79–006 

115TH CONGRESS REPT. 115–480 " ! HOUSE OF REPRESENTATIVES 1st Session Part 1 

INCREASING TELEHEALTH ACCESS IN MEDICARE ACT 

DECEMBER 21, 2017.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. BRADY of Texas, from the Committee on Ways and Means, 

submitted the following 

R E P O R T 

[To accompany H.R. 3727] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Ways and Means, to whom was referred the 

bill (H.R. 3727) to amend title XVIII of the Social Security Act to 

include additional telehealth services for purposes of MA organization bids, and for other purposes, having considered the same, report favorably thereon with an amendment and recommend that 

the bill as amended do pass. 

CONTENTS 

Page 

I. SUMMARY AND BACKGROUND ............................................................... 3 

A. Purpose and Summary ..................................................................... 3 

B. Background and Need for Legislation ............................................. 3 

C. Legislative History ............................................................................ 4 

II. EXPLANATION OF THE BILL ................................................................... 4 

A. The Increasing Telehealth Access in Medicare Act ........................ 4 

III. VOTES OF THE COMMITTEE .................................................................... 5 

IV. BUDGET EFFECTS OF THE BILL ............................................................ 5 

A. Committee Estimate of Budgetary Effects ...................................... 5 

B. Statement Regarding New Budget Authority and Tax Expenditures Budget Authority .................................................................. 6 

C. Cost Estimate Prepared by the Congressional Budget Office ....... 6 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF 

THE HOUSE .............................................................................................. 8 

A. Committee Oversight Findings and Recommendations ................. 8 

B. Statement of General Performance Goals and Objectives ............. 8 

C. Information Relating to Unfunded Mandates ................................ 8 

D. Congressional Earmarks, Limited Tax Benefits, and Limited 

Tariff Benefits ................................................................................. 9 

E. Duplication of Federal Programs ..................................................... 9 

F. Disclosure of Directed Rule Makings .............................................. 9 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED 9 

2 

VII. EXCHANGES OF LETTERS WITH ADDITIONAL COMMITTEES OF 

REFERRAL ................................................................................................. 137 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Increasing Telehealth Access in Medicare Act’’ or 

the ‘‘ITAM Act’’. 

SEC. 2. INCLUSION OF ADDITIONAL TELEHEALTH SERVICES IN MEDICARE ADVANTAGE ORGANIZATION BIDS. 

(a) IN GENERAL.—Section 1852 of the Social Security Act (42 U.S.C. 1395w–22) 

is amended— 

(1) in subsection (a)(1)(B)(i), by adding at the end the following new sentence: 

‘‘For plan year 2020 and each subsequent plan year, for purposes of subsection 

(m) and section 1854, in the case that an MA plan makes an election described 

in subsection (m)(1) with respect to such plan year, additional telehealth services shall be treated as a benefit under the original medicare fee-for-service program option with respect to such plan and plan year.’’; and 

(2) by adding at the end the following new subsection: 

‘‘(m) PROVISION OF ADDITIONAL TELEHEALTH SERVICES.— 

‘‘(1) MA PLAN OPTION.—For purposes of subsection (a)(1)(B)(i), an election described in this paragraph, with respect to an MA plan and plan year, is an election by the sponsor of such plan to provide under the plan for such plan year, 

in accordance with the subsequent provisions of this subsection, additional telehealth services (as defined in paragraph (2)) as a benefit under the original 

medicare fee-for-service program option. Such additional telehealth services, 

with respect to a plan year, shall be in addition to benefits included under the 

original medicare fee-for-service program option for such year. 

‘‘(2) ADDITIONAL TELEHEALTH SERVICES DEFINED.— 

‘‘(A) IN GENERAL.—For purposes of this subsection and section 1854, the 

term ‘additional telehealth services’ means, subject to subparagraph (C), 

services, with respect to a year— 

‘‘(i) for which payment may be made under part B (without regard 

to application of section 1834(m)); 

‘‘(ii) that, if furnished via a telecommunications system, would not be 

payable under section 1834(m); 

‘‘(iii) furnished using electronic information and telecommunications 

technology; 

‘‘(iv) furnished in accordance with such requirements as the Secretary specifies pursuant to paragraph (3); and 

‘‘(v) which are identified for such year by the Secretary as appropriate to furnish using electronic information and telecommunications 

technology where a physician (as defined in section 1861(r)) or practitioner (described in section 1842(b)(18)(C)) furnishing the service is not 

at the same location as the plan enrollee. 

‘‘(B) FLEXIBILITY FOR PHASING IN IDENTIFICATIONS.—In making identifications under subparagraph (A)(v), the Secretary shall make such identifications annually and may make such identifications in a manner that results 

in additional telehealth services being phased in, as determined appropriate 

by the Secretary. 

‘‘(C) EXCLUSION OF CAPITAL AND INFRASTRUCTURE COSTS AND INVESTMENTS.—For purposes of this subsection and section 1854, the term ‘additional telehealth services’ does not include capital and infrastructure costs 

and investments relating to such benefits provided pursuant to this subsection. 

‘‘(3) REQUIREMENTS FOR ADDITIONAL TELEHEALTH SERVICES.—The Secretary 

shall specify requirements for the provision of additional telehealth services 

with respect to— 

‘‘(A) qualifications (other than licensure) of physicians and practitioners 

who furnish such services; 

‘‘(B) the technology used in furnishing such services; 

‘‘(C) factors necessary for coordination of additional telehealth services 

with other services; and 

‘‘(D) such other criteria (such as clinical criteria) as determined by the 

Secretary. 

‘‘(4) ENROLLEE CHOICE.—An MA plan that provides a service as an additional 

telehealth service may not, when furnished without use of electronic informaVerDate Sep 11 2014 03:32 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00002 Fmt 6659 Sfmt 6621 E:\HR\OC\HR480P1.XXX HR480P1
3 

tion and telecommunications technology, deny access to the equivalent in-person 

service. 

‘‘(5) CONSTRUCTION.— 

‘‘(A) IN GENERAL.—In determining if an MA organization or MA plan, as 

applicable, is in compliance with each requirement specified in subparagraph (B), such determination shall be made without regard to any additional telehealth services covered by the plan offered by such organization 

or plan pursuant to this subsection. 

‘‘(B) REQUIREMENTS SPECIFIED.—The requirements specified in this subparagraph are the following: 

‘‘(i) The requirements under subsection (d). 

‘‘(ii) The requirement under subsection (a)(1) with respect to covering 

benefits under the original medicare fee-for-service program option, as 

defined in the first sentence of paragraph (B)(i) of such subsection.’’. 

(b) INCLUSION OF ADDITIONAL TELEHEALTH SERVICES IN MA ORGANIZATION BID

AMOUNT.—Section 1854(a)(6)(A)(ii)(I) of the Social Security Act (42 U.S.C. 1395w– 

24(a)(6)(A)(ii)(I)) is amended by inserting ‘‘, including, for plan year 2020 and subsequent plan years, the provision of such benefits through the use of additional telehealth services under section 1852(m)’’ before the semicolon at the end. 

SEC. 3. USE OF TELECOMMUNICATIONS SYSTEMS IN FURNISHING CHRONIC CARE MANAGEMENT SERVICES. 

Section 1848(b)(8) of the Social Security Act (42 U.S.C. 1395(b)(8)) is amended by 

adding at the end the following new subparagraph: 

‘‘(C) CLARIFICATION.—In carrying out this paragraph, with respect to 

chronic care management services, the Secretary may, subject to subparagraph (B), make payment for such services furnished through the use of secure messaging, Internet, store and forward technologies, or other non-faceto-face communication methods determined appropriate by the Secretary.’’. 

SEC. 4. SENSE OF CONGRESS REGARDING PARITY OF TELEHEALTH SERVICES. 

It is the sense of Congress that there should be— 

(1) parity, with respect to access to telehealth, between the original medicare 

fee-for-service program under parts A and B of title XVIII of the Social Security 

Act and the Medicare Advantage program under part C of such title; and 

(2) access to medically appropriate, quality telehealth for all Medicare beneficiaries. 

SEC. 5. DEPOSIT OF SAVINGS INTO MEDICARE IMPROVEMENT FUND. 

Section 1898(b)(1) of the Social Security Act (42 U.S.C. 1395iii(b)(1)) is amended 

by striking ‘‘during and after fiscal year 2021, $270,000,000’’ and inserting ‘‘during 

and after fiscal year 2021, $325,000,000’’. 

I. SUMMARY AND BACKGROUND 

A. PURPOSE AND SUMMARY

The bill, H.R. 3727, the ‘‘Increasing Telehealth Access in Medicare (‘‘ITAM’’) Act,’’ as ordered reported by the Committee on Ways 

and Means on September 13, 2017, amends title XVIII of the Social 

Security Act to include additional telehealth services for purposes 

of Medicare Advantage (‘‘MA’’) organizations bids. 

B. BACKGROUND AND NEED FOR LEGISLATION

On September 11, 2017, Representative Black (R–TN) and Representative Thompson (D–CA) introduced H.R. 3727, legislation to 

expand the use of telehealth services in MA by allowing these services to be included as a basic benefit, rather than a supplemental 

benefit, which is current practice. 

4 

C. LEGISLATIVE HISTORY

Background 

H.R. 3727 was introduced on September 11, 2017, and was referred to the Committee on Ways and Means and additionally to 

the Committee on Energy and Commerce. 

Committee hearings 

On June 8, 2017, the Committee held a hearing on The Department of Health and Human Services’ Fiscal Year 2018 Budget Request, in which increasing Medicare access to telehealth was discussed. 

On September 14, 2016, the Subcommittee on Health held a 

Hearing on Exploring the Use of Technology and Innovation to Create Efficiencies and Higher Quality in Health Care, in which telehealth was a focus. 

On June 8, 2016, the Subcommittee on Health held a Member 

Day hearing on various proposals to make improvements to Medicare, including expanded delivery of telehealth services. 

Committee action 

The Committee on Ways and Means marked up H.R. 3727, the 

Increasing Telehealth Access in Medicare (‘‘ITAM’’) Act, on September 13, 2017, and ordered the bill, as amended, favorably reported (with a quorum being present). 

II. EXPLANATION OF THE BILL 

A. THE INCREASING TELEHEALTH ACCESS IN MEDICARE ACT

PRESENT LAW

Under current law, MA plans annually submit bids to the Secretary of Health and Human Services (‘‘HHS’’) detailing the estimated cost of providing healthcare services to Medicare beneficiaries. At present, certain telehealth services cannot be included 

as part of the plan’s bid. Those that are not included under the bid 

may only be provided as a supplemental benefit if approved by the 

Secretary. Supplemental benefits may be paid for by the difference 

between the bid and the Medicare-established benchmark but MA 

plans may also charge additional premiums to offer a greater number of supplemental benefits. 

REASONS FOR CHANGE

Medicare beneficiaries are currently limited in their ability to 

utilize telehealth services outside of certain allowable services, particularly in rural areas. This legislation would allow for greater access to telehealth services that could replace certain face-to-face 

services (e.g. remote monitoring following certain medical episodes 

rather than coming back to a provider office repeatedly). This 

change offers convenience and access to the beneficiary, increases 

efficiencies for providers and the Medicare program, while preserving quality of care. 

5 

EXPLANATION OF PROVISIONS

Section 2 of H.R. 3727 allows organizations to include additional 

telehealth services as part of their annual bid as opposed to a supplemental benefit, which is current practice. Additional telehealth 

services are defined under this section as services furnished using 

electronic information and telecommunications technology when a 

physician or practitioner providing the services is not in the same 

location as the beneficiary. The Secretary is required to specify the 

requirements for the technology used to furnish the additional telehealth services, as well as the training or qualifications of the physician or practitioner, and factors necessary for the coordination of 

care. Additional telehealth services are not to be used to meet access to care requirements under Section 1852(d) and plans are prohibited from restricting beneficiary access to the equivalent in-person service. 

Section 3 of H.R. 3727 clarifies that services provided under the 

chronic care management code in the physician fee schedule can be 

provided through telehealth as well as face-to-face visitation. 

Section 4 of H.R. 3727 provides a sense of Congress that there 

should be parity between Medicare fee-for-service and Medicare 

Advantage with regard to delivery of the Medicare benefit through 

telehealth. The sense of Congress further expresses support for 

medically appropriate use of telehealth services in the Medicare 

program, regardless of model of care. 

Section 5 of H.R. 3727 increases the amount of funding in the 

Medicare Improvement Fund (‘‘MIF’’) available to the Department 

of HHS through depositing the savings from the policies contained 

in the legislation. 

EFFECTIVE DATE

The legislation becomes effective beginning in plan year 2020 

and subsequent plan years. 

III. VOTES OF THE COMMITTEE 

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the following statement is made concerning the vote of the Committee on Ways and Means in its consideration of H.R. 3727, the Increasing Telehealth Access in Medicare Act, on September 13, 2017. 

The Chairman’s amendment in the nature of a substitute was 

adopted by a voice vote (with a quorum being present). 

The bill, H.R. 3727, was ordered favorably reported as amended 

by voice vote (with a quorum being present). 

IV. BUDGET EFFECTS OF THE BILL 

A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS

In compliance with clause 3(d) of rule XIII of the Rules of the 

House of Representatives, the following statement is made concerning the effects on the budget of the bill, H.R. 3727, as reported. 

The Committee agrees with the estimate prepared by the Congressional Budget Office (CBO), which is included below. 

6 

B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX

EXPENDITURES BUDGET AUTHORITY

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee states that the bill involves no new or increased budget authority. The Committee states 

further that the bill involves no new or increased tax expenditures. 

C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET

OFFICE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, requiring a cost estimate prepared by 

the CBO, the following statement by CBO is provided. 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, September 22, 2017. 

Hon. KEVIN BRADY, 

Chairman, Committee on Ways and Means, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3727, the Increasing Telehealth Access in Medicare Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Lori Housman. 

Sincerely, 

KEITH HALL, Director. 

Enclosure. 

H.R. 3727—Increasing Telehealth Access in Medicare Act 

Summary: H.R. 3727 would allow Medicare Advantage (MA) 

plans to include the cost of providing telehealth services in their 

bids and increase funding in the Medicare Improvement Fund. 

CBO estimates that enacting H.R. 3727 would increase direct 

spending by $46 million over the 2018–2022 period and decrease 

direct spending by $4 million over the 2018–2027 period. Pay-asyou-go procedures apply because enacting H.R. 3727 would affect 

direct spending. Enacting the bill would not affect revenues. 

CBO estimates that enacting the legislation would not increase net direct spending or on-budget deficits by more than $5 billion 

in any of the four consecutive 10-year periods beginning in 2028. 

The bill contains no intergovernmental or private-sector mandates 

as defined in the Unfunded Mandates Reform Act (UMRA). 

Estimated cost to the Federal Government: The estimated budgetary effect of H.R. 3727 is shown in the following table. The effects 

of this legislation fall within budget function 570 (Medicare). 

By fiscal year, in millions of dollars— 

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017– 

2022 

2017– 

2027 

INCREASES OR DECREASES (¥) IN DIRECT SPENDING OUTLAYS 

Telehealth Costs in 

Medicare Advantage 

Bids ........................ 0 0 0 ¥10 ¥10 ¥10 ¥10 ¥10 ¥10 ¥10 ¥10 ¥30 ¥80 

7 

1The rebate is a portion of the amount by which the ‘‘benchmark’’ amount for the geographic 

area covered by the plan exceeds the MA plan’s bid for services it is required to cover. The 

benchmark is based on estimated spending per beneficiary in the fee-for-service sector in that 

geographic area. The rebate portion is between 50 percent and 70 percent, based on the plan’s 

score on certain measures of quality of care. MA plans are required to use the rebate to pay 

for benefits not covered in the fee-for-service sector. 

By fiscal year, in millions of dollars— 

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017– 

2022 

2017– 

2027 

Medicare Improvement 

Fund ....................... 0 0 0 0 48 28 0 0 0 0 0 76 76 

Total Changes .... 0 0 0 ¥10 38 18 ¥10 ¥10 ¥10 ¥10 ¥10 46 ¥4 

Note: Budget authority is equal to outlays. 

Basis of estimate: Telehealth costs in Medicare Advantage bids: 

Under current law, MA plans may provide some telehealth services 

as part of the standard benefit, mirroring what is covered for beneficiaries enrolled in Medicare’s fee-for-service (FFS) program. However, if an MA plan wants to provide telehealth services that go beyond what is covered in the FFS program, the plan must receive 

approval to provide those services as supplemental benefits and use 

its ‘‘rebate’’ to pay for those services.1 H.R. 3727 would allow MA 

plans to include the cost of additional telehealth services in their 

bids for contracts that cover 2020 or subsequent years. The costs 

included in the bid would not include capital or infrastructure expenses. Telehealth services would not count toward meeting network-adequacy requirements, and plans could not use the availability of telehealth services to limit access to in-person services. 

Based on a review of the literature and discussions with experts, 

CBO concluded that coverage of telehealth services by private payers sometimes results in higher spending and sometimes results in 

savings; in either case, the effects on spending tend to be small. 

For MA plans that offer telehealth services as supplemental benefits, this provision would increase spending, because Medicare’s 

payment would reflect the full cost of those benefits instead of the 

50 percent to 70 percent of the cost that is covered by the rebate. 

(The other 30 percent to 50 percent is covered by displacing other 

supplemental benefits that would be attractive to potential enrollees.) 

In general, CBO expects that an MA plan that begins or expands 

coverage of telehealth benefits under H.R. 3727 would do so based 

on the plan’s expectation that it could manage telehealth services 

in a manner that would enable it to lower its bid. Because coverage 

of telehealth benefits as a supplemental benefit is very limited, 

CBO estimates that the savings from plans that begin or expand 

telehealth services would slightly exceed the increased cost for 

plans that already offer telehealth services as a supplemental benefit. On net, CBO estimates that enactment of this provision would 

reduce direct spending by $80 million over the 2018–2027 period. 

CBO assumes that H.R. 3727 will be enacted near the end of fiscal 

year 2017. 

Medicare Improvement Fund: H.R. 3727 would increase amounts 

earmarked for making improvements to the Medicare fee-for-service program during fiscal year 2021 by $76 million. 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

8 

for legislation affecting direct spending or revenues. The net 

changes in outlays that are subject to those pay-as-you-go procedures are shown in the following table. 

CBO ESTIMATE OF PAY-AS-YOU-CO EFFECTS FOR H.R. 3727, AS ORDERED REPORTED BY THE 

SENATE COMMITTEE ON FINANCE ON MAY 18, 2017 

By fiscal year, in millions of dollars— 

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017– 

2022 

2017– 

2027 

NET INCREASE OR DECREASE (¥) IN THE DEFICIT 

Statutory Pay-As-YouGo Impact ............... 0 0 0 ¥10 38 18 ¥10 ¥10 ¥10 ¥10 ¥10 46 ¥4 

Increase in long-term direct spending and deficits: CBO estimates that enacting the legislation would not increase net direct 

spending or on-budget deficits by more than $5 billion in any of the 

four consecutive 10-year periods beginning in 2028. 

Intergovernmental and private-sector impact: H.R. 3727 contains 

no intergovernmental or private-sector mandates as defined in 

UMRA. 

Previous CBO estimate: On August 1, 2017, CBO transmitted an 

estimate for the S. 870, Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017. 

The telehealth provision of H.R. 3727 is similar to section 303 of 

S. 870, and the estimates for those provisions are identical. 

Estimate prepared by: Federal Costs: Lori Housman; Impact on 

state, local, and tribal governments: Zachary Byrum; Impact on the 

private sector: Amy Petz. 

Estimate approved by: Theresa Gullo, Assistant Director for 

Budget Analysis. 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE 

RULES OF THE HOUSE 

A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

With respect to clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, the Committee made findings and recommendations that are reflected in this report. 

B. STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

With respect to clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the bill does 

not authorize funding, so no statement of general performance 

goals and objectives is required. 

C. INFORMATION RELATING TO UNFUNDED MANDATES

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104–4). 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

9 

D. CONGRESSIONAL EARMARKS, LIMITED TAX BENEFITS, AND

LIMITED TARIFF BENEFITS

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill, and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 

E. DUPLICATION OF FEDERAL PROGRAMS

In compliance with clause 3(c)(5) of rule XIII of the Rules of the 

House of Representatives, the Committee states that no provision 

of the bill establishes or reauthorizes: (1) a program of the Federal 

Government known to be duplicative of another Federal program; 

(2) a program included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public 

Law 111–139; or (3) a program related to a program identified in 

the most recent Catalog of Federal Domestic Assistance, published 

pursuant to the Federal Program Information Act (Pub. L. No. 95– 

220, as amended by Pub. L. No. 98–169). 

F. DISCLOSURE OF DIRECTED RULE MAKINGS

In compliance with Sec. 3(i) of H. Res. 5 (115th Congress), the 

following statement is made concerning directed rule makings: 

The Committee advises that the bill requires no directed 

rulemakings within the meaning of such section. 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS 

REPORTED 

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is show in roman): 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

SOCIAL SECURITY ACT 

* * * * * * * 

TITLE XVIII—HEALTH INSURANCE FOR THE AGED AND 

DISABLED 

* * * * * * * 

10 

PART B—SUPPLEMENTARY MEDICAL INSURANCE BENEFITS FOR THE

AGED AND DISABLED

* * * * * * * 

PAYMENT FOR PHYSICIANS’ SERVICES

SEC. 1848. (a) PAYMENT BASED ON FEE SCHEDULE.— (1) IN GENERAL.—Effective for all physicians’ services (as defined in subsection (j)(3)) furnished under this part during a 

year (beginning with 1992) for which payment is otherwise 

made on the basis of a reasonable charge or on the basis of a 

fee schedule under section 1834(b), payment under this part 

shall instead be based on the lesser of— 

(A) the actual charge for the service, or 

(B) subject to the succeeding provisions of this subsection, the amount determined under the fee schedule established under subsection (b) for services furnished during that year (in this subsection referred to as the ‘‘fee 

schedule amount’’). 

(2) TRANSITION TO FULL FEE SCHEDULE.— 

(A) LIMITING REDUCTIONS AND INCREASES TO 15 PERCENT

IN 1992.— 

(i) LIMIT ON INCREASE.—In the case of a service in 

a fee schedule area (as defined in subsection (j)(2)) for 

which the adjusted historical payment basis (as defined in subparagraph (D)) is less than 85 percent of 

the fee schedule amount for services furnished in 

1992, there shall be substituted for the fee schedule 

amount an amount equal to the adjusted historical 

payment basis plus 15 percent of the fee schedule 

amount otherwise established (without regard to this 

paragraph). 

(ii) LIMIT IN REDUCTION.—In the case of a service in 

a fee schedule area for which the adjusted historical 

payment basis exceeds 115 percent of the fee schedule 

amount for services furnished in 1992, there shall be 

substituted for the fee schedule amount an amount 

equal to the adjusted historical payment basis minus 

15 percent of the fee schedule amount otherwise established (without regard to this paragraph). 

(B) SPECIAL RULE FOR 1993, 1994, AND 1995.—If a physicians’ service in a fee schedule area is subject to the provisions of subparagraph (A) in 1992, for physicians’ services 

furnished in the area— 

(i) during 1993, there shall be substituted for the fee 

schedule amount an amount equal to the sum of— 

(I) 75 percent of the fee schedule amount determined under subparagraph (A), adjusted by the 

update established under subsection (d)(3) for 

1993, and 

(II) 25 percent of the fee schedule amount determined under paragraph (1) for 1993 without regard to this paragraph; 

(ii) during 1994, there shall be substituted for the 

fee schedule amount an amount equal to the sum of— 

11 

(I) 67 percent of the fee schedule amount determined under clause (i), adjusted by the update established under subsection (d)(3) for 1994 and as 

adjusted under subsection (c)(2)(F)(ii) and under 

section 13515(b) of the Omnibus Budget Reconciliation Act of 1993, and 

(II) 33 percent of the fee schedule amount determined under paragraph (1) for 1994 without regard to this paragraph; and 

(iii) during 1995, there shall be substituted for the 

fee schedule amount an amount equal to the sum of— 

(I) 50 percent of the fee schedule amount determined under clause (ii) adjusted by the update established under subsection (d)(3) for 1995, and 

(II) 50 percent of the fee schedule amount determined under paragraph (1) for 1995 without regard to this paragraph. 

(C) SPECIAL RULE FOR ANESTHESIA AND RADIOLOGY SERVICES.—With respect to physicians’ services which are anesthesia services, the Secretary shall provide for a transition 

in the same manner as a transition is provided for other 

services under subparagraph (B). With respect to radiology 

services, ‘‘109 percent’’ and ‘‘9 percent’’ shall be substituted 

for ‘‘115 percent’’ and ‘‘15 percent’’, respectively, in subparagraph (A)(ii). 

(D) ADJUSTED HISTORICAL PAYMENT BASIS DEFINED.— (i) IN GENERAL.—In this paragraph, the term ‘‘adjusted historical payment basis’’ means, with respect 

to a physicians’ service furnished in a fee schedule 

area, the weighted average prevailing charge applied 

in the area for the service in 1991 (as determined by 

the Secretary without regard to physician specialty 

and as adjusted to reflect payments for services with 

customary charges below the prevailing charge or 

other payment limitations imposed by law or regulation) adjusted by the update established under subsection (d)(3) for 1992. 

(ii) APPLICATION TO RADIOLOGY SERVICES.—In applying clause (i) in the case of physicians’ services which 

are radiology services (including radiologist services, 

as defined in section 1834(b)(6)), but excluding nuclear 

medicine services that are subject to section 6105(b) of 

the Omnibus Budget Reconciliation Act of 1989, there 

shall be substituted for the weighted average prevailing charge the amount provided under the fee 

schedule established for the service for the fee schedule area under section 1834(b). 

(iii) NUCLEAR MEDICINE SERVICES.—In applying 

clause (i) in the case of physicians’ services which are 

nuclear medicine services, there shall be substituted 

for the weighted average prevailing charge the amount 

provided under section 6105(b) of the Omnibus Budget 

Reconciliation Act of 1989. 

(3) INCENTIVES FOR PARTICIPATING PHYSICIANS AND SUPPLIERS.—In applying paragraph (1)(B) in the case of a nonVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00011 Fmt 6659 Sfmt 6602 E:\HR\OC\HR480P1.XXX HR480P1
12 

participating physician or a nonparticipating supplier or other 

person, the fee schedule amount shall be 95 percent of such 

amount otherwise applied under this subsection (without regard to this paragraph). In the case of physicians’ services (including services which the Secretary excludes pursuant to subsection (j)(3)) of a nonparticipating physician, supplier, or other 

person for which payment is made under this part on a basis 

other than the fee schedule amount, the payment shall be 

based on 95 percent of the payment basis for such services furnished by a participating physician, supplier, or other person. 

(4) SPECIAL RULE FOR MEDICAL DIRECTION.— (A) IN GENERAL.—With respect to physicians’ services 

furnished on or after January 1, 1994, and consisting of 

medical direction of two, three, or four concurrent anesthesia cases, except as provided in paragraph (5), the fee 

schedule amount to be applied shall be equal to one-half 

of the amount described in subparagraph (B). 

(B) AMOUNT.—The amount described in this subparagraph, for a physician’s medical direction of the performance of anesthesia services, is the following percentage of 

the fee schedule amount otherwise applicable under this 

section if the anesthesia services were personally performed by the physician alone: 

(i) For services furnished during 1994, 120 percent. 

(ii) For services furnished during 1995, 115 percent. 

(iii) For services furnished during 1996, 110 percent. 

(iv) For services furnished during 1997, 105 percent. 

(v) For services furnished after 1997, 100 percent. 

(5) INCENTIVES FOR ELECTRONIC PRESCRIBING.— 

(A) ADJUSTMENT.— 

(i) IN GENERAL.—Subject to subparagraph (B) and 

subsection (m)(2)(B), with respect to covered professional services furnished by an eligible professional 

during 2012, 2013 or 2014, if the eligible professional 

is not a successful electronic prescriber for the reporting period for the year (as determined under subsection (m)(3)(B)), the fee schedule amount for such 

services furnished by such professional during the 

year (including the fee schedule amount for purposes 

of determining a payment based on such amount) 

shall be equal to the applicable percent of the fee 

schedule amount that would otherwise apply to such 

services under this subsection (determined after application of paragraph (3) but without regard to this 

paragraph). 

(ii) APPLICABLE PERCENT.—For purposes of clause (i), 

the term ‘‘applicable percent’’ means— 

(I) for 2012, 99 percent; 

(II) for 2013, 98.5 percent; and 

(III) for 2014, 98 percent. 

(B) SIGNIFICANT HARDSHIP EXCEPTION.—The Secretary 

may, on a case-by-case basis, exempt an eligible professional from the application of the payment adjustment 

under subparagraph (A) if the Secretary determines, subject to annual renewal, that compliance with the requireVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00012 Fmt 6659 Sfmt 6602 E:\HR\OC\HR480P1.XXX HR480P1
13 

ment for being a successful electronic prescriber would result in a significant hardship, such as in the case of an eligible professional who practices in a rural area without 

sufficient Internet access. 

(C) APPLICATION.— (i) PHYSICIAN REPORTING SYSTEM RULES.—Paragraphs (5), (6), and (8) of subsection (k) shall apply for 

purposes of this paragraph in the same manner as 

they apply for purposes of such subsection. 

(ii) INCENTIVE PAYMENT VALIDATION RULES.—Clauses 

(ii) and (iii) of subsection (m)(5)(D) shall apply for purposes of this paragraph in a similar manner as they 

apply for purposes of such subsection. 

(D) DEFINITIONS.—For purposes of this paragraph: 

(i) ELIGIBLE PROFESSIONAL; COVERED PROFESSIONAL

SERVICES.—The terms ‘‘eligible professional’’ and ‘‘covered professional services’’ have the meanings given 

such terms in subsection (k)(3). 

(ii) PHYSICIAN REPORTING SYSTEM.—The term ‘‘physician reporting system’’ means the system established 

under subsection (k). 

(iii) REPORTING PERIOD.—The term ‘‘reporting period’’ means, with respect to a year, a period specified 

by the Secretary. 

(6) SPECIAL RULE FOR TEACHING ANESTHESIOLOGISTS.—With 

respect to physicians’ services furnished on or after January 1, 

2010, in the case of teaching anesthesiologists involved in the 

training of physician residents in a single anesthesia case or 

two concurrent anesthesia cases, the fee schedule amount to be 

applied shall be 100 percent of the fee schedule amount otherwise applicable under this section if the anesthesia services 

were personally performed by the teaching anesthesiologist 

alone and paragraph (4) shall not apply if— 

(A) the teaching anesthesiologist is present during all 

critical or key portions of the anesthesia service or procedure involved; and 

(B) the teaching anesthesiologist (or another anesthesiologist with whom the teaching anesthesiologist has entered 

into an arrangement) is immediately available to furnish 

anesthesia services during the entire procedure. 

(7) INCENTIVES FOR MEANINGFUL USE OF CERTIFIED EHR

TECHNOLOGY.— 

(A) ADJUSTMENT.— 

(i) IN GENERAL.—Subject to subparagraphs (B) and 

(D), with respect to covered professional services furnished by an eligible professional during each of 2015 

through 2018, if the eligible professional is not a 

meaningful EHR user (as determined under subsection 

(o)(2)) for an EHR reporting period for the year, the 

fee schedule amount for such services furnished by 

such professional during the year (including the fee 

schedule amount for purposes of determining a payment based on such amount) shall be equal to the applicable percent of the fee schedule amount that would 

otherwise apply to such services under this subsection 

14 

(determined after application of paragraph (3) but 

without regard to this paragraph). 

(ii) APPLICABLE PERCENT.—Subject to clause (iii), for 

purposes of clause (i), the term ‘‘applicable percent’’ 

means— 

(I) for 2015, 99 percent (or, in the case of an eligible professional who was subject to the application of the payment adjustment under section 

1848(a)(5) for 2014, 98 percent); 

(II) for 2016, 98 percent; and 

(III) for 2017 and 2018, 97 percent. 

(iii) AUTHORITY TO DECREASE APPLICABLE PERCENTAGE FOR 2018.—For 2018, if the Secretary finds that 

the proportion of eligible professionals who are meaningful EHR users (as determined under subsection 

(o)(2)) is less than 75 percent, the applicable percent 

shall be decreased by 1 percentage point from the applicable percent in the preceding year. 

(B) SIGNIFICANT HARDSHIP EXCEPTION.—The Secretary 

may, on a case-by-case basis (and, with respect to the payment adjustment under subparagraph (A) for 2017, for categories of eligible professionals, as established by the Secretary and posted on the Internet website of the Centers 

for Medicare & Medicaid Services prior to December 15, 

2015, an application for which must be submitted to the 

Secretary by not later than March 15, 2016), exempt an eligible professional from the application of the payment adjustment under subparagraph (A) if the Secretary determines, subject to annual renewal, that compliance with the 

requirement for being a meaningful EHR user would result in a significant hardship, such as in the case of an eligible professional who practices in a rural area without 

sufficient Internet access. The Secretary shall exempt an 

eligible professional from the application of the payment 

adjustment under subparagraph (A) with respect to a year, 

subject to annual renewal, if the Secretary determines that 

compliance with the requirement for being a meaningful 

EHR user is not possible because the certified EHR technology used by such professional has been decertified 

under a program kept or recognized pursuant to section 

3001(c)(5) of the Public Health Service Act. In no case may 

an eligible professional be granted an exemption under 

this subparagraph for more than 5 years. 

(C) APPLICATION OF PHYSICIAN REPORTING SYSTEM

RULES.—Paragraphs (5), (6), and (8) of subsection (k) shall 

apply for purposes of this paragraph in the same manner 

as they apply for purposes of such subsection. 

(D) NON-APPLICATION TO HOSPITAL-BASED AND AMBULATORY SURGICAL CENTER-BASED ELIGIBLE PROFESSIONALS.— (i) HOSPITAL-BASED.—No payment adjustment may 

be made under subparagraph (A) in the case of hospital-based eligible professionals (as defined in subsection (o)(1)(C)(ii)). 

(ii) AMBULATORY SURGICAL CENTER-BASED.—Subject 

to clause (iv), no payment adjustment may be made 

15 

under subparagraph (A) for 2017 and 2018 in the case 

of an eligible professional with respect to whom substantially all of the covered professional services furnished by such professional are furnished in an ambulatory surgical center. 

(iii) DETERMINATION.—The determination of whether 

an eligible professional is an eligible professional described in clause (ii) may be made on the basis of— 

(I) the site of service (as defined by the Secretary); or 

(II) an attestation submitted by the eligible professional. 

Determinations made under subclauses (I) and (II) 

shall be made without regard to any employment or 

billing arrangement between the eligible professional 

and any other supplier or provider of services. 

(iv) SUNSET.—Clause (ii) shall no longer apply as of 

the first year that begins more than 3 years after the 

date on which the Secretary determines, through notice and comment rulemaking, that certified EHR 

technology applicable to the ambulatory surgical center setting is available. 

(E) DEFINITIONS.—For purposes of this paragraph: 

(i) COVERED PROFESSIONAL SERVICES.—The term 

‘‘covered professional services’’ has the meaning given 

such term in subsection (k)(3). 

(ii) EHR REPORTING PERIOD.—The term ‘‘EHR reporting period’’ means, with respect to a year, a period 

(or periods) specified by the Secretary. 

(iii) ELIGIBLE PROFESSIONAL.—The term ‘‘eligible 

professional’’ means a physician, as defined in section 

1861(r). 

(8) INCENTIVES FOR QUALITY REPORTING.— 

(A) ADJUSTMENT.— 

(i) IN GENERAL.—With respect to covered professional services furnished by an eligible professional 

during each of 2015 through 2018, if the eligible professional does not satisfactorily submit data on quality 

measures for covered professional services for the 

quality reporting period for the year (as determined 

under subsection (m)(3)(A)), the fee schedule amount 

for such services furnished by such professional during 

the year (including the fee schedule amount for purposes of determining a payment based on such 

amount) shall be equal to the applicable percent of the 

fee schedule amount that would otherwise apply to 

such services under this subsection (determined after 

application of paragraphs (3), (5), and (7), but without 

regard to this paragraph). 

(ii) APPLICABLE PERCENT.—For purposes of clause (i), 

the term ‘‘applicable percent’’ means— 

(I) for 2015, 98.5 percent; and 

(II) for 2016, 2017, and 2018, 98 percent. 

(B) APPLICATION.— 

16 

(i) PHYSICIAN REPORTING SYSTEM RULES.—Paragraphs (5), (6), and (8) of subsection (k) shall apply for 

purposes of this paragraph in the same manner as 

they apply for purposes of such subsection. 

(ii) INCENTIVE PAYMENT VALIDATION RULES.—Clauses 

(ii) and (iii) of subsection (m)(5)(D) shall apply for purposes of this paragraph in a similar manner as they 

apply for purposes of such subsection. 

(C) DEFINITIONS.—For purposes of this paragraph: 

(i) ELIGIBLE PROFESSIONAL; COVERED PROFESSIONAL

SERVICES.—The terms ‘‘eligible professional’’ and ‘‘covered professional services’’ have the meanings given 

such terms in subsection (k)(3). 

(ii) PHYSICIAN REPORTING SYSTEM.—The term ‘‘physician reporting system’’ means the system established 

under subsection (k). 

(iii) QUALITY REPORTING PERIOD.—The term ‘‘quality 

reporting period’’ means, with respect to a year, a period specified by the Secretary. 

(9) INFORMATION REPORTING ON SERVICES INCLUDED IN GLOB- AL SURGICAL PACKAGES.—With respect to services for which a 

physician is required to report information in accordance with 

subsection (c)(8)(B)(i), the Secretary may through rulemaking 

delay payment of 5 percent of the amount that would otherwise 

be payable under the physician fee schedule under this section 

for such services until the information so required is reported. 

(b) ESTABLISHMENT OF FEE SCHEDULES.— (1) IN GENERAL.—Before November 1 of the preceding year, 

for each year beginning with 1998, subject to subsection (p), 

the Secretary shall establish, by regulation, fee schedules that 

establish payment amounts for all physicians’ services furnished in all fee schedule areas (as defined in subsection (j)(2)) 

for the year. Except as provided in paragraph (2), each such 

payment amount for a service shall be equal to the product 

of— 

(A) the relative value for the service (as determined in 

subsection (c)(2)), 

(B) the conversion factor (established under subsection 

(d)) for the year, and 

(C) the geographic adjustment factor (established under 

subsection (e)(2)) for the service for the fee schedule area. 

(2) TREATMENT OF RADIOLOGY SERVICES AND ANESTHESIA

SERVICES.— 

(A) RADIOLOGY SERVICES.—With respect to radiology 

services (including radiologist services, as defined in section 1834(b)(6)), the Secretary shall base the relative values on the relative value scale developed under section 

1834(b)(1)(A), with appropriate modifications of the relative values to assure that the relative values established 

for radiology services which are similar or related to other 

physicians’ services are consistent with the relative values 

established for those similar or related services. 

(B) ANESTHESIA SERVICES.—In establishing the fee 

schedule for anesthesia services for which a relative value 

guide has been established under section 4048(b) of the 

17 

Omnibus Budget Reconciliation Act of 1987, the Secretary 

shall use, to the extent practicable, such relative value 

guide, with appropriate adjustment of the conversion factor, in a manner to assure that the fee schedule amounts 

for anesthesia services are consistent with the fee schedule 

amounts for other services determined by the Secretary to 

be of comparable value. In applying the previous sentence, 

the Secretary shall adjust the conversion factor by geographic adjustment factors in the same manner as such 

adjustment is made under paragraph (1)(C). 

(C) CONSULTATION.—The Secretary shall consult with 

the Physician Payment Review Commission and organizations representing physicians or suppliers who furnish radiology services and anesthesia services in applying subparagraphs (A) and (B). 

(3) TREATMENT OF INTERPRETATION OF ELECTROCARDIOGRAMS.—The Secretary— 

(A) shall make separate payment under this section for 

the interpretation of electrocardiograms performed or ordered to be performed as part of or in conjunction with a 

visit to or a consultation with a physician, and 

(B) shall adjust the relative values established for visits 

and consultations under subsection (c) so as not to include 

relative value units for interpretations of electrocardiograms in the relative value for visits and consultations. 

(4) SPECIAL RULE FOR IMAGING SERVICES.— (A) IN GENERAL.—In the case of imaging services described in subparagraph (B) furnished on or after January 

1, 2007, if— 

(i) the technical component (including the technical 

component portion of a global fee) of the service established for a year under the fee schedule described in 

paragraph (1) without application of the geographic 

adjustment factor described in paragraph (1)(C), exceeds 

(ii) the Medicare OPD fee schedule amount established under the prospective payment system for hospital outpatient department services under paragraph 

(3)(D) of section 1833(t) for such service for such year, 

determined without regard to geographic adjustment 

under paragraph (2)(D) of such section, 

the Secretary shall substitute the amount described in 

clause (ii), adjusted by the geographic adjustment factor 

described in paragraph (1)(C), for the fee schedule amount 

for such technical component for such year. 

