151 
effectiveness of health care delivery, patient satisfac-
tion, and select health outcomes. 
SEC. 235. OFFICE OF THE INSPECTOR GENERAL REPORT ON 
COMPLIANCE WITH AND ENFORCEMENT OF 
NATIONAL STANDARDS ON CULTURALLY AND 
LINGUISTICALLY 
APPROPRIATE 
SERVICES 
(CLAS) IN MEDICARE. 
(a) REPORT.—Not later than two years after the date 
of the enactment of this Act, the Inspector General of the 
Department of Health and Human Services shall prepare 
and publish a report on— 
(1) the extent to which Medicare providers and 
plans are complying with the Office for Civil Rights’ 
Guidance to Federal Financial Assistance Recipients 
Regarding Title VI Prohibition Against National Ori-
gin Discrimination Affecting Limited English Pro-
ficient Persons and the Office of Minority Health’s 
Culturally and Linguistically Appropriate Services 
Standards in health care; and 
(2) a description of the costs associated with or 
savings related to the provision of language services. 
Such report shall include recommendations on improving 
compliance with CLAS Standards and recommendations on 
improving enforcement of CLAS Standards. 
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(b) IMPLEMENTATION.—Not later than one year after 
the date of publication of the report under subsection (a), 
the Department of Health and Human Services shall imple-
ment changes responsive to any deficiencies identified in 
the report. 
SEC. 236. IOM REPORT ON IMPACT OF LANGUAGE ACCESS 
SERVICES. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services shall seek to enter into an arrangement 
with the Institute of Medicine under which the Institute will 
prepare and publish, not later than 3 years after the date 
of the enactment of this Act, a report on the impact of lan-
guage access services on the health and health care of lim-
ited English proficient populations. 
(b) CONTENTS.—Such report shall include— 
(1) recommendations on the development and 
implementation of policies and practices by health 
care organizations and providers for limited English 
proficient patient populations; 
(2) a description of the effect of providing lan-
guage access services on quality of health care and ac-
cess to care and reduced medical error; and 
(3) a description of the costs associated with or 
savings related to provision of language access serv-
ices. 
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153 
SEC. 237. DEFINITIONS. 
In this subtitle: 
(1) BILINGUAL.—The term ‘‘bilingual’’ with re-
spect to an individual means a person who has suffi-
cient degree of proficiency in two languages and can 
ensure effective communication can occur in both lan-
guages. 
(2) COMPETENT INTERPRETER SERVICES.—The 
term ‘‘competent interpreter services’’ means a trans- 
language rendition of a spoken message in which the 
interpreter comprehends the source language and can 
speak comprehensively in the target language to con-
vey the meaning intended in the source language. The 
interpreter knows health and health-related termi-
nology and provides accurate interpretations by 
choosing equivalent expressions that convey the best 
matching and meaning to the source language and 
captures, to the greatest possible extent, all nuances 
intended in the source message. 
(3) COMPETENT
TRANSLATION
SERVICES.—The 
term ‘‘competent translation services’’ means a trans- 
language rendition of a written document in which 
the translator comprehends the source language and 
can write comprehensively in the target language to 
convey the meaning intended in the source language. 
The translator knows health and health-related termi-
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154 
nology and provides accurate translations by choosing 
equivalent expressions that convey the best matching 
and meaning to the source language and captures, to 
the greatest possible extent, all nuances intended in 
the source document. 
(4) EFFECTIVE COMMUNICATION.—The term ‘‘ef-
fective communication’’ means an exchange of infor-
mation between the provider of health care or health 
care-related services and the limited English pro-
ficient recipient of such services that enables limited 
English proficient individuals to access, understand, 
and benefit from health care or health care-related 
services. 
(5) INTERPRETING/INTERPRETATION.—The terms 
‘‘interpreting’’ and ‘‘interpretation’’ mean the trans-
mission of a spoken message from one language into 
another, faithfully, accurately, and objectively. 
(6) HEALTH CARE SERVICES.—The term ‘‘health 
care services’’ means services that address physical as 
well as mental health conditions in all care settings. 
(7) HEALTH
CARE-RELATED
SERVICES.—The 
term ‘‘health care-related services’’ means human or 
social services programs or activities that provide ac-
cess, referrals or links to health care. 
