 
prescriber's identifier. Acceptable identifiers include the 
NPI, Drug Enforcement Administration registration numbers, 
Unique Physician Identification Numbers, and state license 
numbers. However, some drug prescribers are not considered 
covered entities under HIPAA and therefore may not be required 
to obtain an NPI (covered entities include health plans, health 
care clearinghouses, and health care providers that submit 
claims electronically). CMS instructed plans that non-NPI 
prescriber identifiers may be used on PDEs when the prescriber 
does not have an NPI, but that plans and pharmacies should make 
reasonable efforts to submit NPIs in the PDE prescriber field. 
Prescriber identifiers are valuable program integrity 
safeguards, in that they can indicate if legitimate 
practitioners prescribed an enrollee's drugs. Valid identifiers 
make it possible for plans and CMS to review claims and to 
investigate who prescribed covered drugs. In a June 2010 
report, the HHS OIG found that there were a number of Part D 
claims with invalid prescriber identifiers and these claims 
accounted for $1.2 billion in Medicare Part D expenditures.
    The Secretary is required to submit an annual report to 
Congress on the use of RACs. These reports include information 
on the performance of RACs in identifying under- and over 
payments and in recouping overpayments.
    The Federal Office of Child Support Enforcement (OCSE) 
operates the National Directory of New Hires (NDNH), a database 
established by the PRWORA. The primary purpose of the NDNH is 
to assist state child support agencies in locating parents and 
enforcing child support orders; however, Congress has only 
authorized specific state and federal agencies to receive 
information from the NDNH for a limited set of authorized 
purposes.
    The NDNH is a national database of wage and employment 
information. Its primary purpose is to assist state child 
support agencies in locating noncustodial parents, putative 
fathers and custodial parties in order to establish paternity 
and child support obligations, as well as to enforce and modify 
orders for child support, custody and visitation. The NDNH is 
located at the Social Security Administration's National 
Computing Center. NDNH data are only available to specific 
entities for authorized purposes, which include the Secretary 
of the Treasury, state foster care and adoption assistance 
agencies, state welfare agencies, state child and family 
services agencies, the Social Security Commissioner, the 
Secretary of Education, and some de-identified uses by 
researchers. Statutory authority is required to receive NDNH 
information or to request an information comparison. OCSE may 
not disclose NDNH information without appropriate statutory 
authority.
    The federal government and states contribute equally to 
fund most Medicaid and CHIP PI activities, although for some 
activities, the federal government provides additional funds 
through enhanced Federal Medical Assistance Percentage (FMAP) 
matching rates. All states receive the same FMAP rate for 
administrative expenditures, including most PI activities, 
which is generally 50%.
    Under section 4735 of the BBA, states were required to 
submit Medicaid data to CMS using the Medicaid Statistical 
Information System (MSIS). In addition, each state is required 
to have its own Medicaid Management Information System (MMIS), 
and integrated group of procedures and computer processing 
operations that functions as a claims processing and 
information retrieval system. The Secretary must approve 
states' MMISs and have found them to meet a number of 
requirements including compatibility with Medicare claims 
processing and information systems, and consistency with 
uniform coding systems for claims processing and data 
interchange. Among other requirements, MMISs also must be 
capable of providing timely and accurate data, meet other 
specifications as required by the Secretary, and provide for 
electronic transmission of claims data as well as be consistent 
with MSIS data formats. A 90 percent federal match is available 
for MMIS design, development, or installation and a 75 percent 
federal match is available for the operation of an approved 
MMIS.
    Each state has its own MMIS which it uses to process claims 
and monitor service use, but CMS maintains MSIS data for all 
states. CMS's MSIS data is an extract of states' MMISs and 
contains enrollee and claims information from all 50 states and 
the District of Columbia. MSIS is used for analytical research, 
program integrity, planning, budgeting, and Medicaid policy 
analyses. MSIS is the only nationwide Medicaid eligibility and 
claims database, although CMS is developing other data systems 
to help monitor and assist states in administering the Medicaid 
program.
    More recently, section 6402 and 6504 of the ACA 
strengthened this provision by requiring states to include data 
elements the Secretary determines necessary for program 
integrity, program oversight, and administration, including 
managed care encounter data.
    In 2005, the DRA amended the SSA to add section 1936 
established the Medicaid Integrity Program (MIP). Section 1936 
appropriated as much as $75 million annually in MIP funding to 
support and enhance state PI efforts by expanding and 
sustaining national activities such as provider audits, 
overpayment identification, and payment integrity and quality 
of care education. Section 1936, as originally enacted, 
restricted how MIP funding could be used and required that the 
Secretary employ a specified number of full-time equivalent 
staff. Section 1936 also restricted MIP funding to contractor 
payments and limited the Secretary's ability to use MIP funds 
for equipment, travel, benefits, training, and salaries.
    In addition to establishing the MIP, section 6034 of the 
DRA established the Medicare-Medicaid Data Match (Medi-Medi) 
Program. The Medi-Medi program was created to help identify 
Medicare and Medicaid program integrity vulnerabilities using 
computer algorithms (billing or billing patterns related to 
service, time, or patients that appear suspect or otherwise 
implausible).
    Under the Medi-Medi program, state participation is 
voluntary. States receive no direct support other than their 
FMAP administrative match of 50%. Medicare Program Safeguard 
Contractors (PSCs) conducted most of the analysis. Ten states 
volunteered to participate in the Medi-Medi program. In an 
April 2012 report, the HHS OIG found that the Medi-Medi program 
produced limited results and benefitted Medicare more than 
Medicaid. HHS OIG recommended that the Secretary make changes 
to the Medi-Medi program.
    Another program integrity area where Medicare and Medicaid 
coordination could be important is reviewing and monitoring 
expenditures for individuals dually eligible for both programs. 
Although dual eligible beneficiaries are only approximately 25% 
of both programs' enrollment, they account for approximately 
75% of the programs' expenditures, so monitoring their service 
use is important. However, because there are shared 
responsibility for the cost of dual eligibles' care, oversight 
of these expenditures, including program integrity, can be 
fragmented and lack direct timely, accurate data on 
utilization.