(B) IMAGING SERVICES DESCRIBED.—For purposes of this 

paragraph, imaging services described in this subparagraph are imaging and computer-assisted imaging services, including X-ray, ultrasound (including echocardiography), nuclear medicine (including positron emission tomography), magnetic resonance imaging, computed tomography, and fluoroscopy, but excluding diagnostic and 

screening mammography, and for 2010, 2011, and the first 

2 months of 2012, dual-energy x-ray absorptiometry services (as described in paragraph (6)). 

18 

(C) ADJUSTMENT IN IMAGING UTILIZATION RATE.—With 

respect to fee schedules established for 2011, 2012, and 

2013, in the methodology for determining practice expense 

relative value units for expensive diagnostic imaging 

equipment under the final rule published by the Secretary 

in the Federal Register on November 25, 2009 (42 CFR 

410 et al.), the Secretary shall use a 75 percent assumption instead of the utilization rates otherwise established 

in such final rule. With respect to fee schedules established for 2014 and subsequent years, in such methodology, the Secretary shall use a 90 percent utilization rate. 

(D) ADJUSTMENT IN TECHNICAL COMPONENT DISCOUNT ON

SINGLE-SESSION IMAGING INVOLVING CONSECUTIVE BODY

PARTS.—For services furnished on or after July 1, 2010, 

the Secretary shall increase the reduction in payments attributable to the multiple procedure payment reduction applicable to the technical component for imaging under the 

final rule published by the Secretary in the Federal Register on November 21, 2005 (part 405 of title 42, Code of 

Federal Regulations) from 25 percent to 50 percent. 

(5) TREATMENT OF INTENSIVE CARDIAC REHABILITATION PROGRAM.— 

(A) IN GENERAL.—In the case of an intensive cardiac rehabilitation program described in section 1861(eee)(4), the 

Secretary shall substitute the Medicare OPD fee schedule 

amount established under the prospective payment system 

for hospital outpatient department service under paragraph (3)(D) of section 1833(t) for cardiac rehabilitation 

(under HCPCS codes 93797 and 93798 for calendar year 

2007, or any succeeding HCPCS codes for cardiac rehabilitation). 

(B) DEFINITION OF SESSION.—Each of the services described in subparagraphs (A) through (E) of section 

1861(eee)(3), when furnished for one hour, is a separate 

session of intensive cardiac rehabilitation. 

(C) MULTIPLE SESSIONS PER DAY.—Payment may be 

made for up to 6 sessions per day of the series of 72 onehour sessions of intensive cardiac rehabilitation services 

described in section 1861(eee)(4)(B). 

(6) TREATMENT OF BONE MASS SCANS.—For dual-energy x-ray 

absorptiometry services (identified in 2006 by HCPCS codes 

76075 and 76077 (and any succeeding codes)) furnished during 

2010, 2011, and the first 2 months of 2012, instead of the payment amount that would otherwise be determined under this 

section for such years, the payment amount shall be equal to 

70 percent of the product of— 

(A) the relative value for the service (as determined in 

subsection (c)(2)) for 2006; 

(B) the conversion factor (established under subsection 

(d)) for 2006; and 

(C) the geographic adjustment factor (established under 

subsection (e)(2)) for the service for the fee schedule area 

for 2010, 2011, and the first 2 months of 2012, respectively. 

19 

(7) ADJUSTMENT IN DISCOUNT FOR CERTAIN MULTIPLE THER- APY SERVICES.—In the case of therapy services furnished on or 

after January 1, 2011, and before April 1, 2013, and for which 

payment is made under fee schedules established under this 

section, instead of the 25 percent multiple procedure payment 

reduction specified in the final rule published by the Secretary 

in the Federal Register on November 29, 2010, the reduction 

percentage shall be 20 percent. In the case of such services furnished on or after April 1, 2013, and for which payment is 

made under such fee schedules, instead of the 25 percent multiple procedure payment reduction specified in such final rule, 

the reduction percentage shall be 50 percent. 

(8) ENCOURAGING CARE MANAGEMENT FOR INDIVIDUALS WITH

CHRONIC CARE NEEDS.— 

(A) IN GENERAL.—In order to encourage the management 

of care for individuals with chronic care needs the Secretary shall, subject to subparagraph (B), make payment 

(as the Secretary determines to be appropriate) under this 

section for chronic care management services furnished on 

or after January 1, 2015, by a physician (as defined in section 1861(r)(1)), physician assistant or nurse practitioner 

(as defined in section 1861(aa)(5)(A)), clinical nurse specialist (as defined in section 1861(aa)(5)(B)), or certified 

nurse midwife (as defined in section 1861(gg)(2)). 

(B) POLICIES RELATING TO PAYMENT.—In carrying out 

this paragraph, with respect to chronic care management 

services, the Secretary shall— 

(i) make payment to only one applicable provider for 

such services furnished to an individual during a period; 

(ii) not make payment under subparagraph (A) if 

such payment would be duplicative of payment that is 

otherwise made under this title for such services; and 

(iii) not require that an annual wellness visit (as defined in section 1861(hhh)) or an initial preventive 

physical examination (as defined in section 1861(ww)) 

be furnished as a condition of payment for such management services. 

(C) CLARIFICATION.—In carrying out this paragraph, 

with respect to chronic care management services, the Secretary may, subject to subparagraph (B), make payment for 

such services furnished through the use of secure messaging, Internet, store and forward technologies, or other 

non-face-to-face communication methods determined appropriate by the Secretary. 

(9) SPECIAL RULE TO INCENTIVIZE TRANSITION FROM TRADITIONAL X-RAY IMAGING TO DIGITAL RADIOGRAPHY.— 

(A) LIMITATION ON PAYMENT FOR FILM X-RAY IMAGING

SERVICES.—In the case of an imaging service (including the 

imaging portion of a service) that is an X-ray taken using 

film and that is furnished during 2017 or a subsequent 

year, the payment amount for the technical component (including the technical component portion of a global service) 

of such service that would otherwise be determined under 

this section (without application of this paragraph and beVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00019 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
20 

fore application of any other adjustment under this section) for such year shall be reduced by 20 percent. 

(B) PHASED-IN LIMITATION ON PAYMENT FOR COMPUTED

RADIOGRAPHY IMAGING SERVICES.—In the case of an imaging service (including the imaging portion of a service) that 

is an X-ray taken using computed radiography technology— 

(i) in the case of such a service furnished during 

2018, 2019, 2020, 2021, or 2022, the payment amount 

for the technical component (including the technical 

component portion of a global service) of such service 

that would otherwise be determined under this section 

(without application of this paragraph and before application of any other adjustment under this section) 

for such year shall be reduced by 7 percent; and 

(ii) in the case of such a service furnished during 

2023 or a subsequent year, the payment amount for 

the technical component (including the technical component portion of a global service) of such service that 

would otherwise be determined under this section 

(without application of this paragraph and before application of any other adjustment under this section) 

for such year shall be reduced by 10 percent. 

(C) COMPUTED RADIOGRAPHY TECHNOLOGY DEFINED.—For 

purposes of this paragraph, the term ‘‘computed radiography technology’’ means cassette-based imaging which 

utilizes an imaging plate to create the image involved. 

(D) IMPLEMENTATION.—In order to implement this paragraph, the Secretary shall adopt appropriate mechanisms 

which may include use of modifiers. 

(10) REDUCTION OF DISCOUNT IN PAYMENT FOR PROFESSIONAL

COMPONENT OF MULTIPLE IMAGING SERVICES.—In the case of 

the professional component of imaging services furnished on or 

after January 1, 2017, instead of the 25 percent reduction for 

multiple procedures specified in the final rule published by the 

Secretary in the Federal Register on November 28, 2011, as 

amended in the final rule published by the Secretary in the 

Federal Register on November 16, 2012, the reduction percentage shall be 5 percent. 

(11) SPECIAL RULE FOR CERTAIN RADIATION THERAPY SERVICES.—The code definitions, the work relative value units 

under subsection (c)(2)(C)(i), and the direct inputs for the practice expense relative value units under subsection (c)(2)(C)(ii) 

for radiation treatment delivery and related imaging services 

(identified in 2016 by HCPCS G-codes G6001 through G6015) 

for the fee schedule established under this subsection for services furnished in 2017 and 2018 shall be the same as such definitions, units, and inputs for such services for the fee schedule 

established for services furnished in 2016. 

(c) DETERMINATION OF RELATIVE VALUES FOR PHYSICIANS’ SERV- ICES.— (1) DIVISION OF PHYSICIANS’ SERVICES INTO COMPONENTS.—In 

this section, with respect to a physicians’ service: 

(A) WORK COMPONENT DEFINED.—The term ‘‘work component’’ means the portion of the resources used in furVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00020 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
21 

nishing the service that reflects physician time and intensity in furnishing the service. Such portion shall— 

(i) include activities before and after direct patient 

contact, and 

(ii) be defined, with respect to surgical procedures, 

to reflect a global definition including pre-operative 

and post-operative physicians’ services. 

(B) PRACTICE EXPENSE COMPONENT DEFINED.—The term 

‘‘practice expense component’’ means the portion of the resources used in furnishing the service that reflects the 

general categories of expenses (such as office rent and 

wages of personnel, but excluding malpractice expenses) 

comprising practice expenses. 

(C) MALPRACTICE COMPONENT DEFINED.—The term ‘‘malpractice component’’ means the portion of the resources 

used in furnishing the service that reflects malpractice expenses in furnishing the service. 

(2) DETERMINATION OF RELATIVE VALUES.— (A) IN GENERAL.— 

(i) COMBINATION OF UNITS FOR COMPONENTS.—The 

Secretary shall develop a methodology for combining 

the work, practice expense, and malpractice relative 

value units, determined under subparagraph (C), for 

each service in a manner to produce a single relative 

value for that service. Such relative values are subject 

to adjustment under subparagraph (F)(i) and section 

13515(b) of the Omnibus Budget Reconciliation Act of 

1993. 

(ii) EXTRAPOLATION.—The Secretary may use extrapolation and other techniques to determine the 

number of relative value units for physicians’ services 

for which specific data are not available and shall take 

into account recommendations of the Physician Payment Review Commission and the results of consultations with organizations representing physicians who 

provide such services. 

(B) PERIODIC REVIEW AND ADJUSTMENTS IN RELATIVE

VALUES.— 

(i) PERIODIC REVIEW.—The Secretary, not less often 

than every 5 years, shall review the relative values established under this paragraph for all physicians’ services. 

(ii) ADJUSTMENTS.— 

(I) IN GENERAL.—The Secretary shall, to the extent the Secretary determines to be necessary and 

subject to subclause (II) and paragraph (7), adjust 

the number of such units to take into account 

changes in medical practice, coding changes, new 

data on relative value components, or the addition 

of new procedures. The Secretary shall publish an 

explanation of the basis for such adjustments. 

(II) LIMITATION ON ANNUAL ADJUSTMENTS.— Subject to clauses (iv) and (v), the adjustments 

under subclause (I) for a year may not cause the 

amount of expenditures under this part for the 

22 

year to differ by more than $20,000,000 from the 

amount of expenditures under this part that 

would have been made if such adjustments had 

not been made. 

(iii) CONSULTATION.—The Secretary, in making adjustments under clause (ii), shall consult with the 

Medicare Payment Advisory Commission and organizations representing physicians. 

(iv) EXEMPTION OF CERTAIN ADDITIONAL EXPENDI- TURES FROM BUDGET NEUTRALITY.—The additional expenditures attributable to— 

(I) subparagraph (H) shall not be taken into account in applying clause (ii)(II) for 2004; 

(II) subparagraph (I) insofar as it relates to a 

physician fee schedule for 2005 or 2006 shall not 

be taken into account in applying clause (ii)(II) for 

drug administration services under the fee schedule for such year for a specialty described in subparagraph (I)(ii)(II); 

(III) subparagraph (J) insofar as it relates to a 

physician fee schedule for 2005 or 2006 shall not 

be taken into account in applying clause (ii)(II) for 

drug administration services under the fee schedule for such year; and 

(IV) subsection (b)(6) shall not be taken into account in applying clause (ii)(II) for 2010, 2011, or 

the first 2 months of 2012. 

(v) EXEMPTION OF CERTAIN REDUCED EXPENDITURES

FROM BUDGET-NEUTRALITY CALCULATION.—The following reduced expenditures, as estimated by the Secretary, shall not be taken into account in applying 

clause (ii)(II): 

(I) REDUCED PAYMENT FOR MULTIPLE IMAGING

PROCEDURES.—Effective for fee schedules established beginning with 2007, reduced expenditures 

attributable to the multiple procedure payment reduction for imaging under the final rule published 

by the Secretary in the Federal Register on November 21, 2005 (42 CFR 405, et al.) insofar as it 

relates to the physician fee schedules for 2006 and 

2007. 

(II) OPD PAYMENT CAP FOR IMAGING SERVICES.— 

Effective for fee schedules established beginning 

with 2007, reduced expenditures attributable to 

subsection (b)(4). 

(III) CHANGE IN UTILIZATION RATE FOR CERTAIN

IMAGING SERVICES.—Effective for fee schedules established beginning with 2011, reduced expenditures attributable to the changes in the utilization 

rate applicable to 2011 and 2014, as described in 

the first and second sentence, respectively, of subsection (b)(4)(C). 

(VI) ADDITIONAL REDUCED PAYMENT FOR MULTIPLE IMAGING PROCEDURES.—Effective for fee 

schedules established beginning with 2010 (but 

23 

not applied for services furnished prior to July 1, 

2010), reduced expenditures attributable to the increase in the multiple procedure payment reduction from 25 to 50 percent (as described in subsection (b)(4)(D)). 

(VII) REDUCED EXPENDITURES FOR MULTIPLE

THERAPY SERVICES.—Effective for fee schedules established beginning with 2011, reduced expenditures attributable to the multiple procedure payment reduction for therapy services (as described 

in subsection (b)(7)). 

(VIII) REDUCED EXPENDITURES ATTRIBUTABLE TO

APPLICATION OF QUALITY INCENTIVES FOR COMPUTED TOMOGRAPHY.—Effective for fee schedules 

established beginning with 2016, reduced expenditures attributable to the application of the quality 

incentives for computed tomography under section 

1834(p) 

(IX) REDUCTIONS FOR MISVALUED SERVICES IF

TARGET NOT MET.—Effective for fee schedules beginning with 2016, reduced expenditures attributable to the application of the target recapture 

amount described in subparagraph (O)(iii). 

(X) REDUCED EXPENDITURES ATTRIBUTABLE TO

INCENTIVES TO TRANSITION TO DIGITAL RADIOGRAPHY.—Effective for fee schedules established beginning with 2017, reduced expenditures attributable to subparagraph (A) of subsection (b)(9) 

and effective for fee schedules established beginning with 2018, reduced expenditures attributable 

to subparagraph (B) of such subsection. 

(XI) DISCOUNT IN PAYMENT FOR PROFESSIONAL

COMPONENT OF IMAGING SERVICES.—Effective for 

fee schedules established beginning with 2017, reduced expenditures attributable to subsection 

(b)(10). 

(vi) ALTERNATIVE APPLICATION OF BUDGET-NEUTRALITY ADJUSTMENT.—Notwithstanding subsection 

(d)(9)(A), effective for fee schedules established beginning with 2009, with respect to the 5-year review of 

work relative value units used in fee schedules for 

2007 and 2008, in lieu of continuing to apply budgetneutrality adjustments required under clause (ii) for 

2007 and 2008 to work relative value units, the Secretary shall apply such budget-neutrality adjustments 

to the conversion factor otherwise determined for 

years beginning with 2009. 

(C) COMPUTATION OF RELATIVE VALUE UNITS FOR COMPONENTS.—For purposes of this section for each physicians’ 

service— 

(i) WORK RELATIVE VALUE UNITS.—The Secretary 

shall determine a number of work relative value units 

for the service or group of services based on the relative resources incorporating physician time and inVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00023 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
24 

tensity required in furnishing the service or group of 

services. 

(ii) PRACTICE EXPENSE RELATIVE VALUE UNITS.—The 

Secretary shall determine a number of practice expense relative value units for the service for years before 1999 equal to the product of— 

(I) the base allowed charges (as defined in subparagraph (D)) for the service, and 

(II) the practice expense percentage for the service (as determined under paragraph (3)(C)(ii)), 

and for years beginning with 1999 based on the relative practice expense resources involved in furnishing 

the service or group of services. For 1999, such number of units shall be determined based 75 percent on 

such product and based 25 percent on the relative 

practice expense resources involved in furnishing the 

service. For 2000, such number of units shall be determined based 50 percent on such product and based 50 

percent on such relative practice expense resources. 

For 2001, such number of units shall be determined 

based 25 percent on such product and based 75 percent on such relative practice expense resources. For 

a subsequent year, such number of units shall be determined based entirely on such relative practice expense resources. 

(iii) MALPRACTICE RELATIVE VALUE UNITS.—The Secretary shall determine a number of malpractice relative value units for the service or group of services 

for years before 2000 equal to the product of— 

(I) the base allowed charges (as defined in subparagraph (D)) for the service or group of services, 

and 

(II) the malpractice percentage for the service or 

group of services (as determined under paragraph 

(3)(C)(iii)), 

and for years beginning with 2000 based on the malpractice expense resources involved in furnishing the 

service or group of services. 

(D) BASE ALLOWED CHARGES DEFINED.—In this paragraph, the term ‘‘base allowed charges’’ means, with respect to a physician’s service, the national average allowed 

charges for the service under this part for services furnished during 1991, as estimated by the Secretary using 

the most recent data available. 

(E) REDUCTION IN PRACTICE EXPENSE RELATIVE VALUE

UNITS FOR CERTAIN SERVICES.— 

(i) IN GENERAL.—Subject to clause (ii), the Secretary 

shall reduce the practice expense relative value units 

applied to services described in clause (iii) furnished 

in— 

(I) 1994, by 25 percent of the number by which 

the number of practice expense relative value 

units (determined for 1994 without regard to this 

subparagraph) exceeds the number of work relative value units determined for 1994, 

25 

(II) 1995, by an additional 25 percent of such 

excess, and 

(III) 1996, by an additional 25 percent of such 

excess. 

(ii) FLOOR ON REDUCTIONS.—The practice expense 

relative value units for a physician’s service shall not 

be reduced under this subparagraph to a number less 

than 128 percent of the number of work relative value 

units. 

(iii) Services covered.—For purposes of clause (i), the 

services described in this clause are physicians’ services that are not described in clause (iv) and for 

which— 

(I) there are work relative value units, and 

(II) the number of practice expense relative 

value units (determined for 1994) exceeds 128 percent of the number of work relative value units 

(determined for such year). 

(iv) EXCLUDED SERVICES.—For purposes of clause 

(iii), the services described in this clause are services 

which the Secretary determines at least 75 percent of 

which are provided under this title in an office setting. 

(F) BUDGET NEUTRALITY ADJUSTMENTS.—The Secretary— 

(i) shall reduce the relative values for all services 

(other than anesthesia services) established under this 

paragraph (and in the case of anesthesia services, the 

conversion factor established by the Secretary for such 

services) by such percentage as the Secretary determines to be necessary so that, beginning in 1996, the 

amendment made by section 13514(a) of the Omnibus 

Budget Reconciliation Act of 1993 would not result in 

expenditures under this section that exceed the 

amount of such expenditures that would have been 

made if such amendment had not been made, and 

(ii) shall reduce the amounts determined under subsection (a)(2)(B)(ii)(I) by such percentage as the Secretary determines to be required to assure that, taking 

into account the reductions made under clause (i), the 

amendment made by section 13514(a) of the Omnibus 

Budget Reconciliation Act of 1993 would not result in 

expenditures under this section in 1994 that exceed 

the amount of such expenditures that would have been 

made if such amendment had not been made. 

(G) ADJUSTMENTS IN RELATIVE VALUE UNITS FOR 1998.— 

(i) IN GENERAL.—The Secretary shall— 

(I) subject to clauses (iv) and (v), reduce the 

practice expense relative value units applied to 

any services described in clause (ii) furnished in 

1998 to a number equal to 110 percent of the 

number of work relative value units, and 

(II) increase the practice expense relative value 

units for office visit procedure codes during 1998 

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26 

ments for such services equal to the aggregate decrease in payments by reason of subclause (I). 

(ii) SERVICES COVERED.—For purposes of clause (i), 

the services described in this clause are physicians’ 

services that are not described in clause (iii) and for 

which— 

(I) there are work relative value units, and 

(II) the number of practice expense relative 

value units (determined for 1998) exceeds 110 percent of the number of work relative value units 

(determined for such year). 

(iii) EXCLUDED SERVICES.—For purposes of clause 

(ii), the services described in this clause are services 

which the Secretary determines at least 75 percent of 

which are provided under this title in an office setting. 

(iv) LIMITATION ON AGGREGATE REALLOCATION.—If 

the application of clause (i)(I) would result in an aggregate amount of reductions under such clause in excess of $390,000,000, such clause shall be applied by 

substituting for 110 percent such greater percentage 

as the Secretary estimates will result in the aggregate 

amount of such reductions equaling $390,000,000. 

(v) NO REDUCTION FOR CERTAIN SERVICES.—Practice 

expense relative value units for a procedure performed 

in an office or in a setting out of an office shall not be 

reduced under clause (i) if the in-office or out-of-office 

practice expense relative value, respectively, for the 

procedure would increase under the proposed rule on 

resource-based practice expenses issued by the Secretary on June 18, 1997 (62 Federal Register 33158 et 

seq.). 

(H) ADJUSTMENTS IN PRACTICE EXPENSE RELATIVE VALUE

UNITS FOR CERTAIN DRUG ADMINISTRATION SERVICES BEGIN- NING IN 2004.— 

(i) USE OF SURVEY DATA.—In establishing the physician fee schedule under subsection (b) with respect to 

payments for services furnished on or after January 1, 

2004, the Secretary shall, in determining practice expense relative value units under this subsection, utilize a survey submitted to the Secretary as of January 

1, 2003, by a physician specialty organization pursuant to section 212 of the Medicare, Medicaid, and 

SCHIP Balanced Budget Refinement Act of 1999 if the 

survey— 

(I) covers practice expenses for oncology drug 

administration services; and 

(II) meets criteria established by the Secretary 

for acceptance of such surveys. 

(ii) PRICING OF CLINICAL ONCOLOGY NURSES IN PRAC- TICE EXPENSE METHODOLOGY.—If the survey described 

in clause (i) includes data on wages, salaries, and compensation of clinical oncology nurses, the Secretary 

shall utilize such data in the methodology for determining practice expense relative value units under 

subsection (c). 

27 

(iii) WORK RELATIVE VALUE UNITS FOR CERTAIN DRUG

ADMINISTRATION SERVICES.—In establishing the relative value units under this paragraph for drug administration services described in clause (iv) furnished 

on or after January 1, 2004, the Secretary shall establish work relative value units equal to the work relative value units for a level 1 office medical visit for 

an established patient. 

(iv) DRUG ADMINISTRATION SERVICES DESCRIBED.— 

The drug administration services described in this 

clause are physicians’ services— 

(I) which are classified as of October 1, 2003, 

within any of the following groups of procedures: 

therapeutic or diagnostic infusions (excluding 

chemotherapy); chemotherapy administration 

services; and therapeutic, prophylactic, or diagnostic injections; 

(II) for which there are no work relative value 

units assigned under this subsection as of such 

date; and 

(III) for which national relative value units have 

been assigned under this subsection as of such 

date. 

(I) ADJUSTMENTS IN PRACTICE EXPENSE RELATIVE VALUE

UNITS FOR CERTAIN DRUG ADMINISTRATION SERVICES BEGINNING WITH 2005.— 

(i) IN GENERAL.—In establishing the physician fee 

schedule under subsection (b) with respect to payments for services furnished on or after January 1, 

2005 or 2006, the Secretary shall adjust the practice 

expense relative value units for such year consistent 

with clause (ii). 

(ii) USE OF SUPPLEMENTAL SURVEY DATA.— 

(I) IN GENERAL.—Subject to subclause (II), if a 

specialty submits to the Secretary by not later 

than March 1, 2004, for 2005, or March 1, 2005, 

for 2006, data that includes expenses for the administration of drugs and biologicals for which the 

payment amount is determined pursuant to section 1842(o), the Secretary shall use such supplemental survey data in carrying out this subparagraph for the years involved insofar as they are 

collected and provided by entities and organizations consistent with the criteria established by 

the Secretary pursuant to section 212(a) of the 

Medicare, Medicaid, and SCHIP Balanced Budget 

Refinement Act of 1999. 

(II) LIMITATION ON SPECIALTY.—Subclause (I) 

shall apply to a specialty only insofar as not less 

than 40 percent of payments for the specialty 

under this title in 2002 are attributable to the administration of drugs and biologicals, as determined by the Secretary. 

28 

(III) APPLICATION.—This clause shall not apply 

with respect to a survey to which subparagraph 

(H)(i) applies. 

(J) PROVISIONS FOR APPROPRIATE REPORTING AND BILLING

FOR PHYSICIANS’ SERVICES ASSOCIATED WITH THE ADMINISTRATION OF COVERED OUTPATIENT DRUGS AND

BIOLOGICALS.— 

(i) EVALUATION OF CODES.—The Secretary shall 

promptly evaluate existing drug administration codes 

for physicians’ services to ensure accurate reporting 

and billing for such services, taking into account levels 

of complexity of the administration and resource consumption. 

(ii) USE OF EXISTING PROCESSES.—In carrying out 

clause (i), the Secretary shall use existing processes 

for the consideration of coding changes and, to the extent coding changes are made, shall use such processes in establishing relative values for such services. 

(iii) IMPLEMENTATION.—In carrying out clause (i), 

the Secretary shall consult with representatives of 

physician specialties affected by the implementation of 

section 1847A or section 1847B, and shall take such 

steps within the Secretary’s authority to expedite such 

considerations under clause (ii). 

(iv) SUBSEQUENT, BUDGET NEUTRAL ADJUSTMENTS

PERMITTED.—Nothing in subparagraph (H) or (I) or 

this subparagraph shall be construed as preventing 

the Secretary from providing for adjustments in practice expense relative value units under (and consistent 

with) subparagraph (B) for years after 2004, 2005, or 

2006, respectively. 

(K) POTENTIALLY MISVALUED CODES.— 

(i) IN GENERAL.—The Secretary shall— 

(I) periodically identify services as being potentially misvalued using criteria specified in clause 

(ii); and 

(II) review and make appropriate adjustments 

to the relative values established under this paragraph for services identified as being potentially 

misvalued under subclause (I). 

(ii) IDENTIFICATION OF POTENTIALLY MISVALUED

CODES.—For purposes of identifying potentially 

misvalued codes pursuant to clause (i)(I), the Secretary shall examine codes (and families of codes as 

appropriate) based on any or all of the following criteria: 

(I) Codes that have experienced the fastest 

growth. 

(II) Codes that have experienced substantial 

changes in practice expenses. 

(III) Codes that describe new technologies or 

services within an appropriate time period (such 

as 3 years) after the relative values are initially 

established for such codes. 

29 

(IV) Codes which are multiple codes that are 

frequently billed in conjunction with furnishing a 

single service. 

(V) Codes with low relative values, particularly 

those that are often billed multiple times for a single treatment. 

(VI) Codes that have not been subject to review 

since implementation of the fee schedule. 

(VII) Codes that account for the majority of 

spending under the physician fee schedule. 

(VIII) Codes for services that have experienced 

a substantial change in the hospital length of stay 

or procedure time. 

(IX) Codes for which there may be a change in 

the typical site of service since the code was last 

valued. 

(X) Codes for which there is a significant difference in payment for the same service between 

different sites of service. 

(XI) Codes for which there may be anomalies in 

relative values within a family of codes. 

(XII) Codes for services where there may be efficiencies when a service is furnished at the same 

time as other services. 

(XIII) Codes with high intra-service work per 

unit of time. 

(XIV) Codes with high practice expense relative 

value units. 

(XV) Codes with high cost supplies. 

(XVI) Codes as determined appropriate by the 

Secretary. 

(iii) REVIEW AND ADJUSTMENTS.— 

(I) The Secretary may use existing processes to 

receive recommendations on the review and appropriate adjustment of potentially misvalued 

services described in clause (i)(II). 

(II) The Secretary may conduct surveys, other 

data collection activities, studies, or other analyses as the Secretary determines to be appropriate 

to facilitate the review and appropriate adjustment described in clause (i)(II). 

(III) The Secretary may use analytic contractors 

to identify and analyze services identified under 

clause (i)(I), conduct surveys or collect data, and 

make recommendations on the review and appropriate adjustment of services described in clause 

(i)(II). 

(IV) The Secretary may coordinate the review 

and appropriate adjustment described in clause 

(i)(II) with the periodic review described in subparagraph (B). 

(V) As part of the review and adjustment described in clause (i)(II), including with respect to 

codes with low relative values described in clause 

(ii), the Secretary may make appropriate coding 

30 

revisions (including using existing processes for 

consideration of coding changes) which may include consolidation of individual services into bundled codes for payment under the fee schedule 

under subsection (b). 

(VI) The provisions of subparagraph (B)(ii)(II) 

and paragraph (7) shall apply to adjustments to 

relative value units made pursuant to this subparagraph in the same manner as such provisions 

apply to adjustments under subparagraph 

(B)(ii)(I). 

(iv) TREATMENT OF CERTAIN RADIATION THERAPY

SERVICES.—Radiation treatment delivery and related 

imaging services identified under subsection (b)(11) 

shall not be considered as potentially misvalued services for purposes of this subparagraph and subparagraph (O) for 2017 and 2018. 

(L) VALIDATING RELATIVE VALUE UNITS.— (i) IN GENERAL.—The Secretary shall establish a 

process to validate relative value units under the fee 

schedule under subsection (b). 

(ii) COMPONENTS AND ELEMENTS OF WORK.—The 

process described in clause (i) may include validation 

of work elements (such as time, mental effort and professional judgment, technical skill and physical effort, 

and stress due to risk) involved with furnishing a 

service and may include validation of the pre-, post-, 

and intra-service components of work. 

(iii) SCOPE OF CODES.—The validation of work relative value units shall include a sampling of codes for 

services that is the same as the codes listed under 

subparagraph (K)(ii). 

(iv) METHODS.—The Secretary may conduct the validation under this subparagraph using methods described in subclauses (I) through (V) of subparagraph 

(K)(iii) as the Secretary determines to be appropriate. 

(v) ADJUSTMENTS.—The Secretary shall make appropriate adjustments to the work relative value units 

under the fee schedule under subsection (b). The provisions of subparagraph (B)(ii)(II) shall apply to adjustments to relative value units made pursuant to 

this subparagraph in the same manner as such provisions apply to adjustments under subparagraph 

(B)(ii)(II). 

(M) AUTHORITY TO COLLECT AND USE INFORMATION ON

PHYSICIANS’ SERVICES IN THE DETERMINATION OF RELATIVE

VALUES.— 

(i) COLLECTION OF INFORMATION.—Notwithstanding 

any other provision of law, the Secretary may collect 

or obtain information on the resources directly or indirectly related to furnishing services for which payment 

is made under the fee schedule established under subsection (b). Such information may be collected or obtained from any eligible professional or any other 

source. 

31 

(ii) USE OF INFORMATION.—Notwithstanding any 

other provision of law, subject to clause (v), the Secretary may (as the Secretary determines appropriate) 

use information collected or obtained pursuant to 

clause (i) in the determination of relative values for 

services under this section. 

(iii) TYPES OF INFORMATION.—The types of information described in clauses (i) and (ii) may, at the Secretary’s discretion, include any or all of the following: 

(I) Time involved in furnishing services. 

(II) Amounts and types of practice expense inputs involved with furnishing services. 

(III) Prices (net of any discounts) for practice expense inputs, which may include paid invoice 

prices or other documentation or records. 

(IV) Overhead and accounting information for 

practices of physicians and other suppliers. 

(V) Any other element that would improve the 

valuation of services under this section. 

(iv) INFORMATION COLLECTION MECHANISMS.—Information may be collected or obtained pursuant to this 

subparagraph from any or all of the following: 

(I) Surveys of physicians, other suppliers, providers of services, manufacturers, and vendors. 

(II) Surgical logs, billing systems, or other practice or facility records. 

(III) Electronic health records. 

(IV) Any other mechanism determined appropriate by the Secretary. 

(v) TRANSPARENCY OF USE OF INFORMATION.— 

(I) IN GENERAL.—Subject to subclauses (II) and 

(III), if the Secretary uses information collected or 

obtained under this subparagraph in the determination of relative values under this subsection, 

the Secretary shall disclose the information source 

and discuss the use of such information in such 

determination of relative values through notice 

and comment rulemaking. 

(II) THRESHOLDS FOR USE.—The Secretary may 

establish thresholds in order to use such information, including the exclusion of information collected or obtained from eligible professionals who 

use very high resources (as determined by the 

Secretary) in furnishing a service. 

(III) DISCLOSURE OF INFORMATION.—The Secretary shall make aggregate information available 

under this subparagraph but shall not disclose information in a form or manner that identifies an 

eligible professional or a group practice, or information collected or obtained pursuant to a nondisclosure agreement. 

(vi) INCENTIVE TO PARTICIPATE.—The Secretary may 

provide for such payments under this part to an eligible professional that submits such solicited information under this subparagraph as the Secretary deterVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00031 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
32 

mines appropriate in order to compensate such eligible 

professional for such submission. Such payments shall 

be provided in a form and manner specified by the 

Secretary. 

(vii) ADMINISTRATION.—Chapter 35 of title 44, 

United States Code, shall not apply to information collected or obtained under this subparagraph. 

(viii) DEFINITION OF ELIGIBLE PROFESSIONAL.—In 

this subparagraph, the term ‘‘eligible professional’’ has 

the meaning given such term in subsection (k)(3)(B). 

(ix) FUNDING.—For purposes of carrying out this 

subparagraph, in addition to funds otherwise appropriated, the Secretary shall provide for the transfer, 

from the Federal Supplementary Medical Insurance 

Trust Fund under section 1841, of $2,000,000 to the 

Centers for Medicare & Medicaid Services Program 

Management Account for each fiscal year beginning 

with fiscal year 2014. Amounts transferred under the 

preceding sentence for a fiscal year shall be available 

until expended. 

(N) AUTHORITY FOR ALTERNATIVE APPROACHES TO ESTAB- LISHING PRACTICE EXPENSE RELATIVE VALUES.—The Secretary may establish or adjust practice expense relative 

values under this subsection using cost, charge, or other 

data from suppliers or providers of services, including information collected or obtained under subparagraph (M). 

(O) TARGET FOR RELATIVE VALUE ADJUSTMENTS FOR

MISVALUED SERVICES.—With respect to fee schedules established for each of 2016 through 2018, the following shall 

apply: 

(i) DETERMINATION OF NET REDUCTION IN EXPENDITURES.—For each year, the Secretary shall determine 

the estimated net reduction in expenditures under the 

fee schedule under this section with respect to the 

year as a result of adjustments to the relative values 

established under this paragraph for misvalued codes. 

(ii) BUDGET NEUTRAL REDISTRIBUTION OF FUNDS IF

TARGET MET AND COUNTING OVERAGES TOWARDS THE

TARGET FOR THE SUCCEEDING YEAR.—If the estimated 

net reduction in expenditures determined under clause 

(i) for the year is equal to or greater than the target 

for the year— 

(I) reduced expenditures attributable to such adjustments shall be redistributed for the year in a 

budget neutral manner in accordance with subparagraph (B)(ii)(II); and 

(II) the amount by which such reduced expenditures exceeds the target for the year shall be 

treated as a reduction in expenditures described 

in clause (i) for the succeeding year, for purposes 

of determining whether the target has or has not 

been met under this subparagraph with respect to 

that year. 

(iii) EXEMPTION FROM BUDGET NEUTRALITY IF TARGET

NOT MET.—If the estimated net reduction in expendiVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00032 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
33 

tures determined under clause (i) for the year is less 

than the target for the year, reduced expenditures in 

an amount equal to the target recapture amount shall 

not be taken into account in applying subparagraph 

(B)(ii)(II) with respect to fee schedules beginning with 

2016. 

(iv) TARGET RECAPTURE AMOUNT.—For purposes of 

clause (iii), the target recapture amount is, with respect to a year, an amount equal to the difference between— 

(I) the target for the year; and 

(II) the estimated net reduction in expenditures 

determined under clause (i) for the year. 

(v) TARGET.—For purposes of this subparagraph, 

with respect to a year, the target is calculated as 0.5 

percent (or, for 2016, 1.0 percent) of the estimated 

amount of expenditures under the fee schedule under 

this section for the year. 

(3) COMPONENT PERCENTAGES.—For purposes of paragraph 

(2), the Secretary shall determine a work percentage, a practice expense percentage, and a malpractice percentage for each 

physician’s service as follows: 

(A) DIVISION OF SERVICES BY SPECIALTY.—For each physician’s service or class of physicians’ services, the Secretary shall determine the average percentage of each such 

service or class of services that is performed, nationwide, 

under this part by physicians in each of the different physician specialties (as identified by the Secretary). 

(B) DIVISION OF SPECIALTY BY COMPONENT.—The Secretary shall determine the average percentage division of 

resources, among the work component, the practice expense component, and the malpractice component, used by 

physicians in each of such specialties in furnishing physicians’ services. Such percentages shall be based on national data that describe the elements of physician practice 

costs and revenues, by physician specialty. The Secretary 

may use extrapolation and other techniques to determine 

practice costs and revenues for specialties for which adequate data are not available. 

(C) DETERMINATION OF COMPONENT PERCENTAGES.— 

(i) WORK PERCENTAGE.—The work percentage for a 

service (or class of services) is equal to the sum (for all 

physician specialties) of— 

(I) the average percentage division for the work 

component for each physician specialty (determined under subparagraph (B)), multiplied by 

(II) the proportion (determined under subparagraph (A)) of such service (or services) performed 

by physicians in that specialty. 

(ii) PRACTICE EXPENSE PERCENTAGE.—For years before 2002, the practice expense percentage for a service (or class of services) is equal to the sum (for all 

physician specialties) of— 

(I) the average percentage division for the practice expense component for each physician speVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00033 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
34 

cialty (determined under subparagraph (B)), multiplied by 

(II) the proportion (determined under subparagraph (A)) of such service (or services) performed 

by physicians in that specialty. 

(iii) MALPRACTICE PERCENTAGE.—For years before 

1999, the malpractice percentage for a service (or class 

of services) is equal to the sum (for all physician specialties) of— 

(I) the average percentage division for the malpractice component for each physician specialty 

(determined under subparagraph (B)), multiplied 

by 

(II) the proportion (determined under subparagraph (A)) of such service (or services) performed 

by physicians in that specialty. 

(D) PERIODIC RECOMPUTATION.—The Secretary may, 

from time to time, provide for the recomputation of work 

percentages, practice expense percentages, and malpractice 

percentages determined under this paragraph. 

(4) ANCILLARY POLICIES.—The Secretary may establish ancillary policies (with respect to the use of modifiers, local codes, 

and other matters) as may be necessary to implement this section. 

(5) CODING.—The Secretary shall establish a uniform procedure coding system for the coding of all physicians’ services. 

The Secretary shall provide for an appropriate coding structure 

for visits and consultations. The Secretary may incorporate the 

use of time in the coding for visits and consultations. The Secretary, in establishing such coding system, shall consult with 

the Physician Payment Review Commission and other organizations representing physicians. 

(6) NO VARIATION FOR SPECIALISTS.—The Secretary may not 

vary the conversion factor or the number of relative value 

units for a physicians’ service based on whether the physician 

furnishing the service is a specialist or based on the type of 

specialty of the physician. 

(7) PHASE-IN OF SIGNIFICANT RELATIVE VALUE UNIT (RVU) REDUCTIONS.—Effective for fee schedules established beginning 

with 2016, for services that are not new or revised codes, if the 

total relative value units for a service for a year would otherwise be decreased by an estimated amount equal to or greater 

than 20 percent as compared to the total relative value units 

for the previous year, the applicable adjustments in work, 

practice expense, and malpractice relative value units shall be 

phased-in over a 2-year period. 

(8) GLOBAL SURGICAL PACKAGES.— 

(A) PROHIBITION OF IMPLEMENTATION OF RULE REGARDING GLOBAL SURGICAL PACKAGES.— 

(i) IN GENERAL.—The Secretary shall not implement 

the policy established in the final rule published on 

November 13, 2014 (79 Fed. Reg. 67548 et seq.), that 

requires the transition of all 10-day and 90-day global 

surgery packages to 0-day global periods. 

35 

(ii) CONSTRUCTION.—Nothing in clause (i) shall be 

construed to prevent the Secretary from revaluing 

misvalued codes for specific surgical services or assigning values to new or revised codes for surgical services. 

(B) COLLECTION OF DATA ON SERVICES INCLUDED IN

GLOBAL SURGICAL PACKAGES.— (i) IN GENERAL.—Subject to clause (ii), the Secretary 

shall through rulemaking develop and implement a 

process to gather, from a representative sample of 

physicians, beginning not later than January 1, 2017, 

information needed to value surgical services. Such information shall include the number and level of medical visits furnished during the global period and other 

items and services related to the surgery and furnished during the global period, as appropriate. Such 

information shall be reported on claims at the end of 

the global period or in another manner specified by 

the Secretary. For purposes of carrying out this paragraph (other than clause (iii)), the Secretary shall 

transfer from the Federal Supplemental Medical Insurance Trust Fund under section 1841 $2,000,000 to 

the Center for Medicare & Medicaid Services Program 

Management Account for fiscal year 2015. Amounts 

transferred under the previous sentence shall remain 

available until expended. 