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155 
(8) LANGUAGE ACCESS.—The term ‘‘language ac-
cess’’ means the provision of language services to an 
LEP individual designed to enhance that individual’s 
access to, understanding of or benefit from health care 
or health care-related services. 
(9) LANGUAGE SERVICES.—The term ‘‘language 
services’’ means provision of health care services di-
rectly in a non-English language, interpretation, 
translation, and non-English signage. 
(10) LIMITED ENGLISH PROFICIENT.—The term 
‘‘limited English proficient’’ or ‘‘LEP’’ with respect 
to an individual means an individual who speaks a 
primary language other than English and who cannot 
speak, read, write or understand the English language 
at a level that permits the individual to effectively 
communicate with clinical or nonclinical staff at an 
entity providing health care or health care related 
services. 
(11) MEDICARE PROGRAM.—The term ‘‘Medicare 
program’’ means the programs under parts A through 
D of title XVIII of the Social Security Act. 
(12) SERVICE
PROVIDER.—The term ‘‘service 
provider’’ includes all suppliers, providers of services, 
or entities under contract to provide coverage, items 
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156 
or services under any part of title XVIII of the Social 
Security Act. 
TITLE III—PHYSICIANS’ SERVICE 
PAYMENT REFORM 
SEC. 301. ESTABLISHMENT OF SEPARATE TARGET GROWTH 
RATES FOR SERVICE CATEGORIES. 
(a) ESTABLISHMENT OF SERVICE CATEGORIES.—Sub-
section (j) of section 1848 of the Social Security Act (42 
U.S.C. 1395w-4) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(5) SERVICE
CATEGORIES.—For services fur-
nished on or after January 1, 2008, each of the fol-
lowing categories of physicians’ services shall be treat-
ed as a separate ‘service category’: 
‘‘(A) Evaluation and management services 
for primary care (including new and established 
patient office visits delivered by physicians who 
the Secretary determines provide accessible, con-
tinuous, coordinated, and comprehensive care for 
Medicare beneficiaries, emergency department 
visits, and home visits), and for preventive serv-
ices 
(including 
screening 
mammography, 
colorectal cancer screening, and other services as 
defined by the Secretary, limited to the rec-
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ommendations of the United States Preventive 
Services Task Force). 
‘‘(B) Evaluation and management services 
not described in subparagraph (A). 
‘‘(C) Imaging services (as defined in sub-
section (b)(4)(B)) and diagnostic tests (other 
than clinical diagnostic laboratory tests) not de-
scribed in subparagraph (A). 
‘‘(D) Procedures that are subject (under reg-
ulations promulgated to carry out this section) 
to a 10-day or 90-day global period (in this 
paragraph referred to as ‘major procedures’), ex-
cept that the Secretary may reclassify as minor 
procedures under subparagraph (F) any proce-
dures that would otherwise be included in this 
category if the Secretary determines that such 
procedures are not major procedures. 
‘‘(E) Anesthesia services that are paid on 
the basis of the separate conversion factor for an-
esthesia services determined under subsection 
(d)(1)(D). 
‘‘(F) Minor procedures and any other phy-
sicians’ services that are not described in a pre-
ceding subparagraph.’’. 
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158 
(b) ESTABLISHMENT OF SEPARATE CONVERSION FAC-
TORS FOR EACH SERVICE CATEGORY.—Subsection (d)(1) 
of section 1848 of the Social Security Act (42 U.S.C. 
1395w–4) is amended— 
(1) in subparagraph (A)— 
(A) by designating the sentence beginning 
‘‘The conversion factor’’ as clause (i) with the 
heading ‘‘APPLICATION OF SINGLE CONVERSION 
FACTOR.—’’ and with appropriate indentation; 
(B) by striking ‘‘The conversion factor’’ and 
inserting ‘‘Subject to clause (ii), the conversion 
factor’’; and 
(C) by adding at the end the following new 
clause: 
‘‘(ii) APPLICATION OF MULTIPLE CON-
VERSION FACTORS BEGINNING WITH 2008.— 
‘‘(I) IN
GENERAL.—In applying 
clause (i) for years beginning with 
2008, separate conversion factors shall 
be established for each service category 
of physicians’ services (as defined in 
subsection (j)(5)) and any reference in 
this section to a conversion factor for 
such years shall be deemed to be a ref-
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159 
erence to the conversion factor for each 
of such categories. 
