I 

111TH CONGRESS 

1ST SESSION H. R. 3961 

To amend title XVIII of the Social Security Act to reform the Medicare 

SGR payment system for physicians. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 29, 2009 

Mr. DINGELL (for himself, Mr. RANGEL, Mr. WAXMAN, Mr. GEORGE MILLER

of California, Mr. STARK, Mr. PALLONE, and Mr. ANDREWS) introduced 

the following bill; which was referred to the Committee on Energy and 

Commerce, and in addition to the Committee on Ways and Means, for 

a period to be subsequently determined by the Speaker, in each case for 

consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend title XVIII of the Social Security Act to reform 

the Medicare SGR payment system for physicians. 

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 Physician 

5 Payment Reform Act of 2009’’. 

6 SEC. 2. MEDICARE SUSTAINABLE GROWTH RATE REFORM. 

7 (a) TRANSITIONAL UPDATE FOR 2010.—Section 

8 1848(d) of the Social Security Act (42 U.S.C. 1395w– 


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1 4(d)) is amended by adding at the end the following new 

2 paragraph: 

3 ‘‘(10) UPDATE FOR 2010.—The update to the 

4 single conversion factor established in paragraph 

5 (1)(C) for 2010 shall be the percentage increase in 

6 the MEI (as defined in section 1842(i)(3)) for that 

7 year.’’. 

8 (b) REBASING SGR USING 2009; LIMITATION ON

9 CUMULATIVE ADJUSTMENT PERIOD.—Section 1848(d)(4) 

10 of such Act (42 U.S.C. 1395w–4(d)(4)) is amended— 

11 (1) in subparagraph (B), by striking ‘‘subpara12 graph (D)’’ and inserting ‘‘subparagraphs (D) and 

13 (G)’’; and 

14 (2) by adding at the end the following new sub15 paragraph: 

16 ‘‘(G) REBASING USING 2009 FOR FUTURE

17 UPDATE ADJUSTMENTS.—In determining the 

18 update adjustment factor under subparagraph 

19 (B) for 2011 and subsequent years— 

20 ‘‘(i) the allowed expenditures for 2009 

21 shall be equal to the amount of the actual 

22 expenditures for physicians’ services during 

23 2009; and 

24 ‘‘(ii) the reference in subparagraph 

25 (B)(ii)(I) to ‘April 1, 1996’ shall be treatVerDate Nov 24 2008 02:10 Oct 30, 2009 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3961.IH H3961

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1 ed as a reference to ‘January 1, 2009 (or, 

2 if later, the first day of the fifth year be3 fore the year involved)’.’’. 

4 (c) LIMITATION ON PHYSICIANS’ SERVICES IN5 CLUDED IN TARGET GROWTH RATE COMPUTATION TO

6 SERVICES COVERED UNDER PHYSICIAN FEE SCHED7 ULE.—Effective for services furnished on or after January 

8 1, 2009, section 1848(f)(4)(A) of such Act is amended by 

9 striking ‘‘(such as clinical’’ and all that follows through 

10 ‘‘in a physician’s office’’ and inserting ‘‘for which payment 

11 under this part is made under the fee schedule under this 

12 section, for services for practitioners described in section 

13 1842(b)(18)(C) on a basis related to such fee schedule, 

14 or for services described in section 1861(p) (other than 

15 such services when furnished in the facility of a provider 

16 of services)’’. 

17 (d) ESTABLISHMENT OF SEPARATE TARGET

18 GROWTH RATES FOR CATEGORIES OF SERVICES.— 

19 (1) ESTABLISHMENT OF SERVICE CAT20 EGORIES.—Subsection (j) of section 1848 of the So21 cial Security Act (42 U.S.C. 1395w–4) is amended 

22 by adding at the end the following new paragraph: 

23 ‘‘(5) SERVICE CATEGORIES.—For services fur24 nished on or after January 1, 2009, each of the fol25 lowing categories of physicians’ services (as defined 


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1 in paragraph (3)) shall be treated as a separate 

2 ‘service category’: 

3 ‘‘(A) Evaluation and management services 

4 that are procedure codes (for services covered 

5 under this title) for— 

6 ‘‘(i) services in the category des7 ignated Evaluation and Management in the 

8 Health Care Common Procedure Coding 

9 System (established by the Secretary under 

10 subsection (c)(5) as of December 31, 2009, 

11 and as subsequently modified by the Sec12 retary); and 

13 ‘‘(ii) preventive services (as defined in 

14 section 1861(iii)) for which payment is 

15 made under this section. 

16 ‘‘(B) All other services not described in 

17 subparagraph (A). 

18 Service categories established under this paragraph 

19 shall apply without regard to the specialty of the 

20 physician furnishing the service.’’. 