(ii) REASSESSMENT AND POTENTIAL SUNSET.—Every 4 

years, the Secretary shall reassess the value of the information collected pursuant to clause (i). Based on 

such a reassessment and by regulation, the Secretary 

may discontinue the requirement for collection of information under such clause if the Secretary determines that the Secretary has adequate information 

from other sources, such as qualified clinical data registries, surgical logs, billing systems or other practice 

or facility records, and electronic health records, in 

order to accurately value global surgical services 

under this section. 

(iii) INSPECTOR GENERAL AUDIT.—The Inspector General of the Department of Health and Human Services 

shall audit a sample of the information reported under 

clause (i) to verify the accuracy of the information so 

reported. 

(C) IMPROVING ACCURACY OF PRICING FOR SURGICAL

SERVICES.—For years beginning with 2019, the Secretary 

shall use the information reported under subparagraph 

(B)(i) as appropriate and other available data for the purpose of improving the accuracy of valuation of surgical 

services under the physician fee schedule under this section. 

(d) CONVERSION FACTORS.— (1) ESTABLISHMENT.— (A) IN GENERAL.—The conversion factor for each year 

shall be the conversion factor established under this subsection for the previous year (or, in the case of 1992, speciVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00035 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
36 

fied in subparagraph (B)) adjusted by the update (established under paragraph (3)) for the year involved (for years 

before 2001) and, for years beginning with 2001 and ending with 2025, multiplied by the update (established under 

paragraph (4) or a subsequent paragraph) for the year involved. There shall be two separate conversion factors for 

each year beginning with 2026, one for items and services 

furnished by a qualifying APM participant (as defined in 

section 1833(z)(2)) (referred to in this subsection as the 

‘‘qualifying APM conversion factor’’) and the other for other 

items and services (referred to in this subsection as the 

‘‘nonqualifying APM conversion factor’’), equal to the respective conversion factor for the previous year (or, in the 

case of 2026, equal to the single conversion factor for 2025) 

multiplied by the update established under paragraph (20) 

for such respective conversion factor for such year. 

(B) SPECIAL PROVISION FOR 1992.—For purposes of subparagraph (A), the conversion factor specified in this subparagraph is a conversion factor (determined by the Secretary) which, if this section were to apply during 1991 

using such conversion factor, would result in the same aggregate amount of payments under this part for physicians’ services as the estimated aggregate amount of the 

payments under this part for such services in 1991. 

(C) SPECIAL RULES FOR 1998.—Except as provided in subparagraph (D), the single conversion factor for 1998 under 

this subsection shall be the conversion factor for primary 

care services for 1997, increased by the Secretary’s estimate of the weighted average of the three separate updates that would otherwise occur were it not for the enactment of chapter 1 of subtitle F of title IV of the Balanced 

Budget Act of 1997. 

(D) SPECIAL RULES FOR ANESTHESIA SERVICES.—The separate conversion factor for anesthesia services for a year 

shall be equal to 46 percent of the single conversion factor 

(or, beginning with 2026, applicable conversion factor) established for other physicians’ services, except as adjusted 

for changes in work, practice expense, or malpractice relative value units. 

(E) PUBLICATION AND DISSEMINATION OF INFORMATION.— 

The Secretary shall— 

(i) cause to have published in the Federal Register 

not later than November 1 of each year (beginning 

with 2000) the conversion factor which will apply to 

physicians’ services for the succeeding year, the update determined under paragraph (4) for such succeeding year, and the allowed expenditures under such 

paragraph for such succeeding year; and 

(ii) make available to the Medicare Payment Advisory Commission and the public by March 1 of each 

year (beginning with 2000) an estimate of the sustainable growth rate and of the conversion factor which 

will apply to physicians’ services for the succeeding 

year and data used in making such estimate. 

(3) UPDATE FOR 1999 AND 2000.— 

37 

(A) IN GENERAL.—Unless otherwise provided by law, 

subject to subparagraph (D) and the budget-neutrality factor determined by the Secretary under subsection 

(c)(2)(B)(ii), the update to the single conversion factor established in paragraph (1)(C) for 1999 and 2000 is equal 

to the product of— 

(i) 1 plus the Secretary’s estimate of the percentage 

increase in the MEI (as defined in section 1842(i)(3)) 

for the year (divided by 100), and 

(ii) 1 plus the Secretary’s estimate of the update adjustment factor for the year (divided by 100), 

minus 1 and multiplied by 100. 

(B) UPDATE ADJUSTMENT FACTOR.—For purposes of subparagraph (A)(ii), the ‘‘update adjustment factor’’ for a year 

is equal (as estimated by the Secretary) to— 

(i) the difference between (I) the sum of the allowed 

expenditures for physicians’ services (as determined 

under subparagraph (C)) for the period beginning 

April 1, 1997, and ending on March 31 of the year involved, and (II) the amount of actual expenditures for 

physicians’ services furnished during the period beginning April 1, 1997, and ending on March 31 of the preceding year; divided by 

(ii) the actual expenditures for physicians’ services 

for the 12-month period ending on March 31 of the 

preceding year, increased by the sustainable growth 

rate under subsection (f) for the fiscal year which begins during such 12-month period. 

(C) DETERMINATION OF ALLOWED EXPENDITURES.—For 

purposes of this paragraph and paragraph (4), the allowed 

expenditures for physicians’ services for the 12-month period ending with March 31 of— 

(i) 1997 is equal to the actual expenditures for physicians’ services furnished during such 12-month period, as estimated by the Secretary; or 

(ii) a subsequent year is equal to the allowed expenditures for physicians’ services for the previous 

year, increased by the sustainable growth rate under 

subsection (f) for the fiscal year which begins during 

such 12-month period. 

(D) RESTRICTION ON VARIATION FROM MEDICARE ECONOMIC INDEX.—Notwithstanding the amount of the update 

adjustment factor determined under subparagraph (B) for 

a year, the update in the conversion factor under this 

paragraph for the year may not be— 

(i) greater than 100 times the following amount: 

(1.03 + (MEI percentage/100)) ¥1; or 

(ii) less than 100 times the following amount: (0.93 

+ (MEI percentage/100)) ¥1, 

where ‘‘MEI percentage’’ means the Secretary’s estimate of 

the percentage increase in the MEI (as defined in section 

1842(i)(3)) for the year involved. 

(4) UPDATE FOR YEARS BEGINNING WITH 2001 AND ENDING

WITH 2014.— 

38 

(A) IN GENERAL.—Unless otherwise provided by law, 

subject to the budget-neutrality factor determined by the 

Secretary under subsection (c)(2)(B)(ii) and subject to adjustment under subparagraph (F), the update to the single 

conversion factor established in paragraph (1)(C) for a year 

beginning with 2001 and ending with 2014 is equal to the 

product of— 

(i) 1 plus the Secretary’s estimate of the percentage 

increase in the MEI (as defined in section 1842(i)(3)) 

for the year (divided by 100); and 

(ii) 1 plus the Secretary’s estimate of the update adjustment factor under subparagraph (B) for the year. 

(B) UPDATE ADJUSTMENT FACTOR.—For purposes of subparagraph (A)(ii), subject to subparagraph (D) and the succeeding paragraphs of this subsection, the ‘‘update adjustment factor’’ for a year is equal (as estimated by the Secretary) to the sum of the following: 

(i) PRIOR YEAR ADJUSTMENT COMPONENT.—An 

amount determined by— 

(I) computing the difference (which may be positive or negative) between the amount of the allowed expenditures for physicians’ services for the 

prior year (as determined under subparagraph 

(C)) and the amount of the actual expenditures for 

such services for that year; 

(II) dividing that difference by the amount of 

the actual expenditures for such services for that 

year; and 

(III) multiplying that quotient by 0.75. 

(ii) CUMULATIVE ADJUSTMENT COMPONENT.—An 

amount determined by— 

(I) computing the difference (which may be positive or negative) between the amount of the allowed expenditures for physicians’ services (as determined under subparagraph (C)) from April 1, 

1996, through the end of the prior year and the 

amount of the actual expenditures for such services during that period; 

(II) dividing that difference by actual expenditures for such services for the prior year as increased by the sustainable growth rate under subsection (f) for the year for which the update adjustment factor is to be determined; and 

(III) multiplying that quotient by 0.33. 

(C) DETERMINATION OF ALLOWED EXPENDITURES.—For 

purposes of this paragraph: 

(i) PERIOD UP TO APRIL 1, 1999.—The allowed expenditures for physicians’ services for a period before April 

1, 1999, shall be the amount of the allowed expenditures for such period as determined under paragraph 

(3)(C). 

(ii) TRANSITION TO CALENDAR YEAR ALLOWED EXPENDITURES.—Subject to subparagraph (E), the allowed expenditures for— 

39 

(I) the 9-month period beginning April 1, 1999, 

shall be the Secretary’s estimate of the amount of 

the allowed expenditures that would be permitted 

under paragraph (3)(C) for such period; and 

(II) the year of 1999, shall be the Secretary’s estimate of the amount of the allowed expenditures 

that would be permitted under paragraph (3)(C) 

for such year. 

(iii) YEARS BEGINNING WITH 2000.—The allowed expenditures for a year (beginning with 2000) is equal to 

the allowed expenditures for physicians’ services for 

the previous year, increased by the sustainable growth 

rate under subsection (f) for the year involved. 

(D) RESTRICTION ON UPDATE ADJUSTMENT FACTOR.—The 

update adjustment factor determined under subparagraph 

(B) for a year may not be less than ¥0.07 or greater than 

0.03. 

(E) RECALCULATION OF ALLOWED EXPENDITURES FOR UPDATES BEGINNING WITH 2001.—For purposes of determining 

the update adjustment factor for a year beginning with 

2001, the Secretary shall recompute the allowed expenditures for previous periods beginning on or after April 1, 

1999, consistent with subsection (f)(3). 

(F) TRANSITIONAL ADJUSTMENT DESIGNED TO PROVIDE

FOR BUDGET NEUTRALITY.—Under this subparagraph the 

Secretary shall provide for an adjustment to the update 

under subparagraph (A)— 

(i) for each of 2001, 2002, 2003, and 2004, of ¥0.2 

percent; and 

(ii) for 2005 of +0.8 percent. 

(5) UPDATE FOR 2004 AND 2005.—The update to the single conversion factor established in paragraph (1)(C) for each of 2004 

and 2005 shall be not less than 1.5 percent. 

(6) UPDATE FOR 2006.—The update to the single conversion 

factor established in paragraph (1)(C) for 2006 shall be 0 percent. 

(7) CONVERSION FACTOR FOR 2007.— (A) IN GENERAL.—The conversion factor that would otherwise be applicable under this subsection for 2007 shall 

be the amount of such conversion factor divided by the 

product of— 

(i) 1 plus the Secretary’s estimate of the percentage 

increase in the MEI (as defined in section 1842(i)(3)) 

for 2007 (divided by 100); and 

(ii) 1 plus the Secretary’s estimate of the update adjustment factor under paragraph (4)(B) for 2007. 

(B) NO EFFECT ON COMPUTATION OF CONVERSION FACTOR

FOR 2008.—The conversion factor under this subsection 

shall be computed under paragraph (1)(A) for 2008 as if 

subparagraph (A) had never applied. 

(8) UPDATE FOR 2008.— (A) IN GENERAL.—Subject to paragraph (7)(B), in lieu of 

the update to the single conversion factor established in 

paragraph (1)(C) that would otherwise apply for 2008, the 

update to the single conversion factor shall be 0.5 percent. 

40 

(B) NO EFFECT ON COMPUTATION OF CONVERSION FACTOR

FOR 2009.—The conversion factor under this subsection 

shall be computed under paragraph (1)(A) for 2009 and 

subsequent years as if subparagraph (A) had never applied. 

(9) UPDATE FOR 2009.— 

(A) IN GENERAL.—Subject to paragraphs (7)(B) and 

(8)(B), in lieu of the update to the single conversion factor 

established in paragraph (1)(C) that would otherwise apply 

for 2009, the update to the single conversion factor shall 

be 1.1 percent. 

(B) NO EFFECT ON COMPUTATION OF CONVERSION FACTOR

FOR 2010 AND SUBSEQUENT YEARS.—The conversion factor 

under this subsection shall be computed under paragraph 

(1)(A) for 2010 and subsequent years as if subparagraph 

(A) had never applied. 

(10) UPDATE FOR JANUARY THROUGH MAY OF 2010.— 

(A) IN GENERAL.—Subject to paragraphs (7)(B), (8)(B), 

and (9)(B), in lieu of the update to the single conversion 

factor established in paragraph (1)(C) that would otherwise apply for 2010 for the period beginning on January 

1, 2010, and ending on May 31, 2010, the update to the 

single conversion factor shall be 0 percent for 2010. 

(B) NO EFFECT ON COMPUTATION OF CONVERSION FACTOR

FOR REMAINING PORTION OF 2010 AND SUBSEQUENT YEARS.— 

The conversion factor under this subsection shall be computed under paragraph (1)(A) for the period beginning on 

June 1, 2010, and ending on December 31, 2010, and for 

2011 and subsequent years as if subparagraph (A) had 

never applied. 

(11) UPDATE FOR JUNE THROUGH DECEMBER OF 2010.— 

(A) IN GENERAL.—Subject to paragraphs (7)(B), (8)(B), 

(9)(B), and (10)(B), in lieu of the update to the single conversion factor established in paragraph (1)(C) that would 

otherwise apply for 2010 for the period beginning on June 

1, 2010, and ending on December 31, 2010, the update to 

the single conversion factor shall be 2.2 percent. 

(B) NO EFFECT ON COMPUTATION OF CONVERSION FACTOR

FOR 2011 AND SUBSEQUENT YEARS.—The conversion factor 

under this subsection shall be computed under paragraph 

(1)(A) for 2011 and subsequent years as if subparagraph 

(A) had never applied. 

(12) UPDATE FOR 2011.— 

(A) IN GENERAL.—Subject to paragraphs (7)(B), (8)(B), 

(9)(B), (10)(B), and (11)(B), in lieu of the update to the single conversion factor established in paragraph (1)(C) that 

would otherwise apply for 2011, the update to the single 

conversion factor shall be 0 percent. 

(B) NO EFFECT ON COMPUTATION OF CONVERSION FACTOR

FOR 2012 AND SUBSEQUENT YEARS.—The conversion factor 

under this subsection shall be computed under paragraph 

(1)(A) for 2012 and subsequent years as if subparagraph 

(A) had never applied. 

(13) UPDATE FOR 2012.— 

41 

(A) IN GENERAL.—Subject to paragraphs (7)(B), (8)(B), 

(9)(B), (10)(B), (11)(B), and (12)(B), in lieu of the update to 

the single conversion factor established in paragraph (1)(C) 

that would otherwise apply for 2012, the update to the single conversion factor shall be zero percent. 

(B) NO EFFECT ON COMPUTATION OF CONVERSION FACTOR

FOR 2013 AND SUBSEQUENT YEARS.—The conversion factor 

under this subsection shall be computed under paragraph 

(1)(A) for 2013 and subsequent years as if subparagraph 

(A) had never applied. 

(14) UPDATE FOR 2013.— (A) IN GENERAL.—Subject to paragraphs (7)(B), (8)(B), 

(9)(B), (10)(B), (11)(B), (12)(B), and (13)(B), in lieu of the 

update to the single conversion factor established in paragraph (1)(C) that would otherwise apply for 2013, the update to the single conversion factor for such year shall be 

zero percent. 

(B) NO EFFECT ON COMPUTATION OF CONVERSION FACTOR

FOR 2014 AND SUBSEQUENT YEARS.—The conversion factor 

under this subsection shall be computed under paragraph 

(1)(A) for 2014 and subsequent years as if subparagraph 

(A) had never applied. 

(15) UPDATE FOR 2014.— (A) IN GENERAL.—Subject to paragraphs (7)(B), (8)(B), 

(9)(B), (10)(B), (11)(B), (12)(B), (13)(B), and (14)(B), in lieu 

of the update to the single conversion factor established in 

paragraph (1)(C) that would otherwise apply for 2014, the 

update to the single conversion factor shall be 0.5 percent. 

(B) NO EFFECT ON COMPUTATION OF CONVERSION FACTOR

FOR SUBSEQUENT YEARS.—The conversion factor under this 

subsection shall be computed under paragraph (1)(A) for 

2015 and subsequent years as if subparagraph (A) had 

never applied. 

(16) UPDATE FOR JANUARY THROUGH JUNE OF 2015.—Subject 

to paragraphs (7)(B), (8)(B), (9)(B), (10)(B), (11)(B), (12)(B), 

(13)(B), (14)(B), and (15)(B), in lieu of the update to the single 

conversion factor established in paragraph (1)(C) that would 

otherwise apply for 2015 for the period beginning on January 

1, 2015, and ending on June 30, 2015, the update to the single 

conversion factor shall be 0.0 percent. 

(17) UPDATE FOR JULY THROUGH DECEMBER OF 2015.—The update to the single conversion factor established in paragraph 

(1)(C) for the period beginning on July 1, 2015, and ending on 

December 31, 2015, shall be 0.5 percent. 

(18) UPDATE FOR 2016 THROUGH 2019.—The update to the single conversion factor established in paragraph (1)(C) for 2016 

and each subsequent year through 2019 shall be 0.5 percent. 

(19) UPDATE FOR 2020 THROUGH 2025.—The update to the single conversion factor established in paragraph (1)(C) for 2020 

and each subsequent year through 2025 shall be 0.0 percent. 

(20) UPDATE FOR 2026 AND SUBSEQUENT YEARS.—For 2026 

and each subsequent year, the update to the qualifying APM 

conversion factor established under paragraph (1)(A) is 0.75 

percent, and the update to the nonqualifying APM conversion 

factor established under such paragraph is 0.25 percent. 

42 

(e) GEOGRAPHIC ADJUSTMENT FACTORS.— (1) ESTABLISHMENT OF GEOGRAPHIC INDICES.— (A) IN GENERAL.—Subject to subparagraphs (B), (C), (E), 

(G), (H), and (I), the Secretary shall establish— 

(i) an index which reflects the relative costs of the 

mix of goods and services comprising practice expenses 

(other than malpractice expenses) in the different fee 

schedule areas compared to the national average of 

such costs, 

(ii) an index which reflects the relative costs of malpractice expenses in the different fee schedule areas 

compared to the national average of such costs, and 

(iii) an index which reflects 1⁄4 of the difference between the relative value of physicians’ work effort in 

each of the different fee schedule areas and the national average of such work effort. 

(B) CLASS-SPECIFIC GEOGRAPHIC COST-OF-PRACTICE INDI- CES.—The Secretary may establish more than one index 

under subparagraph (A)(i) in the case of classes of physicians’ services, if, because of differences in the mix of 

goods and services comprising practice expenses for the 

different classes of services, the application of a single 

index under such clause to different classes of such services would be substantially inequitable. 

(C) PERIODIC REVIEW AND ADJUSTMENTS IN GEOGRAPHIC

ADJUSTMENT FACTORS.—The Secretary, not less often than 

every 3 years, shall, in consultation with appropriate representatives of physicians, review the indices established 

under subparagraph (A) and the geographic index values 

applied under this subsection for all fee schedule areas. 

Based on such review, the Secretary may revise such index 

and adjust such index values, except that, if more than 1 

year has elapsed since the date of the last previous adjustment, the adjustment to be applied in the first year of the 

next adjustment shall be 1⁄2 of the adjustment that otherwise would be made. 

(D) USE OF RECENT DATA.—In establishing indices and 

index values under this paragraph, the Secretary shall use 

the most recent data available relating to practice expenses, malpractice expenses, and physician work effort in 

different fee schedule areas. 

(E) FLOOR AT 1.0 ON WORK GEOGRAPHIC INDEX.—After 

calculating the work geographic index in subparagraph 

(A)(iii), for purposes of payment for services furnished on 

or after January 1, 2004, and before January 1, 2018, the 

Secretary shall increase the work geographic index to 1.00 

for any locality for which such work geographic index is 

less than 1.00. 

(G) FLOOR FOR PRACTICE EXPENSE, MALPRACTICE, AND

WORK GEOGRAPHIC INDICES FOR SERVICES FURNISHED IN

ALASKA.—For purposes of payment for services furnished 

in Alaska on or after January 1, 2004, and before January 

1, 2006, after calculating the practice expense, malpractice, 

and work geographic indices in clauses (i), (ii), and (iii) of 

subparagraph (A) and in subparagraph (B), the Secretary 

43 

shall increase any such index to 1.67 if such index would 

otherwise be less than 1.67. For purposes of payment for 

services furnished in the State described in the preceding 

sentence on or after January 1, 2009, after calculating the 

work geographic index in subparagraph (A)(iii), the Secretary shall increase the work geographic index to 1.5 if 

such index would otherwise be less than 1.5 

(H) PRACTICE EXPENSE GEOGRAPHIC ADJUSTMENT FOR

2010 AND SUBSEQUENT YEARS.— 

(i) FOR 2010.—Subject to clause (iii), for services furnished during 2010, the employee wage and rent portions of the practice expense geographic index described in subparagraph (A)(i) shall reflect 1⁄2 of the 

difference between the relative costs of employee 

wages and rents in each of the different fee schedule 

areas and the national average of such employee 

wages and rents. 

(ii) FOR 2011.—Subject to clause (iii), for services furnished during 2011, the employee wage and rent portions of the practice expense geographic index described in subparagraph (A)(i) shall reflect 1⁄2 of the 

difference between the relative costs of employee 

wages and rents in each of the different fee schedule 

areas and the national average of such employee 

wages and rents. 

(iii) HOLD HARMLESS.—The practice expense portion 

of the geographic adjustment factor applied in a fee 

schedule area for services furnished in 2010 or 2011 

shall not, as a result of the application of clause (i) or 

(ii), be reduced below the practice expense portion of 

the geographic adjustment factor under subparagraph 

(A)(i) (as calculated prior to the application of such 

clause (i) or (ii), respectively) for such area for such 

year. 

(iv) ANALYSIS.—The Secretary shall analyze current 

methods of establishing practice expense geographic 

adjustments under subparagraph (A)(i) and evaluate 

data that fairly and reliably establishes distinctions in 

the costs of operating a medical practice in the different fee schedule areas. Such analysis shall include 

an evaluation of the following: 

(I) The feasibility of using actual data or reliable survey data developed by medical organizations on the costs of operating a medical practice, 

including office rents and non-physician staff 

wages, in different fee schedule areas. 

(II) The office expense portion of the practice expense geographic adjustment described in subparagraph (A)(i), including the extent to which 

types of office expenses are determined in local 

markets instead of national markets. 

(III) The weights assigned to each of the categories within the practice expense geographic adjustment described in subparagraph (A)(i). 

44 

(v) REVISION FOR 2012 AND SUBSEQUENT YEARS.—As 

a result of the analysis described in clause (iv), the 

Secretary shall, not later than January 1, 2012, make 

appropriate adjustments to the practice expense geographic adjustment described in subparagraph (A)(i) to 

ensure accurate geographic adjustments across fee 

schedule areas, including— 

(I) basing the office rents component and its 

weight on office expenses that vary among fee 

schedule areas; and 

(II) considering a representative range of professional and non-professional personnel employed in 

a medical office based on the use of the American 

Community Survey data or other reliable data for 

wage adjustments. 

Such adjustments shall be made without regard to adjustments made pursuant to clauses (i) and (ii) and 

shall be made in a budget neutral manner. 

(I) FLOOR FOR PRACTICE EXPENSE INDEX FOR SERVICES

FURNISHED IN FRONTIER STATES.— 

(i) IN GENERAL.—Subject to clause (ii), for purposes 

of payment for services furnished in a frontier State 

(as defined in section 1886(d)(3)(E)(iii)(II)) on or after 

January 1, 2011, after calculating the practice expense 

index in subparagraph (A)(i), the Secretary shall increase any such index to 1.00 if such index would otherwise be less that 1.00. The preceding sentence shall 

not be applied in a budget neutral manner. 

(ii) LIMITATION.—This subparagraph shall not apply 

to services furnished in a State that receives a nonlabor related share adjustment under section 

1886(d)(5)(H). 

(2) COMPUTATION OF GEOGRAPHIC ADJUSTMENT FACTOR.—For 

purposes of subsection (b)(1)(C), for all physicians’ services for 

each fee schedule area the Secretary shall establish a geographic adjustment factor equal to the sum of the geographic 

cost-of-practice adjustment factor (specified in paragraph (3)), 

the geographic malpractice adjustment factor (specified in 

paragraph (4)), and the geographic physician work adjustment 

factor (specified in paragraph (5)) for the service and the area. 

(3) GEOGRAPHIC COST-OF-PRACTICE ADJUSTMENT FACTOR.— 

For purposes of paragraph (2), the ‘‘geographic cost-of-practice 

adjustment factor’’, for a service for a fee schedule area, is the 

product of— 

(A) the proportion of the total relative value for the service that reflects the relative value units for the practice expense component, and 

(B) the geographic cost-of-practice index value for the 

area for the service, based on the index established under 

paragraph (1)(A)(i) or (1)(B) (as the case may be). 

(4) GEOGRAPHIC MALPRACTICE ADJUSTMENT FACTOR.—For 

purposes of paragraph (2), the ‘‘geographic malpractice adjustment factor’’, for a service for a fee schedule area, is the product of— 

45 

(A) the proportion of the total relative value for the service that reflects the relative value units for the malpractice 

component, and 

(B) the geographic malpractice index value for the area, 

based on the index established under paragraph (1)(A)(ii). 

(5) GEOGRAPHIC PHYSICIAN WORK ADJUSTMENT FACTOR.—For 

purposes of paragraph (2), the ‘‘geographic physician work adjustment factor’’, for a service for a fee schedule area, is the 

product of— 

(A) the proportion of the total relative value for the service that reflects the relative value units for the work component, and 

(B) the geographic physician work index value for the 

area, based on the index established under paragraph 

(1)(A)(iii). 

(6) USE OF MSAS AS FEE SCHEDULE AREAS IN CALIFORNIA.— 

(A) IN GENERAL.—Subject to the succeeding provisions of 

this paragraph and notwithstanding the previous provisions of this subsection, for services furnished on or after 

January 1, 2017, the fee schedule areas used for payment 

under this section applicable to California shall be the following: 

(i) Each Metropolitan Statistical Area (each in this 

paragraph referred to as an ‘‘MSA’’), as defined by the 

Director of the Office of Management and Budget as 

of December 31 of the previous year, shall be a fee 

schedule area. 

(ii) All areas not included in an MSA shall be treated as a single rest-of-State fee schedule area. 

(B) TRANSITION FOR MSAS PREVIOUSLY IN REST-OF-STATE

PAYMENT LOCALITY OR IN LOCALITY 3.— 

(i) IN GENERAL.—For services furnished in California 

during a year beginning with 2017 and ending with 

2021 in an MSA in a transition area (as defined in 

subparagraph (D)), subject to subparagraph (C), the 

geographic index values to be applied under this subsection for such year shall be equal to the sum of the 

following: 

(I) CURRENT LAW COMPONENT.—The old 

weighting factor (described in clause (ii)) for such 

year multiplied by the geographic index values 

under this subsection for the fee schedule area 

that included such MSA that would have applied 

in such area (as estimated by the Secretary) if this 

paragraph did not apply. 

(II) MSA-BASED COMPONENT.—The MSA-based 

weighting factor (described in clause (iii)) for such 

year multiplied by the geographic index values 

computed for the fee schedule area under subparagraph (A) for the year (determined without 

regard to this subparagraph). 

(ii) OLD WEIGHTING FACTOR.—The old weighting factor described in this clause— 

(I) for 2017, is 5⁄6; and 

46 

(II) for each succeeding year, is the old 

weighting factor described in this clause for the 

previous year minus 1⁄6. (iii) MSA-BASED WEIGHTING FACTOR.—The MSAbased weighting factor described in this clause for a 

year is 1 minus the old weighting factor under clause 

(ii) for that year. 

(C) HOLD HARMLESS.—For services furnished in a transition area in California during a year beginning with 2017, 

the geographic index values to be applied under this subsection for such year shall not be less than the corresponding geographic index values that would have applied in such transition area (as estimated by the Secretary) if this paragraph did not apply. 

(D) TRANSITION AREA DEFINED.—In this paragraph, the 

term ‘‘transition area’’ means each of the following fee 

schedule areas for 2013: 

(i) The rest-of-State payment locality. 

(ii) Payment locality 3. 

(E) REFERENCES TO FEE SCHEDULE AREAS.—Effective for 

services furnished on or after January 1, 2017, for California, any reference in this section to a fee schedule area 

shall be deemed a reference to a fee schedule area established in accordance with this paragraph. 

(f) SUSTAINABLE GROWTH RATE.— (1) PUBLICATION.—The Secretary shall cause to have published in the Federal Register not later than— 

(A) November 1, 2000, the sustainable growth rate for 

2000 and 2001; and 

(B) November 1 of each succeeding year through 2014 

the sustainable growth rate for such succeeding year and 

each of the preceding 2 years. 

(2) SPECIFICATION OF GROWTH RATE.—The sustainable 

growth rate for all physicians’ services for a fiscal year (beginning with fiscal year 1998 and ending with fiscal year 2000) 

and a year beginning with 2000 and ending with 2014 shall be 

equal to the product of— 

(A) 1 plus the Secretary’s estimate of the weighted average percentage increase (divided by 100) in the fees for all 

physicians’ services in the applicable period involved, 

(B) 1 plus the Secretary’s estimate of the percentage 

change (divided by 100) in the average number of individuals enrolled under this part (other than Medicare+Choice 

plan enrollees) from the previous applicable period to the 

applicable period involved, 

(C) 1 plus the Secretary’s estimate of the annual average 

percentage growth in real gross domestic product per capita (divided by 100) during the 10-year period ending with 

the applicable period involved, and 

(D) 1 plus the Secretary’s estimate of the percentage 

change (divided by 100) in expenditures for all physicians’ 

services in the applicable period (compared with the previous applicable period) which will result from changes in 

law and regulations, determined without taking into account estimated changes in expenditures resulting from 

47 

the update adjustment factor determined under subsection 

(d)(3)(B) or (d)(4)(B), as the case may be, 

minus 1 and multiplied by 100. 

(3) DATA TO BE USED.—For purposes of determining the update adjustment factor under subsection (d)(4)(B) for a year beginning with 2001, the sustainable growth rates taken into 

consideration in the determination under paragraph (2) shall 

be determined as follows: 

(A) FOR 2001.—For purposes of such calculations for 

2001, the sustainable growth rates for fiscal year 2000 and 

the years 2000 and 2001 shall be determined on the basis 

of the best data available to the Secretary as of September 

1, 2000. 

(B) FOR 2002.—For purposes of such calculations for 

2002, the sustainable growth rates for fiscal year 2000 and 

for years 2000, 2001, and 2002 shall be determined on the 

basis of the best data available to the Secretary as of September 1, 2001. 

(C) FOR 2003 AND SUCCEEDING YEARS.—For purposes of 

such calculations for a year after 2002— 

(i) the sustainable growth rates for that year and 

the preceding 2 years shall be determined on the basis 

of the best data available to the Secretary as of September 1 of the year preceding the year for which the 

calculation is made; and 

(ii) the sustainable growth rate for any year before 

a year described in clause (i) shall be the rate as most 

recently determined for that year under this subsection. 

Nothing in this paragraph shall be construed as affecting the 

sustainable growth rates established for fiscal year 1998 or fiscal year 1999. 

(4) DEFINITIONS.—In this subsection: 

(A) SERVICES INCLUDED IN PHYSICIANS’ SERVICES.—The 

term ‘‘physicians’ services’’ includes other items and services (such as clinical diagnostic laboratory tests and radiology services), specified by the Secretary, that are commonly performed or furnished by a physician or in a physician’s office, but does not include services furnished to a 

Medicare+Choice plan enrollee. 

(B) MEDICARE+CHOICE PLAN ENROLLEE.—The term 

‘‘Medicare+Choice plan enrollee’’ means, with respect to a 

fiscal year, an individual enrolled under this part who has 

elected to receive benefits under this title for the fiscal 

year through a Medicare+Choice plan offered under part 

C, and also includes an individual who is receiving benefits 

under this part through enrollment with an eligible organization with a risk-sharing contract under section 1876. 

(C) APPLICABLE PERIOD.—The term ‘‘applicable period’’ 

means— 

(i) a fiscal year, in the case of fiscal year 1998, fiscal 

year 1999, and fiscal year 2000; or 

(ii) a calendar year with respect to a year beginning 

with 2000; 

as the case may be. 

48 

(g) LIMITATION ON BENEFICIARY LIABILITY.— 

(1) LIMITATION ON ACTUAL CHARGES.— 

(A) IN GENERAL.—In the case of a nonparticipating physician or nonparticipating supplier or other person (as defined in section 1842(i)(2)) who does not accept payment on 

an assignment-related basis for a physician’s service furnished with respect to an individual enrolled under this 

part, the following rules apply: 

(i) APPLICATION OF LIMITING CHARGE.—No person 

may bill or collect an actual charge for the service in 

excess of the limiting charge described in paragraph 

(2) for such service. 

(ii) NO LIABILITY FOR EXCESS CHARGES.—No person 

is liable for payment of any amounts billed for the 

service in excess of such limiting charge. 

(iii) CORRECTION OF EXCESS CHARGES.—If such a 

physician, supplier, or other person bills, but does not 

collect, an actual charge for a service in violation of 

clause (i), the physician, supplier, or other person 

shall reduce on a timely basis the actual charge billed 

for the service to an amount not to exceed the limiting 

charge for the service. 

(iv) REFUND OF EXCESS COLLECTIONS.—If such a 

physician, supplier, or other person collects an actual 

charge for a service in violation of clause (i), the physician, supplier, or other person shall provide on a timely basis a refund to the individual charged in the 

amount by which the amount collected exceeded the 

limiting charge for the service. The amount of such a 

refund shall be reduced to the extent the individual 

has an outstanding balance owed by the individual to 

the physician. 

(B) SANCTIONS.—If a physician, supplier, or other person— 

(i) knowingly and willfully bills or collects for services in violation of subparagraph (A)(i) on a repeated 

basis, or 

(ii) fails to comply with clause (iii) or (iv) of subparagraph (A) on a timely basis, 

the Secretary may apply sanctions against the physician, 

supplier, or other person in accordance with paragraph (2) 

of section 1842(j). In applying this subparagraph, paragraph (4) of such section applies in the same manner as 

such paragraph applies to such section and any reference 

in such section to a physician is deemed also to include a 

reference to a supplier or other person under this subparagraph. 

(C) TIMELY BASIS.—For purposes of this paragraph, a 

correction of a bill for an excess charge or refund of an 

amount with respect to a violation of subparagraph (A)(i) 

in the case of a service is considered to be provided ‘‘on a 

timely basis’’, if the reduction or refund is made not later 

than 30 days after the date the physician, supplier, or 

other person is notified by the carrier under this part of 

49 

such violation and of the requirements of subparagraph 

(A). 

(2) LIMITING CHARGE DEFINED.— (A) FOR 1991.—For physicians’ services of a physician 

furnished during 1991, other than radiologist services subject to section 1834(b), the ‘‘limiting charge’’ shall be the 

same percentage (or, if less, 25 percent) above the recognized payment amount under this part with respect to the 

physician (as a nonparticipating physician) as the percentage by which— 

(i) the maximum allowable actual charge (as determined under section 1842(j)(1)(C) as of December 31, 

1990, or, if less, the maximum actual charge otherwise 

permitted for the service under this part as of such 

date) for the service of the physician, exceeds 

(ii) the recognized payment amount for the service of 

the physician (as a nonparticipating physician) as of 

such date. 

In the case of evaluation and management services (as specified in 

section 1842(b)(16)(B)(ii)), the preceding sentence shall be applied 

by substituting ‘‘40 percent’’ for ‘‘25 percent’’. 

(B) FOR 1992.—For physicians’ services furnished during 

1992, other than radiologist services subject to section 

1834(b), the ‘‘limiting charge’’ shall be the same percentage 

(or, if less, 20 percent) above the recognized payment 

amount under this part for nonparticipating physicians as 

the percentage by which— 

(i) the limiting charge (as determined under subparagraph (A) as of December 31, 1991) for the service, exceeds 

(ii) the recognized payment amount for the service 

for nonparticipating physicians as of such date. 

(C) AFTER 1992.—For physicians’ services furnished in a 

year after 1992, the ‘‘limiting charge’’ shall be 115 percent 

of the recognized payment amount under this part for nonparticipating physicians or for nonparticipating suppliers 

or other persons. 

(D) RECOGNIZED PAYMENT AMOUNT.—In this section, the 

term ‘‘recognized payment amount’’ means, for services 

furnished on or after January 1, 1992, the fee schedule 

amount determined under subsection (a) (or, if payment 

under this part is made on a basis other than the fee 

schedule under this section, 95 percent of the other payment basis), and, for services furnished during 1991, the 

applicable percentage (as defined in section 

1842(b)(4)(A)(iv)) of the prevailing charge (or fee schedule 

amount) for nonparticipating physicians for that year. 

(3) LIMITATION ON CHARGES FOR MEDICARE BENEFICIARIES EL- IGIBLE FOR MEDICAID BENEFITS.— (A) IN GENERAL.—Payment for physicians’ services furnished on or after April 1, 1990, to an individual who is 

enrolled under this part and eligible for any medical assistance (including as a qualified medicare beneficiary, as 

defined in section 1905(p)(1)) with respect to such services 

50 

under a State plan approved under title XIX may only be 

made on an assignment-related basis and the provisions of 

section 1902(n)(3)(A) apply to further limit permissible 

charges under this section. 

(B) PENALTY.—A person may not bill for physicians’ 

services subject to subparagraph (A) other than on an assignment-related basis. No person is liable for payment of 

any amounts billed for such a service in violation of the 

previous sentence. If a person knowingly and willfully bills 

for physicians’ services in violation of the first sentence, 

the Secretary may apply sanctions against the person in 

accordance with section 1842(j)(2). 

(4) PHYSICIAN SUBMISSION OF CLAIMS.— 

(A) IN GENERAL.—For services furnished on or after September 1, 1990, within 1 year after the date of providing 

a service for which payment is made under this part on a 

reasonable charge or fee schedule basis, a physician, supplier, or other person (or an employer or facility in the 

cases described in section 1842(b)(6)(A))— 

(i) shall complete and submit a claim for such service on a standard claim form specified by the Secretary 

to the carrier on behalf of a beneficiary, and 

(ii) may not impose any charge relating to completing and submitting such a form. 

(B) PENALTY.—(i) With respect to an assigned claim 

wherever a physician, provider, supplier or other person 

(or an employer or facility in the cases described in section 

1842(b)(6)(A)) fails to submit such a claim as required in 

subparagraph (A), the Secretary shall reduce by 10 percent 

the amount that would otherwise be paid for such claim 

under this part. 

(ii) If a physician, supplier, or other person (or an employer or facility in the cases described in section 

1842(b)(6)(A)) fails to submit a claim required to be submitted under subparagraph (A) or imposes a charge in violation of such subparagraph, the Secretary shall apply the 

sanction with respect to such a violation in the same manner as a sanction may be imposed under section 1842(p)(3) 

for a violation of section 1842(p)(1). 

(5) ELECTRONIC BILLING; DIRECT DEPOSIT.—The Secretary 

shall encourage and develop a system providing for expedited 

payment for claims submitted electronically. The Secretary 

shall also encourage and provide incentives allowing for direct 

deposit as payments for services furnished by participating 

physicians. The Secretary shall provide physicians with such 

technical information as necessary to enable such physicians to 

submit claims electronically. The Secretary shall submit a plan 

to Congress on this paragraph by May 1, 1990. 

(6) MONITORING OF CHARGES.— (A) IN GENERAL.—The Secretary shall monitor— 

(i) the actual charges of nonparticipating physicians 

for physicians’ services furnished on or after January 

1, 1991, to individuals enrolled under this part, and 

(ii) changes (by specialty, type of service, and geographic area) in (I) the proportion of expenditures for 

51 

physicians’ services provided under this part by participating physicians, (II) the proportion of expenditures for such services for which payment is made 

under this part on an assignment-related basis, and 

(III) the amounts charged above the recognized payment amounts under this part. 

(B) REPORT.—The Secretary shall, by not later than 

April 15 of each year (beginning in 1992), report to the 

Congress information on the extent to which actual 

charges exceed limiting charges, the number and types of 

services involved, and the average amount of excess 

charges and information regarding the changes described 

in subparagraph (A)(ii). 

(C) PLAN.—If the Secretary finds that there has been a 

significant decrease in the proportions described in subclauses (I) and (II) of subparagraph (A)(ii) or an increase 

in the amounts described in subclause (III) of that subparagraph, the Secretary shall develop a plan to address 

such a problem and transmit to Congress recommendations regarding the plan. The Medicare Payment Advisory 

Commission shall review the Secretary’s plan and recommendations and transmit to Congress its comments regarding such plan and recommendations. 

(7) MONITORING OF UTILIZATION AND ACCESS.— (A) IN GENERAL.—The Secretary shall monitor— 

(i) changes in the utilization of and access to services furnished under this part within geographic, population, and service related categories, 

(ii) possible sources of inappropriate utilization of 

services furnished under this part which contribute to 

the overall level of expenditures under this part, and 

(iii) factors underlying these changes and their 

interrelationships. 