‘‘(II) INITIAL
CONVERSION
FAC-
TORS; SPECIAL RULE FOR ANESTHESIA 
SERVICES.—Such factors for 2008 shall 
be based upon the single conversion 
factor for 2007 multiplied by the up-
date established under paragraph (8) 
for such category for 2008. In the case 
of the service category described in sub-
section (j)(5)(F) (relating to anesthesia 
services), the conversion factor for 2008 
shall be based on the separate conver-
sion factor specified in subparagraph 
(D) for 2007 multiplied by the update 
established under paragraph (8) for 
such category for 2008. 
‘‘(III) UPDATING OF CONVERSION 
FACTORS.—Such factor for a service 
category for a subsequent year shall be 
based upon the conversion factor for 
such category for the previous year and 
adjusted by the update established for 
such category under paragraph (8) for 
the year involved.’’; and 
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160 
(2) in subparagraph (D), by inserting ‘‘(before 
2008)’’ after ‘‘for a year’’. 
(c) ESTABLISHING UPDATES FOR CONVERSION FAC-
TORS FOR SERVICE CATEGORIES.—Section 1848(d) of the 
Social Security Act (42 U.S.C. 1395w-4(d)) is amended— 
(1) in paragraph (4)(B), by striking ‘‘and (6)’’ 
and inserting ‘‘, (6), and (8)’’; 
(2) in paragraph (4)(C)(iii), by striking ‘‘The 
allowed’’ and inserting ‘‘Subject to paragraph (8)(B), 
the allowed’’; 
(3) in paragraph (4)(D), by striking ‘‘The up-
date’’ and inserting ‘‘Subject to paragraph (8)(E), the 
update’’; and 
(4) by adding at the end the following new para-
graph: 
‘‘(8) UPDATES FOR SERVICE CATEGORIES BEGIN-
NING WITH 2008.— 
‘‘(A) IN GENERAL.—In applying paragraph 
(4) for a year beginning with 2008, the following 
rules apply: 
‘‘(i) APPLICATION
OF
SEPARATE
UP-
DATE
ADJUSTMENTS
FOR
EACH
SERVICE 
CATEGORY.—Pursuant 
to 
paragraph 
(1)(A)(ii)(I), the update shall be made to 
the conversion factor for each service cat-
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161 
egory (as defined in subsection (j)(5)) based 
upon an update adjustment factor for the 
respective category and year and the update 
adjustment factor shall be computed, for a 
year, separately for each service category. 
‘‘(ii) COMPUTATION OF ALLOWED AND 
ACTUAL EXPENDITURES BASED ON SERVICE 
CATEGORIES.—In computing the prior year 
adjustment component and the cumulative 
adjustment component under clauses (i) and 
(ii) of paragraph (4)(B), the following rules 
apply: 
‘‘(I) 
APPLICATION
BASED
ON 
SERVICE
CATEGORIES.—The allowed 
expenditures and actual expenditures 
shall be the allowed and actual expend-
itures for the service category, as deter-
mined under subparagraph (B). 
‘‘(II) LIMITATION
TO
PHYSICIAN 
FEE-SCHEDULE SERVICES.—Actual ex-
penditures shall only take into account 
expenditures 
for 
services 
furnished 
under the physician fee schedule. 
‘‘(III) APPLICATION OF CATEGORY 
SPECIFIC TARGET GROWTH RATE.—The 
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162 
growth rate applied under clause 
(ii)(II) of such paragraph shall be the 
target growth rate for the service cat-
egory involved under subsection (f)(5). 
‘‘(IV) 
ALLOCATION
OF
CUMU-
LATIVE
OVERHANG.—There shall be 
substituted for the difference described 
in subparagraph (B)(ii)(I) of such 
paragraph the amount described in 
subparagraph (C)(i) for the service cat-
egory involved. 
‘‘(B) DETERMINATION
OF
ALLOWED
EX-
PENDITURES.—In applying paragraph (4) for a 
year beginning with 2008, notwithstanding sub-
paragraph (C)(iii) of such paragraph, the al-
lowed expenditures for a service category for a 
year is an amount computed by the Secretary as 
follows: 
‘‘(i) FOR 2008.—For 2008: 
‘‘(I) TOTAL
2007
ALLOWED
EX-
PENDITURES.—Compute the total al-
lowed expenditures for services fur-
nished under the physician fee schedule 
under such paragraph for 2007. 