Committee Bill

    The Committee Bill prohibits, for 2015 and for each 
subsequent year, Prescription Drug Plans from paying claims for 
prescription drugs under Part D that do not include a valid 
prescriber NPI.
    The Committee Bill requires that the annual report to 
Congress on RACs for 2015 and each subsequent year include a 
description of (1) the types and financial cost to Medicare of 
improper payment vulnerabilities identified by RACs and (2) how 
the Secretary is addressing such improper payment 
vulnerabilities. The Committee Bill also requires the annual 
report to Congress include an assessment of the effectiveness 
of changes made to payment policies and procedures in Medicare 
in order to address the vulnerabilities so identified.
    The Committee Bill allows the Secretary to use MIP funding 
for equipment, travel, benefits, training and salaries. The 
Committee Bill also allows MIP funding to be used to employ a 
number of staff as the Secretary determines necessary to carry 
out PI.
    The Committee Bill requires the Administrator of CMS have 
access to the information in the NDNH for purposes of 
determining the eligibility of an applicant for, or enrollee 
in, Medicare or a state health subsidy program.
    The Committee Bill requires that if the HHS OIG transmits 
to the Secretary the names and Social Security Numbers of 
individuals, the Secretary must disclose to the HHS OIG 
information on such individuals and their employers maintained 
in the NDNH. The HHS OIG may use this information only for the 
purposes of determining eligibility of an applicant for, or 
enrollee in, Medicare or a state health subsidy program or 
evaluating the integrity of the Medicare program or a state 
health subsidy program.
    If, for the purposes of determining eligibility, a state 
health subsidy program transmits to the Secretary the names, 
dates of birth and Social Security Numbers of individuals, the 
Secretary must disclose to the state agency information on such 
individuals and their employers maintained in the NDNH.
    The Committee Bill requires the Secretary to establish a 
plan to encourage and facilitate the participation of states in 
the Medicare-Medicaid Data Match Program, or Medi-Medi Program. 
The Committee Bill requires the Secretary to develop and 
implement a plan that allows state Medicaid programs access to 
relevant data on improper or fraudulent payments made under 
Medicare. The Committee Bill makes technical changes to the 
Medi-Medi program to improve the participation of states.

                      Subtitle E--Other Provisions


          SEC. 241. COMMISSION ON IMPROVING PATIENT DIRECTED 
                              HEALTH CARE

Present Law

    No provision.

Committee Bill

    The purpose of section 241 of the Committee Bill would be 
to create a Commission on Improving Patient Directed Health 
Care, which is a 15-member group charged with providing a forum 
for nationwide public debate in improving patient self-
determination in health care decision-making; identifying 
strategies to ensure every American receives the health care 
they want; and providing recommendations to Congress. The 
Commission, which includes the Secretary and 14 GAO-appointed 
members selected to represent a diverse range of perspectives 
and experience, will conduct hearings across the country to 
allow Americans to provide input. The Commission will issue a 
Report to the American People on Patient Directed Health Care 
that, among other things, summarizes what the Commission 
learned at its hearings and solicits comment from the public. 
Following close of the public comment period, the Commission 
will submit recommendations to the President and Congress. The 
Bill makes $3,000,000 available in each of fiscal years 2014 
and 2015 for the Commission to conduct its work.

 SEC. 242. EXPANSION OF THE DEFINITION OF INPATIENT HOSPITAL SERVICES 
                      FOR CERTAIN CANCER HOSPITALS

Present Law

    From the outset of the Medicare program, the statute and 
regulations have expressly authorized payment for services 
furnished ``under arrangement'' between a provider and an 
outside vendor. Medicare will pay for diagnostic and other 
therapeutic services if furnished by others under arrangement 
with the hospital as along as the hospital exercises some 
oversight over the vendor. Medicare statute specifies that 
routine services, including bed, board and nursing, are to be 
provided by the hospital. In FY2012, CMS implemented a 
regulation that would require hospitals to provide routine 
services directly and not under arrangement with other 
providers. Enforcement of this regulation has been delayed 
until January 1, 2015.
    There are 11 cancer hospitals that are exempt from 
Medicare's IPPS used to pay acute care hospitals. Some of these 
cancer hospitals are located in the same building or on the 
same campus as another hospital and obtain routine services 
under arrangement with other providers.

Committee Bill

    The Committee Bill would permit cancer hospitals that are 
located in the same building or on the same campus as another 
hospital as of the date of enactment to obtain routine services 
furnished after enactment under arrangement.

   SEC. 243. QUALITY MEASURES FOR CERTAIN POST-ACUTE CARE PROVIDERS 
   RELATING TO NOTICE AND TRANSFER OF PATIENT HEALTH INFORMATION AND 
                        PATIENT CARE PREFERENCES

Present Law

    To differing degrees, acute care hospitals and other Part A 
providers are subject to pay-for-reporting and pay-for-
performance requirements under the Medicare program that can 
use endorsed measures from a consensus-based entity such as the 
National Quality Forum.

Committee Bill

    The Committee Bill would require the Secretary to provide 
for the development of one or more Medicare quality measures to 
accurately communicate the existence and provide for the 
transfer of patient health information and patient care 
preferences when an individual is discharged from a hospital to 
return home or to other post-acute care settings. The Secretary 
would arrange for the development of these measures by 
appropriate measure developers that would submit the measures 
for endorsement buy a consensus-based entity. These measures 
would be included through notice and comment rulemaking in 
different quality reporting programs for acute care hospitals, 
skilled nursing facilities, home health agencies and, as 
determined by the Secretary, other appropriate providers and 
suppliers.

 SEC. 244. CRITERIA FOR MEDICALLY NECESSARY, SHORT INPATIENT HOSPITAL 
                                 STAYS

Present Law

    CMS established regulations to provide guidance on the 
appropriateness of a Medicare inpatient admission as part as 
its FY2014 IPPS rulemaking. Inpatient hospital stays that are 
ordered by physicians with appropriate documentation in the 
patient's medical record that span (or are expected to span) 
two midnights at the hospital will generally be presumed to be 
medically appropriate admissions. CMS has delayed 
implementation of this requirement for six months until March 
31, 2014.

Committee Bill

    The Committee Bill would require the Secretary to consult 
with and seek input from interested stakeholders to determine 
appropriate criteria to determine medically necessary care that 
is an inpatient hospital stay that is less than two midnights 
(as established by 42 CFR 412.3 finalized in the FY2014 IPPS 
rule). Stakeholders would be hospitals, physicians, MACs, RACs, 
and other appropriate parties as determined by the Secretary.

 SEC. 245. TRANSPARENCY OF REASONS FOR EXCLUDING ADDITIONAL PROCEDURES 
    FROM THE MEDICARE AMBULATORY SURGICAL CENTER (ASC) APPROVED LIST

Present Law

    Covered surgical procedures in an ambulatory surgical 
center (ASC) are surgical procedures that are separately paid 
under the OPPS, that would not be expected to pose a 
significant risk to beneficiary safety when furnished in an 
ASC, and that would not be expected to require active medial 
monitoring and care at midnight following the procedure.
    The criteria used to identify a significant safety risk 
when furnished in an ASC include, but are not limited, to those 
procedures that: generally result in extensive blood loss; 
require major or prolonged invasion of body cavities; directly 
involve major blood vessels; are generally emergent or life 
threatening in nature; or commonly require systemic 
thrombolytic therapy. Medicare will not cover unlisted 
procedures associated with a specific anatomic location (for 
example, unlisted codes associated with eye procedures) in an 
ASC. Also, certain procedures have been designated as covered 
only when provided in an inpatient setting.
    CMS updates the lists of covered surgical procedures and 
ancillary services in ASCs as part of the ASC annual rulemaking 
process. For CY2014, commenters requested that CMS add 54 
additional surgical procedures to the list of ASC covered 
surgical procedures. Of these codes, CMS did not review 15 
procedures that were either unlisted codes (2), only covered on 
an inpatient basis (6), or already covered in an ASC (7). Of 
the 39 remaining codes, four were included on the ASC covered 
surgical procedure list starting with CY2014. CMS determined 
that the remaining 35 codes were not appropriate to perform in 
an ASC, but did not provide a reason to justify its decision 
for each code.

