I 

108TH CONGRESS 

1ST SESSION H. R. 2588

To establish under the Medicare Program under title XVIII of the Social 

Security Act incentives to health care providers for delivering highquality, cost-effective health care to Medicare beneficiaries. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 24, 2003

Mr. KING of Iowa introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL

To establish under the Medicare Program under title XVIII 

of the Social Security Act incentives to health care providers for delivering high-quality, cost-effective health 

care to Medicare beneficiaries.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Medicare Value and 

5 Quality Act of 2003’’. 

6 SEC. 2. FINDINGS. 

7 The House makes the following findings: 
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1 (1) The United States Government should re2 ward physicians, hospitals, and other health care 

3 providers that provide high-quality, cost-effective 

4 health care to beneficiaries under the medicare pro5 gram. 

6 (2) The Journal of the American Medical Asso7 ciation has published quality indicators in an article 

8 entitled ‘‘Quality of Medical Care Delivered to Medi9 care Beneficiaries: A Profile at State and National 

10 Levels’’. 

11 (3) The cost of health care is—

12 (A) reflected in the type and volume of 

13 physicians’ services and in physician ordering 

14 and prescribing behavior; and 

15 (B) reflected in the amount of the average 

16 payment to hospitals under the medicare pro17 gram for each medicare beneficiary in each 

18 State. 

19 (4) Physician and hospital practice patterns 

20 contribute to the total cost and quality of care for 

21 each medicare beneficiary in each State. 

22 (5) The original medicare fee-for-service pro23 gram under parts A and B of title XVIII of the So24 cial Security Act does not include a mechanism to 
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1 pay for interventions designed to improve quality of 

2 care. 

3 SEC. 3. TO ENCOURAGE THE PROVISION OF HIGH-QUALITY, 

4 COST-EFFECTIVE INPATIENT HOSPITAL 

5 SERVICES. 

6 (a) PURPOSE.—The purpose under this section is to 

7 encourage the provision of high-quality, cost-effective 

8 health care to beneficiaries under the medicare program 

9 under title XVIII of the Social Security Act (42 U.S.C. 

10 1395 et seq.) by providing incentive payments to hospitals 

11 located in States in which high-quality and cost-effective 

12 services are being provided in order to finance further 

13 quality improvements. 

14 (b) INTENT.—It is the intent of Congress to provide 

15 incentives for States to deliver high quality health care 

16 and to create incentives that assure medicare recognizes 

17 value in the products and services that the program pur18 chases on behalf of medicare beneficiaries. 

19 (c) MECHANISM.—

20 (1) ESTABLISHMENT.—Not later than 6 

21 months after the date of enactment of this Act, the 

22 Secretary shall establish a mechanism under 

23 which—

24 (A) the Secretary provides economic incen25 tives to providers of inpatient hospital services 
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1 that deliver high-quality health care at low costs 

2 in accordance with the methodology established 

3 by the Agency for Healthcare Research and 

4 Quality under paragraph (2) with a 5 percent 

5 add-on bonus payment to providers of inpatient 

6 hospital services within the top ten performing 

7 States; and 

8 (B) the Secretary necessarily recognizes 

9 and includes measurements that factor both the 

10 quality of care delivered in a medicare pur11 chasing region or in the event that purchasing 

12 regions are not developed, then in a State, to 

13 medicare beneficiaries and consumption of re14 sources, including but not limited to labor, tech15 nology, capital infrastructure and pharma16 ceuticals in the delivery of services to medicare 

17 beneficiaries under the medicare program under 

18 title XVIII of the Social Security Act. 

19 (2) VALUE AND QUALITY RANKING METHOD20 OLOGY.—

21 (A) IN GENERAL.—The Agency for 

22 Healthcare Research and Quality shall establish 

23 a value and quality ranking methodology under 

24 which the Secretary awards bonus payments to 

25 providers of inpatient hospital services located 
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1 in those States that demonstrate that such pro2 viders in the State are providing high value be3 cause of the high-quality, cost-effective health 

4 care services being provided to medicare bene5 ficiaries. 

6 (B) BASIS.—The methodology established 

7 under subparagraph (A) shall be based on the 

8 rank and performance on medicare quality indi9 cators published annually in the Journal of the 

10 American Medical Association (JAMA) that 

11 uses Medicare’s current quality of care meas12 ures. Cost rankings will be based on the Cen13 ters for Medicare and Medicaid Services (CMS) 

14 annual report ranking States based on average 

15 Medicare spending per recipient for each State. 

16 (d) DEFINITIONS.—In this section: 

17 (1) PROVIDER OF INPATIENT HOSPITAL SERV18 ICES.—The term ‘‘provider of inpatient hospital 

19 services’’ means any individual or entity that re20 ceives payment under the medicare program under 

21 title XVIII of the Social Security Act (42 U.S.C. 

22 1395 et seq.) for providing an inpatient hospital 

23 service (as defined in section 1861(b) of such Act 

24 (42 U.S.C. 1395x(b))). 
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1 (2) SECRETARY.—The term ‘‘Secretary’’ means 

2 the Secretary of Health and Human Services.

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