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163 
‘‘(II) 
INCREASE
BY
GROWTH 
RATE.—Increase the total under sub-
clause (I) by the target growth rate for 
such category under subsection (f) for 
2008. 
‘‘(III) ALLOCATION
TO
SERVICE 
CATEGORY.—Multiply 
the 
increased 
total under subclause (II) by the over-
hang allocation factor for the service 
category (as defined in subparagraph 
(C)(iii)). 
‘‘(ii) FOR SUBSEQUENT YEARS.—For a 
subsequent year, take the amount of allowed 
expenditures for such category for the pre-
ceding year (under clause (i) or this clause) 
and increase it by the target growth rate de-
termined under subsection (f) for such cat-
egory and year. 
‘‘(C) COMPUTATION
AND
APPLICATION
OF 
CUMULATIVE OVERHANG AMONG CATEGORIES.— 
‘‘(i) IN GENERAL.—For purposes of ap-
plying 
paragraph 
(4)(B)(ii)(II) 
under 
clause (ii)(IV), the amount described in this 
clause for a year (beginning with 2008) is 
the sum of the following: 
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164 
‘‘(I) 
PRE-2008 
CUMULATIVE 
OVERHANG.—The amount of the pre- 
2008 cumulative excess spending (as 
defined in clause (ii)) multiplied by 
the overhang allocation factor for the 
service category (under clause (iii)). 
‘‘(II) 
POST-2007 
CUMULATIVE 
AMOUNTS.—For a year beginning with 
2009, the difference (which may be 
positive 
or 
negative) 
between 
the 
amount of the allowed expenditures for 
physicians’ services (as determined 
under paragraph (4)(C)) in the service 
category 
from 
January 
1, 
2008, 
through the end of the prior year and 
the amount of the actual expenditures 
for such services in such category dur-
ing that period. 
‘‘(ii) PRE-2008 CUMULATIVE
EXCESS 
SPENDING
DEFINED.—For 
purposes 
of 
clause (i)(I), the term ‘pre-2008 cumulative 
excess spending’ means the difference de-
scribed in paragraph (4)(B)(ii)(I) as deter-
mined for the year 2008, taking into ac-
count expenditures through December 31, 
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165 
2007. Such difference takes into account ex-
penditures included in subsection (f)(4)(A). 
‘‘(iii) OVERHANG
ALLOCATION
FAC-
TOR.—For purposes of this paragraph, the 
term ‘overhang allocation factor’ means, for 
a service category, the proportion, as deter-
mined by the Secretary of total actual ex-
penditures under this part for items and 
services in such category during 2007 to the 
total of such actual expenditures for all the 
service categories. In calculating such pro-
portion, the Secretary shall only take into 
account services furnished under the physi-
cian fee schedule. 
‘‘(D) FLOOR FOR UPDATES FOR 2008 AND 
2009.—The update to the conversion factors for 
each service category for each of 2008 and 2009 
shall be not less than 0.5 percent. 
‘‘(E) CHANGE IN RESTRICTION ON UPDATE 
ADJUSTMENT FACTOR FOR 2010 AND 2011.—The 
update adjustment factor determined under sub-
paragraph (4)(B), as modified by this para-
graph, for a service category for a year (begin-
ning with 2010 and ending with 2011) may be 
less than -0.07, but may not be less than -0.14.’’. 
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166 
(d) APPLICATION
OF SEPARATE TARGET GROWTH 
RATES FOR EACH CATEGORY.— 
(1) IN GENERAL.—Section 1848(f) of the Social 
Security Act (42 U.S.C. 1395w–4(f)) is amended by 
adding at the end the following new paragraph: 
‘‘(5) 
APPLICATION
OF
SEPARATE
TARGET 
GROWTH RATES FOR EACH SERVICE CATEGORY BEGIN-
NING WITH 2008.—The target growth rate for a year 
beginning with 2008 shall be computed and applied 
separately under this subsection for each service cat-
egory (as defined in subsection (j)(5)) and shall be 
computed using the same method for computing the 
sustainable growth rate except for the following: 
‘‘(A) The reference in paragraphs (2)(A) 
and (2)(D) to ‘all physicians’ services’ is deemed 
a reference to the physicians’ services included in 
such category but shall not take into account 
items and services included in physicians’ serv-
ices through the operation of paragraph (4)(A). 