Committee Bill

    The Committee Bill would require that the Secretary 
describe the specific safety criteria for not including the 
requested procedure on the list of ASC covered procedures.

           SEC. 246. SUPERVISION IN CRITICAL ACCESS HOSPITALS

Present Law

    Medicare provides coverage for a wide range of diagnostic 
and therapeutic services in HOPDs. In the CY2009 hospital OPPS 
final rule published on November 18, 2008, CMS codified a 
longstanding expectation that hospital outpatient therapeutic 
services provided `incident to' a physician must be under the 
direct supervision of a physician. The term ``physician'' 
refers to (1) a doctor of medicine or osteopathy legally 
authorized to practice in their state; (2) a doctor of dental 
surgery or dental medicine; (3) a doctor of podiatric medicine; 
(4) a doctor of optometry; (5) a chiropractor, or (6) a 
clinical psychologist. Additionally, the term ``direct 
supervision'' requires that such physician be on the hospital 
premises (or department premises for off-campus hospital 
departments) and immediately available to furnish assistance 
and direction throughout the performance of the service or 
procedure if the need arises, but not necessarily in the room 
of service.
    In the CY2010 final rule, after receiving comments from 
stakeholders, CMS modified the direct supervision requirement 
for hospital outpatient therapeutic services. Effective January 
1, 2010, nurse practitioners, physician assistants, clinical 
nurse specialists, or certified nurse-midwives authorized under 
state law could also provide and meet the direct supervision 
requirement. Additionally, CMS implemented a technical 
correction which clarified that the direct supervision 
requirement applied to both hospitals and CAHs--a specific type 
of small rural hospitals.
    On March 15, 2010, in consideration of stakeholder 
comments, CMS issued a notice of non-enforcement of the direct 
supervision of outpatient therapeutic services in CAHs for 
CY2010. While CAHs remained subject to the direct supervision 
standard, contractors were instructed not to evaluate or 
enforce the direct supervision standard against such hospitals. 
In the CY2011 final rule, the notice of non-enforcement was 
extended through CY2011 and applied to small rural hospitals 
with 100 beds or fewer that did not otherwise meet the 
definition of a CAH. In the CY2012 final rule, the notice of 
non-enforcement was extended for CYs 2012 and 2013. 
Additionally, CMS established a Hospital Outpatient Payment 
Panel to advise CMS on appropriate supervision levels other 
than direct supervision for specific outpatient hospital 
therapeutic services. Beginning January 1, 2014, the direct 
supervision requirement will be enforced for certain hospital 
outpatient therapeutic services provided in CAHs and small 
rural hospitals.

Committee Bill

    Section 246 of the Committee Bill would allow general 
supervision by a physician at CAHs for payment of therapeutic 
hospital outpatient services.
    Additionally, professionals including: (1) a doctor of 
medicine or osteopathy legally authorized to practice in their 
State; (2) a doctor of dental surgery or dental medicine; (3) a 
doctor of podiatric medicine; (4) a doctor of optometry; (5) a 
chiropractor, or (6) a clinical psychologist, at CAHs may 
directly supervise cardiac and pulmonary rehabilitation. This 
fixed a technical problem that prohibits non-physician 
practitioners from directly supervising cardiac and pulmonary 
rehabilitation services.

   SEC. 247. REQUIRING STATE LICENSURE OF BIDDING ENTITIES UNDER THE 
COMPETITIVE ACQUISITION PROGRAM FOR CERTAIN DURABLE MEDICAL EQUIPMENT, 
             PROSTHETICS, ORTHOTICS, AND SUPPLIES (DMEPOS)

Present Law

    Under Medicare's competitive bidding program, CMS may only 
award contracts to suppliers if the following requirements are 
met: (1) the supplier is accredited by a CMS-approved national 
accrediting organization, (2) the supplier meets applicable 
financial standards specified by the Secretary, (3) the total 
amount to be paid under contracts in competitive bidding areas 
is expected to be less than amounts that would be paid under 
the fee schedule methodology, and (4) beneficiaries have a 
choice of multiple suppliers in each area.
    Suppliers must also be in good standing with an active 
Medicare provider number, meet all applicable state and federal 
regulatory and licensure requirements, and be ready to provide 
services on the first day of the contract period.

Committee Bill

    For rounds of competitive bidding beginning on or after the 
enactment of the Committee Bill, the Secretary may only accept 
a bid from an entity for an area if the entity already meets 
applicable state licensure requirements for such area for all 
items in such bid.

 SEC. 248. RECOGNITION OF ATTENDING PHYSICIAN ASSISTANTS AS ATTENDING 
                  PHYSICIANS TO SERVE HOSPICE PATIENTS

Present Law

    Currently, under Medicare, physicians and nurse 
practitioners can serve as attending physicians for 
beneficiaries during hospice care. Physician assistants are not 
permitted to serve as a beneficiary's attending physician under 
the hospice benefit services.

Committee Bill

    The Committee Bill would amend section 1861(dd)(3)(B) and 
section 1814(a)(7)(A)(i)(I) of the SSA to allow physician 
assistants, in addition to physicians and nurse practitioners, 
to be attending physicians reimbursed for the services 
furnished they provide during hospice care. The amendments do 
not grant physician assistants the authority to order hospice 
care for beneficiaries.

              SEC. 249. REMOTE PATIENT MONITORING PROJECT

Present Law

    Under certain circumstances, the Medicare program provides 
reimbursement for remote monitoring under the physician fee 
schedule

Committee Bill

    The Committee Bill would require the Secretary of Health 
and Human Services to create pilot projects that incentivize 
home health agencies and other entities to purchase and utilize 
remote patient monitoring and communications technologies. Home 
health agencies participating in the pilot would receive an 
incentive payment based on a percentage of the Medicare savings 
realized as a result of the pilot projects.
    The incentive payments would not exceed the amount that the 
Secretary estimates would be expended to home health agencies 
if the pilot projects had not been implemented. These 
technologies must both enhance health outcomes for Medicare 
beneficiaries and reduce total spending under the Medicare 
program.
    Incentive payments would not reduce the payments that home 
health agencies would otherwise receive for providing home 
health benefits to Medicare beneficiaries, and performance 
targets would be established based on historic spending in 
Medicare.
    The pilot projects would be conducted in both urban and 
rural areas and at least one project would be conducted in a 
state with a population of less than one million.
    The Secretary would conduct a study on the appropriate 
valuation of remote patient monitoring services under the 
Medicare physician fee schedule in order to accurately reflect 
the resources used in furnishing such services. Not later than 
six months after the date of enactment of the Committee Bill, 
the Secretary would submit to Congress a report on the study 
referenced above.

      SEC. 250. COMMUNITY-BASED INSTITUTIONAL SPECIAL NEEDS PLAN 
                         DEMONSTRATION PROGRAM

Present Law

    Section 231 of the MMA established a new type of MA 
coordinated care plan to focus on individuals with special 
needs. SNPs are allowed to target enrollment to one or more 
types of special needs individuals including individuals who 
are institutionalized or who require nursing home level of 
care. These types of SNPs are referred to as Institutionalized 
SNPs (I-SNPs).