21 (2) ESTABLISHMENT OF SEPARATE CONVER22 SION FACTORS FOR EACH SERVICE CATEGORY.— 

23 Subsection (d)(1) of section 1848 of the Social Secu24 rity Act (42 U.S.C. 1395w–4) is amended— 

25 (A) in subparagraph (A)— 


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1 (i) by designating the sentence begin2 ning ‘‘The conversion factor’’ as clause (i) 

3 with the heading ‘‘APPLICATION OF SIN4 GLE CONVERSION FACTOR.—’’ and with 

5 appropriate indentation; 

6 (ii) by striking ‘‘The conversion fac7 tor’’ and inserting ‘‘Subject to clause (ii), 

8 the conversion factor’’; and 

9 (iii) by adding at the end the fol10 lowing new clause: 

11 ‘‘(ii) APPLICATION OF MULTIPLE CON12 VERSION FACTORS BEGINNING WITH

13 2011.— 

14 ‘‘(I) IN GENERAL.—In applying 

15 clause (i) for years beginning with 

16 2011, separate conversion factors 

17 shall be established for each service 

18 category of physicians’ services (as de19 fined in subsection (j)(5)) and any 

20 reference in this section to a conver21 sion factor for such years shall be 

22 deemed to be a reference to the con23 version factor for each of such cat24 egories. 


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1 ‘‘(II) INITIAL CONVERSION FAC2 TORS.—Such factors for 2011 shall be 

3 based upon the single conversion fac4 tor for the previous year multiplied by 

5 the update established under para6 graph (11) for such category for 

7 2011. 

8 ‘‘(III) UPDATING OF CONVER9 SION FACTORS.—Such factor for a 

10 service category for a subsequent year 

11 shall be based upon the conversion 

12 factor for such category for the pre13 vious year and adjusted by the update 

14 established for such category under 

15 paragraph (11) for the year in16 volved.’’; and 

17 (B) in subparagraph (D), by striking 

18 ‘‘other physicians’ services’’ and inserting ‘‘for 

19 physicians’ services described in the service cat20 egory described in subsection (j)(5)(B)’’. 

21 (3) ESTABLISHING UPDATES FOR CONVERSION

22 FACTORS FOR SERVICE CATEGORIES.—Section 

23 1848(d) of the Social Security Act (42 U.S.C. 

24 1395w–4(d)), as amended by subsection (a), is 

25 amended— 


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1 (A) in paragraph (4)(C)(iii), by striking 

2 ‘‘The allowed’’ and inserting ‘‘Subject to para3 graph (11)(B), the allowed’’; and 

4 (B) by adding at the end the following new 

5 paragraph: 

6 ‘‘(11) UPDATES FOR SERVICE CATEGORIES BE7 GINNING WITH 2011.— 

8 ‘‘(A) IN GENERAL.—In applying paragraph 

9 (4) for a year beginning with 2011, the fol10 lowing rules apply: 

11 ‘‘(i) APPLICATION OF SEPARATE UP12 DATE ADJUSTMENTS FOR EACH SERVICE

13 CATEGORY.—Pursuant to paragraph 

14 (1)(A)(ii)(I), the update shall be made to 

15 the conversion factor for each service cat16 egory (as defined in subsection (j)(5)) 

17 based upon an update adjustment factor 

18 for the respective category and year and 

19 the update adjustment factor shall be com20 puted, for a year, separately for each serv21 ice category. 

22 ‘‘(ii) COMPUTATION OF ALLOWED AND

23 ACTUAL EXPENDITURES BASED ON SERV24 ICE CATEGORIES.—In computing the prior 

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1 lative adjustment component under clauses 

2 (i) and (ii) of paragraph (4)(B), the fol3 lowing rules apply: 

4 ‘‘(I) APPLICATION BASED ON

5 SERVICE CATEGORIES.—The allowed 

6 expenditures and actual expenditures 

7 shall be the allowed and actual ex8 penditures for the service category, as 

9 determined under subparagraph (B). 

10 ‘‘(II) APPLICATION OF CATEGORY

11 SPECIFIC TARGET GROWTH RATE.— 

12 The growth rate applied under clause 

13 (ii)(II) of such paragraph shall be the 

14 target growth rate for the service cat15 egory involved under subsection (f)(5). 

16 ‘‘(B) DETERMINATION OF ALLOWED EX17 PENDITURES.—In applying paragraph (4) for a 

18 year beginning with 2010, notwithstanding sub19 paragraph (C)(iii) of such paragraph, the al20 lowed expenditures for a service category for a 

21 year is an amount computed by the Secretary 

22 as follows: 

23 ‘‘(i) FOR 2010.—For 2010: 

24 ‘‘(I) TOTAL 2009 ACTUAL EX25 PENDITURES FOR ALL SERVICES INVerDate Nov 24 2008 02:10 Oct 30, 2009 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3961.IH H3961

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1 CLUDED IN SGR COMPUTATION FOR

2 EACH SERVICE CATEGORY.—Compute 

3 total actual expenditures for physi4 cians’ services (as defined in sub5 section (f)(4)(A)) for 2009 for each 

6 service category. 