‘‘(B) The factor described in paragraph 
(2)(C) for the service category described in sub-
section (j)(5)(A) shall be increased by 0.03. 
‘‘(C) A national coverage determination (as 
defined in section 1869(f)(1)(B)) shall be treated 
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167 
as a change in regulation described in para-
graph (2)(D).’’. 
(2) USE OF TARGET GROWTH RATES.—Section 
1848 of such Act is further amended— 
(A) in subsection (d)— 
(i) in paragraph (1)(E)(ii), by insert-
ing ‘‘or target’’ after ‘‘sustainable’’; and 
(ii) in paragraph (4)(B)(ii)(II), by in-
serting ‘‘or target’’ after ‘‘sustainable’’; and 
(B) in subsection (f)— 
(i) in the heading by inserting ‘‘; TAR-
GET GROWTH RATE’’ after ‘‘SUSTAINABLE 
GROWTH RATE’’ 
(ii) in paragraph (1)— 
(I) by striking ‘‘and’’ at the end 
of subparagraph (A); 
(II) in subparagraph (B), by in-
serting ‘‘before 2008’’ after ‘‘each suc-
ceeding year’’ and by striking the pe-
riod at the end and inserting ‘‘; and’’; 
and 
(III) by adding at the end the fol-
lowing new subparagraph: 
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168 
‘‘(C) November 1 of each succeeding year the 
target growth rate for such succeeding year and 
each of the 2 preceding years.’’; and 
(iii) in paragraph (2), in the matter 
before subparagraph (A), by inserting after 
‘‘beginning with 2000’’ the following: ‘‘and 
ending with 2007’’. 
(e) REPORTS ON EXPENDITURES FOR PART B DRUGS 
AND CLINICAL DIAGNOSTIC LABORATORY TESTS.— 
(1) REPORTING REQUIREMENT.—The Secretary 
of Health and Human Services shall include informa-
tion in the annual physician fee schedule proposed 
rule on the change in the annual rate of growth of ac-
tual expenditures for clinical diagnostic laboratory 
tests or drugs, biologicals, and radiopharmaceuticals 
for which payment is made under part B of title 
XVIII of the Social Security Act. 
(2) RECOMMENDATIONS.—The report submitted 
under paragraph (1) shall include an analysis of the 
reasons for such excess expenditures and recommenda-
tions for addressing them in the future. 
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169 
SEC. 302. IMPROVING ACCURACY OF RELATIVE VALUES 
UNDER 
THE 
MEDICARE 
PHYSICIAN 
FEE 
SCHEDULE. 
(a) USE OF EXPERT PANEL TO IDENTIFY MISVALUED 
PHYSICIANS’ SERVICES.—Section 1848(c) of the Social Se-
curity Act (42 U.S.C. 1395w(c)) is amended by adding at 
the end the following new paragraph: 
‘‘(7) USE
OF
EXPERT
PANEL
TO
IDENTIFY 
MISVALUED PHYSICIANS’ SERVICES.— 
‘‘(A) IN GENERAL.—The Secretary shall es-
tablish an expert panel (in this paragraph re-
ferred to as the ‘expert panel’)— 
‘‘(i) to identify, through data analysis, 
physicians’ services for which the relative 
value under this subsection is potentially 
misvalued, particularly those services for 
which such relative value may be over-
valued; 
‘‘(ii) to assess whether those misvalued 
services warrant review using existing proc-
esses (referred to in paragraph (2)(J)(ii)) 
for the consideration of coding changes; and 
‘‘(iii) to advise the Secretary con-
cerning the exercise of authority under 
clauses (ii)(III) and (vi) of paragraph 
(2)(B). 