(B) REPORT.—The Secretary shall by not later than April 

15, of each year (beginning with 1991) report to the Congress on the changes described in subparagraph (A)(i) and 

shall include in the report an examination of the factors 

(including factors relating to different services and specific 

categories and groups of services and geographic and demographic variations in utilization) which may contribute 

to such changes. 

(C) RECOMMENDATIONS.—The Secretary shall include in 

each annual report under subparagraph (B) recommendations— 

(i) addressing any identified patterns of inappropriate utilization, 

(ii) on utilization review, 

(iii) on physician education or patient education, 

(iv) addressing any problems of beneficiary access to 

care made evident by the monitoring process, and 

(v) on such other matters as the Secretary deems 

appropriate. 

The Medicare Payment Advisory Commission shall comment on the Secretary’s recommendations and in developing its comments, the Commission shall convene and 

52 

consult a panel of physician experts to evaluate the implications of medical utilization patterns for the quality of 

and access to patient care. 

(h) SENDING INFORMATION TO PHYSICIANS.—Before the beginning 

of each year (beginning with 1992), the Secretary shall send to 

each physician or nonparticipating supplier or other person furnishing physicians’ services (as defined in section 1848(j)(3)) furnishing physicians’ services under this part, for services commonly 

performed by the physician, supplier, or other person, information 

on fee schedule amounts that apply for the year in the fee schedule 

area for participating and non-participating physicians, and the 

maximum amount that may be charged consistent with subsection 

(g)(2). Such information shall be transmitted in conjunction with 

notices to physicians, suppliers, and other persons under section 

1842(h) (relating to the participating physician program) for a year. 

(i) MISCELLANEOUS PROVISIONS.— 

(1) RESTRICTION ON ADMINISTRATIVE AND JUDICIAL REVIEW.— 

There shall be no administrative or judicial review under section 1869 or otherwise of— 

(A) the determination of the adjusted historical payment 

basis (as defined in subsection (a)(2)(D)(i)), 

(B) the determination of relative values and relative 

value units under subsection (c), including adjustments 

under subsections (c)(2)(F), (c)(2)(H), and (c)(2)(I) and section 13515(b) of the Omnibus Budget Reconciliation Act of 

1993, 

(C) the determination of conversion factors under subsection (d), including without limitation a prospective redetermination of the sustainable growth rates for any or all 

previous fiscal years, 

(D) the establishment of geographic adjustment factors 

under subsection (e), 

(E) the establishment of the system for the coding of 

physicians’ services under this section, and 

(F) the collection and use of information in the determination of relative values under subsection (c)(2)(M). 

(2) ASSISTANTS-AT-SURGERY.— (A) IN GENERAL.—Subject to subparagraph (B), in the 

case of a surgical service furnished by a physician, if payment is made separately under this part for the services 

of a physician serving as an assistant-at-surgery, the fee 

schedule amount shall not exceed 16 percent of the fee 

schedule amount otherwise determined under this section 

for the global surgical service involved. 

(B) DENIAL OF PAYMENT IN CERTAIN CASES.—If the Secretary determines, based on the most recent data available, that for a surgical procedure (or class of surgical procedures) the national average percentage of such procedure 

performed under this part which involve the use of a physician as an assistant at surgery is less than 5 percent, no 

payment may be made under this part for services of an 

assistant at surgery involved in the procedure. 

(3) NO COMPARABILITY ADJUSTMENT.—For physicians’ services for which payment under this part is determined under 

this section— 

53 

(A) a carrier may not make any adjustment in the payment amount under section 1842(b)(3)(B) on the basis that 

the payment amount is higher than the charge applicable, 

for comparable services and under comparable circumstances, to the policyholders and subscribers of the 

carrier, 

(B) no payment adjustment may be made under section 

1842(b)(8), and 

(C) section 1842(b)(9) shall not apply. 

(j) DEFINITIONS.—In this section: 

(1) CATEGORY.—For services furnished before January 1, 

1998, the term ‘‘category’’ means, with respect to physicians’ 

services, surgical services (as defined by the Secretary and including anesthesia services), primary care services (as defined 

in section 1842(i)(4)), and all other physicians’ services. The 

Secretary shall define surgical services and publish such definitions in the Federal Register no later than May 1, 1990, after 

consultation with organizations representing physicians. 

(2) FEE SCHEDULE AREA.—Except as provided in subsection 

(e)(6)(D), the term ‘‘fee schedule area’’ means a locality used 

under section 1842(b) for purposes of computing payment 

amounts for physicians’ services. 

(3) PHYSICIANS’ SERVICES.—The term ‘‘physicians’ services’’ 

includes items and services described in paragraphs (1), (2)(A), 

(2)(D), (2)(G), (2)(P) (with respect to services described in subparagraphs (A) and (C) of section 1861(oo)(2)), (2)(R) (with respect to services described in suparagraphs (B), (C), and (D) of 

section 1861(pp)(1)), (2)(S), (2)(W), (2)(AA), (2)(DD), (2)(EE), 

(2)(FF) (including administration of the health risk assessment), (3), (4), (13), (14) (with respect to services described in 

section 1861(nn)(2)), and (15) of section 1861(s) (other than 

clinical diagnostic laboratory tests and, except for purposes of 

subsection (a)(3), (g), and (h) such other items and services as 

the Secretary may specify). 

(4) PRACTICE EXPENSES.—The term ‘‘practice expenses’’ includes all expenses for furnishing physicians’ services, excluding malpractice expenses, physician compensation, and other 

physician fringe benefits. 

(k) QUALITY REPORTING SYSTEM.— (1) IN GENERAL.—The Secretary shall implement a system 

for the reporting by eligible professionals of data on quality 

measures specified under paragraph (2). Such data shall be 

submitted in a form and manner specified by the Secretary (by 

program instruction or otherwise), which may include submission of such data on claims under this part. 

(2) USE OF CONSENSUS-BASED QUALITY MEASURES.— 

(A) FOR 2007.— 

(i) IN GENERAL.—For purposes of applying this subsection for the reporting of data on quality measures 

for covered professional services furnished during the 

period beginning July 1, 2007, and ending December 

31, 2007, the quality measures specified under this 

paragraph are the measures identified as 2007 physician quality measures under the Physician Voluntary 

Reporting Program as published on the public website 

54 

of the Centers for Medicare & Medicaid Services as of 

the date of the enactment of this subsection, except as 

may be changed by the Secretary based on the results 

of a consensus-based process in January of 2007, if 

such change is published on such website by not later 

than April 1, 2007. 

(ii) SUBSEQUENT REFINEMENTS IN APPLICATION PER- MITTED.—The Secretary may, from time to time (but 

not later than July 1, 2007), publish on such website 

(without notice or opportunity for public comment) 

modifications or refinements (such as code additions, 

corrections, or revisions) for the application of quality 

measures previously published under clause (i), but 

may not, under this clause, change the quality measures under the reporting system. 

(iii) IMPLEMENTATION.—Notwithstanding any other 

provision of law, the Secretary may implement by program instruction or otherwise this subsection for 2007. 

(B) FOR 2008 AND 2009.— 

(i) IN GENERAL.—For purposes of reporting data on 

quality measures for covered professional services furnished during 2008 and 2009, the quality measures 

specified under this paragraph for covered professional 

services shall be measures that have been adopted or 

endorsed by a consensus organization (such as the National Quality Forum or AQA), that include measures 

that have been submitted by a physician specialty, 

and that the Secretary identifies as having used a consensus-based process for developing such measures. 

Such measures shall include structural measures, 

such as the use of electronic health records and electronic prescribing technology. 

(ii) PROPOSED SET OF MEASURES.—Not later than 

August 15 of each of 2007 and 2008, the Secretary 

shall publish in the Federal Register a proposed set of 

quality measures that the Secretary determines are 

described in clause (i) and would be appropriate for eligible professionals to use to submit data to the Secretary in 2008 or 2009, as applicable. The Secretary 

shall provide for a period of public comment on such 

set of measures. 

(iii) FINAL SET OF MEASURES.—Not later than November 15 of each of 2007 and 2008, the Secretary 

shall publish in the Federal Register a final set of 

quality measures that the Secretary determines are 

described in clause (i) and would be appropriate for eligible professionals to use to submit data to the Secretary in 2008 or 2009, as applicable. 

(C) FOR 2010 AND SUBSEQUENT YEARS.— (i) IN GENERAL.—Subject to clause (ii), for purposes 

of reporting data on quality measures for covered professional services furnished during 2010 and each subsequent year, subject to subsection (m)(3)(C), the quality measures (including electronic prescribing quality 

measures) specified under this paragraph shall be 

55 

such measures selected by the Secretary from measures that have been endorsed by the entity with a contract with the Secretary under section 1890(a). 

(ii) EXCEPTION.—In the case of a specified area or 

medical topic determined appropriate by the Secretary 

for which a feasible and practical measure has not 

been endorsed by the entity with a contract under section 1890(a), the Secretary may specify a measure that 

is not so endorsed as long as due consideration is 

given to measures that have been endorsed or adopted 

by a consensus organization identified by the Secretary, such as the AQA alliance. 

(D) OPPORTUNITY TO PROVIDE INPUT ON MEASURES FOR

2009 AND SUBSEQUENT YEARS.—For each quality measure 

(including an electronic prescribing quality measure) 

adopted by the Secretary under subparagraph (B) (with respect to 2009) or subparagraph (C), the Secretary shall ensure that eligible professionals have the opportunity to 

provide input during the development, endorsement, or selection of measures applicable to services they furnish. 

(3) COVERED PROFESSIONAL SERVICES AND ELIGIBLE PROFES- SIONALS DEFINED.—For purposes of this subsection: 

(A) COVERED PROFESSIONAL SERVICES.—The term ‘‘covered professional services’’ means services for which payment is made under, or is based on, the fee schedule established under this section and which are furnished by an eligible professional. 

(B) ELIGIBLE PROFESSIONAL.—The term ‘‘eligible professional’’ means any of the following: 

(i) A physician. 

(ii) A practitioner described in section 

1842(b)(18)(C). 

(iii) A physical or occupational therapist or a qualified speech-language pathologist. 

(iv) Beginning with 2009, a qualified audiologist (as 

defined in section 1861(ll)(3)(B)). 

(4) USE OF REGISTRY-BASED REPORTING.—As part of the publication of proposed and final quality measures for 2008 under 

clauses (ii) and (iii) of paragraph (2)(B), the Secretary shall address a mechanism whereby an eligible professional may provide data on quality measures through an appropriate medical 

registry (such as the Society of Thoracic Surgeons National 

Database) or through a Maintenance of Certification program 

operated by a specialty body of the American Board of Medical 

Specialties that meets the criteria for such a registry, as identified by the Secretary. 

(5) IDENTIFICATION UNITS.—For purposes of applying this 

subsection, the Secretary may identify eligible professionals 

through billing units, which may include the use of the Provider Identification Number, the unique physician identification number (described in section 1833(q)(1)), the taxpayer 

identification number, or the National Provider Identifier. For 

purposes of applying this subsection for 2007, the Secretary 

shall use the taxpayer identification number as the billing 

unit. 

56 

(6) EDUCATION AND OUTREACH.—The Secretary shall provide 

for education and outreach to eligible professionals on the operation of this subsection. 

(7) LIMITATIONS ON REVIEW.—There shall be no administrative or judicial review under section 1869, section 1878, or otherwise, of the development and implementation of the reporting system under paragraph (1), including identification of 

quality measures under paragraph (2) and the application of 

paragraphs (4) and (5). 

(8) IMPLEMENTATION.—The Secretary shall carry out this 

subsection acting through the Administrator of the Centers for 

Medicare & Medicaid Services. 

(9) CONTINUED APPLICATION FOR PURPOSES OF MIPS AND FOR

CERTAIN PROFESSIONALS VOLUNTEERING TO REPORT.—The Secretary shall, in accordance with subsection (q)(1)(F), carry out 

the provisions of this subsection— 

(A) for purposes of subsection (q); and 

(B) for eligible professionals who are not MIPS eligible 

professionals (as defined in subsection (q)(1)(C)) for the 

year involved. 

(l) PHYSICIAN ASSISTANCE AND QUALITY INITIATIVE FUND.— (1) ESTABLISHMENT.—The Secretary shall establish under 

this subsection a Physician Assistance and Quality Initiative 

Fund (in this subsection referred to as the ‘‘Fund’’) which shall 

be available to the Secretary for physician payment and quality improvement initiatives, which may include application of 

an adjustment to the update of the conversion factor under 

subsection (d). 

(2) FUNDING.— 

(A) AMOUNT AVAILABLE.— 

(i) IN GENERAL.—Subject to clause (ii), there shall be 

available to the Fund the following amounts: 

(I) For expenditures during 2008, an amount equal to $150,500,000. 

(II) For expenditures during 2009, an amount 

equal to $24,500,000. 

(ii) LIMITATIONS ON EXPENDITURES.— (I) 2008.—The amount available for expenditures during 2008 shall be reduced as provided by 

subparagraph (A) of section 225(c)(1) and section 

524 of the Departments of Labor, Health and 

Human Services, and Education, and Related 

Agencies Appropriations Act, 2008 (division G of 

the Consolidated Appropriations Act, 2008). 

(II) 2009.—The amount available for expenditures during 2009 shall be reduced as provided by 

subparagraph (B) of such section 225(c)(1). 

(B) TIMELY OBLIGATION OF ALL AVAILABLE FUNDS FOR

SERVICES.—The Secretary shall provide for expenditures 

from the Fund in a manner designed to provide (to the 

maximum extent feasible) for the obligation of the entire 

amount available for expenditures, after application of 

subparagraph (A)(ii), during— 

(i) 2008 for payment with respect to physicians’ 

services furnished during 2008; and 

57 

(ii) 2009 for payment with respect to physicians’ 

services furnished during 2009. 

(C) PAYMENT FROM TRUST FUND.—The amount specified 

in subparagraph (A) shall be available to the Fund, as expenditures are made from the Fund, from the Federal Supplementary Medical Insurance Trust Fund under section 

1841. 

(D) FUNDING LIMITATION.—Amounts in the Fund shall be 

available in advance of appropriations in accordance with 

subparagraph (B) but only if the total amount obligated 

from the Fund does not exceed the amount available to the 

Fund under subparagraph (A). The Secretary may obligate 

funds from the Fund only if the Secretary determines (and 

the Chief Actuary of the Centers for Medicare & Medicaid 

Services and the appropriate budget officer certify) that 

there are available in the Fund sufficient amounts to cover 

all such obligations incurred consistent with the previous 

sentence. 

(E) CONSTRUCTION.—In the case that expenditures from 

the Fund are applied to, or otherwise affect, a conversion 

factor under subsection (d) for a year, the conversion factor 

under such subsection shall be computed for a subsequent 

year as if such application or effect had never occurred. 

(m) INCENTIVE PAYMENTS FOR QUALITY REPORTING.— (1) INCENTIVE PAYMENTS.— (A) IN GENERAL.—For 2007 through 2014, with respect 

to covered professional services furnished during a reporting period by an eligible professional, if— 

(i) there are any quality measures that have been 

established under the physician reporting system that 

are applicable to any such services furnished by such 

professional for such reporting period; 

(ii) the eligible professional satisfactorily submits (as 

determined under this subsection) to the Secretary 

data on such quality measures in accordance with 

such reporting system for such reporting period, 

in addition to the amount otherwise paid under this part, 

there also shall be paid to the eligible professional (or to 

an employer or facility in the cases described in clause (A) 

of section 1842(b)(6)) or, in the case of a group practice 

under paragraph (3)(C), to the group practice, from the 

Federal Supplementary Medical Insurance Trust Fund established under section 1841 an amount equal to the applicable quality percent of the Secretary’s estimate (based on 

claims submitted not later than 2 months after the end of 

the reporting period) of the allowed charges under this 

part for all such covered professional services furnished by 

the eligible professional (or, in the case of a group practice 

under paragraph (3)(C), by the group practice) during the 

reporting period. 

(B) APPLICABLE QUALITY PERCENT.—For purposes of subparagraph (A), the term ‘‘applicable quality percent’’ 

means— 

(i) for 2007 and 2008, 1.5 percent; and 

(ii) for 2009 and 2010, 2.0 percent; 

58 

(iii) for 2011, 1.0 percent; and 

(iv) for 2012, 2013, and 2014, 0.5 percent. 

(2) INCENTIVE PAYMENTS FOR ELECTRONIC PRESCRIBING.— (A) IN GENERAL.—Subject to subparagraph (D), for 2009 

through 2013, with respect to covered professional services 

furnished during a reporting period by an eligible professional, if the eligible professional is a successful electronic 

prescriber for such reporting period, in addition to the 

amount otherwise paid under this part, there also shall be 

paid to the eligible professional (or to an employer or facility in the cases described in clause (A) of section 

1842(b)(6)) or, in the case of a group practice under paragraph (3)(C), to the group practice, from the Federal Supplementary Medical Insurance Trust Fund established 

under section 1841 an amount equal to the applicable electronic prescribing percent of the Secretary’s estimate 

(based on claims submitted not later than 2 months after 

the end of the reporting period) of the allowed charges 

under this part for all such covered professional services 

furnished by the eligible professional (or, in the case of a 

group practice under paragraph (3)(C), by the group practice) during the reporting period. 

(B) LIMITATION WITH RESPECT TO ELECTRONIC PRE- SCRIBING QUALITY MEASURES.—The provisions of this paragraph and subsection (a)(5) shall not apply to an eligible 

professional (or, in the case of a group practice under paragraph (3)(C), to the group practice) if, for the reporting period (or, for purposes of subsection (a)(5), for the reporting 

period for a year)— 

(i) the allowed charges under this part for all covered professional services furnished by the eligible 

professional (or group, as applicable) for the codes to 

which the electronic prescribing quality measure applies (as identified by the Secretary and published on 

the Internet website of the Centers for Medicare & 

Medicaid Services as of January 1, 2008, and as subsequently modified by the Secretary) are less than 10 

percent of the total of the allowed charges under this 

part for all such covered professional services furnished by the eligible professional (or the group, as applicable); or 

(ii) if determined appropriate by the Secretary, the 

eligible professional does not submit (including both 

electronically and nonelectronically) a sufficient number (as determined by the Secretary) of prescriptions 

under part D. 

If the Secretary makes the determination to apply clause 

(ii) for a period, then clause (i) shall not apply for such period. 

(C) APPLICABLE ELECTRONIC PRESCRIBING PERCENT.—For 

purposes of subparagraph (A), the term ‘‘applicable electronic prescribing percent’’ means— 

(i) for 2009 and 2010, 2.0 percent; 

(ii) for 2011 and 2012, 1.0 percent; and 

(iii) for 2013, 0.5 percent. 

59 

(D) LIMITATION WITH RESPECT TO EHR INCENTIVE PAY- MENTS.—The provisions of this paragraph shall not apply 

to an eligible professional (or, in the case of a group practice under paragraph (3)(C), to the group practice) if, for 

the EHR reporting period the eligible professional (or 

group practice) receives an incentive payment under subsection (o)(1)(A) with respect to a certified EHR technology 

(as defined in subsection (o)(4)) that has the capability of 

electronic prescribing. 

(3) SATISFACTORY REPORTING AND SUCCESSFUL ELECTRONIC

PRESCRIBER AND DESCRIBED.— (A) IN GENERAL.—For purposes of paragraph (1), an eligible professional shall be treated as satisfactorily submitting data on quality measures for covered professional 

services for a reporting period (or, for purposes of subsection (a)(8), for the quality reporting period for the year) 

if quality measures have been reported as follows: 

(i) THREE OR FEWER QUALITY MEASURES APPLICABLE.—If there are no more than 3 quality measures 

that are provided under the physician reporting system and that are applicable to such services of such 

professional furnished during the period, each such 

quality measure has been reported under such system 

in at least 80 percent of the cases in which such measure is reportable under the system. 

(ii) FOUR OR MORE QUALITY MEASURES APPLICABLE.— If there are 4 or more quality measures that are provided under the physician reporting system and that 

are applicable to such services of such professional 

furnishedduring the period, at least 3 such quality 

measures have been reported under such system in at 

least 80 percent of the cases in which the respective 

measure is reportable under the system. 

For years after 2008, quality measures for purposes of this 

subparagraph shall not include electronic prescribing quality measures. 

(B) SUCCESSFUL ELECTRONIC PRESCRIBER.— (i) IN GENERAL.—For purposes of paragraph (2) and 

subsection (a)(5), an eligible professional shall be 

treated as a successful electronic prescriber for a reporting period (or, for purposes of subsection (a)(5), for 

the reporting period for a year) if the eligible professional meets the requirement described in clause (ii), 

or, if the Secretary determines appropriate, the requirement described in clause (iii). If the Secretary 

makes the determination under the preceding sentence to apply the requirement described in clause (iii) 

for a period, then the requirement described in clause 

(ii) shall not apply for such period. 

(ii) REQUIREMENT FOR SUBMITTING DATA ON ELEC- TRONIC PRESCRIBING QUALITY MEASURES.—The requirement described in this clause is that, with respect to 

covered professional services furnished by an eligible 

professional during a reporting period (or, for purposes 

of subsection (a)(5), for the reporting period for a 

60 

year), if there are any electronic prescribing quality 

measures that have been established under the physician reporting system and are applicable to any such 

services furnished by such professional for the period, 

such professional reported each such measure under 

such system in at least 50 percent of the cases in 

which such measure is reportable by such professional 

under such system. 

(iii) REQUIREMENT FOR ELECTRONICALLY PRE- SCRIBING UNDER PART D.—The requirement described 

in this clause is that the eligible professional electronically submitted a sufficient number (as determined by 

the Secretary) of prescriptions under part D during 

the reporting period (or, for purposes of subsection 

(a)(5), for the reporting period for a year). 

(iv) USE OF PART D DATA.—Notwithstanding sections 

1860D-15(d)(2)(B) and 1860D-15(f)(2), the Secretary 

may use data regarding drug claims submitted for 

purposes of section 1860D-15 that are necessary for 

purposes of clause (iii), paragraph (2)(B)(ii), and paragraph (5)(G). 

(v) STANDARDS FOR ELECTRONIC PRESCRIBING.—To 

the extent practicable, in determining whether eligible 

professionals meet the requirements under clauses (ii) 

and (iii) for purposes of clause (i), the Secretary shall 

ensure that eligible professionals utilize electronic prescribing systems in compliance with standards established for such systems pursuant to the Part D Electronic Prescribing Program under section 1860D–4(e). 

(C) SATISFACTORY REPORTING MEASURES FOR GROUP

PRACTICES.— (i) IN GENERAL.—By January 1, 2010, the Secretary 

shall establish and have in place a process under 

which eligible professionals in a group practice (as defined by the Secretary) shall be treated as satisfactorily submitting data on quality measures under subparagraph (A) and as meeting the requirement described in subparagraph (B)(ii) for covered professional 

services for a reporting period (or, for purposes of subsection (a)(5), for a reporting period for a year, or, for 

purposes of subsection (a)(8), for a quality reporting 

period for the year) if, in lieu of reporting measures 

under subsection (k)(2)(C), the group practice reports 

measures determined appropriate by the Secretary, 

such as measures that target high-cost chronic conditions and preventive care, in a form and manner, and 

at a time, specified by the Secretary. 

(ii) STATISTICAL SAMPLING MODEL.—The process 

under clause (i) shall provide and, for 2016 and subsequent years, may provide for the use of a statistical 

sampling model to submit data on measures, such as 

the model used under the Physician Group Practice 

demonstration project under section 1866A. 

(iii) NO DOUBLE PAYMENTS.—Payments to a group 

practice under this subsection by reason of the process 

61 

under clause (i) shall be in lieu of the payments that 

would otherwise be made under this subsection to eligible professionals in the group practice for satisfactorily submitting data on quality measures. 

(D) SATISFACTORY REPORTING MEASURES THROUGH PAR- TICIPATION IN A QUALIFIED CLINICAL DATA REGISTRY.—For 

2014 and subsequent years, the Secretary shall treat an eligible professional as satisfactorily submitting data on 

quality measures under subparagraph (A) and, for 2016 

and subsequent years, subparagraph (A) or (C) if, in lieu 

of reporting measures under subsection (k)(2)(C), the eligible professional is satisfactorily participating, as determined by the Secretary, in a qualified clinical data registry 

(as described in subparagraph (E)) for the year. 

(E) QUALIFIED CLINICAL DATA REGISTRY.— 

(i) IN GENERAL.—The Secretary shall establish requirements for an entity to be considered a qualified 

clinical data registry. Such requirements shall include 

a requirement that the entity provide the Secretary 

with such information, at such times, and in such 

manner, as the Secretary determines necessary to 

carry out this subsection. 

(ii) CONSIDERATIONS.—In establishing the requirements under clause (i), the Secretary shall consider 

whether an entity— 

(I) has in place mechanisms for the transparency of data elements and specifications, risk 

models, and measures; 

(II) requires the submission of data from participants with respect to multiple payers; 

(III) provides timely performance reports to participants at the individual participant level; and 

(IV) supports quality improvement initiatives 

for participants. 

(iii) MEASURES.—With respect to measures used by 

a qualified clinical data registry— 

(I) sections 1890(b)(7) and 1890A(a) shall not 

apply; and 

(II) measures endorsed by the entity with a contract with the Secretary under section 1890(a) 

may be used. 

(iv) CONSULTATION.—In carrying out this subparagraph, the Secretary shall consult with interested parties. 

(v) DETERMINATION.—The Secretary shall establish 

a process to determine whether or not an entity meets 

the requirements established under clause (i). Such 

process may involve one or both of the following: 

(I) A determination by the Secretary. 

(II) A designation by the Secretary of one or 

more independent organizations to make such determination. 

(F) AUTHORITY TO REVISE SATISFACTORILY REPORTING

DATA.—For years after 2009, the Secretary, in consultation 

with stakeholders and experts, may revise the criteria 

62 

under this subsection for satisfactorily submitting data on 

quality measures under subparagraph (A) and the criteria 

for submitting data on electronic prescribing quality measures under subparagraph (B)(ii). 

(4) FORM OF PAYMENT.—The payment under this subsection 

shall be in the form of a single consolidated payment. 

(5) APPLICATION.— 

(A) PHYSICIAN REPORTING SYSTEM RULES.—Paragraphs 

(5), (6),and (8) of subsection (k) shall apply for purposes of 

this subsection in the same manner as they apply for purposes of such subsection. 

(B) COORDINATION WITH OTHER BONUS PAYMENTS.—The 

provisions of this subsection shall not be taken into account in applying subsections (m) and (u) of section 1833 

and any payment under such subsections shall not be 

taken into account in computing allowable charges under 

this subsection. 

(C) IMPLEMENTATION.—Notwithstanding any other provision of law, for 2007, 2008, and 2009, the Secretary may 

implement by program instruction or otherwise this subsection. 

(D) VALIDATION.— 

(i) IN GENERAL.—Subject to the succeeding provisions of this subparagraph, for purposes of determining whether a measure is applicable to the covered 

professional services of an eligible professional under 

this subsection for 2007 and 288, the Secretary shall 

presume that if an eligible professional submits data 

for a measure, such measure is applicable to such professional. 

(ii) METHOD.—The Secretary may establish procedures to validate (by sampling or other means as the 

Secretary determines to be appropriate) whether 

measures applicable to covered professional services of 

an eligible professional have been reported. 

(iii) DENIAL OF PAYMENT AUTHORITY.—If the Secretary determines that an eligible professional (or, in 

the case of a group practice under paragraph (3)(C), 

the group practice) has not reported measures applicable to covered professional services of such professional, the Secretary shall not pay the incentive payment under this subsection. If such payments for such 

period have already been made, the Secretary shall recoup such payments from the eligible professional (or 

the group practice). 

(E) LIMITATIONS ON REVIEW.— 

Except as provided in subparagraph (I), there shall 

be no administrative or judicial review under 1869, 

section 1878, or otherwise of 

(i) the determination of measures applicable to services furnished by eligible professionals under this subsection; 

(ii) the determination of satisfactory reporting under 

this subsection; 

63 

(iii) the determination of a successful electronic prescriber under paragraph (3), the limitation under 

paragraph (2)(B), and the exception under subsection 

(a)(5)(B); and 

(iv) the determination of any incentive payment 

under this subsection and the payment adjustment 

under paragraphs (5)(A) and (8)(A) of subsection (a). 

(F) EXTENSION.—For 2008 through reporting periods occurring in 2015, the Secretary shall establish and, for reporting periods occurring in 2016 and subsequent years, 

the Secretary may establish alternative criteria for satisfactorily reporting under this subsection and alternative 

reporting periods under paragraph (6)(C) for reporting 

groups of measures under subsection (k)(2)(B) and for reporting using the method specified in subsection (k)(4). 

(G) POSTING ON WEBSITE.—The Secretary shall post on 

the Internet website of the Centers for Medicare & Medicaid Services, in an easily understandable format, a list of 

the names of the following: 

(i) The eligible professionals (or, in the case of reporting under paragraph (3)(C), the group practices) 

who satisfactorily submitted data on quality measures 

under this subsection. 

(ii) The eligible professionals (or, in the case of reporting under paragraph (3)(C), the group practices) 

who are successful electronic prescribers. 

(H) FEEDBACK.—The Secretary shall provide timely feedback to eligible professionals on the performance of the eligible professional with respect to satisfactorily submitting 

data on quality measures under this subsection. 

(I) INFORMAL APPEALS PROCESS.—The Secretary shall, by 

not later than January 1, 2011, establish and have in 

place an informal process for eligible professionals to seek 

a review of the determination that an eligible professional 

did not satisfactorily submit data on quality measures 

under this subsection. 

(6) DEFINITIONS.—For purposes of this subsection: 

(A) ELIGIBLE PROFESSIONAL; COVERED PROFESSIONAL

SERVICES.—The terms ‘‘eligible professional’’ and ‘‘covered 

professional services’’ have the meanings given such 

termsin subsection (k)(3). 

(B) PHYSICIAN REPORTING SYSTEM.—The term ‘‘physician 

reporting system’’ means the system established under 

subsection (k). 

(C) REPORTING PERIOD.— 

(i) IN GENERAL.—Subject to clauses (ii) and (iii), the 

term ‘‘reporting period’’ means— 

(I) for 2007, the period beginning on July 1, 

2007, and ending on December 31, 2007; and 

(II) for 2008 and subsequent years, the entire 

year. 

(ii) AUTHORITY TO REVISE REPORTING PERIOD.—For 

years after 2009, the Secretary may revise the reporting period under clause (i) if the Secretary determines 

such revision is appropriate, produces valid results on 

64 

measures reported, and is consistent with the goals of 

maximizing scientific validity and reducing administrative burden. If the Secretary revises such period 

pursuant to the preceding sentence, the term ‘‘reporting period’’ shall mean such revised period. 

(iii) REFERENCE.—Any reference in this subsection 

to a reporting period with respect to the application of 

subsection (a)(5) (a)(8) shall be deemed a reference to 

the reporting period under subsection (a)(5)(D)(iii) or 

the quality reporting period under subsection 

(a)(8)(D)(iii), respectively. 

(7) INTEGRATION OF PHYSICIAN QUALITY REPORTING AND EHR

REPORTING.—Not later than January 1, 2012, the Secretary 

shall develop a plan to integrate reporting on quality measures 

under this subsection with reporting requirements under subsection (o) relating to the meaningful use of electronic health 

records. Such integration shall consist of the following: 

(A) The selection of measures, the reporting of which 

would both demonstrate— 

(i) meaningful use of an electronic health record for 

purposes of subsection (o); and 

(ii) quality of care furnished to an individual. 

(B) Such other activities as specified by the Secretary. 

(8) ADDITIONAL INCENTIVE PAYMENT.— (A) IN GENERAL.—For 2011 through 2014, if an eligible 

professional meets the requirements described in subparagraph (B), the applicable quality percent for such year, as 

described in clauses (iii) and (iv) of paragraph (1)(B), shall 

be increased by 0.5 percentage points. 

(B) REQUIREMENTS DESCRIBED.—In order to qualify for 

the additional incentive payment described in subparagraph (A), an eligible professional shall meet the following 

requirements: 

(i) The eligible professional shall— 

(I) satisfactorily submit data on quality measures for purposes of paragraph (1) for a year; and 

(II) have such data submitted on their behalf 

through a Maintenance of Certification Program 

(as defined in subparagraph (C)(i)) that meets— 

(aa) the criteria for a registry (as described 

in subsection (k)(4)); or 

(bb) an alternative form and manner determined appropriate by the Secretary. 

(ii) The eligible professional, more frequently than is 

required to qualify for or maintain board certification 

status— 

(I) participates in such a Maintenance of Certification program for a year; and 

(II) successfully completes a qualified Maintenance of Certification Program practice assessment (as defined in subparagraph (C)(ii)) for such 

year. 

(iii) A Maintenance of Certification program submits 

to the Secretary, on behalf of the eligible professional, 

information— 

65 

(I) in a form and manner specified by the Secretary, that the eligible professional has successfully met the requirements of clause (ii) (which 

may be in the form of a structural measure); 

(II) if requested by the Secretary, on the survey 

of patient experience with care (as described in 

subparagraph (C)(ii)(II)); and 

(III) as the Secretary may require, on the methods, measures, and data used under the Maintenance of Certification Program and the qualified 

Maintenance of Certification Program practice assessment. 

(C) DEFINITIONS.—For purposes of this paragraph: 

(i) The term ‘‘Maintenance of Certification Program’’ 

means a continuous assessment program, such as 

qualified American Board of Medical Specialties Maintenance of Certification program or an equivalent program (as determined by the Secretary), that advances 

quality and the lifelong learning and self-assessment 

of board certified specialty physicians by focusing on 

the competencies of patient care, medical knowledge, 

practice-based learning, interpersonal and communication skills and professionalism. Such a program shall 

include the following: 

(I) The program requires the physician to maintain a valid, unrestricted medical license in the 

United States. 

(II) The program requires a physician to participate in educational and self-assessment programs 

that require an assessment of what was learned. 

(III) The program requires a physician to demonstrate, through a formalized, secure examination, that the physician has the fundamental diagnostic skills, medical knowledge, and clinical judgment to provide quality care in their respective 

specialty. 

(IV) The program requires successful completion 

of a qualified Maintenance of Certification Program practice assessment as described in clause 

(ii). 

(ii) The term ‘‘qualified Maintenance of Certification 

Program practice assessment’’ means an assessment of 

a physician’s practice that— 

(I) includes an initial assessment of an eligible 

professional’s practice that is designed to demonstrate the physician’s use of evidence-based 

medicine; 

(II) includes a survey of patient experience with 

care; and 

(III) requires a physician to implement a quality 

improvement intervention to address a practice 

weakness identified in the initial assessment 

under subclause (I) and then to remeasure to assess performance improvement after such intervention. 

66 

(9) CONTINUED APPLICATION FOR PURPOSES OF MIPS AND FOR

CERTAIN PROFESSIONALS VOLUNTEERING TO REPORT.—The Secretary shall, in accordance with subsection (q)(1)(F), carry out 

the processes under this subsection— 

(A) for purposes of subsection (q); and 

(B) for eligible professionals who are not MIPS eligible 

professionals (as defined in subsection (q)(1)(C)) for the 

year involved. 

(n) PHYSICIAN FEEDBACK PROGRAM.— (1) ESTABLISHMENT.— (A) IN GENERAL.— (i) ESTABLISHMENT.—The Secretary shall establish a 

Physician Feedback Program (in this subsection referred to as the ‘‘Program’’). 

(ii) REPORTS ON RESOURCES.—The Secretary shall 

use claims data under this title (and may use other 

data) to provide confidential reports to physicians 

(and, as determined appropriate by the Secretary, to 

groups of physicians) that measure the resources involved in furnishing care to individuals under this 

title. 

(iii) INCLUSION OF CERTAIN INFORMATION.—If determined appropriate by the Secretary, the Secretary 

may include information on the quality of care furnished to individuals under this title by the physician 

(or group of physicians) in such reports. 

(B) RESOURCE USE.—The resources described in subparagraph (A)(ii) may be measured— 

(i) on an episode basis; 

(ii) on a per capita basis; or 

(iii) on both an episode and a per capita basis. 

(2) IMPLEMENTATION.—The Secretary shall implement the 

Program by not later than January 1, 2009. 

(3) DATA FOR REPORTS.—To the extent practicable, reports 

under the Program shall be based on the most recent data 

available. 

(4) AUTHORITY TO FOCUS INITIAL APPLICATION.—The Secretary may focus the initial application of the Program as appropriate, such as focusing the Program on— 

(A) physician specialties that account for a certain percentage of all spending for physicians’ services under this 

title; 

(B) physicians who treat conditions that have a high cost 

or a high volume, or both, under this title; 

(C) physicians who use a high amount of resources compared to other physicians; 

(D) physicians practicing in certain geographic areas; or 

(E) physicians who treat a minimum number of individuals under this title. 

(5) AUTHORITY TO EXCLUDE CERTAIN INFORMATION IF INSUFFI- CIENT INFORMATION.—The Secretary may exclude certain information regarding a service from a report under the Program 

with respect to a physician (or group of physicians) if the Secretary determines that there is insufficient information relating to that service to provide a valid report on that service. 

67 

(6) ADJUSTMENT OF DATA.—To the extent practicable, the 

Secretary shall make appropriate adjustments to the data used 

in preparing reports under the Program, such as adjustments 

to take into account variations in health status and other patient characteristics. For adjustments for reports on utilization 

under paragraph (9), see subparagraph (D) of such paragraph. 

(7) EDUCATION AND OUTREACH.—The Secretary shall provide 

for education and outreach activities to physicians on the operation of, and methodologies employed under, the Program. 

(8) DISCLOSURE EXEMPTION.—Reports under the Program 

shall be exempt from disclosure under section 552 of title 5, 

United States Code. 

(9) REPORTS ON UTILIZATION.— 

(A) DEVELOPMENT OF EPISODE GROUPER.— 

(i) IN GENERAL.—The Secretary shall develop an episode grouper that combines separate but clinically related items and services into an episode of care for an 

individual, as appropriate. 

(ii) TIMELINE FOR DEVELOPMENT.—The episode 

grouper described in subparagraph (A) shall be developed by not later than January 1, 2012. 

(iii) PUBLIC AVAILABILITY.—The Secretary shall 

make the details of the episode grouper described in 

subparagraph (A) available to the public. 

(iv) ENDORSEMENT.—The Secretary shall seek endorsement of the episode grouper described in subparagraph (A) by the entity with a contract under section 1890(a). 

(B) REPORTS ON UTILIZATION.—Effective beginning with 

2012, the Secretary shall provide reports to physicians 

that compare, as determined appropriate by the Secretary, 

patterns of resource use of the individual physician to such 

patterns of other physicians. 

(C) ANALYSIS OF DATA.—The Secretary shall, for purposes of preparing reports under this paragraph, establish 

methodologies as appropriate, such as to— 

(i) attribute episodes of care, in whole or in part, to 

physicians; 

(ii) identify appropriate physicians for purposes of 

comparison under subparagraph (B); and 

(iii) aggregate episodes of care attributed to a physician under clause (i) into a composite measure per individual. 

(D) DATA ADJUSTMENT.—In preparing reports under this 

paragraph, the Secretary shall make appropriate adjustments, including adjustments— 

(i) to account for differences in socioeconomic and 

demographic characteristics, ethnicity, and health status of individuals (such as to recognize that less 

healthy individuals may require more intensive interventions); and 

(ii) to eliminate the effect of geographic adjustments 

in payment rates (as described in subsection (e)). 

(E) PUBLIC AVAILABILITY OF METHODOLOGY.—The Secretary shall make available to the public— 

68 

(i) the methodologies established under subparagraph (C); 

(ii) information regarding any adjustments made to 

data under subparagraph (D); and 

(iii) aggregate reports with respect to physicians. 

(F) DEFINITION OF PHYSICIAN.—In this paragraph: 

(i) IN GENERAL.—The term ‘‘physician’’ has the 

meaning given that term in section 1861(r)(1). 

(ii) TREATMENT OF GROUPS.—Such term includes, as 

the Secretary determines appropriate, a group of physicians. 

(G) LIMITATIONS ON REVIEW.—There shall be no administrative or judicial review under section 1869, section 1878, 

or otherwise of the establishment of the methodology 

under subparagraph (C), including the determination of an 

episode of care under such methodology. 

(10) COORDINATION WITH OTHER VALUE-BASED PURCHASING

REFORMS.—The Secretary shall coordinate the Program with 

the value-based payment modifier established under subsection 

(p) and, as the Secretary determines appropriate, other similar 

provisions of this title. 

(11) REPORTS ENDING WITH 2017.—Reports under the Program shall not be provided after December 31, 2017. See subsection (q)(12) for reports under the eligible professionals 

Merit-based Incentive Payment System. 