The Committee Bill

    The Committee Bill requires the Secretary to conduct a 
Community-Based Institutional Special Needs Plan demonstration 
program aimed at preventing and delaying institutionalization 
of Medicaid beneficiaries enrolled in plans participating in 
the demonstration. The demonstration would include up to five 
I-SNPs that have experience offering services to enrollees who 
live in the community and are located in a state that has 
agreed to participate in the demonstration. These participating 
plans would be required to provide certain long term care 
services and supports as a supplemental benefit to their 
enrollees. The plans participating in the demonstration would 
enroll beneficiaries who are eligible for the low-income 
subsidy under Part D and who are unable to perform two or more 
activities of daily living.
    The demonstration would begin no later than January 1, 2016 
and would last three years. An independent evaluation will be 
required to determine whether the demonstration has reduced 
hospitalization (or re-hospitalizations), Medicaid nursing home 
facility stays, and spend down of income and assets for 
purposes of becoming eligible for Medicaid. $3 million is made 
available for the demonstration and $500,000 is available for 
the evaluation.

  SEC. 251. APPLYING CMMI WAIVER AUTHORITY TO PACE IN ORDER TO FOSTER 
                              INNOVATIONS

Present Law

    Section 3021 of the ACA created the CMMI within CMS. CMMI 
is tasked with testing innovative payment and delivery system 
reforms that improve quality or reduce costs. In order to test 
innovations under CMMI, the Secretary is permitted to waive 
requirements in titles XI and XVIII of the SSA but only three 
specific portions of title XI: 1902(a)(1), 1902(a)(13), and 
1903(m)(2)(A)(iii). CMMI is not permitted to waive the Medicaid 
requirements of the Programs of All-Inclusive Care for the 
Elderly (PACE) program.
    The PACE program is a provider-based program that serves 
frail, elderly Medicare and Medicaid beneficiaries. PACE 
providers receive separate payments from Medicare and Medicaid 
and provide both Medicare and Medicaid services. The 
eligibility to receive services from a PACE provider is more 
stringent than Medicare and Medicaid eligibility standards. 
Individuals eligible to enroll must: (1) be 55 years of age or 
older, (2) require the level of care for nursing home coverage 
under a state Medicaid program, and (3) reside in the service 
area of a PACE program.

The Committee Bill

    The Committee Bill provides the Secretary the authority to 
waive applicable Medicaid requirements of the PACE program in 
order to conduct demonstration projects through CMMI that 
involve PACE. The Committee Bill prohibits the Secretary from 
waiving the requirement to offer items and services covered 
under Medicare (1934(b)(1)(A)) and the requirements regarding 
enrollment in and disenrollment from PACE programs (1934(c)(5)) 
as part of a CMMI demonstration.

  SEC. 252. IMPROVE AND MODERNIZE MEDICAID DATA SYSTEMS AND REPORTING

Present Law

    Current law includes data system requirements applicable to 
states and the Secretary; however, current law does not 
specifically require the Secretary to submit a Medicaid data 
systems strategic plan to Congress. Under section 4735 of the 
BBA states were required to submit Medicaid data to CMS using 
the Medicaid Statistical Information System (MSIS), thus 
creating some common data definitions and standards. More 
recently, section 6405 of the ACA strengthened this provision 
by requiring states to include data elements the Secretary 
determines necessary for program integrity, program oversight, 
and administration, including managed care encounter data.
    Each state has its own MSIS which it uses to process claims 
and monitor service use, but CMS maintains a national MSIS for 
all states. MSIS is the only nationwide Medicaid eligibility 
and claims database, although CMS is developing other data 
systems to help monitor and assist states in administering the 
Medicaid program. The GAO and the HHS OIG have identified MSIS 
data shortcomings such as inaccuracies, insufficient data for 
conducting program integrity functions, redundancy, and 
outdated information. CMS initiated a pilot, call Transformed-
MSIS (T-MSIS), in March 2011 as a continuation of past MSIS 
improvement efforts. CMS indicated that it plans to transition 
all states to T-MSIS by July 1, 2014. In a March 2011 report, 
the Medicaid and CHIP Payment Advisory Commission recommended 
that CMS implement a strategic plan to address redundancies and 
gaps in Medicaid data.

Committee Bill

    The Committee Bill directs the Secretary to implement a 
strategic plan to increase the usefulness of data about state 
Medicaid programs reported by states to CMS. The strategic plan 
would address redundancies and gaps in Medicaid data systems 
and reporting through improvements to, and modernization of, 
computer and data systems. Areas for improvement under the plan 
would include the following: (1) the reporting of encounter 
data by managed care plans; (2) the timeliness and quality of 
reported data, including enrollment data; (3) the consistency 
of data reported from multiple sources; and (4) information 
about state program policies. Within a year of enactment of the 
Committee Bill, the Secretary is required to submit a report to 
Congress on the status of the implementation of the strategic 
plan.

           SEC. 253. FAIRNESS IN MEDICAID SUPPLEMENTAL TRUSTS

Present Law

    The Omnibus Budget Reconciliation Act of 1993 (OBRA93; P.L. 
103-66) established two trusts that are commonly utilized by 
individuals with disabilities to maintain assets while not 
endangering their eligibility for public benefits. 
Specifically, section 1396p(d)(4)(A) and section 1396p(d)(4)(C) 
of the SSA, known as section (d)(4)(A) and (d)(4)(C) trusts 
respectively, exempt the assets held therein from counting for 
purposes of Medicaid and Supplemental Security Income 
eligibility. A section (d)(4)(C) trust may be created by a 
parent, grandparent, legal guardian, or individuals themselves, 
and is held and managed by a third-party for the benefit of the 
individual with a disability. However, a section (d)(4)(A) 
trust may be created only by the parent, grandparent, legal, or 
a court, not individuals themselves.

Committee Bill

    The Committee Bill would allow an individual with a 
disability, who otherwise qualifies for a section (d)(4)(A) 
trust, to create the trust independently.

  SEC. 254. HELPING ENSURE LIFE- AND LIMB-SAVING ACCESS TO PODIATRIC 
                               PHYSICIANS

Present Law

    For the purposes of Medicaid, a physician is a doctor of 
medicine or osteopathy legally authorized to practice medicine 
and surgery by the state in which he or she practices. The 
definition does not include doctors of podiatric medicine. As a 
result, foot and ankle care services provided by a podiatrist 
are considered an optional benefit and are not covered by all 
state plans.
    Under Medicare, extra-depth shoes with inserts or custom 
molded shoes with inserts for an individual with diabetes must 
meet a number of conditions in order to be considered covered 
services. The individual's managing physician must document 
that the individual has peripheral neuropathy with evidence of 
callus formation, a history of pre-ulcerative calluses, a 
history of previous ulceration, foot deformity, or previous 
amputation, or poor circulation. Additionally, the physician 
must certify that the individual needs such shoes under a 
comprehensive plan of care related to the diabetic condition. A 
podiatrist or other qualified physician must prescribe the 
particular type of shoes. The shoes must be fit and furnished 
by a podiatrist or other qualified individual (such as a 
pedorthist or orthotist, as established by the Secretary) who 
is not the physician certifying the need for the shoes. 
However, the physician certifying the need for shoes can also 
fit and furnish them if the Secretary finds that the physician 
is the only such qualified individual in the area.