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170 
‘‘(B) COMPOSITION OF PANEL.—The expert 
panel shall be appointed by the Secretary and 
composed of— 
‘‘(i) members with expertise in medical 
economics and technology diffusion; 
‘‘(ii) members with clinical expertise; 
‘‘(iii) physicians, particularly physi-
cians (such as a physician employed by the 
Veterans Administration or a physician 
who has a full time faculty appointment at 
a medical school) who are not directly af-
fected by changes in the physician fee sched-
ule under this section; 
‘‘(iv) carrier medical directors; and 
‘‘(v) representatives of private payor 
health plans. 
‘‘(C) APPOINTMENT
CONSIDERATIONS.—In 
appointing members to the expert panel, the Sec-
retary shall assure racial and ethnic diversity on 
the panel and may consider appointing a liaison 
from organizations with experience in the con-
sideration of coding changes to the panel.’’. 
(b) EXAMINATION OF SERVICES WITH SUBSTANTIAL 
CHANGES.—Such section is further amended by adding at 
the end the following new paragraph: 
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171 
‘‘(8) EXAMINATION OF SERVICES WITH SUBSTAN-
TIAL CHANGES.—The Secretary, in consultation with 
the expert panel under paragraph (7), shall— 
‘‘(A) conduct a five-year review of physi-
cians’ services in conjunction with the RUC 5- 
year review, particularly for services that have 
experienced substantial changes in length of stay, 
site of service, volume, practice expense, or other 
factors that may indicate changes in physician 
work; 
‘‘(B) identify new services to determine if 
they are likely to experience a reduction in rel-
ative value over time and forward a list of the 
services so identified for such five-year review; 
and 
‘‘(C) for physicians’ services that are other-
wise unreviewed under the process the Secretary 
has established, periodically review a sample of 
relative value units within different types of 
services to assess the accuracy of the relative val-
ues contained in the Medicare physician fee 
schedule.’’. 
(c) AUTHORITY TO REDUCE WORK COMPONENT FOR 
SERVICES WITH ACCELERATED VOLUME GROWTH.— 
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172 
(1) IN GENERAL.—Paragraph (2)(B) of such sec-
tion is amended— 
(A) in clause (v), by adding at the end the 
following new subclause: 
‘‘(III) 
REDUCTIONS
IN
WORK 
VALUE UNITS FOR SERVICES WITH AC-
CELERATED VOLUME GROWTH.—Effec-
tive January 1, 2009, reduced expendi-
tures attributable to clause (vi).’’; and 
(B) by adding at the end the following new 
clauses: 
‘‘(vi) AUTHORIZING
REDUCTION
IN 
WORK
VALUE
UNITS
FOR
SERVICES
WITH 
ACCELERATED VOLUME GROWTH.—The Sec-
retary may provide (without using existing 
processes the Secretary has established for 
review of relative value) for a reduction in 
the work value units for a particular physi-
cian’s service if the annual rate of growth 
in the expenditures for such service for 
which payment is made under this part for 
individuals for 2006 or a subsequent year 
exceeds the average annual rate of growth in 
expenditures of all physicians’ services for 
which payment is made under this part by 
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more than 10 percentage points for such 
year. 
‘‘(vii) CONSULTATION
WITH
EXPERT 
PANEL
AND
BASED
ON
CLINICAL
EVI-
DENCE.—The Secretary shall exercise au-
thority under clauses (ii)(III) and (vi) in 
consultation with the expert panel estab-
lished under paragraph (7) and shall take 
into account clinical evidence supporting or 
refuting the merits of such accelerated 
growth.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply with respect to payment 
for services furnished on or after January 1, 2009. 
(d) ADJUSTMENT AUTHORITY FOR EFFICIENCY GAINS 
FOR NEW PROCEDURES.—Paragraph (2)(B)(ii) of such sec-
tion is amended by adding at the end the following new 
subclause: 
‘‘(III) ADJUSTMENT
AUTHORITY 
FOR EFFICIENCY GAINS FOR NEW PRO-
CEDURES.—In carrying out subclauses 
(I) and (II), the Secretary may apply 
a methodology, based on supporting 
evidence, under which there is imposed 
a reduction over a period of years in 
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specified relative value units in the 
case of a new (or newer) procedure to 
take into account inherent efficiencies 
that are typically or likely to be gained 
during the period of initial increased 
application of the procedure.’’. 
SEC. 303. FEEDBACK MECHANISM ON PRACTICE PATTERNS. 
