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‘‘(iv) 1 plus the Secretary’s estimate
of the percentage change (divided by 100)
in expenditures for all physicians’ services
in the fiscal year (compared with the pre-
vious fiscal year) which will result from
changes in law (including changes made by
the Secretary in response to section 1895),
determined without taking into account es-
timated changes in expenditures due to
changes in the volume and intensity of
physicians’ services or changes in expendi-
tures resulting from changes in the update
to the conversion factor under subsection
(d)(3),
minus 1 and multiplied by 100.
‘‘(2) EXCLUSION OF SERVICES FURNISHED TO
PRIVATE PLAN ENROLLEES.—In this subsection, the
term ‘physicians’ services’ with respect to a fiscal
year does not include services furnished to an indi-
vidual enrolled under this part who has elected to re-
ceive benefits under this title for the fiscal year
through a MedicarePlus product offered under part
C or through enrollment with an eligible organiza-
tion with a risk-sharing contract under section
1876.’’.
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(b) ESTABLISHING UPDATE TO CONVERSION FAC-
TOR
TO
MATCH
SPENDING
UNDER
SUSTAINABLE
GROWTH RATE.—
(1) IN GENERAL.—Section 1848(d) (42 U.S.C.
1395w–4(d)) is amended—
(A) by striking paragraph (2);
(B) by amending paragraph (3) to read as
follows:
‘‘(3) UPDATE.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (E), for purposes of this section the up-
date for a year (beginning with 1997) is equal
to the product of—
‘‘(i) 1 plus the Secretary’s estimate of
the percentage increase in the medicare
economic index (described in the fourth
sentence of section 1842(b)(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.—The
‘update adjustment factor’ for a year is equal to
the quotient of—
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‘‘(i) the difference between (I) the
sum of the allowed expenditures for physi-
cians’ services furnished during each of the
years 1995 through the year involved and
(II) the sum of the amount of actual ex-
penditures for physicians’ services fur-
nished during each of the years 1995
through the previous year; divided by
‘‘(ii) the Secretary’s estimate of al-
lowed expenditures for physicians’ services
furnished during the year.
‘‘(C) DETERMINATION
OF
ALLOWED
EX-
PENDITURES.—For purposes of subparagraph
(B), allowed expenditures for physicians’ serv-
ices shall be determined as follows (as esti-
mated by the Secretary):
‘‘(i) In the case of allowed expendi-
tures for 1995, such expenditures shall be
equal to actual expenditures for services
furnished during the 12-month period end-
ing with June of 1995.
‘‘(ii) In the case of allowed expendi-
tures for 1996 and each subsequent year,
such expenditures shall be equal to allowed
expenditures for the previous year, in-
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creased by the sustainable growth rate
under subsection (f) for the fiscal year
which begins during the year.
‘‘(D) DETERMINATION
OF
ACTUAL
EX-
PENDITURES.—For purposes of subparagraph
(B), the amount of actual expenditures for phy-
sicians’ services furnished during a year shall
be equal to the amount of expenditures for such
services during the 12-month period ending
with June of the previous year.
‘‘(E) RESTRICTION
ON
VARIATION
FROM
MEDICARE ECONOMIC INDEX.—
‘‘(i) IN
GENERAL.—Notwithstanding
the amount of the update adjustment fac-
tor 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 103 percent of
1 plus the Secretary’s estimate of the
percentage increase in the medicare
economic index (described in the
fourth sentence of section 1842(b)(3))
for the year (divided by 100); or
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‘‘(II) less than the applicable per-
centage limit of 1 plus the Secretary’s
estimate of the percentage increase in
the medicare economic index (de-
scribed in the fourth sentence of sec-
tion 1842(b)(3)) for the year (divided
by 100).
‘‘(ii) 
APPLICABLE
PERCENTAGE
LIMIT.—In clause (i)(II), the ‘applicable
percentage limit’ for a year is—
‘‘(I) for 1997, 93 percent;
‘‘(II) for 1998, 92.25 percent;
and
‘‘(III) for 1999 and each suc-
ceeding year, 92 percent.’’; and
(C) by adding at the end the following new
paragraph:
‘‘(4) REPORTING REQUIREMENTS.—
‘‘(A) IN
GENERAL.—Not later than No-
vember 1 of each year (beginning with 1996),
the Secretary shall transmit to the Congress a
report that describes the update in the conver-
sion factor for physicians’ services (as defined
in subsection (f)(3)(A)) in the following year.
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‘‘(B) COMMISSION REVIEW.—The Medicare
Payment Review Commission shall review the
report submitted under subparagraph (A) for a
year and shall submit to the Congress, by not
later than December 1 of the year, a report
containing its analysis of the conversion factor
for the following year.’’.
(2) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to physicians’ services
furnished on or after January 1, 1996.
(c) ESTABLISHMENT OF SINGLE CONVERSION FAC-
TOR FOR 1996.—
(1) IN
GENERAL.—Section 1848(d)(1) (42
U.S.C. 1395w–4(d)(1)) is amended—
(A) by redesignating subparagraph (C) as
subparagraph (D); and
(B) by inserting after subparagraph (B)
the following new subparagraph:
‘‘(C) SPECIAL
RULE
FOR
1996.—For
1996, the conversion factor under this sub-
section shall be $35.42 for all physicians’ serv-
ices.’’.
(2) CONFORMING AMENDMENTS.—Section 1848
(42 U.S.C. 1395w–4), as amended by paragraph (1),
is amended—