Committee Bill

    Effective upon the date of enactment, the Committee Bill 
would amend Medicaid's definition of physician under section 
1905(a)(5)(A) to include a doctor of podiatric medicine as 
defined under section 1861(r) of Medicare. The Committee Bill 
allows states requiring legislation to comply with the change 
additional time to do so.
    Effective for items and services furnished on or after 
January 1, 2015, extra-depth shoes with inserts or custom 
molded shoes with inserts for an individual with diabetes would 
have to meet a different set of conditions in order to be 
considered covered services. The physician managing the 
individual's diabetic condition would have to:
          (1) Document that the individual has diabetes,
          (2) Certify that the individual is under a 
        comprehensive plan of care related to a diabetic 
        condition, and
          (3) Document agreement with the prescribing 
        podiatrist or other qualified physician that the shoes 
        are medically necessary.
    Additionally, the therapeutic shoes would have to be 
prescribed by a podiatrist or other qualified physician who:
          (1) Examines the individual and determines the 
        medical necessity for the individual to receive the 
        therapeutic shoes, and
          (2) Communicates in writing to the individual's 
        managing physician that therapeutic shoes are medically 
        necessary as well as findings that the individual has 
        peripheral neuropathy with evidence of callus 
        formation, a history of pre-ulcerative calluses, a 
        history of previous ulceration, foot deformity, 
        previous amputation, or poor circulation.
    The shoes would be fit and furnished by a podiatrist or 
other qualified individual (such as a pedorthist or orthotist, 
as established by the Secretary) who is not the physician 
certifying the need for the shoes. However, the physician 
certifying the need for the shoes would also be able to fit and 
furnish them if the Secretary finds that the physician is the 
only such qualified individual in the area.

  SEC. 255. DEMONSTRATION PROGRAM TO IMPROVE COMMUNITY MENTAL HEALTH 
                                SERVICES

Present Law

    Under current law, CMS and the Substance Abuse and Mental 
Health Services Administration (SAMHSA) collaborate on several 
issues. Both the CMS Administrator and the SAMHSA Administrator 
sit on the Task Force on Aging Research. The Secretary, acting 
through the SAMHSA Administrator, is required to promote the 
coordination of programs relevant to individuals with mental 
illness or substance abuse, in part through liaisons with CMS. 
The duties of the Director of SAMHSA's Center for Substance 
Abuse Treatment include collaborating with the CMS 
Administrator to promote integration of substance abuse 
treatment into the mainstream of the health care system. The 
Secretary is required to ensure that CMS, SAMHSA, and other 
agencies coordinate the planning, funding, and implementation 
of federal HIV programs.
    There is no statutory definition of a behavioral health 
clinic; however, statutory requirements do exist for three 
similar types of facilities, each in the context of a specific 
program (e.g., a grant or Medicare Part B). The first is a 
mental health center, which must provide: services principally 
to individuals residing in geographically defined service 
areas; a series of specified outpatient services; 24-hour 
emergency care services; day treatment, partial hospitalization 
services, or psychosocial rehabilitation services; and 
screening for patients being considered for admission to state 
mental health facilities. Such services must be provided to any 
individual residing or employed in the service area, regardless 
of ability to pay; services must be available and accessible 
promptly, as appropriate and in a manner which preserves human 
dignity and assures continuity and high quality care. The 
second is a community mental health center, which also provides 
the services specified above for mental health centers; in 
addition they must meet applicable state licensing or 
certification requirements and provide at least 40 percent of 
their services to individuals who are not Medicare 
beneficiaries. The third is an emergency mental health center, 
which must serve as a central receiving point for individuals 
in need of emergency mental health services; provide necessary 
mental health treatment or a referral for such treatment; 
purchase any necessary equipment; and provide any necessary 
training to the medical staff. Such centers may also establish 
and train a mobile crisis intervention team.
    States establish and administer their Medicaid programs and 
determine the type, amount, duration, and scope of covered 
services within broad federal guidelines. For example, states 
must cover certain mandatory benefits and may choose to cover 
optional benefits listed in Medicaid statute. In general, 
Medicaid covered services must meet a ``statewideness'' 
requirement whereby states must provide the same amount, 
duration and scope of coverage for a given benefit throughout 
the entire state.
    Federal Medicaid statute does not specify the exact types 
of mental health services that can be reimbursed. However, all 
state Medicaid programs cover some mental health services, 
whether through state plan services, the Early and Periodic 
Screening, Diagnostic and Testing benefit, or waiver programs. 
Medicaid reimbursement is available for mental health services 
under various Medicaid service categories, including: physician 
services, inpatient and outpatient hospital services, clinics, 
rehabilitative services, inpatient psychiatric hospital 
services for individuals under age 21, and prescription drugs. 
Examples of services in these categories include counseling, 
therapy, medication management, psychiatrist services, licensed 
clinical social work services, peer supports, and substance 
abuse treatment. Individuals may receive services in their 
homes, other residences, schools, or medical institutions, if 
necessary.
    The federal government and the states jointly finance 
Medicaid. The federal government reimburses states for a 
portion of each state's Medicaid program costs. The federal 
government's share of most Medicaid expenditures is established 
by the FMAP rate. A state's share of program spending for 
Medicaid is equal to 100 percent minus the FMAP. CHIP is also 
jointly financed by the federal government and the states using 
a matching scheme. The federal government pays a larger share 
for CHIP than it does for Medicaid. The enhanced FMAP (E-FMAP) 
for CHIP means a state's share of expenditures is 30 percent 
lower than under the regular FMAP.
    Federal laws and regulations govern the time and manner in 
which state Medicaid agencies pay providers. For most Medicaid 
providers, states develop their own methodologies for making 
Medicaid payments (e.g., they may pay providers by FFS, on a 
capitated basis, or under a combination of both). Federally 
qualified health centers (FQHCs) and rural health clinics 
(RHCs), which provide health care services to populations in 
areas where access to physician care has been limited, are 
unique in Medicaid in that federal statute specifies their 
reimbursement methodology referred to as a prospective payment 
system (PPS). Since January 2002, the law requires that each 
existing FQHC/RHC is entitled to a payment amount per visit 
equal to the amount for the previous fiscal year increased by 
the percentage increase in the Medicare Economic Index (MEI) 
for primary care services, and adjusted to take into account 
any change in the scope of services furnished.
    For entities first qualifying as FQHCs and RHCs after 2000, 
the per visit payments begin in the first year that the center 
or clinic attains qualification and are based on 100 percent of 
the costs incurred during that year and the rates established 
for similar centers or clinics with similar caseloads in the 
same or adjacent geographic areas. In the absence of such 
similar centers or clinics, the methodology is based on that 
used for developing rates for established FQHCs or RHCs or such 
methodology or reasonable specifications as established by the 
Secretary. For each fiscal year thereafter, per visit payments 
for all FQHCs and RHCs are equal to amounts for the preceding 
fiscal year increased by the percentage increase in the MEI 
applicable to primary care services for that fiscal year, and 
adjusted for any increase or decrease in the scope of services 
furnished during that fiscal year. Under managed care 
contracts, states must make supplemental payments to the center 
or clinic equal to the difference between contracted amounts 
and the cost-based amounts. States are allowed to establish 
alternative payment methods but only when payments are at least 
equal to the amounts that would otherwise be provided under the 
PPS.