By not later than July 1, 2008, the Secretary of Health 
and Human Services shall develop and implement a mecha-
nism to measure resource use on a per capita and an epi-
sode basis in order to provide confidential feedback to physi-
cians in the Medicare program on how their practice pat-
terns compare to physicians generally, both in the same lo-
cality as well as nationally. Such feedback shall not be sub-
ject to disclosure under section 552 of title 5, United States 
Code). The Secretary shall consider extending such mecha-
nism to other suppliers as necessary. 
SEC. 304. PAYMENTS FOR EFFICIENT AREAS. 
Section 1833 of the Social Security Act (42 U.S.C. 
1395l) is amended by adding at the end the following new 
subsection: 
‘‘(v) INCENTIVE PAYMENTS FOR EFFICIENT AREAS.— 
‘‘(1) IN GENERAL.—In the case of services fur-
nished under the physician fee schedule under section 
1848 on or after January 1, 2009, and before Janu-
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ary 1, 2011, by a supplier that is paid under such 
fee schedule in an efficient area (as identified under 
paragraph (2)), in addition to the amount of pay-
ment that would otherwise be made for such services 
under this part, there also shall be paid an amount 
equal to 5 percent of the payment amount for the 
services under this part. 
‘‘(2) IDENTIFICATION OF EFFICIENT AREAS.— 
‘‘(A) IN GENERAL.—Based upon available 
data, the Secretary shall identify those counties 
or equivalent areas in the United States in the 
lowest fifth percentile of utilization based on per 
capita spending for services provided in 2007 
under this part and part A. 
‘‘(B) IDENTIFICATION OF COUNTIES WHERE 
SERVICE IS FURNISHED.—For purposes of pay-
ing the additional amount specified in para-
graph (1), if the Secretary uses the 5-digit postal 
ZIP Code where the service is furnished, the 
dominant county of the postal ZIP Code (as de-
termined by the United States Postal Service, or 
otherwise) shall be used to determine whether the 
postal ZIP Code is in a county described in sub-
paragraph (A). 
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‘‘(C) JUDICIAL REVIEW.—There shall be no 
administrative or judicial review under section 
1869, 1878, or otherwise, respecting— 
‘‘(i) the identification of a county or 
other area under subparagraph (A); or 
‘‘(ii) the assignment of a postal ZIP 
Code to a county or other area under sub-
paragraph (B). 
‘‘(D) PUBLICATION OF LIST OF COUNTIES; 
POSTING ON WEBSITE.—With respect to a year 
for which a county or area is identified under 
this paragraph, the Secretary shall identify such 
counties or areas as part of the proposed and 
final rule to implement the physician fee sched-
ule under section 1848 for the applicable year. 
The Secretary shall post the list of counties iden-
tified under this paragraph on the Internet 
website of the Centers for Medicare & Medicaid 
Services.’’. 
SEC. 305. RECOMMENDATIONS ON REFINING THE PHYSI-
CIAN FEE SCHEDULE. 
(a) RECOMMENDATIONS ON CONSOLIDATED CODING 
FOR SERVICES COMMONLY PERFORMED TOGETHER.—Not 
later than December 31, 2008, the Comptroller General of 
the United States shall— 
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(1) complete an analysis of codes paid under the 
Medicare physician fee schedule to determine whether 
the codes for procedures that are commonly furnished 
together should be combined; and 
(2) submit to Congress a report on such analysis 
and include in the report recommendations on wheth-
er an adjustment should be made to the relative value 
units for such combined code. 
(b) RECOMMENDATIONS ON INCREASED USE OF BUN-
DLED PAYMENTS.—Not later than December 31, 2008, the 
Comptroller General of the United States shall— 
(1) complete an analysis of those procedures 
under the Medicare physician fee schedule for which 
no global payment methodology is applied but for 
which a ‘‘bundled’’ payment methodology would be 
appropriate; and 
(2) submit to Congress a report on such analysis 
and include in the report recommendations on in-
creasing the use of ‘‘bundled’’ payment methodology 
under such schedule. 
(c) MEDICARE PHYSICIAN FEE SCHEDULE.—In this 
section, the term ‘‘Medicare physician fee schedule’’ means 
the fee schedule established under section 1848 of the Social 
Security Act (42 U.S.C. 1395w–4). 
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