(o) INCENTIVES FOR ADOPTION AND MEANINGFUL USE OF CER- TIFIED EHR TECHNOLOGY.— (1) INCENTIVE PAYMENTS.— (A) IN GENERAL.— 

(i) IN GENERAL.—Subject to the succeeding subparagraphs of this paragraph, with respect to covered professional services furnished by an eligible professional 

during a payment year (as defined in subparagraph 

(E)), if the eligible professional is a meaningful EHR 

user (as determined under paragraph (2)) for the EHR 

reporting period with respect to such year, in addition 

to the amount otherwise paid under this part, there 

also shall be paid to the eligible professional (or to an 

employer or facility in the cases described in clause (A) 

of section 1842(b)(6)), from the Federal Supplementary 

Medical Insurance Trust Fund established under section 1841 an amount equal to 75 percent of the Secretary’s estimate (based on claims submitted not later 

than 2 months after the end of the payment year) of 

the allowed charges under this part for all such covered professional services furnished by the eligible 

professional during such year. 

(ii) NO INCENTIVE PAYMENTS WITH RESPECT TO YEARS

AFTER 2016.—No incentive payments may be made 

under this subsection with respect to a year after 

2016. 

(B) LIMITATIONS ON AMOUNTS OF INCENTIVE PAYMENTS.— (i) IN GENERAL.—In no case shall the amount of the 

incentive payment provided under this paragraph for 

an eligible professional for a payment year exceed the 

69 

applicable amount specified under this subparagraph 

with respect to such eligible professional and such 

year. 

(ii) AMOUNT.—Subject to clauses (iii) through (v), the 

applicable amount specified in this subparagraph for 

an eligible professional is as follows: 

(I) For the first payment year for such profes- sional, $15,000 (or, if the first payment year for 

such eligible professional is 2011 or 2012, 

$18,000). 

(II) For the second payment year for such pro- fessional, $12,000. 

(III) For the third payment year for such profes- sional, $8,000. 

(IV) For the fourth payment year for such pro- fessional, $4,000. 

(V) For the fifth payment year for such profes- sional, $2,000. 

(VI) For any succeeding payment year for such professional, $0. 

(iii) PHASE DOWN FOR ELIGIBLE PROFESSIONALS FIRST

ADOPTING EHR AFTER 2013.—If the first payment year 

for an eligible professional is after 2013, then the 

amount specified in this subparagraph for a payment 

year for such professional is the same as the amount 

specified in clause (ii) for such payment year for an eligible professional whose first payment year is 2013. 

(iv) INCREASE FOR CERTAIN ELIGIBLE PROFESSIONALS.—In the case of an eligible professional who 

predominantly furnishes services under this part in an 

area that is designated by the Secretary (under section 

332(a)(1)(A) of the Public Health Service Act) as a 

health professional shortage area, the amount that 

would otherwise apply for a payment year for such 

professional under subclauses (I) through (V) of clause 

(ii) shall be increased by 10 percent. In implementing 

the preceding sentence, the Secretary may, as determined appropriate, apply provisions of subsections (m) 

and (u) of section 1833 in a similar manner as such 

provisions apply under such subsection. 

(v) NO INCENTIVE PAYMENT IF FIRST ADOPTING AFTER

2014.—If the first payment year for an eligible professional is after 2014 then the applicable amount specified in this subparagraph for such professional for 

such year and any subsequent year shall be $0. 

(C) NON-APPLICATION TO HOSPITAL-BASED ELIGIBLE PROFESSIONALS.— 

(i) IN GENERAL.—No incentive payment may be 

made under this paragraph in the case of a hospitalbased eligible professional. 

(ii) HOSPITAL-BASED ELIGIBLE PROFESSIONAL.—For 

purposes of clause (i), the term ‘‘hospital-based eligible 

professional’’ means, with respect to covered professional services furnished by an eligible professional 

during the EHR reporting period for a payment year, 

70 

an eligible professional, such as a pathologist, anesthesiologist, or emergency physician, who furnishes substantially all of such services in a hospital inpatient or 

emergency room setting and through the use of the facilities and equipment, including qualified electronic 

health records, of the hospital. The determination of 

whether an eligible professional is a hospital-based eligible professional shall be made on the basis of the 

site of service (as defined by the Secretary) and without regard to any employment or billing arrangement 

between the eligible professional and any other provider. 

(D) PAYMENT.— 

(i) FORM OF PAYMENT.—The payment under this 

paragraph may be in the form of a single consolidated 

payment or in the form of such periodic installments 

as the Secretary may specify. 

(ii) COORDINATION OF APPLICATION OF LIMITATION

FOR PROFESSIONALS IN DIFFERENT PRACTICES.—In the 

case of an eligible professional furnishing covered professional services in more than one practice (as specified by the Secretary), the Secretary shall establish 

rules to coordinate the incentive payments, including 

the application of the limitation on amounts of such 

incentive payments under this paragraph, among such 

practices. 

(iii) COORDINATION WITH MEDICAID.—The Secretary 

shall seek, to the maximum extent practicable, to 

avoid duplicative requirements from Federal and State 

governments to demonstrate meaningful use of certified EHR technology under this title and title XIX. 

The Secretary may also adjust the reporting periods 

under such title and such subsections in order to carry 

out this clause. 

(E) PAYMENT YEAR DEFINED.— (i) IN GENERAL.—For purposes of this subsection, the 

term ‘‘payment year’’ means a year beginning with 

2011. 

(ii) FIRST, SECOND, ETC. PAYMENT YEAR.—The term 

‘‘first payment year’’ means, with respect to covered 

professional services furnished by an eligible professional, the first year for which an incentive payment 

is made for such services under this subsection. The 

terms ‘‘second payment year’’, ‘‘third payment year’’, 

‘‘fourth payment year’’, and ‘‘fifth payment year’’ 

mean, with respect to covered professional services 

furnished by such eligible professional, each successive 

year immediately following the first payment year for 

such professional. 

(2) MEANINGFUL EHR USER.— (A) IN GENERAL.—An eligible professional shall be treated as a meaningful EHR user for an EHR reporting period 

for a payment year (or, for purposes of subsection (a)(7), 

for an EHR reporting period under such subsection for a 

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71 

section (q), for a performance period under such subsection 

for a year) if each of the following requirements is met: 

(i) MEANINGFUL USE OF CERTIFIED EHR TECH- NOLOGY.—The eligible professional demonstrates to 

the satisfaction of the Secretary, in accordance with 

subparagraph (C)(i), that during such period the professional is using certified EHR technology in a meaningful manner, which shall include the use of electronic prescribing as determined to be appropriate by 

the Secretary. 

(ii) INFORMATION EXCHANGE.—The eligible professional demonstrates to the satisfaction of the Secretary, in accordance with subparagraph (C)(i), that 

during such period such certified EHR technology is 

connected in a manner that provides, in accordance 

with law and standards applicable to the exchange of 

information, for the electronic exchange of health information to improve the quality of health care, such 

as promoting care coordination, and the professional 

demonstrates (through a process specified by the Secretary, such as the use of an attestation) that the professional has not knowingly and willfully taken action 

(such as to disable functionality) to limit or restrict 

the compatibility or interoperability of the certified 

EHR technology. 

(iii) REPORTING ON MEASURES USING EHR.—Subject 

to subparagraph (B)(ii) and subsection (q)(5)(B)(ii)(II) 

and using such certified EHR technology, the eligible 

professional submits information for such period, in a 

form and manner specified by the Secretary, on such 

clinical quality measures and such other measures as 

selected by the Secretary under subparagraph (B)(i). 

The Secretary may provide for the use of alternative 

means for meeting the requirements of clauses (i), (ii), and 

(iii) in the case of an eligible professional furnishing covered professional services in a group practice (as defined 

by the Secretary). The Secretary shall seek to improve the 

use of electronic health records and health care quality 

over time by requiring more stringent measures of meaningful use selected under this paragraph. 

(B) REPORTING ON MEASURES.— 

(i) SELECTION.—The Secretary shall select measures 

for purposes of subparagraph (A)(iii) but only consistent with the following: 

(I) The Secretary shall provide preference to 

clinical quality measures that have been endorsed 

by the entity with a contract with the Secretary 

under section 1890(a). 

(II) Prior to any measure being selected under 

this subparagraph, the Secretary shall publish in 

the Federal Register such measure and provide for 

a period of public comment on such measure. 

(ii) LIMITATION.—The Secretary may not require the 

electronic reporting of information on clinical quality 

measures under subparagraph (A)(iii) unless the SecVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00071 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
72 

retary has the capacity to accept the information electronically, which may be on a pilot basis. 

(iii) COORDINATION OF REPORTING OF INFORMATION.—In selecting such measures, and in establishing 

the form and manner for reporting measures under 

subparagraph (A)(iii), the Secretary shall seek to avoid 

redundant or duplicative reporting otherwise required, 

including reporting under subsection (k)(2)(C). 

(C) DEMONSTRATION OF MEANINGFUL USE OF CERTIFIED

EHR TECHNOLOGY AND INFORMATION EXCHANGE.— 

(i) IN GENERAL.—A professional may satisfy the 

demonstration requirement of clauses (i) and (ii) of 

subparagraph (A) through means specified by the Secretary, which may include— 

(I) an attestation; 

(II) the submission of claims with appropriate 

coding (such as a code indicating that a patient 

encounter was documented using certified EHR 

technology); 

(III) a survey response; 

(IV) reporting under subparagraph (A)(iii); and 

(V) other means specified by the Secretary. 

(ii) USE OF PART D DATA.—Notwithstanding sections 

1860D–15(d)(2)(B) and 1860D–15(f)(2), the Secretary 

may use data regarding drug claims submitted for 

purposes of section 1860D–15 that are necessary for 

purposes of subparagraph (A). 

(D) CONTINUED APPLICATION FOR PURPOSES OF MIPS.— 

With respect to 2019 and each subsequent payment year, 

the Secretary shall, for purposes of subsection (q) and in 

accordance with paragraph (1)(F) of such subsection, determine whether an eligible professional who is a MIPS eligible professional (as defined in subsection (q)(1)(C)) for such 

year is a meaningful EHR user under this paragraph for 

the performance period under subsection (q) for such year. 

The provisions of subparagraphs (B) and (D) of subsection 

(a)(7), shall apply to assessments of MIPS eligible professionals under subsection (q) with respect to the performance category described in subsection (q)(2)(A)(iv) in an appropriate manner which may be similar to the manner in 

which such provisions apply with respect to payment adjustments made under subsection (a)(7)(A). 

(3) APPLICATION.— 

(A) PHYSICIAN REPORTING SYSTEM RULES.—Paragraphs 

(5), (6), and (8) of subsection (k) shall apply for purposes 

of this subsection in the same manner as they apply for 

purposes of such subsection. 

(B) COORDINATION WITH OTHER PAYMENTS.—The provisions of this subsection shall not be taken into account in 

applying the provisions of subsection (m) of this section 

and of section 1833(m) and any payment under such provisions shall not be taken into account in computing allowable charges under this subsection. 

73 

(C) LIMITATIONS ON REVIEW.—There shall be no administrative or judicial review under section 1869, section 1878, 

or otherwise, of— 

(i) the methodology and standards for determining 

payment amounts under this subsection and payment 

adjustments under subsection (a)(7)(A), including the 

limitation under paragraph (1)(B) and coordination 

under clauses (ii) and (iii) of paragraph (1)(D); 

(ii) the methodology and standards for determining 

a meaningful EHR user under paragraph (2), including selection of measures under paragraph (2)(B), 

specification of the means of demonstrating meaningful EHR use under paragraph (2)(C), and the hardship 

exception under subsection (a)(7)(B); 

(iii) the methodology and standards for determining 

a hospital-based eligible professional under paragraph 

(1)(C); and 

(iv) the specification of reporting periods under 

paragraph (5) and the selection of the form of payment 

under paragraph (1)(D)(i). 

(D) POSTING ON WEBSITE.—The Secretary shall post on 

the Internet website of the Centers for Medicare & Medicaid Services, in an easily understandable format, a list of 

the names, business addresses, and business phone numbers of the eligible professionals who are meaningful EHR 

users and, as determined appropriate by the Secretary, of 

group practices receiving incentive payments under paragraph (1). 

(4) CERTIFIED EHR TECHNOLOGY DEFINED.—For purposes of 

this section, the term ‘‘certified EHR technology’’ means a 

qualified electronic health record (as defined in section 

3000(13) of the Public Health Service Act) that is certified pursuant to section 3001(c)(5) of such Act as meeting standards 

adopted under section 3004 of such Act that are applicable to 

the type of record involved (as determined by the Secretary, 

such as an ambulatory electronic health record for office-based 

physicians or an inpatient hospital electronic health record for 

hospitals). 

(5) DEFINITIONS.—For purposes of this subsection: 

(A) COVERED PROFESSIONAL SERVICES.—The term ‘‘covered professional services’’ has the meaning given such 

term in subsection (k)(3). 

(B) EHR REPORTING PERIOD.—The term ‘‘EHR reporting 

period’’ means, with respect to a payment year, any period 

(or periods) as specified by the Secretary. 

(C) ELIGIBLE PROFESSIONAL.—The term ‘‘eligible professional’’ means a physician, as defined in section 1861(r). 

(p) ESTABLISHMENT OF VALUE-BASED PAYMENT MODIFIER.— 

(1) IN GENERAL.—The Secretary shall establish a payment 

modifier that provides for differential payment to a physician 

or a group of physicians under the fee schedule established 

under subsection (b) based upon the quality of care furnished 

compared to cost (as determined under paragraphs (2) and (3), 

respectively) during a performance period. Such payment modiVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00073 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
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fier shall be separate from the geographic adjustment factors 

established under subsection (e). 

(2) QUALITY.— (A) IN GENERAL.—For purposes of paragraph (1), quality 

of care shall be evaluated, to the extent practicable, based 

on a composite of measures of the quality of care furnished 

(as established by the Secretary under subparagraph (B)). 

(B) MEASURES.— (i) The Secretary shall establish appropriate measures of the quality of care furnished by a physician or 

group of physicians to individuals enrolled under this 

part, such as measures that reflect health outcomes. 

Such measures shall be risk adjusted as determined 

appropriate by the Secretary. 

(ii) The Secretary shall seek endorsement of the 

measures established under this subparagraph by the 

entity with a contract under section 1890(a). 

(C) CONTINUED APPLICATION FOR PURPOSES OF MIPS.— The Secretary shall, in accordance with subsection 

(q)(1)(F), carry out subparagraph (B) for purposes of subsection (q). 

(3) COSTS.—For purposes of paragraph (1), costs shall be 

evaluated, to the extent practicable, based on a composite of 

appropriate measures of costs established by the Secretary 

(such as the composite measure under the methodology established under subsection (n)(9)(C)(iii)) that eliminate the effect 

of geographic adjustments in payment rates (as described in 

subsection (e)), and take into account risk factors (such as socioeconomic and demographic characteristics, ethnicity, and 

health status of individuals (such as to recognize that less 

healthy individuals may require more intensive interventions) 

and other factors determined appropriate by the Secretary. 

With respect to 2019 and each subsequent year, the Secretary 

shall, in accordance with subsection (q)(1)(F), carry out this 

paragraph for purposes of subsection (q). 

(4) IMPLEMENTATION.— (A) PUBLICATION OF MEASURES, DATES OF IMPLEMENTA- TION, PERFORMANCE PERIOD.—Not later than January 1, 

2012, the Secretary shall publish the following: 

(i) The measures of quality of care and costs established under paragraphs (2) and (3), respectively. 

(ii) The dates for implementation of the payment 

modifier (as determined under subparagraph (B)). 

(iii) The initial performance period (as specified 

under subparagraph (B)(ii)). 

(B) DEADLINES FOR IMPLEMENTATION.— 

(i) INITIAL IMPLEMENTATION.—Subject to the preceding provisions of this subparagraph, the Secretary 

shall begin implementing the payment modifier established under this subsection through the rulemaking 

process during 2013 for the physician fee schedule established under subsection (b). 

(ii) INITIAL PERFORMANCE PERIOD.— 

(I) IN GENERAL.—The Secretary shall specify an 

initial performance period for application of the 

75 

payment modifier established under this subsection with respect to 2015. 

(II) PROVISION OF INFORMATION DURING INITIAL

PERFORMANCE PERIOD.—During the initial performance period, the Secretary shall, to the extent 

practicable, provide information to physicians and 

groups of physicians about the quality of care furnished by the physician or group of physicians to 

individuals enrolled under this part compared to 

cost (as determined under paragraphs (2) and (3), 

respectively) with respect to the performance period. 

(iii) APPLICATION.—The Secretary shall apply the 

payment modifier established under this subsection for 

items and services furnished on or after January 1, 

2015, with respect to specific physicians and groups of 

physicians the Secretary determines appropriate, and 

for services furnished on or after January 1, 2017, 

with respect to all physicians and groups of physicians. Such payment modifier shall not be applied for 

items and services furnished on or after January 1, 

2019. 

(C) BUDGET NEUTRALITY.—The payment modifier established under this subsection shall be implemented in a 

budget neutral manner. 

(5) SYSTEMS-BASED CARE.—The Secretary shall, as appropriate, apply the payment modifier established under this subsection in a manner that promotes systems-based care. 

(6) CONSIDERATION OF SPECIAL CIRCUMSTANCES OF CERTAIN

PROVIDERS.—In applying the payment modifier under this subsection, the Secretary shall, as appropriate, take into account 

the special circumstances of physicians or groups of physicians 

in rural areas and other underserved communities. 

(7) APPLICATION.—For purposes of the initial application of 

the payment modifier established under this subsection during 

the period beginning on January 1, 2015, and ending on December 31, 2016, the term ‘‘physician’’ has the meaning given 

such term in section 1861(r). On or after January 1, 2017, the 

Secretary may apply this subsection to eligible professionals 

(as defined in subsection (k)(3)(B)) as the Secretary determines 

appropriate. 

(8) DEFINITIONS.—For purposes of this subsection: 

(A) COSTS.—The term ‘‘costs’’ means expenditures per individual as determined appropriate by the Secretary. In 

making the determination under the preceding sentence, 

the Secretary may take into account the amount of growth 

in expenditures per individual for a physician compared to 

the amount of such growth for other physicians. 

(B) PERFORMANCE PERIOD.—The term ‘‘performance period’’ means a period specified by the Secretary. 

(9) COORDINATION WITH OTHER VALUE-BASED PURCHASING REFORMS.—The Secretary shall coordinate the value-based payment modifier established under this subsection with the Physician Feedback Program under subsection (n) and, as the SecVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00075 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
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retary determines appropriate, other similar provisions of this 

title. 

(10) LIMITATIONS ON REVIEW.—There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of— 

(A) the establishment of the value-based payment modifier under this subsection; 

(B) the evaluation of quality of care under paragraph (2), 

including the establishment of appropriate measures of the 

quality of care under paragraph (2)(B); 

(C) the evaluation of costs under paragraph (3), including the establishment of appropriate measures of costs 

under such paragraph; 

(D) the dates for implementation of the value-based payment modifier; 

(E) the specification of the initial performance period 

and any other performance period under paragraphs 

(4)(B)(ii) and (8)(B), respectively; 

(F) the application of the value-based payment modifier 

under paragraph (7); and 

(G) the determination of costs under paragraph (8)(A). 

(q) MERIT-BASED INCENTIVE PAYMENT SYSTEM.— 

(1) ESTABLISHMENT.— 

(A) IN GENERAL.—Subject to the succeeding provisions of 

this subsection, the Secretary shall establish an eligible 

professional Merit-based Incentive Payment System (in 

this subsection referred to as the ‘‘MIPS’’) under which the 

Secretary shall— 

(i) develop a methodology for assessing the total performance of each MIPS eligible professional according 

to performance standards under paragraph (3) for a 

performance period (as established under paragraph 

(4)) for a year; 

(ii) using such methodology, provide for a composite 

performance score in accordance with paragraph (5) 

for each such professional for each performance period; 

and 

(iii) use such composite performance score of the 

MIPS eligible professional for a performance period for 

a year to determine and apply a MIPS adjustment factor (and, as applicable, an additional MIPS adjustment 

factor) under paragraph (6) to the professional for the 

year. 

Notwithstanding subparagraph (C)(ii), under the MIPS, 

the Secretary shall permit any eligible professional (as defined in subsection (k)(3)(B)) to report on applicable measures and activities described in paragraph (2)(B). 

(B) PROGRAM IMPLEMENTATION.—The MIPS shall apply 

to payments for items and services furnished on or after 

January 1, 2019. 

(C) MIPS ELIGIBLE PROFESSIONAL DEFINED.— 

(i) IN GENERAL.—For purposes of this subsection, 

subject to clauses (ii) and (iv), the term ‘‘MIPS eligible 

professional’’ means— 

77 

(I) for the first and second years for which the 

MIPS applies to payments (and for the performance period for such first and second year), a physician (as defined in section 1861(r)), a physician 

assistant, nurse practitioner, and clinical nurse 

specialist (as such terms are defined in section 

1861(aa)(5)), a certified registered nurse anesthetist (as defined in section 1861(bb)(2)), and a 

group that includes such professionals; and 

(II) for the third year for which the MIPS applies to payments (and for the performance period 

for such third year) and for each succeeding year 

(and for the performance period for each such 

year), the professionals described in subclause (I), 

such other eligible professionals (as defined in 

subsection (k)(3)(B)) as specified by the Secretary, 

and a group that includes such professionals. 

(ii) EXCLUSIONS.—For purposes of clause (i), the 

term ‘‘MIPS eligible professional’’ does not include, 

with respect to a year, an eligible professional (as defined in subsection (k)(3)(B)) who— 

(I) is a qualifying APM participant (as defined 

in section 1833(z)(2)); 

(II) subject to clause (vii), is a partial qualifying 

APM participant (as defined in clause (iii)) for the 

most recent period for which data are available 

and who, for the performance period with respect 

to such year, does not report on applicable measures and activities described in paragraph (2)(B) 

that are required to be reported by such a professional under the MIPS; or 

(III) for the performance period with respect to 

such year, does not exceed the low-volume threshold measurement selected under clause (iv). 

(iii) PARTIAL QUALIFYING APM PARTICIPANT.—For 

purposes of this subparagraph, the term ‘‘partial qualifying APM participant’’ means, with respect to a year, 

an eligible professional for whom the Secretary determines the minimum payment percentage (or percentages), as applicable, described in paragraph (2) of section 1833(z) for such year have not been satisfied, but 

who would be considered a qualifying APM participant 

(as defined in such paragraph) for such year if— 

(I) with respect to 2019 and 2020, the reference 

in subparagraph (A) of such paragraph to 25 percent was instead a reference to 20 percent; 

(II) with respect to 2021 and 2022— 

(aa) the reference in subparagraph (B)(i) of 

such paragraph to 50 percent was instead a 

reference to 40 percent; and 

(bb) the references in subparagraph (B)(ii) 

of such paragraph to 50 percent and 25 percent of such paragraph were instead references to 40 percent and 20 percent, respectively; and 

78 

(III) with respect to 2023 and subsequent 

years— 

(aa) the reference in subparagraph (C)(i) of 

such paragraph to 75 percent was instead a 

reference to 50 percent; and 

(bb) the references in subparagraph (C)(ii) 

of such paragraph to 75 percent and 25 percent of such paragraph were instead references to 50 percent and 20 percent, respectively. 

(iv) SELECTION OF LOW-VOLUME THRESHOLD MEASUREMENT.—The Secretary shall select a low-volume 

threshold to apply for purposes of clause (ii)(III), 

which may include one or more or a combination of 

the following: 

(I) The minimum number (as determined by the 

Secretary) of individuals enrolled under this part 

who are treated by the eligible professional for the 

performance period involved. 

(II) The minimum number (as determined by 

the Secretary) of items and services furnished to 

individuals enrolled under this part by such professional for such performance period. 

(III) The minimum amount (as determined by 

the Secretary) of allowed charges billed by such 

professional under this part for such performance 

period. 

(v) TREATMENT OF NEW MEDICARE ENROLLED ELIGIBLE PROFESSIONALS.—In the case of a professional who 

first becomes a Medicare enrolled eligible professional 

during the performance period for a year (and had not 

previously submitted claims under this title such as a 

person, an entity, or a part of a physician group or 

under a different billing number or tax identifier), 

such professional shall not be treated under this subsection as a MIPS eligible professional until the subsequent year and performance period for such subsequent year. 

(vi) CLARIFICATION.—In the case of items and services furnished during a year by an individual who is 

not a MIPS eligible professional (including pursuant to 

clauses (ii) and (v)) with respect to a year, in no case 

shall a MIPS adjustment factor (or additional MIPS 

adjustment factor) under paragraph (6) apply to such 

individual for such year. 

(vii) PARTIAL QUALIFYING APM PARTICIPANT CLARIFICATIONS.— 

(I) TREATMENT AS MIPS ELIGIBLE PROFESSIONAL.—In the case of an eligible professional 

who is a partial qualifying APM participant, with 

respect to a year, and who, for the performance 

period for such year, reports on applicable measures and activities described in paragraph (2)(B) 

that are required to be reported by such a professional under the MIPS, such eligible professional 

79 

is considered to be a MIPS eligible professional 

with respect to such year. 

(II) NOT ELIGIBLE FOR QUALIFYING APM PARTICI- PANT PAYMENTS.—In no case shall an eligible professional who is a partial qualifying APM participant, with respect to a year, be considered a qualifying APM participant (as defined in paragraph 

(2) of section 1833(z)) for such year or be eligible 

for the additional payment under paragraph (1) of 

such section for such year. 

(D) APPLICATION TO GROUP PRACTICES.— (i) IN GENERAL.—Under the MIPS: 

(I) QUALITY PERFORMANCE CATEGORY.—The Secretary shall establish and apply a process that includes features of the provisions of subsection 

(m)(3)(C) for MIPS eligible professionals in a 

group practice with respect to assessing performance of such group with respect to the performance category described in clause (i) of paragraph 

(2)(A). 

(II) OTHER PERFORMANCE CATEGORIES.—The 

Secretary may establish and apply a process that 

includes features of the provisions of subsection 

(m)(3)(C) for MIPS eligible professionals in a 

group practice with respect to assessing the performance of such group with respect to the performance categories described in clauses (ii) 

through (iv) of such paragraph. 

(ii) ENSURING COMPREHENSIVENESS OF GROUP PRACTICE ASSESSMENT.—The process established under 

clause (i) shall to the extent practicable reflect the 

range of items and services furnished by the MIPS eligible professionals in the group practice involved. 

(E) USE OF REGISTRIES.—Under the MIPS, the Secretary 

shall encourage the use of qualified clinical data registries 

pursuant to subsection (m)(3)(E) in carrying out this subsection. 

(F) APPLICATION OF CERTAIN PROVISIONS.—In applying a 

provision of subsection (k), (m), (o), or (p) for purposes of 

this subsection, the Secretary shall— 

(i) adjust the application of such provision to ensure 

the provision is consistent with the provisions of this 

subsection; and 

(ii) not apply such provision to the extent that the 

provision is duplicative with a provision of this subsection. 

(G) ACCOUNTING FOR RISK FACTORS.— 

(i) RISK FACTORS.—Taking into account the relevant 

studies conducted and recommendations made in reports under section 2(d) of the Improving Medicare 

Post-Acute Care Transformation Act of 2014, and, as 

appropriate, other information, including information 

collected before completion of such studies and recommendations, the Secretary, on an ongoing basis, 

shall, as the Secretary determines appropriate and 

80 

based on an individual’s health status and other risk 

factors— 

(I) assess appropriate adjustments to quality 

measures, resource use measures, and other measures used under the MIPS; and 

(II) assess and implement appropriate adjustments to payment adjustments, composite performance scores, scores for performance categories, or scores for measures or activities under 

the MIPS. 

(2) MEASURES AND ACTIVITIES UNDER PERFORMANCE CATEGORIES.— 

(A) PERFORMANCE CATEGORIES.—Under the MIPS, the 

Secretary shall use the following performance categories 

(each of which is referred to in this subsection as a performance category) in determining the composite performance score under paragraph (5): 

(i) Quality. 

(ii) Resource use. 

(iii) Clinical practice improvement activities. 

(iv) Meaningful use of certified EHR technology. 

(B) MEASURES AND ACTIVITIES SPECIFIED FOR EACH CAT- EGORY.—For purposes of paragraph (3)(A) and subject to 

subparagraph (C), measures and activities specified for a 

performance period (as established under paragraph (4)) 

for a year are as follows: 

(i) QUALITY.—For the performance category described in subparagraph (A)(i), the quality measures 

included in the final measures list published under 

subparagraph (D)(i) for such year and the list of quality measures described in subparagraph (D)(vi) used 

by qualified clinical data registries under subsection 

(m)(3)(E). 

(ii) RESOURCE USE.—For the performance category 

described in subparagraph (A)(ii), the measurement of 

resource use for such period under subsection (p)(3), 

using the methodology under subsection (r) as appropriate, and, as feasible and applicable, accounting for 

the cost of drugs under part D. 

(iii) CLINICAL PRACTICE IMPROVEMENT ACTIVITIES.— 

For the performance category described in subparagraph (A)(iii), clinical practice improvement activities 

(as defined in subparagraph (C)(v)(III)) under subcategories specified by the Secretary for such period, 

which shall include at least the following: 

(I) The subcategory of expanded practice access, 

such as same day appointments for urgent needs 

and after hours access to clinician advice. 

(II) The subcategory of population management, 

such as monitoring health conditions of individuals to provide timely health care interventions or 

participation in a qualified clinical data registry. 

(III) The subcategory of care coordination, such 

as timely communication of test results, timely exchange of clinical information to patients and 

81 

other providers, and use of remote monitoring or 

telehealth. 

(IV) The subcategory of beneficiary engagement, 

such as the establishment of care plans for individuals with complex care needs, beneficiary selfmanagement assessment and training, and using 

shared decision-making mechanisms. 

(V) The subcategory of patient safety and practice assessment, such as through use of clinical or 

surgical checklists and practice assessments related to maintaining certification. 

(VI) The subcategory of participation in an alternative payment model (as defined in section 

1833(z)(3)(C)). 

In establishing activities under this clause, the Secretary shall give consideration to the circumstances of 

small practices (consisting of 15 or fewer professionals) 

and practices located in rural areas and in health professional shortage areas (as designated under section 

332(a)(1)(A) of the Public Health Service Act). 

(iv) MEANINGFUL EHR USE.—For the performance 

category described in subparagraph (A)(iv), the requirements established for such period under subsection (o)(2) for determining whether an eligible professional is a meaningful EHR user. 

(C) ADDITIONAL PROVISIONS.— (i) EMPHASIZING OUTCOME MEASURES UNDER THE

QUALITY PERFORMANCE CATEGORY.—In applying subparagraph (B)(i), the Secretary shall, as feasible, emphasize the application of outcome measures. 

(ii) APPLICATION OF ADDITIONAL SYSTEM MEASURES.—The Secretary may use measures used for a 

payment system other than for physicians, such as 

measures for inpatient hospitals, for purposes of the 

performance categories described in clauses (i) and (ii) 

of subparagraph (A). For purposes of the previous sentence, the Secretary may not use measures for hospital 

outpatient departments, except in the case of items 

and services furnished by emergency physicians, radiologists, and anesthesiologists. 

(iii) GLOBAL AND POPULATION-BASED MEASURES.— 

The Secretary may use global measures, such as global outcome measures, and population-based measures 

for purposes of the performance category described in 

subparagraph (A)(i). 

(iv) APPLICATION OF MEASURES AND ACTIVITIES TO

NON-PATIENT-FACING PROFESSIONALS.—In carrying out 

this paragraph, with respect to measures and activities specified in subparagraph (B) for performance categories described in subparagraph (A), the Secretary— 

(I) shall give consideration to the circumstances 

of professional types (or subcategories of those 

types determined by practice characteristics) who 

typically furnish services that do not involve faceto-face interaction with a patient; and 

82 

(II) may, to the extent feasible and appropriate, 

take into account such circumstances and apply 

under this subsection with respect to MIPS eligible professionals of such professional types or subcategories, alternative measures or activities that 

fulfill the goals of the applicable performance category. 

In carrying out the previous sentence, the Secretary 

shall consult with professionals of such professional 

types or subcategories. 

(v) CLINICAL PRACTICE IMPROVEMENT ACTIVITIES.— (I) REQUEST FOR INFORMATION.—In initially applying subparagraph (B)(iii), the Secretary shall 

use a request for information to solicit recommendations from stakeholders to identify activities described in such subparagraph and specifying criteria for such activities. 

(II) CONTRACT AUTHORITY FOR CLINICAL PRACTICE IMPROVEMENT ACTIVITIES PERFORMANCE CATEGORY.—In applying subparagraph (B)(iii), the 

Secretary may contract with entities to assist the 

Secretary in— 

(aa) identifying activities described in subparagraph (B)(iii); 

(bb) specifying criteria for such activities; 

and 

(cc) determining whether a MIPS eligible 

professional meets such criteria. 

(III) CLINICAL PRACTICE IMPROVEMENT ACTIVITIES DEFINED.—For purposes of this subsection, 

the term ‘‘clinical practice improvement activity’’ 

means an activity that relevant eligible professional organizations and other relevant stakeholders identify as improving clinical practice or 

care delivery and that the Secretary determines, 

when effectively executed, is likely to result in improved outcomes. 

(D) ANNUAL LIST OF QUALITY MEASURES AVAILABLE FOR

MIPS ASSESSMENT.— (i) IN GENERAL.—Under the MIPS, the Secretary, 

through notice and comment rulemaking and subject 

to the succeeding clauses of this subparagraph, shall, 

with respect to the performance period for a year, establish an annual final list of quality measures from 

which MIPS eligible professionals may choose for purposes of assessment under this subsection for such 

performance period. Pursuant to the previous sentence, the Secretary shall— 

(I) not later than November 1 of the year prior 

to the first day of the first performance period 

under the MIPS, establish and publish in the Federal Register a final list of quality measures; and 

(II) not later than November 1 of the year prior 

to the first day of each subsequent performance 

period, update the final list of quality measures 

83 

from the previous year (and publish such updated 

final list in the Federal Register), by— 

(aa) removing from such list, as appropriate, quality measures, which may include 

the removal of measures that are no longer 

meaningful (such as measures that are topped 

out); 

(bb) adding to such list, as appropriate, new 

quality measures; and 

(cc) determining whether or not quality 

measures on such list that have undergone 

substantive changes should be included in the 

updated list. 

(ii) CALL FOR QUALITY MEASURES.— 

(I) IN GENERAL.—Eligible professional organizations and other relevant stakeholders shall be requested to identify and submit quality measures 

to be considered for selection under this subparagraph in the annual list of quality measures published under clause (i) and to identify and submit 

updates to the measures on such list. For purposes of the previous sentence, measures may be 

submitted regardless of whether such measures 

were previously published in a proposed rule or 

endorsed by an entity with a contract under section 1890(a). 

(II) ELIGIBLE PROFESSIONAL ORGANIZATION DE- FINED.—In this subparagraph, the term ‘‘eligible 

professional organization’’ means a professional 

organization as defined by nationally recognized 

specialty boards of certification or equivalent certification boards. 

(iii) REQUIREMENTS.—In selecting quality measures 

for inclusion in the annual final list under clause (i), 

the Secretary shall— 

(I) provide that, to the extent practicable, all 

quality domains (as defined in subsection (s)(1)(B)) 

are addressed by such measures; and 

(II) ensure that such selection is consistent with 

the process for selection of measures under subsections (k), (m), and (p)(2). 

(iv) PEER REVIEW.—Before including a new measure 

in the final list of measures published under clause (i) 

for a year, the Secretary shall submit for publication 

in applicable specialty-appropriate, peer-reviewed journals such measure and the method for developing and 

selecting such measure, including clinical and other 

data supporting such measure. 

(v) MEASURES FOR INCLUSION.—The final list of 

quality measures published under clause (i) shall include, as applicable, measures under subsections (k), 

(m), and (p)(2), including quality measures from 

among— 

(I) measures endorsed by a consensus-based entity; 

84 

(II) measures developed under subsection (s); 

and 

(III) measures submitted under clause (ii)(I). 

Any measure selected for inclusion in such list that is 

not endorsed by a consensus-based entity shall have a 

focus that is evidence-based. 

(vi) EXCEPTION FOR QUALIFIED CLINICAL DATA REG- ISTRY MEASURES.—Measures used by a qualified clinical data registry under subsection (m)(3)(E) shall not 

be subject to the requirements under clauses (i), (iv), 

and (v). The Secretary shall publish the list of measures used by such qualified clinical data registries on 

the Internet website of the Centers for Medicare & 

Medicaid Services. 

(vii) EXCEPTION FOR EXISTING QUALITY MEASURES.— 

Any quality measure specified by the Secretary under 

subsection (k) or (m), including under subsection 

(m)(3)(E), and any measure of quality of care established under subsection (p)(2) for the reporting period 

or performance period under the respective subsection 

beginning before the first performance period under 

the MIPS— 

(I) shall not be subject to the requirements 

under clause (i) (except under items (aa) and (cc) 

of subclause (II) of such clause) or to the requirement under clause (iv); and 

(II) shall be included in the final list of quality 

measures published under clause (i) unless removed under clause (i)(II)(aa). 

(viii) CONSULTATION WITH RELEVANT ELIGIBLE PRO- FESSIONAL ORGANIZATIONS AND OTHER RELEVANT

STAKEHOLDERS.—Relevant eligible professional organizations and other relevant stakeholders, including 

State and national medical societies, shall be consulted in carrying out this subparagraph. 

(ix) OPTIONAL APPLICATION.—The process under section 1890A is not required to apply to the selection of 

measures under this subparagraph. 

(3) PERFORMANCE STANDARDS.— (A) ESTABLISHMENT.—Under the MIPS, the Secretary 

shall establish performance standards with respect to 

measures and activities specified under paragraph (2)(B) 

for a performance period (as established under paragraph 

(4)) for a year. 

(B) CONSIDERATIONS IN ESTABLISHING STANDARDS.—In 

establishing such performance standards with respect to 

measures and activities specified under paragraph (2)(B), 

the Secretary shall consider the following: 

(i) Historical performance standards. 

(ii) Improvement. 

(iii) The opportunity for continued improvement. 

(4) PERFORMANCE PERIOD.—The Secretary shall establish a 

performance period (or periods) for a year (beginning with 

2019). Such performance period (or periods) shall begin and 

end prior to the beginning of such year and be as close as posVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00084 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
85 

sible to such year. In this subsection, such performance period 

(or periods) for a year shall be referred to as the performance 

period for the year. 

(5) COMPOSITE PERFORMANCE SCORE.— (A) IN GENERAL.—Subject to the succeeding provisions of 

this paragraph and taking into account, as available and 

applicable, paragraph (1)(G), the Secretary shall develop a 

methodology for assessing the total performance of each 

MIPS eligible professional according to performance standards under paragraph (3) with respect to applicable measures and activities specified in paragraph (2)(B) with respect to each performance category applicable to such professional for a performance period (as established under 

paragraph (4)) for a year. Using such methodology, the 

Secretary shall provide for a composite assessment (using 

a scoring scale of 0 to 100) for each such professional for 

the performance period for such year. In this subsection 

such a composite assessment for such a professional with 

respect to a performance period shall be referred to as the 

‘‘composite performance score’’ for such professional for 

such performance period. 

(B) INCENTIVE TO REPORT; ENCOURAGING USE OF CER- TIFIED EHR TECHNOLOGY FOR REPORTING QUALITY MEAS- URES.— 

(i) INCENTIVE TO REPORT.—Under the methodology 

established under subparagraph (A), the Secretary 

shall provide that in the case of a MIPS eligible professional who fails to report on an applicable measure 

or activity that is required to be reported by the professional, the professional shall be treated as achieving the lowest potential score applicable to such measure or activity. 

(ii) ENCOURAGING USE OF CERTIFIED EHR TECH- NOLOGY AND QUALIFIED CLINICAL DATA REGISTRIES FOR

REPORTING QUALITY MEASURES.—Under the methodology established under subparagraph (A), the Secretary shall— 

(I) encourage MIPS eligible professionals to report on applicable measures with respect to the 

performance category described in paragraph 

(2)(A)(i) through the use of certified EHR technology and qualified clinical data registries; and 

(II) with respect to a performance period, with 

respect to a year, for which a MIPS eligible professional reports such measures through the use of 

such EHR technology, treat such professional as 

satisfying the clinical quality measures reporting 

requirement described in subsection (o)(2)(A)(iii) 

for such year. 

(C) CLINICAL PRACTICE IMPROVEMENT ACTIVITIES PER- FORMANCE SCORE.— (i) RULE FOR CERTIFICATION.—A MIPS eligible professional who is in a practice that is certified as a patient-centered medical home or comparable specialty 

practice, as determined by the Secretary, with respect 

86 

to a performance period shall be given the highest potential score for the performance category described in 

paragraph (2)(A)(iii) for such period. 

(ii) APM PARTICIPATION.—Participation by a MIPS 

eligible professional in an alternative payment model 

(as defined in section 1833(z)(3)(C)) with respect to a 

performance period shall earn such eligible professional a minimum score of one-half of the highest potential score for the performance category described in 

paragraph (2)(A)(iii) for such performance period. 

(iii) SUBCATEGORIES.—A MIPS eligible professional 

shall not be required to perform activities in each subcategory under paragraph (2)(B)(iii) or participate in 

an alternative payment model in order to achieve the 

highest potential score for the performance category 

described in paragraph (2)(A)(iii). 