7 ‘‘(II) INCREASE BY GROWTH

8 RATE TO OBTAIN 2010 ALLOWED EX9 PENDITURES FOR SERVICE CAT10 EGORY.—Compute allowed expendi11 tures for the service category for 2010 

12 by increasing the allowed expenditures 

13 for the service category for 2009 com14 puted under subclause (I) by the tar15 get growth rate for such service cat16 egory under subsection (f) for 2010. 

17 ‘‘(ii) FOR SUBSEQUENT YEARS.—For 

18 a subsequent year, take the amount of al19 lowed expenditures for such category for 

20 the preceding year (under clause (i) or this 

21 clause) and increase it by the target 

22 growth rate determined under subsection 

23 (f) for such category and year.’’. 

24 (4) APPLICATION OF SEPARATE TARGET

25 GROWTH RATES FOR EACH CATEGORY.— 


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1 (A) IN GENERAL.—Section 1848(f) of the 

2 Social Security Act (42 U.S.C. 1395w–4(f)) is 

3 amended by adding at the end the following 

4 new paragraph: 

5 ‘‘(5) APPLICATION OF SEPARATE TARGET

6 GROWTH RATES FOR EACH SERVICE CATEGORY BE7 GINNING WITH 2010.—The target growth rate for a 

8 year beginning with 2010 shall be computed and ap9 plied separately under this subsection for each serv10 ice category (as defined in subsection (j)(5)) and 

11 shall be computed using the same method for com12 puting the target growth rate except that the factor 

13 described in paragraph (2)(C) for— 

14 ‘‘(A) the service category described in sub15 section (j)(5)(A) shall be increased by 0.02; and 

16 ‘‘(B) the service category described in sub17 section (j)(5)(B) shall be increased by 0.01.’’. 

18 (B) USE OF TARGET GROWTH RATES.— 

19 Section 1848 of such Act is further amended— 

20 (i) in subsection (d)— 

21 (I) in paragraph (1)(E)(ii), by in22 serting ‘‘or target’’ after ‘‘sustain23 able’’; and 


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1 (II) in paragraph (4)(B)(ii)(II), 

2 by inserting ‘‘or target’’ after ‘‘sus3 tainable’’; 

4 (ii) in the heading of subsection (f), 

5 by inserting ‘‘AND TARGET GROWTH

6 RATE’’ after ‘‘SUSTAINABLE GROWTH

7 RATE’’; 

8 (iii) in subsection (f)(1)— 

9 (I) by striking ‘‘and’’ at the end 

10 of subparagraph (A); 

11 (II) in subparagraph (B), by in12 serting ‘‘before 2010’’ after ‘‘each 

13 succeeding year’’ and by striking the 

14 period at the end and inserting ‘‘; 

15 and’’; and 

16 (III) by adding at the end the 

17 following new subparagraph: 

18 ‘‘(C) November 1 of each succeeding year 

19 the target growth rate for such succeeding year 

20 and each of the 2 preceding years.’’; and 

21 (iv) in subsection (f)(2), in the matter 

22 before subparagraph (A), by inserting after 

23 ‘‘beginning with 2000’’ the following: ‘‘and 

24 ending with 2009’’. 


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1 (e) APPLICATION TO HEALTH CARE GROUP DEM2 ONSTRATION PROGRAM AND SUCCESSOR ACCOUNTABLE

3 CARE ORGANIZATION PILOT PROGRAM.—In applying the 

4 target growth rate under subsections (d) and (f) of section 

5 1848 of the Social Security Act to services furnished by 

6 a practitioner to beneficiaries who are attributable to a 

7 health care group under the demonstration program pro8 vided under section 1886A of such Act (or to an account9 able care organization under a pilot program that is a 

10 succcessor to such demonstration program under a section 

11 of such Act), the Secretary of Health and Human Services 

12 shall develop, not later than January 1, 2012, for applica13 tion beginning with 2012, a method that— 

14 (1) allows each such group or organization to 

15 have its own expenditure targets and updates for 

16 such practitioners, with respect to beneficiaries who 

17 are attributable to that group or organization, that 

18 are consistent with the methodologies described in 

19 such subsection (f); and 

20 (2) provides that the target growth rate appli21 cable to other physicians shall not apply to such 

22 physicians to the extent that the physicians’ services 

23 are furnished through the group or organization. 

24 In applying paragraph (1), the Secretary of Health and 

25 Human Services may apply the difference in the update 


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1 under such paragraph on a claim-by-claim or lump sum 

2 basis and such a payment shall be taken into account 

3 under the demonstration or pilot program. 

Æ 


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