Committee Bill

    The Committee Bill establishes a five-year demonstration 
program for up to ten states, setting new criteria for 
community behavioral health providers and allowing them to be 
reimbursed for a broad range of services. The Secretary, in 
coordination with the Administrator of SAMHSA, would award 
planning grants to the selected states.
    To be eligible, states would be required to submit an 
application to the Secretary, conduct a financial assessment, 
comply with any other requirements as established by the 
Secretary, and certify that the behavioral health providers 
under the demonstration program meet certain specified criteria 
for certified clinics. States would also have to certify that 
providers of community mental health services meet new criteria 
and offer specific behavioral health services. Those services 
would then be reimbursed under Medicaid using a PPS based on 
the PPS for FQHCs under section 1902(bb) of the SSA. Those 
services would also be eligible for an enhanced federal match 
rate as defined under section 2105(b). In selecting states for 
the demonstration, considerations will be made for geographic 
diversity of participating states, including representation of 
certified clinics in rural and other underserved areas within 
those states. The Secretary would be able to waive the Medicaid 
statewideness requirement, which would permit states to offer 
different service packages in different areas.
    The certified clinics would have to provide a number of 
services under the new criteria including: (1) crisis 
psychiatric services available on a 24-hour basis as well as 
psychiatric screenings; (2) evidence-based and integrated 
treatment for mental illness, substance abuse, and trauma 
including cognitive behavioral therapy, applied behavioral 
analysis, and medication management; (3) peer support and 
counselor services for individuals and families; and (4) 
integrated preventive screenings for diabetes, hypertension, 
and cardiovascular disease.
    The certified clinics would have to meet a number of 
additional requirements under the new criteria, including to: 
(1) demonstrate the capacity to comply with behavioral health 
and related healthcare quality measures; (2) form linkages or 
formal contracts with FQHCs, VA facilities, acute care 
hospitals, psychiatric hospitals, and other providers and 
social service organizations; and (3) provide outreach, 
engagement, and intensive community-based mental healthcare for 
members of the armed forces and veterans, particularly in rural 
areas.
    The Committee Bill authorizes $50 million to be 
appropriated to carry out this section.

                  SEC. 256. ANNUAL MEDICAID DSH REPORT

Present Law

    The Medicaid statute requires states make disproportionate 
share hospital (DSH) payments to hospitals treating large 
numbers of low-income patients. While most federal Medicaid 
funding is provided on an open-ended basis, federal Medicaid 
DSH funding is capped. Each state receives an annual federal 
DSH allotment, which is the maximum amount of federal matching 
funds that each state can claim for Medicaid DSH payments. In 
FY2013, the federal DSH allotments to states totaled $11.5 
billion. Medicaid DSH allotments will be reduced by $1.2 
billion in FY2016, $1.8 billion in FY2017, $5 billion in 
FY2018, $5.6 billion in FY2019, and $4.0 billion for FY2020 
through FY2023. Under current law, in FY2024, states' DSH 
allotments will rebound to their pre-2014 reduced levels with 
the annual inflation adjustments for FY2014 to FY2024. 
Currently, federal statute requires states submit annual 
reports identifying each DSH hospital and other information as 
the Secretary determines necessary, which includes hospital-
specific information such as Medicaid inpatient utilization 
rate and amount of uncompensated care.

Committee Bill

    Under the Committee Bill, beginning January 1, 2015, the 
Secretary would annually submit a report to Congress on the 
Medicaid DSH payments for the purpose of providing Congress 
with information relevant to determining an appropriate level 
of overall funding for the payment adjustments during and after 
2014-2022, the period in which reductions to the DSH allotments 
are made.
    Each report would have to include: (1) information 
regarding changes in the number of uninsured individuals over 
time; (2) information on the extent to which hospitals continue 
to incur uncompensated care costs; (3) the extent to which 
hospitals continue to provide charity care and incur bad debt; 
(4) in the first report submitted, a methodology for estimating 
the amount of unpaid patient deductibles, copayments, and 
coinsurance incurred by hospitals for patients enrolled in 
qualified health plans and in subsequent reports, data 
regarding such uncompensated care costs collected pursuant to 
such methodology; (5) for each state, the difference between 
the aggregate amount of uncompensated care costs for all 
disproportionate share hospitals and the state's DSH allotment 
in the prior year; (6) the extent to which there are certain 
vital hospitals that are disproportionately experiencing high 
levels of uncompensated care; and (7) any other relevant 
information on the appropriate level and allocation of funding 
that the Secretary determines appropriate.

                        SEC. 257. IMPLEMENTATION

Present Law

    When Congress enacts legislation, Congress often grants 
rulemaking authority to agencies, and agencies use that 
authority to set standards and prescribe the details of certain 
federal policies and programs. In issuing those regulations, 
agencies are generally required to follow a certain set of 
procedures that Congress has enacted into law. The most long-
standing and broadly applicable federal rulemaking requirements 
are in the Administrative Procedure Act of 1946 (APA, P.L. 79-
404).
    In general, the APA requires agencies to issue a notice of 
proposed rulemaking (NPRM) prior to issuing a final rule (5 
U.S.C. Sec. 553(b)). Under the APA, the NPRM must contain 
either the ``terms or substance of the proposed rule'' or ``a 
description of the subjects and issues involved.'' The APA 
contains some exceptions to that requirement, including 
``interpretative rules, general statements of policy, or rules 
of agency organization, procedure, or practice''; or ``when the 
agency for good cause finds . . . that notice and public 
procedure thereon are impracticable, unnecessary, or contrary 
to the public interest.''
    Following the notice of proposed rulemaking, agencies are 
generally required to take comments on the NPRM (5 U.S.C. 
Sec. 553(c)). However, the same exceptions apply to the comment 
period that apply to the issuance of an NPRM (see above). The 
APA does not specify a minimum duration for the comment period. 
Unless specified in statute, the agency may determine the 
length of a comment period for a given rule, so long as it 
gives the public a meaningful opportunity to participate.
    Similarly, the APA does not require agencies to issue their 
rules under any particular timeline. In many cases, agencies 
are required by or permitted under statute to issue rules 
without any deadlines.
    Section 553(d) of the APA requires that, with some 
exceptions, agencies must have a 30-day period following the 
publication date of a rule before it can become effective. The 
APA's exceptions to that requirement are ``(1) a substantive 
rule which grants or recognizes an exemption or relieves a 
restriction; (2) interpretative rules and statements of policy; 
or (3) as otherwise provided by the agency for good cause found 
and published with the rule.''

Committee Bill

    The Committee Bill would establish requirements for the 
issuance of implementing regulations for any section of the 
Bill. The Secretary would be required to, unless otherwise 
specified in the Committee Bill: (1) issue a notice of proposed 
rulemaking that includes the proposed regulation; (2) provide a 
period of not less than 60 calendar days for comments on the 
proposed regulation; and (3) publish the final regulation or 
take alternative action (such as withdrawing the rule or 
proposing a revised rule with a new comment period) on the 
proposed regulation, not more than 24 months following 
publication of the proposed rule and not less than 30 calendar 
days before the effective date of such final regulation.