(D) ACHIEVEMENT AND IMPROVEMENT.— 

(i) TAKING INTO ACCOUNT IMPROVEMENT.—Beginning 

with the second year to which the MIPS applies, in addition to the achievement of a MIPS eligible professional, if data sufficient to measure improvement is 

available, the methodology developed under subparagraph (A)— 

(I) in the case of the performance score for the 

performance category described in clauses (i) and 

(ii) of paragraph (2)(A), shall take into account the 

improvement of the professional; and 

(II) in the case of performance scores for other 

performance categories, may take into account the 

improvement of the professional. 

(ii) ASSIGNING HIGHER WEIGHT FOR ACHIEVEMENT.— Subject to clause (i), under the methodology developed 

under subparagraph (A), the Secretary may assign a 

higher scoring weight under subparagraph (F) with respect to the achievement of a MIPS eligible professional than with respect to any improvement of such 

professional applied under clause (i) with respect to a 

measure, activity, or category described in paragraph 

(2). 

(E) WEIGHTS FOR THE PERFORMANCE CATEGORIES.— 

(i) IN GENERAL.—Under the methodology developed 

under subparagraph (A), subject to subparagraph 

(F)(i) and clause (ii), the composite performance score 

shall be determined as follows: 

(I) QUALITY.— 

(aa) IN GENERAL.—Subject to item (bb), thirty percent of such score shall be based on performance with respect to the category described in clause (i) of paragraph (2)(A). In applying the previous sentence, the Secretary 

shall, as feasible, encourage the application of 

outcome measures within such category. 

(bb) FIRST 2 YEARS.—For the first and second years for which the MIPS applies to payments, the percentage applicable under item 

87 

(aa) shall be increased in a manner such that 

the total percentage points of the increase 

under this item for the respective year equals 

the total number of percentage points by 

which the percentage applied under subclause 

(II)(bb) for the respective year is less than 30 

percent. 

(II) RESOURCE USE.— (aa) IN GENERAL.—Subject to item (bb), thirty percent of such score shall be based on performance with respect to the category described in clause (ii) of paragraph (2)(A). 

(bb) FIRST 2 YEARS.—For the first year for 

which the MIPS applies to payments, not 

more than 10 percent of such score shall be 

based on performance with respect to the category described in clause (ii) of paragraph 

(2)(A). For the second year for which the 

MIPS applies to payments, not more than 15 

percent of such score shall be based on performance with respect to the category described in clause (ii) of paragraph (2)(A). 

(III) CLINICAL PRACTICE IMPROVEMENT ACTIVI- TIES.—Fifteen percent of such score shall be based 

on performance with respect to the category described in clause (iii) of paragraph (2)(A). 

(IV) MEANINGFUL USE OF CERTIFIED EHR TECH- NOLOGY.—Twenty-five percent of such score shall 

be based on performance with respect to the category described in clause (iv) of paragraph (2)(A). 

(ii) AUTHORITY TO ADJUST PERCENTAGES IN CASE OF

HIGH EHR MEANINGFUL USE ADOPTION.—In any year in 

which the Secretary estimates that the proportion of 

eligible professionals (as defined in subsection (o)(5)) 

who are meaningful EHR users (as determined under 

subsection (o)(2)) is 75 percent or greater, the Secretary may reduce the percent applicable under clause 

(i)(IV), but not below 15 percent. If the Secretary 

makes such reduction for a year, subject to subclauses 

(I)(bb) and (II)(bb) of clause (i), the percentages applicable under one or more of subclauses (I), (II), and 

(III) of clause (i) for such year shall be increased in a 

manner such that the total percentage points of the increase under this clause for such year equals the total 

number of percentage points reduced under the preceding sentence for such year. 

(F) CERTAIN FLEXIBILITY FOR WEIGHTING PERFORMANCE

CATEGORIES, MEASURES, AND ACTIVITIES.—Under the methodology under subparagraph (A), if there are not sufficient 

measures and activities (described in paragraph (2)(B)) applicable and available to each type of eligible professional 

involved, the Secretary shall assign different scoring 

weights (including a weight of 0)— 

(i) which may vary from the scoring weights specified in subparagraph (E), for each performance catVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00087 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
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egory based on the extent to which the category is applicable to the type of eligible professional involved; 

and 

(ii) for each measure and activity specified under 

paragraph (2)(B) with respect to each such category 

based on the extent to which the measure or activity 

is applicable and available to the type of eligible professional involved. 

(G) RESOURCE USE.—Analysis of the performance category described in paragraph (2)(A)(ii) shall include results 

from the methodology described in subsection (r)(5), as appropriate. 

(H) INCLUSION OF QUALITY MEASURE DATA FROM OTHER

PAYERS.—In applying subsections (k), (m), and (p) with respect to measures described in paragraph (2)(B)(i), analysis of the performance category described in paragraph 

(2)(A)(i) may include data submitted by MIPS eligible professionals with respect to items and services furnished to 

individuals who are not individuals entitled to benefits 

under part A or enrolled under part B. 

(I) USE OF VOLUNTARY VIRTUAL GROUPS FOR CERTAIN AS- SESSMENT PURPOSES.— (i) IN GENERAL.—In the case of MIPS eligible professionals electing to be a virtual group under clause (ii) 

with respect to a performance period for a year, for 

purposes of applying the methodology under subparagraph (A) with respect to the performance categories 

described in clauses (i) and (ii) of paragraph (2)(A)— 

(I) the assessment of performance provided 

under such methodology with respect to such performance categories that is to be applied to each 

such professional in such group for such performance period shall be with respect to the combined 

performance of all such professionals in such 

group for such period; and 

(II) with respect to the composite performance 

score provided under this paragraph for such performance period for each such MIPS eligible professional in such virtual group, the components of 

the composite performance score that assess performance with respect to such performance categories shall be based on the assessment of the 

combined performance under subclause (I) for 

such performance categories and performance period. 

(ii) ELECTION OF PRACTICES TO BE A VIRTUAL

GROUP.—The Secretary shall, in accordance with the 

requirements under clause (iii), establish and have in 

place a process to allow an individual MIPS eligible 

professional or a group practice consisting of not more 

than 10 MIPS eligible professionals to elect, with respect to a performance period for a year to be a virtual 

group under this subparagraph with at least one other 

such individual MIPS eligible professional or group 

practice. Such a virtual group may be based on approVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00088 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
89 

priate classifications of providers, such as by geographic areas or by provider specialties defined by nationally recognized specialty boards of certification or 

equivalent certification boards. 

(iii) REQUIREMENTS.—The requirements for the process under clause (ii) shall— 

(I) provide that an election under such clause, 

with respect to a performance period, shall be 

made before the beginning of such performance 

period and may not be changed during such performance period; 

(II) provide that an individual MIPS eligible 

professional and a group practice described in 

clause (ii) may elect to be in no more than one virtual group for a performance period and that, in 

the case of such a group practice that elects to be 

in such virtual group for such performance period, 

such election applies to all MIPS eligible professionals in such group practice; 

(III) provide that a virtual group be a combination of tax identification numbers; 

(IV) provide for formal written agreements 

among MIPS eligible professionals electing to be a 

virtual group under this subparagraph; and 

(V) include such other requirements as the Secretary determines appropriate. 

(6) MIPS PAYMENTS.— (A) MIPS ADJUSTMENT FACTOR.—Taking into account 

paragraph (1)(G), the Secretary shall specify a MIPS adjustment factor for each MIPS eligible professional for a 

year. Such MIPS adjustment factor for a MIPS eligible 

professional for a year shall be in the form of a percent 

and shall be determined— 

(i) by comparing the composite performance score of 

the eligible professional for such year to the performance threshold established under subparagraph (D)(i) 

for such year; 

(ii) in a manner such that the adjustment factors 

specified under this subparagraph for a year result in 

differential payments under this paragraph reflecting 

that— 

(I) MIPS eligible professionals with composite 

performance scores for such year at or above such 

performance threshold for such year receive zero 

or positive payment adjustment factors for such 

year in accordance with clause (iii), with such professionals having higher composite performance 

scores receiving higher adjustment factors; and 

(II) MIPS eligible professionals with composite 

performance scores for such year below such performance threshold for such year receive negative 

payment adjustment factors for such year in accordance with clause (iv), with such professionals 

having lower composite performance scores receiving lower adjustment factors; 

90 

(iii) in a manner such that MIPS eligible professionals with composite scores described in clause (ii)(I) 

for such year, subject to clauses (i) and (ii) of subparagraph (F), receive a zero or positive adjustment factor 

on a linear sliding scale such that an adjustment factor of 0 percent is assigned for a score at the performance threshold and an adjustment factor of the applicable percent specified in subparagraph (B) is assigned 

for a score of 100; and 

(iv) in a manner such that— 

(I) subject to subclause (II), MIPS eligible professionals with composite performance scores described in clause (ii)(II) for such year receive a 

negative payment adjustment factor on a linear 

sliding scale such that an adjustment factor of 0 

percent is assigned for a score at the performance 

threshold and an adjustment factor of the negative of the applicable percent specified in subparagraph (B) is assigned for a score of 0; and 

(II) MIPS eligible professionals with composite 

performance scores that are equal to or greater 

than 0, but not greater than 1⁄4 of the performance 

threshold specified under subparagraph (D)(i) for 

such year, receive a negative payment adjustment 

factor that is equal to the negative of the applicable percent specified in subparagraph (B) for such 

year. 

(B) APPLICABLE PERCENT DEFINED.—For purposes of this 

paragraph, the term ‘‘applicable percent’’ means— 

(i) for 2019, 4 percent; 

(ii) for 2020, 5 percent; 

(iii) for 2021, 7 percent; and 

(iv) for 2022 and subsequent years, 9 percent. 

(C) ADDITIONAL MIPS ADJUSTMENT FACTORS FOR EXCEPTIONAL PERFORMANCE.—For 2019 and each subsequent 

year through 2024, in the case of a MIPS eligible professional with a composite performance score for a year at or 

above the additional performance threshold under subparagraph (D)(ii) for such year, in addition to the MIPS 

adjustment factor under subparagraph (A) for the eligible 

professional for such year, subject to subparagraph (F)(iv), 

the Secretary shall specify an additional positive MIPS adjustment factor for such professional and year. Such additional MIPS adjustment factors shall be in the form of a 

percent and determined by the Secretary in a manner such 

that professionals having higher composite performance 

scores above the additional performance threshold receive 

higher additional MIPS adjustment factors. 

(D) ESTABLISHMENT OF PERFORMANCE THRESHOLDS.— (i) PERFORMANCE THRESHOLD.—For each year of the 

MIPS, the Secretary shall compute a performance 

threshold with respect to which the composite performance score of MIPS eligible professionals shall be 

compared for purposes of determining adjustment factors under subparagraph (A) that are positive, negaVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00090 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
91 

tive, and zero. Such performance threshold for a year 

shall be the mean or median (as selected by the Secretary) of the composite performance scores for all 

MIPS eligible professionals with respect to a prior period specified by the Secretary. The Secretary may reassess the selection of the mean or median under the 

previous sentence every 3 years. 

(ii) ADDITIONAL PERFORMANCE THRESHOLD FOR EXCEPTIONAL PERFORMANCE.—In addition to the performance threshold under clause (i), for each year of the 

MIPS, the Secretary shall compute an additional performance threshold for purposes of determining the 

additional MIPS adjustment factors under subparagraph (C). For each such year, the Secretary shall 

apply either of the following methods for computing 

such additional performance threshold for such a year: 

(I) The threshold shall be the score that is equal 

to the 25th percentile of the range of possible composite performance scores above the performance 

threshold determined under clause (i). 

(II) The threshold shall be the score that is 

equal to the 25th percentile of the actual composite performance scores for MIPS eligible professionals with composite performance scores at or 

above the performance threshold with respect to 

the prior period described in clause (i). 

(iii) SPECIAL RULE FOR INITIAL 2 YEARS.—With respect to each of the first two years to which the MIPS 

applies, the Secretary shall, prior to the performance 

period for such years, establish a performance threshold for purposes of determining MIPS adjustment factors under subparagraph (A) and a threshold for purposes of determining additional MIPS adjustment factors under subparagraph (C). Each such performance 

threshold shall— 

(I) be based on a period prior to such performance periods; and 

(II) take into account— 

(aa) data available with respect to performance on measures and activities that may be 

used under the performance categories under 

subparagraph (2)(B); and 

(bb) other factors determined appropriate 

by the Secretary. 

(E) APPLICATION OF MIPS ADJUSTMENT FACTORS.—In the 

case of items and services furnished by a MIPS eligible 

professional during a year (beginning with 2019), the 

amount otherwise paid under this part with respect to 

such items and services and MIPS eligible professional for 

such year, shall be multiplied by— 

(i) 1, plus 

(ii) the sum of— 

(I) the MIPS adjustment factor determined 

under subparagraph (A) divided by 100, and 

92 

(II) as applicable, the additional MIPS adjustment factor determined under subparagraph (C) 

divided by 100. 

(F) AGGREGATE APPLICATION OF MIPS ADJUSTMENT FAC- TORS.— 

(i) APPLICATION OF SCALING FACTOR.— (I) IN GENERAL.—With respect to positive MIPS 

adjustment factors under subparagraph (A)(ii)(I) 

for eligible professionals whose composite performance score is above the performance threshold 

under subparagraph (D)(i) for such year, subject 

to subclause (II), the Secretary shall increase or 

decrease such adjustment factors by a scaling factor in order to ensure that the budget neutrality 

requirement of clause (ii) is met. 

(II) SCALING FACTOR LIMIT.—In no case may the 

scaling factor applied under this clause exceed 3.0. 

(ii) BUDGET NEUTRALITY REQUIREMENT.— (I) IN GENERAL.—Subject to clause (iii), the Secretary shall ensure that the estimated amount described in subclause (II) for a year is equal to the 

estimated amount described in subclause (III) for 

such year. 

(II) AGGREGATE INCREASES.—The amount described in this subclause is the estimated increase 

in the aggregate allowed charges resulting from 

the application of positive MIPS adjustment factors under subparagraph (A) (after application of 

the scaling factor described in clause (i)) to MIPS 

eligible professionals whose composite performance score for a year is above the performance 

threshold under subparagraph (D)(i) for such year. 

(III) AGGREGATE DECREASES.—The amount described in this subclause is the estimated decrease 

in the aggregate allowed charges resulting from 

the application of negative MIPS adjustment factors under subparagraph (A) to MIPS eligible professionals whose composite performance score for 

a year is below the performance threshold under 

subparagraph (D)(i) for such year. 

(iii) EXCEPTIONS.— 

(I) In the case that all MIPS eligible professionals receive composite performance scores for a 

year that are below the performance threshold 

under subparagraph (D)(i) for such year, the negative MIPS adjustment factors under subparagraph 

(A) shall apply with respect to such MIPS eligible 

professionals and the budget neutrality requirement of clause (ii) and the additional adjustment 

factors under clause (iv) shall not apply for such 

year. 

(II) In the case that, with respect to a year, the 

application of clause (i) results in a scaling factor 

equal to the maximum scaling factor specified in 

clause (i)(II), such scaling factor shall apply and 

93 

the budget neutrality requirement of clause (ii) 

shall not apply for such year. 

(iv) ADDITIONAL INCENTIVE PAYMENT ADJUST- MENTS.— 

(I) IN GENERAL.—Subject to subclause (II), in 

specifying the MIPS additional adjustment factors 

under subparagraph (C) for each applicable MIPS 

eligible professional for a year, the Secretary shall 

ensure that the estimated aggregate increase in 

payments under this part resulting from the application of such additional adjustment factors for 

MIPS eligible professionals in a year shall be 

equal (as estimated by the Secretary) to 

$500,000,000 for each year beginning with 2019 

and ending with 2024. 

(II) LIMITATION ON ADDITIONAL INCENTIVE PAYMENT ADJUSTMENTS.—The MIPS additional adjustment factor under subparagraph (C) for a year 

for an applicable MIPS eligible professional whose 

composite performance score is above the additional performance threshold under subparagraph 

(D)(ii) for such year shall not exceed 10 percent. 

The application of the previous sentence may result in an aggregate amount of additional incentive payments that are less than the amount specified in subclause (I). 

(7) ANNOUNCEMENT OF RESULT OF ADJUSTMENTS.—Under the 

MIPS, the Secretary shall, not later than 30 days prior to January 1 of the year involved, make available to MIPS eligible 

professionals the MIPS adjustment factor (and, as applicable, 

the additional MIPS adjustment factor) under paragraph (6) 

applicable to the eligible professional for items and services 

furnished by the professional for such year. The Secretary may 

include such information in the confidential feedback under 

paragraph (12). 

(8) NO EFFECT IN SUBSEQUENT YEARS.—The MIPS adjustment factors and additional MIPS adjustment factors under 

paragraph (6) shall apply only with respect to the year involved, and the Secretary shall not take into account such adjustment factors in making payments to a MIPS eligible professional under this part in a subsequent year. 

(9) PUBLIC REPORTING.— 

(A) IN GENERAL.—The Secretary shall, in an easily understandable format, make available on the Physician 

Compare Internet website of the Centers for Medicare & 

Medicaid Services the following: 

(i) Information regarding the performance of MIPS 

eligible professionals under the MIPS, which— 

(I) shall include the composite score for each 

such MIPS eligible professional and the performance of each such MIPS eligible professional with 

respect to each performance category; and 

(II) may include the performance of each such 

MIPS eligible professional with respect to each 

measure or activity specified in paragraph (2)(B). 

94 

(ii) The names of eligible professionals in eligible alternative payment models (as defined in section 

1833(z)(3)(D)) and, to the extent feasible, the names of 

such eligible alternative payment models and performance of such models. 

(B) DISCLOSURE.—The information made available under 

this paragraph shall indicate, where appropriate, that publicized information may not be representative of the eligible professional’s entire patient population, the variety of 

services furnished by the eligible professional, or the 

health conditions of individuals treated. 

(C) OPPORTUNITY TO REVIEW AND SUBMIT CORRECTIONS.—The Secretary shall provide for an opportunity for 

a professional described in subparagraph (A) to review, 

and submit corrections for, the information to be made 

public with respect to the professional under such subparagraph prior to such information being made public. 

(D) AGGREGATE INFORMATION.—The Secretary shall periodically post on the Physician Compare Internet website 

aggregate information on the MIPS, including the range of 

composite scores for all MIPS eligible professionals and the 

range of the performance of all MIPS eligible professionals 

with respect to each performance category. 

(10) CONSULTATION.—The Secretary shall consult with stakeholders in carrying out the MIPS, including for the identification of measures and activities under paragraph (2)(B) and the 

methodologies developed under paragraphs (5)(A) and (6) and 

regarding the use of qualified clinical data registries. Such consultation shall include the use of a request for information or 

other mechanisms determined appropriate. 

(11) TECHNICAL ASSISTANCE TO SMALL PRACTICES AND PRACTICES IN HEALTH PROFESSIONAL SHORTAGE AREAS.— 

(A) IN GENERAL.—The Secretary shall enter into contracts or agreements with appropriate entities (such as 

quality improvement organizations, regional extension centers (as described in section 3012(c) of the Public Health 

Service Act), or regional health collaboratives) to offer 

guidance and assistance to MIPS eligible professionals in 

practices of 15 or fewer professionals (with priority given 

to such practices located in rural areas, health professional 

shortage areas (as designated under in section 332(a)(1)(A) 

of such Act), and medically underserved areas, and practices with low composite scores) with respect to— 

(i) the performance categories described in clauses 

(i) through (iv) of paragraph (2)(A); or 

(ii) how to transition to the implementation of and 

participation in an alternative payment model as described in section 1833(z)(3)(C). 

(B) FUNDING FOR TECHNICAL ASSISTANCE.—For purposes 

of implementing subparagraph (A), the Secretary shall provide for the transfer from the Federal Supplementary Medical Insurance Trust Fund established under section 1841 

to the Centers for Medicare & Medicaid Services Program 

Management Account of $20,000,000 for each of fiscal 

years 2016 through 2020. Amounts transferred under this 

95 

subparagraph for a fiscal year shall be available until expended. 

(12) FEEDBACK AND INFORMATION TO IMPROVE PERFORM- ANCE.— 

(A) PERFORMANCE FEEDBACK.— (i) IN GENERAL.—Beginning July 1, 2017, the Secretary— 

(I) shall make available timely (such as quarterly) confidential feedback to MIPS eligible professionals on the performance of such professionals with respect to the performance categories 

under clauses (i) and (ii) of paragraph (2)(A); and 

(II) may make available confidential feedback to 

such professionals on the performance of such professionals with respect to the performance categories under clauses (iii) and (iv) of such paragraph. 

(ii) MECHANISMS.—The Secretary may use one or 

more mechanisms to make feedback available under 

clause (i), which may include use of a web-based portal 

or other mechanisms determined appropriate by the 

Secretary. With respect to the performance category 

described in paragraph (2)(A)(i), feedback under this 

subparagraph shall, to the extent an eligible professional chooses to participate in a data registry for purposes of this subsection (including registries under 

subsections (k) and (m)), be provided based on performance on quality measures reported through the 

use of such registries. With respect to any other performance category described in paragraph (2)(A), the 

Secretary shall encourage provision of feedback 

through qualified clinical data registries as described 

in subsection (m)(3)(E)). 

(iii) USE OF DATA.—For purposes of clause (i), the 

Secretary may use data, with respect to a MIPS eligible professional, from periods prior to the current performance period and may use rolling periods in order 

to make illustrative calculations about the performance of such professional. 

(iv) DISCLOSURE EXEMPTION.—Feedback made available under this subparagraph shall be exempt from 

disclosure under section 552 of title 5, United States 

Code. 

(v) RECEIPT OF INFORMATION.—The Secretary may 

use the mechanisms established under clause (ii) to receive information from professionals, such as information with respect to this subsection. 

(B) ADDITIONAL INFORMATION.— 

(i) IN GENERAL.—Beginning July 1, 2018, the Secretary shall make available to MIPS eligible professionals information, with respect to individuals who 

are patients of such MIPS eligible professionals, about 

items and services for which payment is made under 

this title that are furnished to such individuals by 

other suppliers and providers of services, which may 

96 

include information described in clause (ii). Such information may be made available under the previous sentence to such MIPS eligible professionals by mechanisms determined appropriate by the Secretary, which 

may include use of a web-based portal. Such information may be made available in accordance with the 

same or similar terms as data are made available to 

accountable care organizations participating in the 

shared savings program under section 1899. 

(ii) TYPE OF INFORMATION.—For purposes of clause 

(i), the information described in this clause, is the following: 

(I) With respect to selected items and services 

(as determined appropriate by the Secretary) for 

which payment is made under this title and that 

are furnished to individuals, who are patients of a 

MIPS 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), such as the name of 

such providers furnishing such items and services 

to such patients during such period, the types of 

such items and services so furnished, and the 

dates such items and services were so furnished. 

(II) Historical data, such as 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). 

(13) REVIEW.— 

(A) TARGETED REVIEW.—The Secretary shall establish a 

process under which a MIPS eligible professional may seek 

an informal review of the calculation of the MIPS adjustment factor (or factors) applicable to such eligible professional under this subsection for a year. The results of a review conducted pursuant to the previous sentence shall not 

be taken into account for purposes of paragraph (6) with 

respect to a year (other than with respect to the calculation of such eligible professional’s MIPS adjustment factor 

for such year or additional MIPS adjustment factor for 

such year) after the factors determined in subparagraph 

(A) and subparagraph (C) of such paragraph have been determined for such year. 

(B) LIMITATION.—Except as provided for in subparagraph (A), there shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the 

following: 

(i) The methodology used to determine the amount 

of the MIPS adjustment factor under paragraph (6)(A) 

and the amount of the additional MIPS adjustment 

factor under paragraph (6)(C) and the determination 

of such amounts. 

(ii) The establishment of the performance standards 

under paragraph (3) and the performance period 

under paragraph (4). 

97 

(iii) The identification of measures and activities 

specified under paragraph (2)(B) and information 

made public or posted on the Physician Compare 

Internet website of the Centers for Medicare & Medicaid Services under paragraph (9). 

(iv) The methodology developed under paragraph (5) 

that is used to calculate performance scores and the 

calculation of such scores, including the weighting of 

measures and activities under such methodology. 

(r) COLLABORATING WITH THE PHYSICIAN, PRACTITIONER, AND

OTHER STAKEHOLDER COMMUNITIES TO IMPROVE RESOURCE USE

MEASUREMENT.— 

(1) IN GENERAL.—In order to involve the physician, practitioner, and other stakeholder communities in enhancing the infrastructure for resource use measurement, including for purposes of the Merit-based Incentive Payment System under subsection (q) and alternative payment models under section 

1833(z), the Secretary shall undertake the steps described in 

the succeeding provisions of this subsection. 

(2) DEVELOPMENT OF CARE EPISODE AND PATIENT CONDITION

GROUPS AND CLASSIFICATION CODES.— 

(A) IN GENERAL.—In order to classify similar patients 

into care episode groups and patient condition groups, the 

Secretary shall undertake the steps described in the succeeding provisions of this paragraph. 

(B) PUBLIC AVAILABILITY OF EXISTING EFFORTS TO DESIGN

AN EPISODE GROUPER.—Not later than 180 days after the 

date of the enactment of this subsection, the Secretary 

shall post on the Internet website of the Centers for Medicare & Medicaid Services a list of the episode groups developed pursuant to subsection (n)(9)(A) and related descriptive information. 

(C) STAKEHOLDER INPUT.—The Secretary shall accept, 

through the date that is 120 days after the day the Secretary posts the list pursuant to subparagraph (B), suggestions from physician specialty societies, applicable practitioner organizations, and other stakeholders for episode 

groups in addition to those posted pursuant to such subparagraph, and specific clinical criteria and patient characteristics to classify patients into— 

(i) care episode groups; and 

(ii) patient condition groups. 

(D) DEVELOPMENT OF PROPOSED CLASSIFICATION

CODES.— 

(i) IN GENERAL.—Taking into account the information described in subparagraph (B) and the information received under subparagraph (C), the Secretary 

shall— 

(I) establish care episode groups and patient 

condition groups, which account for a target of an 

estimated 1⁄2 of expenditures under parts A and B 

(with such target increasing over time as appropriate); and 

(II) assign codes to such groups. 

98 

(ii) CARE EPISODE GROUPS.—In establishing the care 

episode groups under clause (i), the Secretary shall 

take into account— 

(I) 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 

occurs, and the principal procedures or services 

furnished; and 

(II) other factors determined appropriate by the 

Secretary. 

(iii) PATIENT CONDITION GROUPS.—In establishing 

the patient condition groups under clause (i), the Secretary shall take into account— 

(I) the patient’s clinical history at the time of a 

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 a previous period, such 

as 3 months); and 

(II) other factors determined appropriate by the 

Secretary, such as eligibility status under this 

title (including eligibility under section 226(a), 

226(b), or 226A, and dual eligibility under this 

title and title XIX). 

(E) DRAFT CARE EPISODE AND PATIENT CONDITION

GROUPS AND CLASSIFICATION CODES.—Not later than 270 

days after the end of the comment period described in subparagraph (C), the Secretary shall post on the Internet 

website of the Centers for Medicare & Medicaid Services 

a draft list of the care episode and patient condition codes 

established under subparagraph (D) (and the criteria and 

characteristics assigned to such code). 

(F) SOLICITATION OF INPUT.—The Secretary shall seek, 

through the date that is 120 days after the Secretary posts 

the list pursuant to subparagraph (E), comments from 

physician specialty societies, applicable practitioner organizations, and other stakeholders, including representatives of individuals entitled to benefits under part A or enrolled under this part, regarding the care episode and patient condition groups (and codes) posted under subparagraph (E). In seeking such comments, the Secretary shall 

use one or more mechanisms (other than notice and comment rulemaking) that may include use of open door forums, town hall meetings, or other appropriate mechanisms. 

(G) OPERATIONAL LIST OF CARE EPISODE AND PATIENT

CONDITION GROUPS AND CODES.—Not later than 270 days 

after the end of the comment period described in subparagraph (F), taking into account the comments received 

under such subparagraph, the Secretary shall post on the 

Internet website of the Centers for Medicare & Medicaid 

Services an operational list of care episode and patient 

condition codes (and the criteria and characteristics assigned to such code). 

99 

(H) SUBSEQUENT REVISIONS.—Not later than November 1 

of each year (beginning with 2018), the Secretary shall, 

through rulemaking, make revisions to the operational 

lists of care episode and patient condition codes as the Secretary determines may be appropriate. Such revisions may 

be based on experience, new information developed pursuant to subsection (n)(9)(A), and input from the physician 

specialty societies, applicable practitioner organizations, 

and other stakeholders, including representatives of individuals entitled to benefits under part A or enrolled under 

this part. 

(3) ATTRIBUTION OF PATIENTS TO PHYSICIANS OR PRACTITIONERS.— 

(A) IN GENERAL.—In order to facilitate the attribution of 

patients and episodes (in whole or in part) to one or more 

physicians or applicable practitioners furnishing items and 

services, the Secretary shall undertake the steps described 

in the succeeding provisions of this paragraph. 

(B) DEVELOPMENT OF PATIENT RELATIONSHIP CATEGORIES

AND CODES.—The Secretary shall 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 furnishing an 

item or service. Such patient relationship categories shall 

include different relationships of the physician or applicable practitioner to the patient (and the codes may reflect 

combinations of such categories), such as a physician or 

applicable practitioner who— 

(i) considers themself to have the primary responsibility for the general and ongoing care for the patient 

over extended periods of time; 

(ii) 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; 

(iii) 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; 

(iv) furnishes items and services to the patient on an 

occasional basis, usually at the request of another physician or practitioner; or 

(v) furnishes items and services only as ordered by 

another physician or practitioner. 

(C) DRAFT LIST OF PATIENT RELATIONSHIP CATEGORIES

AND CODES.—Not later than one year after the date of the 

enactment of this subsection, the Secretary shall post on 

the Internet website of the Centers for Medicare & Medicaid Services a draft list of the patient relationship categories and codes developed under subparagraph (B). 

(D) STAKEHOLDER INPUT.—The Secretary shall seek, 

through the date that is 120 days after the Secretary posts 

the list pursuant to subparagraph (C), comments from 

physician specialty societies, applicable practitioner organizations, and other stakeholders, including representatives of individuals entitled to benefits under part A or enVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00099 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
100 

rolled under this part, regarding the patient relationship 

categories and codes posted under subparagraph (C). In 

seeking such comments, the Secretary shall use one or 

more mechanisms (other than notice and comment rulemaking) that may include open door forums, town hall 

meetings, web-based forums, or other appropriate mechanisms. 

(E) OPERATIONAL LIST OF PATIENT RELATIONSHIP CAT- EGORIES AND CODES.—Not later than 240 days after the 

end of the comment period described in subparagraph (D), 

taking into account the comments received under such 

subparagraph, the Secretary shall post on the Internet 

website of the Centers for Medicare & Medicaid Services 

an operational list of patient relationship categories and 

codes. 

(F) SUBSEQUENT REVISIONS.—Not later than November 1 

of each year (beginning with 2018), the Secretary shall, 

through rulemaking, make revisions to the operational list 

of patient relationship categories and codes as the Secretary determines appropriate. Such revisions may be 

based on experience, new information developed pursuant 

to subsection (n)(9)(A), and input from the physician specialty societies, applicable practitioner organizations, and 

other stakeholders, including representatives of individuals entitled to benefits under part A or enrolled under 

this part. 

(4) REPORTING OF INFORMATION FOR RESOURCE USE MEASURE- MENT.—Claims submitted for items and services furnished by 

a physician or applicable practitioner on or after January 1, 

2018, shall, as determined appropriate by the Secretary, include— 

(A) applicable codes established under paragraphs (2) 

and (3); and 

(B) the national provider identifier of the ordering physician or applicable practitioner (if different from the billing 

physician or applicable practitioner). 

(5) METHODOLOGY FOR RESOURCE USE ANALYSIS.— (A) IN GENERAL.—In order to evaluate the resources 

used to treat patients (with respect to care episode and patient condition groups), the Secretary shall, as the Secretary determines appropriate— 

(i) use the patient relationship codes reported on 

claims pursuant to paragraph (4) to attribute patients 

(in whole or in part) to one or more physicians and applicable practitioners; 

(ii) use the care episode and patient condition codes 

reported on claims pursuant to paragraph (4) as a 

basis to compare similar patients and care episodes 

and patient condition groups; and 

(iii) conduct an analysis of resource use (with respect to care episodes and patient condition groups of 

such patients). 

(B) ANALYSIS OF PATIENTS OF PHYSICIANS AND PRACTITIONERS.—In conducting the analysis described in subparagraph (A)(iii) with respect to patients attributed to 

101 

physicians and applicable practitioners, the Secretary 

shall, as feasible— 

(i) use the claims data experience of such patients 

by patient condition codes during a common period, 

such as 12 months; and 

(ii) use the claims data experience of such patients 

by care episode codes— 

(I) in the case of episodes without a hospitalization, during periods of time (such as the number 

of days) determined appropriate by the Secretary; 

and 

(II) in the case of episodes with a hospitalization, during periods of time (such as the number 

of days) before, during, and after the hospitalization. 

(C) MEASUREMENT OF RESOURCE USE.—In measuring 

such resource use, the Secretary— 

(i) shall use per patient total allowed charges for all 

services under part A and this part (and, if the Secretary determines appropriate, part D) for the analysis 

of patient resource use, by care episode codes and by 

patient condition codes; and 

(ii) may, as determined appropriate, 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). 

(D) STAKEHOLDER INPUT.—The Secretary shall seek comments from the physician specialty societies, applicable 

practitioner organizations, and other stakeholders, including representatives of individuals entitled to benefits 

under part A or enrolled under this part, regarding the resource use methodology established pursuant to this paragraph. In seeking comments the Secretary shall use one or 

more mechanisms (other than notice and comment rulemaking) that may include open door forums, town hall 

meetings, web-based forums, or other appropriate mechanisms. 

(6) IMPLEMENTATION.—To the extent that the Secretary contracts with an entity to carry out any part of the provisions of 

this subsection, the Secretary may not contract with an entity 

or an entity with a subcontract if the entity or subcontracting 

entity currently makes recommendations to the Secretary on 

relative values for services under the fee schedule for physicians’ services under this section. 

(7) LIMITATION.—There shall be no administrative or judicial 

review under section 1869, section 1878, or otherwise of— 

(A) care episode and patient condition groups and codes 

established under paragraph (2); 

(B) patient relationship categories and codes established 

under paragraph (3); and 

(C) measurement of, and analyses of resource use with 

respect to, care episode and patient condition codes and 

patient relationship codes pursuant to paragraph (5). 

102 

(8) ADMINISTRATION.—Chapter 35 of title 44, United States 

Code, shall not apply to this section. 

(9) DEFINITIONS.—In this subsection: 

(A) PHYSICIAN.—The term ‘‘physician’’ has the meaning 

given such term in section 1861(r)(1). 

(B) APPLICABLE PRACTITIONER.—The term ‘‘applicable 

practitioner’’ means— 

(i) a physician assistant, nurse practitioner, and 

clinical nurse specialist (as such terms are defined in 

section 1861(aa)(5)), and a certified registered nurse 

anesthetist (as defined in section 1861(bb)(2)); and 

(ii) beginning January 1, 2019, such other eligible 

professionals (as defined in subsection (k)(3)(B)) as 

specified by the Secretary. 

(10) CLARIFICATION.—The provisions of sections 1890(b)(7) 

and 1890A shall not apply to this subsection. 

(s) PRIORITIES AND FUNDING FOR MEASURE DEVELOPMENT.— 

(1) PLAN IDENTIFYING MEASURE DEVELOPMENT PRIORITIES

AND TIMELINES.— 

(A) DRAFT MEASURE DEVELOPMENT PLAN.—Not later 

than January 1, 2016, the Secretary shall develop, and 

post on the Internet website of the Centers for Medicare 

& Medicaid Services, a draft plan for the development of 

quality measures for application under the applicable provisions (as defined in paragraph (5)). Under such plan the 

Secretary shall— 

(i) address how measures used by private payers 

and integrated delivery systems could be incorporated 

under title XVIII; 

(ii) describe how coordination, to the extent possible, 

will occur across organizations developing such measures; and 

(iii) take into account how clinical best practices and 

clinical practice guidelines should be used in the development of quality measures. 

(B) QUALITY DOMAINS.—For purposes of this subsection, 

the term ‘‘quality domains’’ means at least the following 

domains: 

(i) Clinical care. 

(ii) Safety. 

(iii) Care coordination. 

(iv) Patient and caregiver experience. 

(v) Population health and prevention. 

(C) CONSIDERATION.—In developing the draft plan under 

this paragraph, the Secretary shall consider— 

(i) gap analyses conducted by the entity with a contract under section 1890(a) or other contractors or entities; 

(ii) whether measures are applicable across health 

care settings; 

(iii) clinical practice improvement activities submitted under subsection (q)(2)(C)(iv) for identifying 

possible areas for future measure development and 

identifying existing gaps with respect to such measures; and 

103 

(iv) the quality domains applied under this subsection. 

(D) PRIORITIES.—In developing the draft plan under this 

paragraph, the Secretary shall give priority to the following types of measures: 

(i) Outcome measures, including patient reported 

outcome and functional status measures. 

(ii) Patient experience measures. 

(iii) Care coordination measures. 

(iv) Measures of appropriate use of services, including measures of over use. 

(E) STAKEHOLDER INPUT.—The Secretary shall accept 

through March 1, 2016, comments on the draft plan posted 

under paragraph (1)(A) from the public, including health 

care providers, payers, consumers, and other stakeholders. 

(F) FINAL MEASURE DEVELOPMENT PLAN.—Not later than 

May 1, 2016, taking into account the comments received 

under this subparagraph, the Secretary shall finalize the 

plan and post on the Internet website of the Centers for 

Medicare & Medicaid Services an operational plan for the 

development of quality measures for use under the applicable provisions. Such plan shall be updated as appropriate. 

(2) CONTRACTS AND OTHER ARRANGEMENTS FOR QUALITY

MEASURE DEVELOPMENT.— 

(A) IN GENERAL.—The Secretary shall enter into contracts or other arrangements with entities for the purpose 

of developing, improving, updating, or expanding in accordance with the plan under paragraph (1) quality measures for application under the applicable provisions. Such 

entities shall include organizations with quality measure 

development expertise. 

(B) PRIORITIZATION.— 

(i) IN GENERAL.—In entering into contracts or other 

arrangements under subparagraph (A), the Secretary 

shall give priority to the development of the types of 

measures described in paragraph (1)(D). 

(ii) CONSIDERATION.—In selecting measures for development under this subsection, the Secretary shall 

consider— 

(I) whether such measures would be electronically specified; and 

(II) clinical practice guidelines to the extent that 

such guidelines exist. 

(3) ANNUAL REPORT BY THE SECRETARY.— 

(A) IN GENERAL.—Not later than May 1, 2017, and annually thereafter, the Secretary shall post on the Internet 

website of the Centers for Medicare & Medicaid Services 

a report on the progress made in developing quality measures for application under the applicable provisions. 

(B) REQUIREMENTS.—Each report submitted pursuant to 

subparagraph (A) shall include the following: 

(i) A description of the Secretary’s efforts to implement this paragraph. 

104 

(ii) With respect to the measures developed during 

the previous year— 

(I) a description of the total number of quality 

measures developed and the types of such measures, such as an outcome or patient experience 

measure; 

(II) the name of each measure developed; 

(III) the name of the developer and steward of 

each measure; 

(IV) with respect to each type of measure, an estimate of the total amount expended under this 

title to develop all measures of such type; and 

(V) whether the measure would be electronically 

specified. 

(iii) With respect to measures in development at the 

time of the report— 

(I) the information described in clause (ii), if 

available; and 

(II) a timeline for completion of the development 

of such measures. 

(iv) A description of any updates to the plan under 

paragraph (1) (including newly identified gaps and the 

status of previously identified gaps) and the inventory 

of measures applicable under the applicable provisions. 

(v) Other information the Secretary determines to be 

appropriate. 

(4) STAKEHOLDER INPUT.—With respect to paragraph (1), the 

Secretary shall seek stakeholder input with respect to— 

(A) the identification of gaps where no quality measures 

exist, particularly with respect to the types of measures 

described in paragraph (1)(D); 

(B) prioritizing quality measure development to address 

such gaps; and 

(C) other areas related to quality measure development 

determined appropriate by the Secretary. 

(5) DEFINITION OF APPLICABLE PROVISIONS.—In this subsection, the term ‘‘applicable provisions’’ means the following 

provisions: 

(A) Subsection (q)(2)(B)(i). 

(B) Section 1833(z)(2)(C). 

(6) FUNDING.—For purposes of carrying out this subsection, 

the Secretary shall provide for the transfer, from the Federal 

Supplementary Medical Insurance Trust Fund under section 

1841, of $15,000,000 to the Centers for Medicare & Medicaid 

Services Program Management Account for each of fiscal years 

2015 through 2019. Amounts transferred under this paragraph 

shall remain available through the end of fiscal year 2022. 

(7) ADMINISTRATION.—Chapter 35 of title 44, United States 

Code, shall not apply to the collection of information for the development of quality measures. 

* * * * * * * 

105 

PART C—MEDICARE+CHOICE PROGRAM

* * * * * * * 

BENEFITS AND BENEFICIARY PROTECTIONS

SEC. 1852. (a) BASIC BENEFITS.— (1) REQUIREMENT.— (A) IN GENERAL.—Except as provided in section 

1859(b)(3) for MSA plans and except as provided in paragraph (6) for MA regional plans, each Medicare+Choice 

plan shall provide to members enrolled under this part, 

through providers and other persons that meet the applicable requirements of this title and part A of title XI, benefits under the original medicare fee-for-service program option (and, for plan years before 2006, additional benefits 

required under section 1854(f)(1)(A)). 

(B) BENEFITS UNDER THE ORIGINAL MEDICARE FEE-FOR- SERVICE PROGRAM OPTION DEFINED.— (i) IN GENERAL.—For purposes of this part, the term 

‘‘benefits under the original medicare fee-for-service 

program option’’ means those items and services (other 

than hospice care or coverage for organ acquisitions 

for kidney transplants, including as covered under section 1881(d)) for which benefits are available under 

parts A and B to individuals entitled to benefits under 

part A and enrolled under part B, with cost-sharing 

for those services as required under parts A and B or, 

subject to clause (iii), an actuarially equivalent level of 

cost-sharing as determined in this part. For plan year 

2020 and each subsequent plan year, for purposes of 

subsection (m) and section 1854, in the case that an 

MA plan makes an election described in subsection 

(m)(1) with respect to such plan year, additional telehealth services shall be treated as a benefit under the 

original medicare fee-for-service program option with 

respect to such plan and plan year. 

(ii) SPECIAL RULE FOR REGIONAL PLANS.—In the case 

of an MA regional plan in determining an actuarially 

equivalent level of cost-sharing with respect to benefits under the original medicare fee-for-service program option, there shall only be taken into account, 

with respect to the application of section 1858(b)(2), 

such expenses only with respect to subparagraph (A) 

of such section. 

(iii) LIMITATION ON VARIATION OF COST SHARING FOR

CERTAIN BENEFITS.—Subject to clause (v), cost-sharing 

for services described in clause (iv) shall not exceed 

the cost-sharing required for those services under 

parts A and B. 

(iv) SERVICES DESCRIBED.—The following services 

are described in this clause: 

(I) Chemotherapy administration services. 

(II) Renal dialysis services (as defined in section 

1881(b)(14)(B)). 

(III) Skilled nursing care. 

106 

(IV) Such other services that the Secretary determines appropriate (including services that the 

Secretary determines require a high level of predictability and transparency for beneficiaries). 

(v) EXCEPTION.—In the case of services described in 

clause (iv) for which there is no cost-sharing required 

under parts A and B, cost-sharing may be required for 

those services in accordance with clause (i). 

(2) SATISFACTION OF REQUIREMENT.— (A) IN GENERAL.—A Medicare+Choice plan (other than 

an MSA plan) offered by a Medicare+Choice organization 

satisfies paragraph (1)(A), with respect to benefits for 

items and services furnished other than through a provider or other person that has a contract with the organization offering the plan, if the plan provides payment in 

an amount so that— 

(i) the sum of such payment amount and any cost 

sharing provided for under the plan, is equal to at 

least 

(ii) the total dollar amount of payment for such 

items and services as would otherwise be authorized 

under parts A and B (including any balance billing 

permitted under such parts). 

(B) REFERENCE TO RELATED PROVISIONS.—For provision 

relating to— 

(i) limitations on balance billing against 

Medicare+Choice organizations for non-contract providers, see sections 1852(k) and 1866(a)(1)(O), and 

(ii) limiting actuarial value of enrollee liability for 

covered benefits, see section 1854(e). 

(C) ELECTION OF UNIFORM COVERAGE DETERMINATION.— In the case of a Medicare+Choice organization that offers 

a Medicare+Choice plan in an area in which more than 

one local coverage determination is applied with respect to 

different parts of the area, the organization may elect to 

have the local coverage determination for the part of the 

area that is most beneficial to Medicare+Choice enrollees 

(as identified by the Secretary) apply with respect to all 

Medicare+Choice enrollees enrolled in the plan. 

(3) SUPPLEMENTAL BENEFITS.— 

(A) BENEFITS INCLUDED SUBJECT TO SECRETARY’S APPROVAL.—Each Medicare+Choice organization may provide 

to individuals enrolled under this part, other than under 

an MSA plan (without affording those individuals an option to decline the coverage), supplemental health care 

benefits that the Secretary may approve. The Secretary 

shall approve any such supplemental benefits unless the 

Secretary determines that including such supplemental 

benefits would substantially discourage enrollment by 

Medicare+Choice eligible individuals with the organization. 

(B) AT ENROLLEES’ OPTION.— (i) IN GENERAL.—Subject to clause (ii), a 

Medicare+Choice organization may provide to individuals enrolled under this part supplemental health care 

107 

benefits that the individuals may elect, at their option, 

to have covered. 

(ii) SPECIAL RULE FOR MSA PLANS.—A 

Medicare+Choice organization may not provide, under 

an MSA plan, supplemental health care benefits that 

cover the deductible described in section 1859(b)(2)(B). 

In applying the previous sentence, health benefits described in section 1882(u)(2)(B) shall not be treated as 

covering such deductible. 

(C) APPLICATION TO MEDICARE+CHOICE PRIVATE FEE- FOR-SERVICE PLANS.—Nothing in this paragraph shall be 

construed as preventing a Medicare+Choice private fee-forservice plan from offering supplemental benefits that include payment for some or all of the balance billing 

amounts permitted consistent with section 1852(k) and 

coverage of additional services that the plan finds to be 

medically necessary. Such benefits may include reductions 

in cost-sharing below the actuarial value specified in section 1854(e)(4)(B). 

(4) ORGANIZATION AS SECONDARY PAYER.—Notwithstanding 

any other provision of law, a Medicare+Choice organization 

may (in the case of the provision of items and services to an 

individual under a Medicare+Choice plan under circumstances 

in which payment under this title is made secondary pursuant 

to section 1862(b)(2)) charge or authorize the provider of such 

services to charge, in accordance with the charges allowed 

under a law, plan, or policy described in such section— 

(A) the insurance carrier, employer, or other entity 

which under such law, plan, or policy is to pay for the provision of such services, or 

(B) such individual to the extent that the individual has 

been paid under such law, plan, or policy for such services. 

(5) NATIONAL COVERAGE DETERMINATIONS AND LEGISLATIVE

CHANGES IN BENEFITS.—If there is a national coverage determination or legislative change in benefits required to be provided under this part made in the period beginning on the date 

of an announcement under section 1853(b) and ending on the 

date of the next announcement under such section and the Secretary projects that the determination will result in a significant change in the costs to a Medicare+Choice organization of 

providing the benefits that are the subject of such national coverage determination and that such change in costs was not incorporated in the determination of the annual 

Medicare+Choice capitation rate under section 1853 included 

in the announcement made at the beginning of such period, 

then, unless otherwise required by law— 

(A) such determination or legislative change in benefits 

shall not apply to contracts under this part until the first 

contract year that begins after the end of such period, and 

(B) if such coverage determination or legislative change 

provides for coverage of additional benefits or coverage 

under additional circumstances, section 1851(i)(1) shall not 

apply to payment for such additional benefits or benefits 

provided under such additional circumstances until the 

first contract year that begins after the end of such period. 

108 

The projection under the previous sentence shall be based on 

an analysis by the Chief Actuary of the Centers for Medicare 

& Medicaid Services of the actuarial costs associated with the 

coverage determination or legislative change in benefits. 

(6) SPECIAL BENEFIT RULES FOR REGIONAL PLANS.—In the 

case of an MA plan that is an MA regional plan, benefits under 

the plan shall include the benefits described in paragraphs (1) 

and (2) of section 1858(b). 

(7) LIMITATION ON COST-SHARING FOR DUAL ELIGIBLES AND

QUALIFIED MEDICARE BENEFICIARIES.—In the case of an individual who is a full-benefit dual eligible individual (as defined 

in section 1935(c)(6)) or a qualified medicare beneficiary (as defined in section 1905(p)(1)) and who is enrolled in a specialized 

Medicare Advantage plan for special needs individuals described in section 1859(b)(6)(B)(ii), the plan may not impose 

cost-sharing that exceeds the amount of cost-sharing that 

would be permitted with respect to the individual under title 

XIX if the individual were not enrolled in such plan. 

(b) ANTIDISCRIMINATION.— 

(1) BENEFICIARIES.—A Medicare Advantage organization may 

not deny, limit, or condition the coverage or provision of benefits under this part, for individuals permitted to be enrolled 

with the organization under this part, based on any health status-related factor described in section 2702(a)(1) of the Public 

Health Service Act. The Secretary shall not approve a plan of 

an organization if the Secretary determines that the design of 

the plan and its benefits are likely to substantially discourage 

enrollment by certain MA eligible individuals with the organization. 

(2) PROVIDERS.—A Medicare+Choice organization shall not 

discriminate with respect to participation, reimbursement, or 

indemnification as to any provider who is acting within the 

scope of the provider’s license or certification under applicable 

State law, solely on the basis of such license or certification. 

This paragraph shall not be construed to prohibit a plan from 

including providers only to the extent necessary to meet the 

needs of the plan’s enrollees or from establishing any measure 

designed to maintain quality and control costs consistent with 

the responsibilities of the plan. 

(c) DISCLOSURE REQUIREMENTS.— 

(1) DETAILED DESCRIPTION OF PLAN PROVISIONS.—A 

Medicare+Choice organization shall disclose, in clear, accurate, 

and standardized form to each enrollee with a 

Medicare+Choice plan offered by the organization under this 

part at the time of enrollment and at least annually thereafter, 

the following information regarding such plan: 

(A) SERVICE AREA.—The plan’s service area. 

(B) BENEFITS.—Benefits offered under the plan, including information described in section 1851(d)(3)(A) and exclusions from coverage and, if it is an MSA plan, a comparison of benefits under such a plan with benefits under 

other Medicare+Choice plans. 

(C) ACCESS.—The number, mix, and distribution of plan 

providers, out-of-network coverage (if any) provided by the 

109 

plan, and any point-of-service option (including the supplemental premium for such option). 

(D) OUT-OF-AREA COVERAGE.—Out-of-area coverage provided by the plan. 

(E) EMERGENCY COVERAGE.—Coverage of emergency 

services, including— 

(i) the appropriate use of emergency services, including use of the 911 telephone system or its local equivalent in emergency situations and an explanation of 

what constitutes an emergency situation; 

(ii) the process and procedures of the plan for obtaining emergency services; and 

(iii) the locations of (I) emergency departments, and 

(II) other settings, in which plan physicians and hospitals provide emergency services and post-stabilization care. 

(F) SUPPLEMENTAL BENEFITS.—Supplemental benefits 

available from the organization offering the plan, including— 

(i) whether the supplemental benefits are optional, 

(ii) the supplemental benefits covered, and 

(iii) the Medicare+Choice monthly supplemental 

beneficiary premium for the supplemental benefits. 

(G) PRIOR AUTHORIZATION RULES.—Rules regarding prior 

authorization or other review requirements that could result in nonpayment. 

(H) PLAN GRIEVANCE AND APPEALS PROCEDURES.—All 

plan appeal or grievance rights and procedures. 

(I) QUALITY IMPROVEMENT PROGRAM.—A description of 

the organization’s quality improvement program under 

subsection (e). 

(2) DISCLOSURE UPON REQUEST.—Upon request of a 

Medicare+Choice eligible individual, a Medicare+Choice organization must provide the following information to such individual: 

(A) The general coverage information and general comparative plan information made available under clauses (i) 

and (ii) of section 1851(d)(2)(A). 

(B) Information on procedures used by the organization 

to control utilization of services and expenditures. 

(C) Information on the number of grievances, redeterminations, and appeals and on the disposition in the aggregate of such matters. 

(D) An overall summary description as to the method of 

compensation of participating physicians. 

(d) ACCESS TO SERVICES.— 

(1) IN GENERAL.—A Medicare+Choice organization offering a 

Medicare+Choice plan may select the providers from whom the 

benefits under the plan are provided so long as— 

(A) the organization makes such benefits available and 

accessible to each individual electing the plan within the 

plan service area with reasonable promptness and in a 

manner which assures continuity in the provision of benefits; 

110 

(B) when medically necessary the organization makes 

such benefits available and accessible 24 hours a day and 

7 days a week; 

(C) the plan provides for reimbursement with respect to 

services which are covered under subparagraphs (A) and 

(B) and which are provided to such an individual other 

than through the organization, if— 

(i) the services were not emergency services (as defined in paragraph (3)), but (I) the services were medically necessary and immediately required because of 

an unforeseen illness, injury, or condition, and (II) it 

was not reasonable given the circumstances to obtain 

the services through the organization, 

(ii) the services were renal dialysis services and 

were provided other than through the organization because the individual was temporarily out of the plan’s 

service area, or 

(iii) the services are maintenance care or post-stabilization care covered under the guidelines established under paragraph (2); 

(D) the organization provides access to appropriate providers, including credentialed specialists, for medically 

necessary treatment and services; and 

(E) coverage is provided for emergency services (as defined in paragraph (3)) without regard to prior authorization or the emergency care provider’s contractual relationship with the organization. 

(2) GUIDELINES RESPECTING COORDINATION OF POST-STABILIZATION CARE.—A Medicare+Choice plan shall comply with 

such guidelines as the Secretary may prescribe relating to promoting efficient and timely coordination of appropriate maintenance and post-stabilization care of an enrollee after the enrollee has been determined to be stable under section 1867. 

(3) DEFINITION OF EMERGENCY SERVICES.—In this subsection— 

(A) IN GENERAL.—The term ‘‘emergency services’’ means, 

with respect to an individual enrolled with an organization, covered inpatient and outpatient services that— 

(i) are furnished by a provider that is qualified to 

furnish such services under this title, and 

(ii) are needed to evaluate or stabilize an emergency 

medical condition (as defined in subparagraph (B)). 

(B) EMERGENCY MEDICAL CONDITION BASED ON PRUDENT

LAYPERSON.—The term ‘‘emergency medical condition’’ 

means a medical condition manifesting itself by acute 

symptoms of sufficient severity (including severe pain) 

such that a prudent layperson, who possesses an average 

knowledge of health and medicine, could reasonably expect 

the absence of immediate medical attention to result in— 

(i) placing the health of the individual (or, with respect to a pregnant woman, the health of the woman 

or her unborn child) in serious jeopardy, 

(ii) serious impairment to bodily functions, or 

(iii) serious dysfunction of any bodily organ or part. 

111 

(4) ASSURING ACCESS TO SERVICES IN MEDICARE+CHOICE

PRIVATE FEE-FOR-SERVICE PLANS.—In addition to any other 

requirements under this part, in the case of a 

Medicare+Choice private fee-for-service plan, the organization offering the plan must demonstrate to the Secretary 

that the organization has sufficient number and range of 

health care professionals and providers willing to provide 

services under the terms of the plan. Subject to paragraphs (5) and (6), the Secretary shall find that an organization has met such requirement with respect to any category of health care professional or provider if, with respect to that category of provider— 

(A) the plan has established payment rates for covered services furnished by that category of provider 

that are not less than the payment rates provided for 

under part A, part B, or both, for such services, or 

(B) the plan has contracts or agreements (other than 

deemed contracts or agreements under subsection 

(j)(6)) with a sufficient number and range of providers 

within such category to meet the access standards in 

subparagraphs (A) through (E) of paragraph (1), 

or a combination of both. The previous sentence shall not 

be construed as restricting the persons from whom enrollees under such a plan may obtain covered benefits, except 

that, if a plan entirely meets such requirement with respect to a category of health care professional or provider 

on the basis of subparagraph (B), it may provide for a 

higher beneficiary copayment in the case of health care 

professionals and providers of that category who do not 

have contracts or agreements (other than deemed contracts or agreements under subsection (j)(6)) to provide 

covered services under the terms of the plan. 

(5) REQUIREMENT OF CERTAIN NONEMPLOYER MEDICARE ADVANTAGE PRIVATE FEE-FOR-SERVICE PLANS TO USE CONTRACTS

WITH PROVIDERS.— 

(A) IN GENERAL.—For plan year 2011 and subsequent 

plan years, in the case of a Medicare Advantage private 

fee-for-service plan not described in paragraph (1) or (2) of 

section 1857(i) operating in a network area (as defined in 

subparagraph (B)), the plan shall meet the access standards under paragraph (4) in that area only through entering into written contracts as provided for under subparagraph (B) of such paragraph and not, in whole or in part, 

through the establishment of payment rates meeting the 

requirements under subparagraph (A) of such paragraph. 

(B) NETWORK AREA DEFINED.—For purposes of subparagraph (A), the term ‘‘network area’’ means, for a plan year, 

an area which the Secretary identifies (in the Secretary’s 

announcement of the proposed payment rates for the previous plan year under section 1853(b)(1)(B)) as having at 

least 2 network-based plans (as defined in subparagraph 

(C)) with enrollment under this part as of the first day of 

the year in which such announcement is made. 

(C) NETWORK-BASED PLAN DEFINED.— 

112 

(i) IN GENERAL.—For purposes of subparagraph (B), 

the term ‘‘network-based plan’’ means— 

(I) except as provided in clause (ii), a Medicare 

Advantage plan that is a coordinated care plan described in section 1851(a)(2)(A)(i); 

(II) a network-based MSA plan; and 

(III) a reasonable cost reimbursement plan 

under section 1876. 

(ii) EXCLUSION OF NON-NETWORK REGIONAL PPOS.— 

The term ‘‘network-based plan’’ shall not include an 

MA regional plan that, with respect to the area, meets 

access adequacy standards under this part substantially through the authority of section 422.112(a)(1)(ii) 

of title 42, Code of Federal Regulations, rather than 

through written contracts. 

(6) REQUIREMENT OF ALL EMPLOYER MEDICARE ADVANTAGE

PRIVATE FEE-FOR-SERVICE PLANS TO USE CONTRACTS WITH PROVIDERS.—For plan year 2011 and subsequent plan years, in the 

case of a Medicare Advantage private fee-for-service plan that 

is described in paragraph (1) or (2) of section 1857(i), the plan 

shall meet the access standards under paragraph (4) only 

through entering into written contracts as provided for under 

subparagraph (B) of such paragraph and not, in whole or in 

part, through the establishment of payment rates meeting the 

requirements under subparagraph (A) of such paragraph. 

(e) QUALITY IMPROVEMENT PROGRAM.— 

(1) IN GENERAL.—Each MA organization shall have an ongoing quality improvement program for the purpose of improving 

the quality of care provided to enrollees in each MA plan offered by such organization. 

(2) CHRONIC CARE IMPROVEMENT PROGRAMS.—As part of the 

quality improvement program under paragraph (1), each MA 

organization shall have a chronic care improvement program. 

Each chronic care improvement program shall have a method 

for monitoring and identifying enrollees with multiple or sufficiently severe chronic conditions that meet criteria established 

by the organization for participation under the program. 

(3) DATA.— 

(A) COLLECTION, ANALYSIS, AND REPORTING.— 

(i) IN GENERAL.—Except as provided in clauses (ii) 

and (iii) with respect to plans described in such 

clauses and subject to subparagraph (B), as part of the 

quality improvement program under paragraph (1), 

each MA organization shall provide for the collection, 

analysis, and reporting of data that permits the measurement of health outcomes and other indices of quality. With respect to MA private fee-for-service plans 

and MSA plans, the requirements under the preceding 

sentence may not exceed the requirements under this 

subparagraph with respect to MA local plans that are 

preferred provider organization plans, except that, for 

plan year 2010, the limitation under clause (iii) shall 

not apply and such requirements shall apply only with 

respect to administrative claims data. 

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(ii) SPECIAL REQUIREMENTS FOR SPECIALIZED MA

PLANS FOR SPECIAL NEEDS INDIVIDUALS.—In addition 

to the data required to be collected, analyzed, and reported under clause (i) and notwithstanding the limitations under subparagraph (B), as part of the quality 

improvement program under paragraph (1), each MA 

organization offering a specialized Medicare Advantage plan for special needs individuals shall provide 

for the collection, analysis, and reporting of data that 

permits the measurement of health outcomes and 

other indices of quality with respect to the requirements described in paragraphs (2) through (5) of subsection (f). Such data may be based on claims data and 

shall be at the plan level. 

(iii) APPLICATION TO LOCAL PREFERRED PROVIDER ORGANIZATIONS AND MA REGIONAL PLANS.—Clause (i) 

shall apply to MA organizations with respect to MA 

local plans that are preferred provider organization 

plans and to MA regional plans only insofar as services are furnished by providers or services, physicians, 

and other health care practitioners and suppliers that 

have contracts with such organization to furnish services under such plans. 

(iv) DEFINITION OF PREFERRED PROVIDER ORGANIZA- TION PLAN.—In this subparagraph, the term ‘‘preferred 

provider organization plan’’ means an MA plan that— 

(I) has a network of providers that have agreed 

to a contractually specified reimbursement for covered benefits with the organization offering the 

plan; 

(II) provides for reimbursement for all covered 

benefits regardless of whether such benefits are 

provided within such network of providers; and 

(III) is offered by an organization that is not licensed or organized under State law as a health 

maintenance organization. 

(B) LIMITATIONS.— (i) TYPES OF DATA.—The Secretary shall not collect 

under subparagraph (A) data on quality, outcomes, 

and beneficiary satisfaction to facilitate consumer 

choice and program administration other than the 

types of data that were collected by the Secretary as 

of November 1, 2003. 

(ii) CHANGES IN TYPES OF DATA.—Subject to subclause (iii), the Secretary may only change the types 

of data that are required to be submitted under subparagraph (A) after submitting to Congress a report 

on the reasons for such changes that was prepared in 

consultation with MA organizations and private accrediting bodies. 

(iii) CONSTRUCTION.—Nothing in the subsection 

shall be construed as restricting the ability of the Secretary to carry out the duties under section 

1851(d)(4)(D). 

(4) TREATMENT OF ACCREDITATION.— 

114 

(A) IN GENERAL.—The Secretary shall provide that a 

Medicare+Choice organization is deemed to meet all the 

requirements described in any specific clause of subparagraph (B) if the organization is accredited (and periodically 

reaccredited) by a private accrediting organization under a 

process that the Secretary has determined assures that the 

accrediting organization applies and enforces standards 

that meet or exceed the standards established under section 1856 to carry out the requirements in such clause. 

(B) REQUIREMENTS DESCRIBED.—The provisions described in this subparagraph are the following: 

(i) Paragraphs (1) through (3) of this subsection (relating to quality improvement programs). 

(ii) Subsection (b) (relating to antidiscrimination). 

(iii) Subsection (d) (relating to access to services). 

(iv) Subsection (h) (relating to confidentiality and accuracy of enrollee records). 

(v) Subsection (i) (relating to information on advance 

directives). 

(vi) Subsection (j) (relating to provider participation 

rules). 

(vii) The requirements described in section 1860D– 

4(j), to the extent such requirements apply under section 1860D–21(c). 

(C) TIMELY ACTION ON APPLICATIONS.—The Secretary 

shall determine, within 210 days after the date the Secretary receives an application by a private accrediting organization and using the criteria specified in section 

1865(a)(2), whether the process of the private accrediting 

organization meets the requirements with respect to any 

specific clause in subparagraph (B) with respect to which 

the application is made. The Secretary may not deny such 

an application on the basis that it seeks to meet the requirements with respect to only one, or more than one, 

such specific clause. 

(D) CONSTRUCTION.—Nothing in this paragraph shall be 

construed as limiting the authority of the Secretary under 

section 1857, including the authority to terminate contracts with Medicare+Choice organizations under subsection (c)(2) of such section. 

(f) GRIEVANCE MECHANISM.—Each Medicare+Choice organization 

must provide meaningful procedures for hearing and resolving 

grievances between the organization (including any entity or individual through which the organization provides health care services) and enrollees with Medicare+Choice plans of the organization 

under this part. 

(g) COVERAGE DETERMINATIONS, RECONSIDERATIONS, AND AP- PEALS.— 

(1) DETERMINATIONS BY ORGANIZATION.— (A) IN GENERAL.—A Medicare+Choice organization shall 

have a procedure for making determinations regarding 

whether an individual enrolled with the plan of the organization under this part is entitled to receive a health service under this section and the amount (if any) that the individual is required to pay with respect to such service. 

115 

Subject to paragraph (3), such procedures shall provide for 

such determination to be made on a timely basis. 

(B) EXPLANATION OF DETERMINATION.—Such a determination that denies coverage, in whole or in part, shall 

be in writing and shall include a statement in understandable language of the reasons for the denial and a description of the reconsideration and appeals processes. 

(2) RECONSIDERATIONS.— (A) IN GENERAL.—The organization shall provide for reconsideration of a determination described in paragraph 

(1)(B) upon request by the enrollee involved. The reconsideration shall be within a time period specified by the Secretary, but shall be made, subject to paragraph (3), not 

later than 60 days after the date of the receipt of the request for reconsideration. 

(B) PHYSICIAN DECISION ON CERTAIN RECONSIDERATIONS.—A reconsideration relating to a determination to 

deny coverage based on a lack of medical necessity shall 

be made only by a physician with appropriate expertise in 

the field of medicine which necessitates treatment who is 

other than a physician involved in the initial determination. 

(3) EXPEDITED DETERMINATIONS AND RECONSIDERATIONS.— (A) RECEIPT OF REQUESTS.— (i) ENROLLEE REQUESTS.—An enrollee in a 

Medicare+Choice plan may request, either in writing 

or orally, an expedited determination under paragraph 

(1) or an expedited reconsideration under paragraph 

(2) by the Medicare+Choice organization. 

(ii) PHYSICIAN REQUESTS.—A physician, regardless 

whether the physician is affiliated with the organization or not, may request, either in writing or orally, 

such an expedited determination or reconsideration. 

(B) ORGANIZATION PROCEDURES.— 

(i) IN GENERAL.—The Medicare+Choice organization 

shall maintain procedures for expediting organization 

determinations and reconsiderations when, upon request of an enrollee, the organization determines that 

the application of the normal time frame for making 

a determination (or a reconsideration involving a determination) could seriously jeopardize the life or 

health of the enrollee or the enrollee’s ability to regain 

maximum function. 

(ii) EXPEDITION REQUIRED FOR PHYSICIAN REQUESTS.—In the case of a request for an expedited determination or reconsideration made under subparagraph (A)(ii), the organization shall expedite the determination or reconsideration if the request indicates 

that the application of the normal time frame for making a determination (or a reconsideration involving a 

determination) could seriously jeopardize the life or 

health of the enrollee or the enrollee’s ability to regain 

maximum function. 

(iii) TIMELY RESPONSE.—In cases described in 

clauses (i) and (ii), the organization shall notify the 

116 

enrollee (and the physician involved, as appropriate) of 

the determination or reconsideration under time limitations established by the Secretary, but not later 

than 72 hours of the time of receipt of the request for 

the determination or reconsideration (or receipt of the 

information necessary to make the determination or 

reconsideration), or such longer period as the Secretary may permit in specified cases. 

(4) INDEPENDENT REVIEW OF CERTAIN COVERAGE DENIALS.— The Secretary shall contract with an independent, outside entity to review and resolve in a timely manner reconsiderations 

that affirm denial of coverage, in whole or in part. The provisions of section 1869(c)(5) shall apply to independent outside 

entities under contract with the Secretary under this paragraph. 

(5) APPEALS.—An enrollee with a Medicare+Choice plan of a 

Medicare+Choice organization under this part who is dissatisfied by reason of the enrollee’s failure to receive any health 

service to which the enrollee believes the enrollee is entitled 

and at no greater charge than the enrollee believes the enrollee 

is required to pay is entitled, if the amount in controversy is 

$100 or more, to a hearing before the Secretary to the same 

extent as is provided in section 205(b), and in any such hearing 

the Secretary shall make the organization a party. If the 

amount in controversy is $1,000 or more, the individual or organization shall, upon notifying the other party, be entitled to 

judicial review of the Secretary’s final decision as provided in 

section 205(g), and both the individual and the organization 

shall be entitled to be parties to that judicial review. In applying subsections (b) and (g) of section 205 as provided in this 

paragraph, and in applying section 205(l) thereto, any reference therein to the Commissioner of Social Security or the 

Social Security Administration shall be considered a reference 

to the Secretary or the Department of Health and Human 

Services, respectively. The provisions of section 

1869(b)(1)(E)(iii) shall apply with respect to dollar amounts 

specified in the first 2 sentences of this paragraph in the same 

manner as they apply to the dollar amounts specified in section 

1869(b)(1)(E)(i). 

(h) CONFIDENTIALITY AND ACCURACY OF ENROLLEE RECORDS.— 

Insofar as a Medicare+Choice organization maintains medical 

records or other health information regarding enrollees under this 

part, the Medicare+Choice organization shall establish procedures— 

(1) to safeguard the privacy of any individually identifiable 

enrollee information; 

(2) to maintain such records and information in a manner 

that is accurate and timely; and 

(3) to assure timely access of enrollees to such records and 

information. 

(i) INFORMATION ON ADVANCE DIRECTIVES.—Each 

Medicare+Choice organization shall meet the requirement of section 1866(f) (relating to maintaining written policies and procedures respecting advance directives). 

(j) RULES REGARDING PROVIDER PARTICIPATION.— 

117 

(1) PROCEDURES.—Insofar as a Medicare+Choice organization 

offers benefits under a Medicare+Choice plan through agreements with physicians, the organization shall establish reasonable procedures relating to the participation (under an agreement between a physician and the organization) of physicians 

under such a plan. Such procedures shall include— 

(A) providing notice of the rules regarding participation, 

(B) providing written notice of participation decisions 

that are adverse to physicians, and 

(C) providing a process within the organization for appealing such adverse decisions, including the presentation 

of information and views of the physician regarding such 

decision. 

(2) CONSULTATION IN MEDICAL POLICIES.—A Medicare+Choice 

organization shall consult with physicians who have entered 

into participation agreements with the organization regarding 

the organization’s medical policy, quality, and medical management procedures. 

(3) PROHIBITING INTERFERENCE WITH PROVIDER ADVICE TO

ENROLLEES.— 

(A) IN GENERAL.—Subject to subparagraphs (B) and (C), 

a Medicare+Choice organization (in relation to an individual enrolled under a Medicare+Choice plan offered by 

the organization under this part) shall not prohibit or otherwise restrict a covered health care professional (as defined in subparagraph (D)) from advising such an individual who is a patient of the professional about the health 

status of the individual or medical care or treatment for 

the individual’s condition or disease, regardless of whether 

benefits for such care or treatment are provided under the 

plan, if the professional is acting within the lawful scope 

of practice. 

(B) CONSCIENCE PROTECTION.—Subparagraph (A) shall 

not be construed as requiring a Medicare+Choice plan to 

provide, reimburse for, or provide coverage of a counseling 

or referral service if the Medicare+Choice organization offering the plan— 

(i) objects to the provision of such service on moral 

or religious grounds; and 

(ii) in the manner and through the written instrumentalities such Medicare+Choice organization deems 

appropriate, makes available information on its policies regarding such service to prospective enrollees before or during enrollment and to enrollees within 90 

days after the date that the organization or plan 

adopts a change in policy regarding such a counseling 

or referral service. 

(C) CONSTRUCTION.—Nothing in subparagraph (B) shall 

be construed to affect disclosure requirements under State 

law or under the Employee Retirement Income Security 

Act of 1974. 

(D) HEALTH CARE PROFESSIONAL DEFINED.—For purposes 

of this paragraph, the term ‘‘health care professional’’ 

means a physician (as defined in section 1861(r)) or other 

health care professional if coverage for the professional’s 

118 

services is provided under the Medicare+Choice plan for 

the services of the professional. Such term includes a podiatrist, optometrist, chiropractor, psychologist, dentist, physician assistant, physical or occupational therapist and 

therapy assistant, speech-language pathologist, audiologist, registered or licensed practical nurse (including 

nurse practitioner, clinical nurse specialist, certified registered nurse anesthetist, and certified nurse-midwife), licensed certified social worker, registered respiratory therapist, and certified respiratory therapy technician. 

(4) LIMITATIONS ON PHYSICIAN INCENTIVE PLANS.— (A) IN GENERAL.—No Medicare+Choice organization may 

operate any physician incentive plan (as defined in subparagraph (B)) unless the organization provides assurances satisfactory to the Secretary that the following requirements are met: 

(i) No specific payment is made directly or indirectly 

under the plan to a physician or physician group as an 

inducement to reduce or limit medically necessary 

services provided with respect to a specific individual 

enrolled with the organization. 

(ii) If the plan places a physician or physician group 

at substantial financial risk (as determined by the 

Secretary) for services not provided by the physician 

or physician group, the organization provides stop-loss 

protection for the physician or group that is adequate 

and appropriate, based on standards developed by the 

Secretary that take into account the number of physicians placed at such substantial financial risk in the 

group or under the plan and the number of individuals 

enrolled with the organization who receive services 

from the physician or group. 

(B) PHYSICIAN INCENTIVE PLAN DEFINED.—In this paragraph, the term ‘‘physician incentive plan’’ means any compensation arrangement between a Medicare+Choice organization and a physician or physician group that may directly or indirectly have the effect of reducing or limiting 

services provided with respect to individuals enrolled with 

the organization under this part. 

(5) LIMITATION ON PROVIDER INDEMNIFICATION.—A 

Medicare+Choice organization may not provide (directly or indirectly) for a health care professional, provider of services, or 

other entity providing health care services (or group of such 

professionals, providers, or entities) to indemnify the organization against any liability resulting from a civil action brought 

for any damage caused to an enrollee with a Medicare+Choice 

plan of the organization under this part by the organization’s 

denial of medically necessary care. 

(6) SPECIAL RULES FOR MEDICARE+CHOICE PRIVATE FEE-FOR- SERVICE PLANS.—For purposes of applying this part (including 

subsection (k)(1)) and section 1866(a)(1)(O), a hospital (or other 

provider of services), a physician or other health care professional, or other entity furnishing health care services is treated 

as having an agreement or contract in effect with a 

Medicare+Choice organization (with respect to an individual 

119 

enrolled in a Medicare+Choice private fee-for-service plan it offers), if— 

(A) the provider, professional, or other entity furnishes 

services that are covered under the plan to such an enrollee; and 

(B) before providing such services, the provider, professional, or other entity — 

(i) has been informed of the individual’s enrollment 

under the plan, and 

(ii) either— 

(I) has been informed of the terms and conditions of payment for such services under the plan, 

or 

(II) is given a reasonable opportunity to obtain 

information concerning such terms and conditions, 

in a manner reasonably designed to effect informed 

agreement by a provider. 

The previous sentence shall only apply in the absence of an explicit agreement between such a provider, professional, or 

other entity and the Medicare+Choice organization. 

(7) PROMOTION OF E-PRESCRIBING BY MA PLANS.— (A) IN GENERAL.—An MA–PD plan may provide for a 

separate payment or otherwise provide for a differential 

payment for a participating physician that prescribes covered part D drugs in accordance with an electronic prescription drug program that meets standards established 

under section 1860D–4(e). 

(B) CONSIDERATIONS.—Such payment may take into consideration the costs of the physician in implementing such 

a program and may also be increased for those participating physicians who significantly increase— 

(i) formulary compliance; 

(ii) lower cost, therapeutically equivalent alternatives; 

(iii) reductions in adverse drug interactions; and 

(iv) efficiencies in filing prescriptions through reduced administrative costs. 

(C) STRUCTURE.—Additional or increased payments 

under this subsection may be structured in the same manner as medication therapy management fees are structured 

under section 1860D–4(c)(2)(E). 

(k) TREATMENT OF SERVICES FURNISHED BY CERTAIN PROVIDERS.— 

(1) IN GENERAL.—Except as provided in paragraph (2), a physician or other entity (other than a provider of services) that 

does not have a contract establishing payment amounts for 

services furnished to an individual enrolled under this part 

with a Medicare+Choice organization described in section 

1851(a)(2)(A) or with an organization offering an MSA plan 

shall accept as payment in full for covered services under this 

title that are furnished to such an individual the amounts that 

the physician or other entity could collect if the individual were 

not so enrolled. Any penalty or other provision of law that applies to such a payment with respect to an individual entitled 

to benefits under this title (but not enrolled with a 

120 

Medicare+Choice organization under this part) also applies 

with respect to an individual so enrolled. 

(2) APPLICATION TO MEDICARE+CHOICE PRIVATE FEE-FOR- SERVICE PLANS.— (A) BALANCE BILLING LIMITS UNDER MEDICARE+CHOICE

PRIVATE FEE-FOR-SERVICE PLANS IN CASE OF CONTRACT PRO- VIDERS.— 

(i) IN GENERAL.—In the case of an individual enrolled in a Medicare+Choice private fee-for-service 

plan under this part, a physician, provider of services, 

or other entity that has a contract (including through 

the operation of subsection (j)(6)) establishing a payment rate for services furnished to the enrollee shall 

accept as payment in full for covered services under 

this title that are furnished to such an individual an 

amount not to exceed (including any deductibles, coinsurance, copayments, or balance billing otherwise permitted under the plan) an amount equal to 115 percent of such payment rate. 

(ii) PROCEDURES TO ENFORCE LIMITS.—The 

Medicare+Choice organization that offers such a plan 

shall establish procedures, similar to the procedures 

described in section 1848(g)(1)(A), in order to carry out 

the previous sentence. 

(iii) ASSURING ENFORCEMENT.—If the 

Medicare+Choice organization fails to establish and 

enforce procedures required under clause (ii), the organization is subject to intermediate sanctions under 

section 1857(g). 

(B) ENROLLEE LIABILITY FOR NONCONTRACT PROVIDERS.— 

For provision— 

(i) establishing minimum payment rate in the case 

of noncontract providers under a Medicare+Choice private fee-for-service plan, see section 1852(a)(2); or 

(ii) limiting enrollee liability in the case of covered 

services furnished by such providers, see paragraph 

(1) and section 1866(a)(1)(O). 

(C) INFORMATION ON BENEFICIARY LIABILITY.— (i) IN GENERAL.—Each Medicare+Choice organization that offers a Medicare+Choice private fee-for-service plan shall provide that enrollees under the plan 

who are furnished services for which payment is 

sought under the plan are provided an appropriate explanation of benefits (consistent with that provided 

under parts A and B and, if applicable, under medicare supplemental policies) that includes a clear statement of the amount of the enrollee’s liability (including any liability for balance billing consistent with this 

subsection) with respect to payments for such services. 

(ii) ADVANCE NOTICE BEFORE RECEIPT OF INPATIENT

HOSPITAL SERVICES AND CERTAIN OTHER SERVICES.—In 

addition, such organization shall, in its terms and conditions of payments to hospitals for inpatient hospital 

services and for other services identified by the Secretary for which the amount of the balance billing 

121 

under subparagraph (A) could be substantial, require 

the hospital to provide to the enrollee, before furnishing such services and if the hospital imposes balance billing under subparagraph (A)— 

(I) notice of the fact that balance billing is permitted under such subparagraph for such services, 

and 

(II) a good faith estimate of the likely amount of 

such balance billing (if any), with respect to such 

services, based upon the presenting condition of 

the enrollee. 

(l) RETURN TO HOME SKILLED NURSING FACILITIES FOR COVERED

POST-HOSPITAL EXTENDED CARE SERVICES.— 

(1) ENSURING RETURN TO HOME SNF.— 

(A) IN GENERAL.—In providing coverage of post-hospital 

extended care services, a Medicare+Choice plan shall provide for such coverage through a home skilled nursing facility if the following conditions are met: 

(i) ENROLLEE ELECTION.—The enrollee elects to receive such coverage through such facility. 

(ii) SNF AGREEMENT.—The facility has a contract 

with the Medicare+Choice organization for the provision of such services, or the facility agrees to accept 

substantially similar payment under the same terms 

and conditions that apply to similarly situated skilled 

nursing facilities that are under contract with the 

Medicare+Choice organization for the provision of such 

services and through which the enrollee would otherwise receive such services. 

(B) MANNER OF PAYMENT TO HOME SNF.—The organization shall provide payment to the home skilled nursing facility consistent with the contract or the agreement described in subparagraph (A)(ii), as the case may be. 

(2) NO LESS FAVORABLE COVERAGE.—The coverage provided 

under paragraph (1) (including scope of services, cost-sharing, 

and other criteria of coverage) shall be no less favorable to the 

enrollee than the coverage that would be provided to the enrollee with respect to a skilled nursing facility the post-hospital 

extended care services of which are otherwise covered under 

the Medicare+Choice plan. 

(3) RULE OF CONSTRUCTION.—Nothing in this subsection 

shall be construed to do the following: 

(A) To require coverage through a skilled nursing facility 

that is not otherwise qualified to provide benefits under 

part A for medicare beneficiaries not enrolled in a 

Medicare+Choice plan. 

(B) To prevent a skilled nursing facility from refusing to 

accept, or imposing conditions upon the acceptance of, an 

enrollee for the receipt of post-hospital extended care services. 

(4) DEFINITIONS.—In this subsection: 

(A) HOME SKILLED NURSING FACILITY.—The term ‘‘home 

skilled nursing facility’’ means, with respect to an enrollee 

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122 

ices under a Medicare+Choice plan, any of the following 

skilled nursing facilities: 

(i) SNF RESIDENCE AT TIME OF ADMISSION.—The 

skilled nursing facility in which the enrollee resided at 

the time of admission to the hospital preceding the receipt of such post-hospital extended care services. 