                             LIST OF TERMS

ACA: The Patient Protection and Affordable Care Act (P.L. 111-
    148); the health care provisions of the Health Care and 
    Education Reconciliation Act of 2010 (P.L. 111-152)
APA: The Administrative Procedures Act of 1946 (P.L. 79-404)
APM: Alternative payment model
ARRA: The American Recovery and Reinvestment Act of 2009 (P.L. 
    111-5)
ATRA: The American Taxpayer Relief Act (P.L. 112-240)
BBA: The Balanced Budget Act of 1997 (P.L. 105-33)
BPBA: The Bipartisan Budget Act of 2013 (P.L. 113-67)
CAH: Critical access hospital
CMMI: The Center for Medicare and Medicaid Innovation
CMS: The Centers for Medicare and Medicaid Services
C-SNP: Medicare Advantage special needs plan for individuals 
    with specific, severe or disabling chronic conditions
DRA: The Deficit Reduction Act of 2005 (P.L. 109-171)
D-SNP: Medicare Advantage special needs plan for individuals 
    who are eligible for Medicare and Medicaid
EHR: Electronic health record
ERISA: Employee Retirement Insurance Security Act of 1974 (P.L. 
    93-406)
FFS: Fee-for-service
FIDE-SNP: a subset of D-SNPs that must fully integrate Medicare 
    and Medicaid benefits, including long-term care services 
    and supports, and have a contract with the state Medicaid 
    program among other requirements
FMAP: Federal Medical Assistance Percentage
FOIA: The Freedom of Information Act of 1996 (P.L. 104-231)
FQHC: Federally qualified health center
GAO: Government Accountability Office
GPCI: Geographic practice cost index
HCFAC: Health Care Fraud and Abuse Control Program
HCPCS: Healthcare Common Procedure Coding System
HHS OIG: Office of the Inspector General of the Department of 
    Health and Human Services
HI: Hospital insurance; benefits of Part A of the Medicare 
    program
HIPAA: The Health Insurance Portability and Accountability Act 
    of 1996 (P.L. 104-191)
HOPD: Hospital outpatient department
HPSA: Health professional shortage area
IPPS: Inpatient prospective payment system
I-SNP: Medicare Advantage special needs plan for individuals 
    who are institutionalized
MA: Medicare Advantage
MAC: Medicare administrative contractor
MCTRJCA: The Middle Class Tax Relief and Job Creation Act of 
    2012 (P.L. 112-96)
MDH: Medicare dependent hospital
MedPAC: The Medicare Payment Advisory Commission
MEI: Medicare economic index
MIPPA: The Medicare Improvements for Patients and Providers Act 
    of 2008 (P.L. 110-275)
MMA: The Medicare Prescription Drug, Improvement and 
    Modernization Act (P.L. 108-173)
MMIS: Medicaid Management Information System
MSIS: Medicaid Statistical Information System
MVPS: Medicare volume performance standard
NCQA: National Committee on Quality Assurance
NDNH: National Directory of New Hires
NPI: National provider identifier
NPRM: Notice of proposed rulemaking
OBRA89: The Omnibus Budget Reconciliation Act of 1989 (P.L. 
    101-239)
OBRA93: The Omnibus Budget Reconciliation Act of 1993 (P.L. 
    103-66)
OCSE: Federal Office of Child Support Enforcement
OE: Improper payment outreach and education program
OPPS: Outpatient prospective payment system
PDE: Prescription drug event
PI: Program integrity
PPS: Prospective payment system
PQRS: Physician Quality Reporting System
QE: Qualified entity
RAC: Recovery audit contractor
RBRVS: Recourse-based relative value scale
RHC: Rural health clinic
RUC: The American Medical Association/Specialty Society 
    Relative Value Scale Update Committee
RVU: Relative value unit
SAMHSA: The Substance Abuse and Mental Health Services 
    Administration
SGR: The Sustainable Growth Rate
SMI: Supplementary medical insurance; benefits of Part B of the 
    Medicare program
SNP: Medicare Advantage special needs plan
SSA: The Social Security Act of 1935 (P.L. 74-271)
TIN: Tax identification number
TRHCA: The Tax Relief and Health Care Act of 2006 (P.L. 109-
    432)
VBM: Value-based payment modifier
VBP: Value-based performance incentive program

                    III. BUDGET EFFECTS OF THE BILL


               Information Relating to Unfunded Mandates

    The statement of unfunded mandates from the Director of the 
Congressional Budget Office was not available at the time the 
Committee Report was submitted. Pursuant to section 423(f)(2) 
of the Unfunded Mandates Act of 1995 (P.L. 104-4) the statement 
will be published in the Congressional Record in advance of 
floor consideration of the Committee Bill.

                             Cost Estimate

    Pursuant to paragraph 11(a) of the Rule XXVI of the 
Standing Rules of the Senate, a Congressional Budget Office 
report related to the cost of the Committee Bill must accompany 
this report. An estimate of the cost of the Chairman's Mark, 
made available to the public on December 10, 2013, is provided. 
Because an updated estimate of the cost of the legislation by 
the Congressional Budget Office was not available at the time 
the report was submitted, it was impracticable to provide an 
estimate of the cost of the Committee Bill under paragraph 
11(a) of Rule XXVI of the Standing Rules of the Senate. An 
estimate of the cost of the Committee Bill will be made 
available.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>

 ADDITIONAL CLARIFICATIONS PROVIDED BY THE STAFF OF THE SENATE FINANCE 
                               COMMITTEE


  ENCOURAGING CARE MANAGEMENT FOR INDIVIDUALS WITH CHRONIC CARE NEEDS

    
 There is a discrepancy between the Chairman's Mark 
and the legislative text of S. 1871, the SGR Repeal and 
Medicare Beneficiary Access Improvement Act. Page 27 of the 
Chairman's Mark states that applicable providers eligible to 
receive payments for chronic care management include doctors of 
medicine and osteopathy, doctors of dental surgery and dental 
medicine, doctors of podiatry and optometry, and chiropractors. 
This was arrived at by inadvertently listing all of the health 
care professionals defined in section 1861(r) of the SSA. 
However, the correct citation is section 1861(r)(1), and that 
mistake was corrected in the legislative text, which references 
section 1861(r)(1). The legislative text is correct in defining 
those physician types that are eligible to receive payments for 
chronic care management as doctors of medicine and osteopathy 
because those are the two categories of professionals who can 
provide these services contemplated in the provision.
    The legislative text contains the correct definition of 
applicable providers eligible to receive chronic care 
management payments. In addition to doctors of medicine and 
osteopathy, the legislation specifies that nurse practitioners, 
clinical nurse specialists, and physician assistants are also 
applicable providers. Professionals receiving chronic care 
management payments would be accountable for coordinating a 
patient's care across the spectrum of health care settings. For 
this reason, the legislation specifies that only one provider 
can receive this payment for a given patient. Additionally, 
providers would have to practice in a patient-centered medical 
home or comparable specialty practice to receive the payment.