(ii) SNF IN CONTINUING CARE RETIREMENT COMMUNITY.—A skilled nursing facility that is providing such 

services through a continuing care retirement community (as defined in subparagraph (B)) which provided 

residence to the enrollee at the time of such admission. 

(iii) SNF RESIDENCE OF SPOUSE AT TIME OF DISCHARGE.—The skilled nursing facility in which the 

spouse of the enrollee is residing at the time of discharge from such hospital. 

(B) CONTINUING CARE RETIREMENT COMMUNITY.—The 

term ‘‘continuing care retirement community’’ means, with 

respect to an enrollee in a Medicare+Choice plan, an arrangement under which housing and health-related services are provided (or arranged) through an organization for 

the enrollee under an agreement that is effective for the 

life of the enrollee or for a specified period. 

(m) PROVISION OF ADDITIONAL TELEHEALTH SERVICES.— 

(1) MA PLAN OPTION.—For purposes of subsection (a)(1)(B)(i), 

an election described in this paragraph, with respect to an MA 

plan and plan year, is an election by the sponsor of such plan 

to provide under the plan for such plan year, in accordance 

with the subsequent provisions of this subsection, additional 

telehealth services (as defined in paragraph (2)) as a benefit 

under the original medicare fee-for-service program option. 

Such additional telehealth services, with respect to a plan year, 

shall be in addition to benefits included under the original 

medicare fee-for-service program option for such year. 

(2) ADDITIONAL TELEHEALTH SERVICES DEFINED.— 

(A) IN GENERAL.—For purposes of this subsection and 

section 1854, the term ‘‘additional telehealth services’’ 

means, subject to subparagraph (C), services, with respect 

to a year— 

(i) for which payment may be made under part B 

(without regard to application of section 1834(m)); 

(ii) that, if furnished via a telecommunications system, would not be payable under section 1834(m); 

(iii) furnished using electronic information and telecommunications technology; 

(iv) furnished in accordance with such requirements 

as the Secretary specifies pursuant to paragraph (3); 

and 

(v) which are identified for such year by the Secretary as appropriate to furnish using electronic information and telecommunications technology where a 

physician (as defined in section 1861(r)) or practitioner 

(described in section 1842(b)(18)(C)) furnishing the 

service is not at the same location as the plan enrollee. 

123 

(B) FLEXIBILITY FOR PHASING IN IDENTIFICATIONS.—In 

making identifications under subparagraph (A)(v), the Secretary shall make such identifications annually and may 

make such identifications in a manner that results in additional telehealth services being phased in, as determined 

appropriate by the Secretary. 

(C) EXCLUSION OF CAPITAL AND INFRASTRUCTURE COSTS

AND INVESTMENTS.—For purposes of this subsection and 

section 1854, the term ‘‘additional telehealth services’’ does 

not include capital and infrastructure costs and investments relating to such benefits provided pursuant to this 

subsection. 

(3) REQUIREMENTS FOR ADDITIONAL TELEHEALTH SERVICES.— 

The Secretary shall specify requirements for the provision of additional telehealth services with respect to— 

(A) qualifications (other than licensure) of physicians and 

practitioners who furnish such services; 

(B) the technology used in furnishing such services; 

(C) factors necessary for coordination of additional telehealth services with other services; and 

(D) such other criteria (such as clinical criteria) as determined by the Secretary. 

(4) ENROLLEE CHOICE.—An MA plan that provides a service 

as an additional telehealth service may not, when furnished 

without use of electronic information and telecommunications 

technology, deny access to the equivalent in-person service. 

(5) CONSTRUCTION.— (A) IN GENERAL.—In determining if an MA organization 

or MA plan, as applicable, is in compliance with each requirement specified in subparagraph (B), such determination shall be made without regard to any additional telehealth services covered by the plan offered by such organization or plan pursuant to this subsection. 

(B) REQUIREMENTS SPECIFIED.—The requirements specified in this subparagraph are the following: 

(i) The requirements under subsection (d). 

(ii) The requirement under subsection (a)(1) with respect to covering benefits under the original medicare 

fee-for-service program option, as defined in the first 

sentence of paragraph (B)(i) of such subsection. 

* * * * * * * 

PREMIUMS AND BID AMOUNTS

SEC. 1854. (a) SUBMISSION OF PROPOSED PREMIUMS, BID

AMOUNTS, AND RELATED INFORMATION.— 

(1) IN GENERAL.— 

(A) INITIAL SUBMISSION.—Not later than the second 

Monday in September of 2002, 2003, and 2004 (or the first 

Monday in June of each subsequent year), each MA organization shall submit to the Secretary, in a form and manner specified by the Secretary and for each MA plan for 

the service area (or segment of such an area if permitted 

under subsection (h)) in which it intends to be offered in 

the following year the following: 

124 

(i) The information described in paragraph (2), (3), 

(4), or (6)(A) for the type of plan and year involved. 

(ii) The plan type for each plan. 

(iii) The enrollment capacity (if any) in relation to 

the plan and area. 

(B) BENEFICIARY REBATE INFORMATION.—In the case of a 

plan required to provide a monthly rebate under subsection (b)(1)(C) for a year, the MA organization offering 

the plan shall submit to the Secretary, in such form and 

manner and at such time as the Secretary specifies, information on— 

(i) the manner in which such rebate will be provided 

under clause (ii) of such subsection; and 

(ii) the MA monthly prescription drug beneficiary 

premium (if any) and the MA monthly supplemental 

beneficiary premium (if any). 

(C) PAPERWORK REDUCTION FOR OFFERING OF MA RE- GIONAL PLANS NATIONALLY OR IN MULTI-REGION AREAS.— The Secretary shall establish requirements for information 

submission under this subsection in a manner that promotes the offering of MA regional plans in more than one 

region (including all regions) through the filing of consolidated information. 

(2) INFORMATION REQUIRED FOR COORDINATED CARE PLANS

BEFORE 2006.—For a Medicare+Choice plan described in section 

1851(a)(2)(A), the information described in this paragraph is as 

follows: 

(A) BASIC (AND ADDITIONAL) BENEFITS.—For benefits described in section 1852(a)(1)(A) for a year before 2006— 

(i) the adjusted community rate (as defined in subsection (f)(3)); 

(ii) the Medicare+Choice monthly basic beneficiary 

premium (as defined in subsection (b)(2)(A)); 

(iii) a description of deductibles, coinsurance, and copayments applicable under the plan and the actuarial 

value of such deductibles, coinsurance, and copayments, described in subsection (e)(1)(A); and 

(iv) if required under subsection (f)(1), a description 

of the additional benefits to be provided pursuant to 

such subsection and the value determined for such 

proposed benefits under such subsection. 

(B) SUPPLEMENTAL BENEFITS.—For benefits described in 

section 1852(a)(3)— 

(i) the adjusted community rate (as defined in subsection (f)(3)); 

(ii) the Medicare+Choice monthly supplemental beneficiary premium (as defined in subsection (b)(2)(B)); 

and 

(iii) a description of deductibles, coinsurance, and copayments applicable under the plan and the actuarial 

value of such deductibles, coinsurance, and copayments, described in subsection (e)(2). 

(3) REQUIREMENTS FOR MSA PLANS.—For an MSA plan described, the information for any year in this paragraph is as 

follows: 

125 

(A) BASIC (AND ADDITIONAL) BENEFITS.—For benefits described in section 1852(a)(1)(A), the amount of the 

Medicare+Choice monthly MSA premium. 

(B) SUPPLEMENTAL BENEFITS.—For benefits described in 

section 1852(a)(3), the amount of the Medicare+Choice 

monthly supplementary beneficiary premium. 

(4) REQUIREMENTS FOR PRIVATE FEE-FOR-SERVICE PLANS BEFORE 2006.—For a Medicare+Choice plan described in section 

1851(a)(2)(C) for benefits described in section 1852(a)(1)(A) for 

a year before 2006, the information described in this paragraph 

is as follows: 

(A) BASIC (AND ADDITIONAL) BENEFITS.—For benefits described in section 1852(a)(1)(A)— 

(i) the adjusted community rate (as defined in subsection (f)(3)); 

(ii) the amount of the Medicare+Choice monthly 

basic beneficiary premium; 

(iii) a description of the deductibles, coinsurance, 

and copayments applicable under the plan, and the actuarial value of such deductibles, coinsurance, and copayments, as described in subsection (e)(4)(A); and 

(iv) if required under subsection (f)(1), a description 

of the additional benefits to be provided pursuant to 

such subsection and the value determined for such 

proposed benefits under such subsection. 

(B) SUPPLEMENTAL BENEFITS.—For benefits described in 

section 1852(a)(3), the amount of the Medicare+Choice 

monthly supplemental beneficiary premium (as defined in 

subsection (b)(2)(B)). 

(5) REVIEW.— 

(A) IN GENERAL.—Subject to subparagraph (B), the Secretary shall review the adjusted community rates, the 

amounts of the basic and supplemental premiums, and 

values filed under paragraphs (2) and (4) of this subsection 

and shall approve or disapprove such rates, amounts, and 

values so submitted. The Chief Actuary of the Centers for 

Medicare & Medicaid Services shall review the actuarial 

assumptions and data used by the Medicare+Choice organization with respect to such rates, amounts, and values 

so submitted to determine the appropriateness of such assumptions and data. 

(B) EXCEPTION.—The Secretary shall not review, approve, or disapprove the amounts submitted under paragraph (3) or, in the case of an MA private fee-for-service 

plan, subparagraphs (A)(ii) and (B) of paragraph (4). 

(C) REJECTION OF BIDS.— 

(i) IN GENERAL.—Nothing in this section shall be 

construed as requiring the Secretary to accept any or 

every bid submitted by an MA organization under this 

subsection. 

(ii) AUTHORITY TO DENY BIDS THAT PROPOSE SIGNIFICANT INCREASES IN COST SHARING OR DECREASES IN

BENEFITS.—The Secretary may deny a bid submitted 

by an MA organization for an MA plan if it proposes 

126 

significant increases in cost sharing or decreases in 

benefits offered under the plan. 

(6) SUBMISSION OF BID AMOUNTS BY MA ORGANIZATIONS BEGINNING IN 2006.— 

(A) INFORMATION TO BE SUBMITTED.—For an MA plan 

(other than an MSA plan) for a plan year beginning on or 

after January 1, 2006, the information described in this 

subparagraph is as follows: 

(i) The monthly aggregate bid amount for the provision of all items and services under the plan, which 

amount shall be based on average revenue requirements (as used for purposes of section 1302(8) of the 

Public Health Service Act) in the payment area for an 

enrollee with a national average risk profile for the 

factors described in section 1853(a)(1)(C) (as specified 

by the Secretary). 

(ii) The proportions of such bid amount that are attributable to— 

(I) the provision of benefits under the original 

medicare fee-for-service program option (as defined in section 1852(a)(1)(B)), including, for plan 

year 2020 and subsequent plan years, the provision of such benefits through the use of additional 

telehealth services under section 1852(m); 

(II) the provision of basic prescription drug coverage; and 

(III) the provision of supplemental health care 

benefits. 

(iii) The actuarial basis for determining the amount 

under clause (i) and the proportions described in 

clause (ii) and such additional information as the Secretary may require to verify such actuarial bases and 

the projected number of enrollees in each MA local 

area. 

(iv) A description of deductibles, coinsurance, and 

copayments applicable under the plan and the actuarial value of such deductibles, coinsurance, and copayments, described in subsection (e)(4)(A). 

(v) With respect to qualified prescription drug coverage, the information required under section 1860D– 

4, as incorporated under section 1860D–11(b)(2), with 

respect to such coverage. 

In the case of a specialized MA plan for special needs individuals, the information described in this subparagraph is 

such information as the Secretary shall specify. 

(B) ACCEPTANCE AND NEGOTIATION OF BID AMOUNTS.— 

(i) AUTHORITY.—Subject to clauses (iii) and (iv), the 

Secretary has the authority to negotiate regarding 

monthly bid amounts submitted under subparagraph 

(A) (and the proportions described in subparagraph 

(A)(ii)), including supplemental benefits provided 

under subsection (b)(1)(C)(ii)(I) and in exercising such 

authority the Secretary shall have authority similar to 

the authority of the Director of the Office of Personnel 

127 

Management with respect to health benefits plans 

under chapter 89 of title 5, United States Code. 

(ii) APPLICATION OF FEHBP STANDARD.—Subject to 

clause (iv), the Secretary may only accept such a bid 

amount or proportion if the Secretary determines that 

such amount and proportions are supported by the actuarial bases provided under subparagraph (A) and 

reasonably and equitably reflects the revenue requirements (as used for purposes of section 1302(8) of the 

Public Health Service Act) of benefits provided under 

that plan. 

(iii) NONINTERFERENCE.—In order to promote competition under this part and part D and in carrying 

out such parts, the Secretary may not require any MA 

organization to contract with a particular hospital, 

physician, or other entity or individual to furnish 

items and services under this title or require a particular price structure for payment under such a contract to the extent consistent with the Secretary’s authority under this part. 

(iv) EXCEPTION.—In the case of a plan described in 

section 1851(a)(2)(C), the provisions of clauses (i) and 

(ii) shall not apply and the provisions of paragraph 

(5)(B), prohibiting the review, approval, or disapproval 

of amounts described in such paragraph, shall apply to 

the negotiation and rejection of the monthly bid 

amounts and the proportions referred to in subparagraph (A). 

(b) MONTHLY PREMIUM CHARGED.— 

(1) IN GENERAL.— 

(A) RULE FOR OTHER THAN MSA PLANS.—Subject to the 

rebate under subparagraph (C), the monthly amount (if 

any) of the premium charged to an individual enrolled in 

a Medicare+Choice plan (other than an MSA plan) offered 

by a Medicare+Choice organization shall be equal to the 

sum of the Medicare+Choice monthly basic beneficiary premium, the Medicare+Choice monthly supplementary beneficiary premium (if any), and, if the plan provides qualified 

prescription drug coverage, the MA monthly prescription 

drug beneficiary premium. 

(B) MSA PLANS.—The monthly amount of the premium 

charged to an individual enrolled in an MSA plan offered 

by a Medicare+Choice organization shall be equal to the 

Medicare+Choice monthly supplemental beneficiary premium (if any). 

(C) BENEFICIARY REBATE RULE.— 

(i) REQUIREMENT.—The MA plan shall provide to the 

enrollee a monthly rebate equal to 75 percent (or the 

applicable rebate percentage specified in clause (iii) in 

the case of plan years beginning on or after January 

1, 2012) of the average per capita savings (if any) described in paragraph (3)(C) or (4)(C), as applicable to 

the plan and year involved. 

(ii) FORM OF REBATE FOR PLAN YEARS BEFORE 2012.— 

For plan years before 2012, a rebate required under 

128 

this subparagraph shall be provided through the application of the amount of the rebate toward one or more 

of the following: 

(I) PROVISION OF SUPPLEMENTAL HEALTH CARE

BENEFITS AND PAYMENT FOR PREMIUM FOR SUPPLE- MENTAL BENEFITS.—The provision of supplemental 

health care benefits described in section 1852(a)(3) 

in a manner specified under the plan, which may 

include the reduction of cost-sharing otherwise applicable as well as additional health care benefits 

which are not benefits under the original medicare 

fee-for-service program option, or crediting toward 

an MA monthly supplemental beneficiary premium (if any). 

(II) PAYMENT FOR PREMIUM FOR PRESCRIPTION

DRUG COVERAGE.—Crediting toward the MA 

monthly prescription drug beneficiary premium. 

(III) PAYMENT TOWARD PART B PREMIUM.—Crediting toward the premium imposed under part B 

(determined without regard to the application of 

subsections (b), (h), and (i) of section 1839). 

(iii) APPLICABLE REBATE PERCENTAGE.—The applicable rebate percentage specified in this clause for a 

plan for a year, based on the system under section 

1853(o)(4)(A), is the sum of— 

(I) the product of the old phase-in proportion for 

the year under clause (iv) and 75 percent; and 

(II) the product of the new phase-in proportion 

for the year under clause (iv) and the final applicable rebate percentage under clause (v). 

(iv) OLD AND NEW PHASE-IN PROPORTIONS.—For purposes of clause (iv)— 

(I) for 2012, the old phase-in proportion is 2⁄3

and the new phase-in proportion is 1⁄3; 

(II) for 2013, the old phase-in proportion is 1⁄3

and the new phase-in proportion is 2⁄3; and 

(III) for 2014 and any subsequent year, the old 

phase-in proportion is 0 and the new phase-in proportion is 1. 

(v) FINAL APPLICABLE REBATE PERCENTAGE.—Subject 

to clause (vi), the final applicable rebate percentage 

under this clause is— 

(I) in the case of a plan with a quality rating 

under such system of at least 4.5 stars, 70 percent; 

(II) in the case of a plan with a quality rating 

under such system of at least 3.5 stars and less 

than 4.5 stars, 65 percent; and 

(III) in the case of a plan with a quality rating 

under such system of less than 3.5 stars, 50 percent. 

(vi) TREATMENT OF LOW ENROLLMENT AND NEW

PLANS.—For purposes of clause (v)— 

(I) for 2012, in the case of a plan described in 

subclause (I) of subsection (o)(3)(A)(ii), the plan 

129 

shall be treated as having a rating of 4.5 stars; 

and 

(II) for 2012 or a subsequent year, in the case 

of a new MA plan (as defined under subclause 

(III) of subsection (o)(3)(A)(iii)) that is treated as 

a qualifying plan pursuant to subclause (I) of such 

subsection, the plan shall be treated as having a 

rating of 3.5 stars. 

(vii) DISCLOSURE RELATING TO REBATES.—The plan 

shall disclose to the Secretary information on the form 

and amount of the rebate provided under this subparagraph or the actuarial value in the case of supplemental health care benefits. 

(viii) APPLICATION OF PART B PREMIUM REDUCTION.— 

Insofar as an MA organization elects to provide a rebate under this subparagraph under a plan as a credit 

toward the part B premium under clause (ii)(III), the 

Secretary shall apply such credit to reduce the premium under section 1839 of each enrollee in such plan 

as provided in section 1840(i). 

(2) PREMIUM AND BID TERMINOLOGY DEFINED.—For purposes 

of this part: 

(A) MA MONTHLY BASIC BENEFICIARY PREMIUM.—The 

term ‘‘MA monthly basic beneficiary premium’’ means, 

with respect to an MA plan— 

(i) described in section 1853(a)(1)(B)(i) (relating to 

plans providing rebates), zero; or 

(ii) described in section 1853(a)(1)(B)(ii), the amount 

(if any) by which the unadjusted MA statutory nondrug monthly bid amount (as defined in subparagraph 

(E)) exceeds the applicable unadjusted MA area-specific non-drug monthly benchmark amount (as defined 

in section 1853(j)). 

(B) MA MONTHLY PRESCRIPTION DRUG BENEFICIARY PREMIUM.—The term ‘‘MA monthly prescription drug beneficiary premium’’ means, with respect to an MA plan, the 

base beneficiary premium (as determined under section 

1860D–13(a)(2) and as adjusted under section 1860D– 

13(a)(1)(B)), less the amount of rebate credited toward 

such amount under section 1854(b)(1)(C)(ii)(II). 

(C) MA MONTHLY SUPPLEMENTAL BENEFICIARY PREMIUM.— 

(i) IN GENERAL.—The term ‘‘MA monthly supplemental beneficiary premium’’ means, with respect to 

an MA plan, the portion of the aggregate monthly bid 

amount submitted under clause (i) of subsection 

(a)(6)(A) for the year that is attributable under clause 

(ii)(III) of such subsection to the provision of supplemental health care benefits, less the amount of rebate 

credited toward such portion under section 

1854(b)(1)(C)(ii)(I). 

(ii) APPLICATION OF MA MONTHLY SUPPLEMENTARY

BENEFICIARY PREMIUM.—For plan years beginning on 

or after January 1, 2012, any MA monthly supplementary beneficiary premium charged to an individual 

130 

enrolled in an MA plan shall be used for the purposes, 

and in the priority order, described in subclauses (I) 

through (III) of paragraph (1)(C)(iii). 

(D) MEDICARE+CHOICE MONTHLY MSA PREMIUM.—The 

term ‘‘Medicare+Choice monthly MSA premium’’ means, 

with respect to a Medicare+Choice plan, the amount of 

such premium filed under subsection (a)(3)(A) for the plan. 

(E) UNADJUSTED MA STATUTORY NON-DRUG MONTHLY BID

AMOUNT.—The term ‘‘unadjusted MA statutory non-drug 

monthly bid amount’’ means the portion of the bid amount 

submitted under clause (i) of subsection (a)(6)(A) for the 

year that is attributable under clause (ii)(I) of such subsection to the provision of benefits under the original medicare fee-for-service program option (as defined in section 

1852(a)(1)(B)). 

(3) COMPUTATION OF AVERAGE PER CAPITA MONTHLY SAVINGS

FOR LOCAL PLANS.—For purposes of paragraph (1)(C)(i), the average per capita monthly savings referred to in such paragraph 

for an MA local plan and year is computed as follows: 

(A) DETERMINATION OF STATEWIDE AVERAGE RISK AD- JUSTMENT FOR LOCAL PLANS.— (i) IN GENERAL.—Subject to clause (iii), the Secretary 

shall determine, at the same time rates are promulgated under section 1853(b)(1) (beginning with 2006) 

for each State, the average of the risk adjustment factors to be applied under section 1853(a)(1)(C) to payment for enrollees in that State for MA local plans. 

(ii) TREATMENT OF STATES FOR FIRST YEAR IN WHICH

LOCAL PLAN OFFERED.—In the case of a State in which 

no MA local plan was offered in the previous year, the 

Secretary shall estimate such average. In making such 

estimate, the Secretary may use average risk adjustment factors applied to comparable States or applied 

on a national basis. 

(iii) AUTHORITY TO DETERMINE RISK ADJUSTMENT FOR

AREAS OTHER THAN STATES.—The Secretary may provide for the determination and application of risk adjustment factors under this subparagraph on the basis 

of areas other than States or on a plan-specific basis. 

(B) DETERMINATION OF RISK ADJUSTED BENCHMARK AND

RISK-ADJUSTED BID FOR LOCAL PLANS.—For each MA plan 

offered in a local area in a State, the Secretary shall— 

(i) adjust the applicable MA area-specific non-drug 

monthly benchmark amount (as defined in section 

1853(j)(1)) for the area by the average risk adjustment 

factor computed under subparagraph (A); and 

(ii) adjust the unadjusted MA statutory non-drug 

monthly bid amount by such applicable average risk 

adjustment factor. 

(C) DETERMINATION OF AVERAGE PER CAPITA MONTHLY

SAVINGS.—The average per capita monthly savings described in this subparagraph for an MA local plan is equal 

to the amount (if any) by which— 

(i) the risk-adjusted benchmark amount computed 

under subparagraph (B)(i); exceeds 

131 

(ii) the risk-adjusted bid computed under subparagraph (B)(ii). 

(4) COMPUTATION OF AVERAGE PER CAPITA MONTHLY SAVINGS

FOR REGIONAL PLANS.—For purposes of paragraph (1)(C)(i), the 

average per capita monthly savings referred to in such paragraph for an MA regional plan and year is computed as follows: 

(A) DETERMINATION OF REGIONWIDE AVERAGE RISK ADJUSTMENT FOR REGIONAL PLANS.— 

(i) IN GENERAL.—The Secretary shall determine, at 

the same time rates are promulgated under section 

1853(b)(1) (beginning with 2006) for each MA region 

the average of the risk adjustment factors to be applied under section 1853(a)(1)(C) to payment for enrollees in that region for MA regional plans. 

(ii) TREATMENT OF REGIONS FOR FIRST YEAR IN

WHICH REGIONAL PLAN OFFERED.—In the case of an 

MA region in which no MA regional plan was offered 

in the previous year, the Secretary shall estimate such 

average. In making such estimate, the Secretary may 

use average risk adjustment factors applied to comparable regions or applied on a national basis. 

(iii) AUTHORITY TO DETERMINE RISK ADJUSTMENT FOR

AREAS OTHER THAN REGIONS.—The Secretary may provide for the determination and application of risk adjustment factors under this subparagraph on the basis 

of areas other than MA regions or on a plan-specific 

basis. 

(B) DETERMINATION OF RISK-ADJUSTED BENCHMARK AND

RISK-ADJUSTED BID FOR REGIONAL PLANS.—For each MA regional plan offered in a region, the Secretary shall— 

(i) adjust the applicable MA area-specific non-drug 

monthly benchmark amount (as defined in section 

1853(j)(2)) for the region by the average risk adjustment factor computed under subparagraph (A); and 

(ii) adjust the unadjusted MA statutory non-drug 

monthly bid amount by such applicable average risk 

adjustment factor. 

(C) DETERMINATION OF AVERAGE PER CAPITA MONTHLY

SAVINGS.—The average per capita monthly savings described in this subparagraph for an MA regional plan is 

equal to the amount (if any) by which— 

(i) the risk-adjusted benchmark amount computed 

under subparagraph (B)(i); exceeds 

(ii) the risk-adjusted bid computed under subparagraph (B)(ii). 

(c) UNIFORM PREMIUM AND BID AMOUNTS.—Except as permitted 

under section 1857(i), the MA monthly bid amount submitted 

under subsection (a)(6), the amounts of the MA monthly basic, prescription drug, and supplemental beneficiary premiums, and the 

MA monthly MSA premium charged under subsection (b) of an MA 

organization under this part may not vary among individuals enrolled in the plan. 

(d) TERMS AND CONDITIONS OF IMPOSING PREMIUMS.— 

132 

(1) IN GENERAL.—Each Medicare+Choice organization shall 

permit the payment of Medicare+Choice monthly basic, prescription drug, and supplemental beneficiary premiums on a 

monthly basis, may terminate election of individuals for a 

Medicare+Choice plan for failure to make premium payments 

only in accordance with section 1851(g)(3)(B)(i), and may not 

provide for cash or other monetary rebates as an inducement 

for enrollment or otherwise. 

(2) BENEFICIARY’S OPTION OF PAYMENT THROUGH WITHHOLDING FROM SOCIAL SECURITY PAYMENT OR USE OF ELECTRONIC FUNDS TRANSFER MECHANISM.—In accordance with regulations, an MA organization shall permit each enrollee, at the 

enrollee’s option, to make payment of premiums (if any) under 

this part to the organization through— 

(A) withholding from benefit payments in the manner 

provided under section 1840 with respect to monthly premiums under section 1839; 

(B) an electronic funds transfer mechanism (such as 

automatic charges of an account at a financial institution 

or a credit or debit card account); or 

(C) such other means as the Secretary may specify, including payment by an employer or under employmentbased retiree health coverage (as defined in section 

1860D–22(c)(1)) on behalf of an employee or former employee (or dependent). 

All premium payments that are withheld under subparagraph 

(A) shall be credited to the appropriate Trust Fund (or Account 

thereof), as specified by the Secretary, under this title and 

shall be paid to the MA organization involved. No charge may 

be imposed under an MA plan with respect to the election of 

the payment option described in subparagraph (A). The Secretary shall consult with the Commissioner of Social Security 

and the Secretary of the Treasury regarding methods for allocating premiums withheld under subparagraph (A) among the 

appropriate Trust Funds and Account. 

(3) INFORMATION NECESSARY FOR COLLECTION.—In order to 

carry out paragraph (2)(A) with respect to an enrollee who has 

elected such paragraph to apply, the Secretary shall transmit 

to the Commissioner of Social Security— 

(A) by the beginning of each year, the name, social security account number, consolidated monthly beneficiary premium described in paragraph (4) owed by such enrollee for 

each month during the year, and other information determined appropriate by the Secretary, in consultation with 

the Commissioner of Social Security; and 

(B) periodically throughout the year, information to update the information previously transmitted under this 

paragraph for the year. 

(4) CONSOLIDATED MONTHLY BENEFICIARY PREMIUM.—In the 

case of an enrollee in an MA plan, the Secretary shall provide 

a mechanism for the consolidation of— 

(A) the MA monthly basic beneficiary premium (if any); 

(B) the MA monthly supplemental beneficiary premium 

(if any); and 

133 

(C) the MA monthly prescription drug beneficiary premium (if any). 

(e) LIMITATION ON ENROLLEE LIABILITY.— (1) FOR BASIC AND ADDITIONAL BENEFITS BEFORE 2006.—For 

periods before 2006, in no event may— 

(A) the Medicare+Choice monthly basic beneficiary premium (multiplied by 12) and the actuarial value of the 

deductibles, coinsurance, and copayments applicable on average to individuals enrolled under this part with a 

Medicare+Choice plan described in section 1851(a)(2)(A) of 

an organization with respect to required benefits described 

in section 1852(a)(1)(A) and additional benefits (if any) required under subsection (f)(1)(A) for a year, exceed 

(B) the actuarial value of the deductibles, coinsurance, 

and copayments that would be applicable on average to individuals entitled to benefits under part A and enrolled 

under part B if they were not members of a 

Medicare+Choice organization for the year. 

(2) FOR SUPPLEMENTAL BENEFITS BEFORE 2006.—For periods 

before 2006, if the Medicare+Choice organization provides to 

its members enrolled under this part in a Medicare+Choice 

plan described in section 1851(a)(2)(A) with respect to supplemental benefits described in section 1852(a)(3), the sum of the 

Medicare+Choice monthly supplemental beneficiary premium 

(multiplied by 12) charged and the actuarial value of its 

deductibles, coinsurance, and copayments charged with respect 

to such benefits may not exceed the adjusted community rate 

for such benefits (as defined in subsection (f)(3)). 

(3) DETERMINATION ON OTHER BASIS.—If the Secretary determines that adequate data are not available to determine the 

actuarial value under paragraph (1)(A), (2), or (4) the Secretary 

may determine such amount with respect to all individuals in 

same geographic area, the State, or in the United States, eligible to enroll in the Medicare+Choice plan involved under this 

part or on the basis of other appropriate data. 

(4) SPECIAL RULE FOR PRIVATE FEE-FOR-SERVICE PLANS AND

FOR BASIC BENEFITS BEGINNING IN 2006.—With respect to a 

Medicare+Choice private fee-for-service plan (other than a plan 

that is an MSA plan) and for periods beginning with 2006, 

with respect to an MA plan described in section 1851(a)(2)(A), 

in no event may— 

(A) the actuarial value of the deductibles, coinsurance, 

and copayments applicable on average to individuals enrolled under this part with such a plan of an organization 

with respect to benefits under the original medicare feefor-service program option, exceed 

(B) the actuarial value of the deductibles, coinsurance, 

and copayments that would be applicable with respect to 

such benefits on average to individuals entitled to benefits 

under part A and enrolled under part B if they were not 

members of a Medicare+Choice organization for the year. 

(f) REQUIREMENT FOR ADDITIONAL BENEFITS BEFORE 2006.— 

(1) REQUIREMENT.— 

(A) IN GENERAL.—For years before 2006, each 

Medicare+Choice organization (in relation to a 

134 

Medicare+Choice plan, other than an MSA plan, it offers) 

shall provide that if there is an excess amount (as defined 

in subparagraph (B)) for the plan for a contract year, subject to the succeeding provisions of this subsection, the organization shall provide to individuals such additional benefits (as the organization may specify) in a value which the 

Secretary determines is at least equal to the adjusted excess amount (as defined in subparagraph (C)). 

(B) EXCESS AMOUNT.—For purposes of this paragraph, 

the ‘‘excess amount’’, for an organization for a plan, is the 

amount (if any) by which— 

(i) the average of the capitation payments made to 

the organization under section 1853 for the plan at the 

beginning of contract year, exceeds 

(ii) the actuarial value of the required benefits described in section 1852(a)(1)(A) under the plan for individuals under this part, as determined based upon 

an adjusted community rate described in paragraph 

(3) (as reduced for the actuarial value of the coinsurance, copayments, and deductibles under parts A and 

B). 

(C) ADJUSTED EXCESS AMOUNT.—For purposes of this 

paragraph, the ‘‘adjusted excess amount’’, for an organization for a plan, is the excess amount reduced to reflect any 

amount withheld and reserved for the organization for the 

year under paragraph (2). 

(D) UNIFORM APPLICATION.—This paragraph shall be applied uniformly for all enrollees for a plan. 

(E) PREMIUM REDUCTIONS.— 

(i) IN GENERAL.—Subject to clause (ii), as part of 

providing any additional benefits required under subparagraph (A), a Medicare+Choice organization may 

elect a reduction in its payments under section 

1853(a)(1)(A) with respect to a Medicare+Choice plan 

and the Secretary shall apply such reduction to reduce 

the premium under section 1839 of each enrollee in 

such plan as provided in section 1840(i). 

(ii) AMOUNT OF REDUCTION.—The amount of the reduction under clause (i) with respect to any enrollee in 

a Medicare+Choice plan— 

(I) may not exceed 125 percent of the premium 

described under section 1839(a)(3); and 

(II) shall apply uniformly to each enrollee of the 

Medicare+Choice plan to which such reduction applies. 

(F) CONSTRUCTION.—Nothing in this subsection shall be 

construed as preventing a Medicare+Choice organization 

from providing supplemental benefits (described in section 

1852(a)(3)) that are in addition to the health care benefits 

otherwise required to be provided under this paragraph 

and from imposing a premium for such supplemental benefits. 

(2) STABILIZATION FUND.—A Medicare+Choice organization 

may provide that a part of the value of an excess amount described in paragraph (1) be withheld and reserved in the FedVerDate Sep 11 2014 01:19 Dec 23, 2017 Jkt 079006 PO 00000 Frm 00134 Fmt 6659 Sfmt 6601 E:\HR\OC\HR480P1.XXX HR480P1
135 

eral Hospital Insurance Trust Fund and in the Federal Supplementary Medical Insurance Trust Fund (in such proportions as 

the Secretary determines to be appropriate) by the Secretary 

for subsequent annual contract periods, to the extent required 

to stabilize and prevent undue fluctuations in the additional 

benefits offered in those subsequent periods by the organization in accordance with such paragraph. Any of such value of 

the amount reserved which is not provided as additional benefits described in paragraph (1)(A) to individuals electing the 

Medicare+Choice plan of the organization in accordance with 

such paragraph prior to the end of such periods, shall revert 

for the use of such trust funds. 

(3) ADJUSTED COMMUNITY RATE.—For purposes of this subsection, subject to paragraph (4), the term ‘‘adjusted community rate’’ for a service or services means, at the election of a 

Medicare+Choice organization, either— 

(A) the rate of payment for that service or services which 

the Secretary annually determines would apply to an individual electing a Medicare+Choice plan under this part if 

the rate of payment were determined under a ‘‘community 

rating system’’ (as defined in section 1302(8) of the Public 

Health Service Act, other than subparagraph (C)), or 

(B) such portion of the weighted aggregate premium, 

which the Secretary annually estimates would apply to 

such an individual, as the Secretary annually estimates is 

attributable to that service or services, 

but adjusted for differences between the utilization characteristics of the individuals electing coverage under this part and the 

utilization characteristics of the other enrollees with the plan 

(or, if the Secretary finds that adequate data are not available 

to adjust for those differences, the differences between the utilization characteristics of individuals selecting other 

Medicare+Choice coverage, or Medicare+Choice eligible individuals in the area, in the State, or in the United States, eligible 

to elect Medicare+Choice coverage under this part and the utilization characteristics of the rest of the population in the area, 

in the State, or in the United States, respectively). 

(4) DETERMINATION BASED ON INSUFFICIENT DATA.—For purposes of this subsection, if the Secretary finds that there is insufficient enrollment experience to determine an average of the 

capitation payments to be made under this part at the beginning of a contract period or to determine (in the case of a 

newly operated provider-sponsored organization or other new 

organization) the adjusted community rate for the organization, the Secretary may determine such an average based on 

the enrollment experience of other contracts entered into under 

this part and may determine such a rate using data in the general commercial marketplace. 

(g) PROHIBITION OF STATE IMPOSITION OF PREMIUM TAXES.—No 

State may impose a premium tax or similar tax with respect to 

payments to Medicare+Choice organizations under section 1853 or 

premiums paid to such organizations under this part. 

(h) PERMITTING USE OF SEGMENTS OF SERVICE AREAS.—The Secretary shall permit a Medicare+Choice organization to elect to 

apply the provisions of this section uniformly to separate segments 

136 

of a service area (rather than uniformly to an entire service area) 

as long as such segments are composed of one or more 

Medicare+Choice payment areas. 

* * * * * * * 

PART E—MISCELLANEOUS PROVISIONS

* * * * * * * 

MEDICARE IMPROVEMENT FUND

SEC. 1898. 

(a) ESTABLISHMENT.—The Secretary shall establish under this 

title a Medicare Improvement Fund (in this section referred to as 

the ‘Fund’) which shall be available to the Secretary to make improvements under the original Medicare fee-for-service program 

under parts A and B for individuals entitled to, or enrolled for, benefits under part or enrolled under part B including adjustments to 

payments for items and services furnished by providers of services 

and suppliers under such original Medicare fee-for-service program. 

(b) FUNDING.— 

(1) IN GENERAL.—There shall be available to the Fund, for 

expenditures from the Fund for services furnished øduring and 

after fiscal year 2021, $270,000,000¿ during and after fiscal 

year 2021, $325,000,000. 

(2) PAYMENT FROM TRUST FUNDS.—The amount specified 

under paragraph (1) shall be available to the Fund, as expenditures are made from the Fund, from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical 

Insurance Trust Fund in such proportion as the Secretary determines appropriate. 

(3) FUNDING LIMITATION.—Amounts in the Fund shall be 

available in advance of appropriations but only if the total 

amount obligated from the Fund does not exceed the amount 

available to the Fund under paragraph (1). The Secretary may 

obligate funds from the Fund only if the Secretary determines 

(and the Chief Actuary of the Centers for Medicare & Medicaid 

Services and the appropriate budget officer certify) that there 

are available in the Fund sufficient amounts to cover all such 

obligations incurred consistent with the previous sentence. 

(4) NO EFFECT ON PAYMENTS IN SUBSEQUENT YEARS.—In the 

case that expenditures from the Fund are applied to, or otherwise affect, a payment rate for an item or service under this 

title for a year, the payment rate for such item or service shall 

be computed for a subsequent year as if such application or effect had never occurred. 

* * * * * * * 

137 


Insert graphic folio 151 HR480P1.001

VII. EXCHANGES OF LETTERS WITH ADDITIONAL 

COMMITTEES OF REFERRAL 

(JRFG WALDEN OREGON 

CHAIRMAN 

fRANK PALLONE. JR NEW Jf:RSE:l: 

ONE HUNDRED FIFTEENTH CONGRESS 

<!l:ongn;ss of tfJr mnitrb $tatrs 

J!)ousr of l-\cprcsrnt.ltibcs 

COMMITIEE ON ENERGY AND COMMERCE 

2125 RAYRURN HousF 0FFtl:E Bu!LDINCi 

WASHINUON, DC 20515-6115 

The Honorable Kevin Brady 

Chairman 

Committee on Ways and Means 

December 5. 2017 

II 02 Longworth House Office Building 

Washington. DC 20515 

Dear Chairman Brady: 

Ht\NKING MFMBER 

I 'WTite concerning II.R. 3727, a bill to amend title XVIII of the Social Security Act to 

include additional te1ehcalth services lor purposes of MA organization bids, and for other 

purposes. which was additionally referred to the Committee on Energy and Commerce. 

I wanted to notify you that the Committee will forgo action on H.R. 3 727 so that it may 

proceed expeditiously to the House floor for consideration. This is done with the understanding 

that the Committees jurisdictional interests over this and similar legislation are in no way 

diminished or altered. In addition. the Committee reserves the right to seek conferees on ltR. 

3727 and requests your support when such a request is made. 

I would appreciate your response eontirming this understanding with respect to l·LR. 

3727 and ask that a copy of our exchange of letters on this matter be included in the 

Congressional Record during consideration of the bill on the House floor. 

Sincerely, 

Chairman 

~~ 
138 


Insert graphic folio 152 HR480P1.002

ltongrcss of the 'llnitcd ~tatcs 

hl.,5. 1Jiousc of lRcprcscnratiocs COMM!TIEE ON WAYS AND MEANS 

1102 LONGWORTH HOUSE OFFICE BUilDING 

(202)225-3625 

OAV!OSTEW"-RT 

STAFFOlRIOCTOR 

The Honorable Greg Walden 

Chairman 

Committee on Energy and Commerce 

2125 Rayburn House Ot1icc Building 

Washington. DC 20515 

Dear Chairman Walden. 

t1.lasl1ington, P~ 20111-bHS 

http:!lwaysandmeans.house.gov 

December 5. 2017 

Thank you for your letter conceming ll.R. 3727. on which the Energy and Commerce Committee was 

granted an additional referral. 

I am most appreciative of your decision to waive formal consideration ofli.R. 3727. 1 acknowledge 

that although you waived formal considemtion of the bill. the Energy and Commerce Committee is in 

no way waiving its jurisdiction over the sul~ject matt~r contained in those provisions of the bill that taU 

within your Rule X jurisdiction. 1 would support your eftort to seek appointment of an appropriate 

number of confCrees on any House-Senate conference involving this legislation. 

l will include a copy of our letters in our committee report and in the ( 'ongressional Record should this 

legislation be considered on the House tloor. 

cc: The Honorable Paul Ryan. 

The Honorahle Richard E. 

The Honorable Frank Pallone 

Thomas .J. Wickham, Jr .. Parliamentarian 

0