  REQUIRING STATE LICENSURE OF BIDDING ENTITIES UNDER THE COMPETITIVE 
ACQUISITION PROGRAM FOR CERTAIN DURABLE MEDICAL EQUIPMENT, PROSTHETICS, 
                    ORTHOTICS, AND SUPPLIES (DMEPOS)

    
 An amendment submitted by Senator Roberts and 
Senator Thune was modified, accepted, and reflected in the 
Committee Bill as section 247.

                       IV. VOTES OF THE COMMITTEE

    In compliance with paragraph 7(b) of Rule XXVI of the 
Standing Rules of the Senate, the Committee states that, with a 
majority and quorum present, the ``SGR Repeal and Medicare 
Beneficiary Access Improvement Act of 2013'' was amended and 
ordered favorably reported as follows:
    The Committee on Finance met on December 12, 2013 to 
consider an original bill entitled, ``SGR Repeal and Medicare 
Beneficiary Access Improvement Act of 2013.''
    The Chairman's Mark was modified and amended as follows:

Amendment 8, Wyden/Isakson 1
The Better Care, Lower Cost Delivery System for Medicare 
    Beneficiaries with Multiple Chronic Conditions.
Amendment withdrawn.
Amendment 89, Roberts/Casey 1
    Expansion of MTM Targeted Beneficiary.
Amendment withdrawn.

Amendment 119, Thune/Enzi 3
    Requiring Interoperability in the Meaningful Use Program by 
2017.
Amendment withdrawn.

Amendment 45, Menendez/Brown 9
To make the Family-to-Family Health Information Centers and the 
    Maternal, Infant and Early Childhood Visitation program 
    permanent.
Amendment withdrawn.

Amendment 126, Isakson 1
Demonstration Project to Test Physician Private Contracting in 
    Medicare.
Amendment withdrawn.

Amendment 49, Carper/Toomey/Brown 4
Improvements to Medicare Procedures to Prevent Fraudulent 
    Diversion and Medically Unnecessary or Unsafe Use of 
    Prescription Drugs.
Amendment withdrawn.

Amendment 32, Nelson/Schumer/Stabenow/Menendez/Casey 1
Residency Physician Shortage Reduction.
Amendment withdrawn.

Amendment 56, Cardin/Portman 4
To encourage the use of efficient dispensing techniques for 
    long-term care pharmacies.
Amendment withdrawn.

Amendment 105, Cornyn 1
Protect seniors from a board of 15 bureaucrats empowered to 
    make substantial changes to the Medicare without full 
    transparency and accountability.
Amendment withdrawn.

Amendment 61, Bennet/Cornyn/Isakson 1
To incentivize states to achieve reductions in future health 
    care cost growth while improving quality.
Amendment withdrawn.

Amendment 135, Toomey/Carper/Cornyn 1
Standard of Care Protection.
Amendment withdrawn.

Amendment 67, Casey/Rockefeller/Brown/Wyden 1
Performance Bonus Payment to Offset Additional Medicaid and 
    CHIP Enrollment Costs Resulting from Enrollment and 
    Retention Efforts.
Amendment withdrawn.

Amendment 99, Enzi 3
An amendment to require the Department of Health and Human 
    Services (HHS) and the Centers for Medicare and Medicaid 
    Services (CMS) to seek public comment on whether proposed 
    Medicare payment policies will increase or decrease the 
    consolidation of health care providers.
Amendment withdrawn.

Amendment 74, Grassley/Bennett/Toomey/Nelson/Portman/
    Rockefeller/Casey/Brown/Cantwell 5
Coordinated Care for Medically Complex Children.
Amendment withdrawn.

Amendment 102, Enzi 6
An amendment to modernize the Medicare benefit through 
    bipartisan, common-sense reforms.
Amendment withdrawn.

Amendment 10, Wyden/Isakson/Carper/Grassley 3
An Amendment to Improve Medicare Advantage Risk Adjustment.
Amendment withdrawn.

Amendment 16, Wyden/Portman/Carper/Enzi 9
An Amendment to Include S. 1228: Medicare Better Health Rewards 
    Program Act of 2013.
Amendment withdrawn.

Amendment 132, Portman/Brown/Stabenow 1
Health Coverage Tax Credit Extension.
Amendment withdrawn.

Amendment 26, Stabenow/Casey 2
To clarify payments for drugs under Medicare Part B by 
    excluding prompt pay discounts from Average Sales Price.
Amendment withdrawn.

Amendment 90, Roberts/Enzi 2
Clarification of 96 Hour Rule for Critical Access Hospital 
    Conditions of Participation.
Amendment withdrawn.

Amendment 66, Bennet/Cornyn 6
To better inform taxpayers about their individual Medicare 
    contributions and benefits by including information in a 
    yearly statement they already receive about Social 
    Security.
Amendment withdrawn.

Amendment 134, Portman 3
Amendment to Improve Coordination in Behavioral Health 
    Information Technology.
Amendment withdrawn.

Amendment 27, Stabenow 3
To postpone the rebasing of home health payments to allow for 
    further evaluation.
Amendment withdrawn.

Amendment 129, Isakson 4
Strike Extension of Health Workforce Demonstration Project.
Amendment withdrawn.

Amendment 137, Toomey/Casey 3
Preserving Access to Orphan Drugs.
Amendment withdrawn.

Amendment 52, Carper/Grassley 7
Increasing Patient Medication Education and Adherence.
Amendment withdrawn.

Amendment 70, Grassley/Wyden 1
Transition to Independence Medicaid Demonstration.
Amendment withdrawn.

Amendment 79, Grassley/Rockefeller/Carper 10
Prevention of Diabesity Amendment.
Amendment withdrawn.

Amendment 69, Casey/Crapo 3
Delay of CMS CY14 HOPPS Final Rule Implementation of Skin 
    Substitute Bundling for Advanced Therapeutic Wound Healing 
    Products.
Amendment withdrawn.

Amendment 25, Stabenow/Grassley 1
To improve quality, and expand access to community mental 
    health services.
Approved by voice vote.

Amendment 18, Schumer/Grassley 1
Rural Hospital Access Act.
Approved by unanimous voice vote.

Amendment 118, Thune/Casey/Enzi 2
To provide a demonstration project on remote patient monitoring 
    (RPM) in the Medicare program to ensure seniors can remain 
    in their homes longer and to prevent hospital readmissions.
Approved by unanimous voice vote.

Amendment 82, Grassley 13
Full GPCI Permanence.
Approved by unanimous voice vote.

Amendment 4, Rockefeller/Brown/Casey 4
Transitional Medical Assistance Substitution and Improvement.
Approved by voice vote.

Amendment 21, Schumer/Grassley/Cardin/Stabenow 4
Helping Ensure Life- and Limb-Saving Access to Podiatric 
    Physicians (HELLPP) Act.
Approved by voice vote.

Amendment 120, Thune/Rockefeller 4
Providing Additional Technical Assistance to Small Rural 
    Practices in the Value Based Performance (VBP) Program
Approved by unanimous voice vote.

The Chairman's Mark, as amended, was ordered favorably reported 
    by a voice vote.

        V. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In the opinion of the Committee, in order to expedite the 
business of the Senate, it is necessary to dispense with the 
requirements of paragraph 12 of Rule XXVI of the Standing Rules 
of the Senate (relating to the showing of changes in existing 
law made by the bill as reported by the Committee).