I 
113TH CONGRESS 
1ST SESSION 
H. R. 574 
To amend part B of title XVIII of the Social Security Act to reform Medicare 
payment for physicians’ services by eliminating the sustainable growth 
rate system and providing incentives for the adoption of innovative pay-
ment and delivery models to improve quality and efficiency. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 6, 2013 
Ms. SCHWARTZ (for herself, Mr. HECK of Nevada, Mr. BLUMENAUER, Mrs. 
CHRISTENSEN, Mr. CARNEY, Mr. COURTNEY, Mr. POLIS, Mr. FATTAH, 
and Ms. CASTOR of Florida) introduced the following bill; which was re-
ferred to the Committee on Energy and Commerce, and in addition to 
the Committee on Ways and Means, for a period to be subsequently de-
termined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
A BILL 
To amend part B of title XVIII of the Social Security 
Act to reform Medicare payment for physicians’ services 
by eliminating the sustainable growth rate system and 
providing incentives for the adoption of innovative pay-
ment and delivery models to improve quality and effi-
ciency. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE; PURPOSE. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Medicare Physician Payment Innovation Act of 2013’’. 
(b) PURPOSE.—The purpose of this Act is to reform 
the system of Medicare payment for physicians’ services— 
(1) by ending the application of the sustainable 
growth rate (SGR) system; 
(2) to stabilize payments for 2014; 
(3) to promote the rapid development and im-
plementation of alternative improved payment and 
delivery models that incentivize high quality, high- 
value care; and 
(4) to provide continuing incentives for adop-
tion of such alternative payment and delivery models 
by physicians and other providers. 
SEC. 2. MEDICARE PHYSICIAN PAYMENT REFORM. 
(a) REPEAL OF SGR PAYMENT METHODOLOGY.— 
Section 1848 of the Social Security Act (42 U.S.C. 
1395w–4) is amended— 
(1) in subsection (d)— 
(A) in paragraph (1)(A), by inserting ‘‘or 
a subsequent paragraph’’ after ‘‘paragraph 
(4)’’; and 
(B) in paragraph (4)— 
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(i) in the heading, by striking ‘‘YEARS 
BEGINNING
WITH
2001’’ and inserting 
‘‘2001, 2002, AND 2003’’; and 
(ii) in subparagraph (A), by striking 
‘‘a year beginning with 2001’’ and insert-
ing ‘‘2001, 2002, and 2003’’; and 
(2) in subsection (f)— 
(A) in paragraph (1)(B), by inserting 
‘‘through 2013’’ after ‘‘of such succeeding 
year’’; and 
(B) in paragraph (2), by inserting ‘‘and 
ending with 2013’’ after ‘‘beginning with 
2000’’. 
(b) STABILIZING 2014 PAYMENT RATES AT CUR-
RENT LEVEL.— 
(1) IN
GENERAL.—Subsection (d) of section 
1848 of the Social Security Act (42 U.S.C. 1395w– 
4), as amended by section 601 of the American Tax-
payer Relief Act of 2012 (Public Law 112–240), is 
amended by adding at the end the following new 
paragraph: 
‘‘(15) UPDATE FOR 2014.—In lieu of the update 
to the single conversion factor established in para-
graph (1)(C) that would otherwise apply for 2014, 
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the update to the single conversion factor shall be 0 
percent for 2014.’’. 
(2) TECHNICAL
AMENDMENT.—Effective for 
years beginning with 2014, subparagraph (C)(i) of 
paragraph (7) of section 1848(m) of the Social Se-
curity Act (42 U.S.C. 1395w–4(m)(7)(C)(i); relating 
to additional incentive payment) is amended by in-
serting ‘‘, the program of Osteopathic Continuous 
Certification of the American Osteopathic Associa-
tion,’’ after ‘‘Specialties Maintenance of Certification 
program’’. 
(c) ESTABLISHMENT OF DIFFERENTIAL UPDATES 
BEGINNING WITH 2015 TO PROMOTE ACCESS TO PRI-
MARY CARE SERVICES.— 
(1) 
ESTABLISHMENT
OF
SERVICE
CAT-
EGORIES.—Subsection (j) of section 1848 of the So-
cial Security Act (42 U.S.C. 1395w–4) is amended 
by adding at the end the following new paragraphs: 
‘‘(5) SERVICE CATEGORIES.— 
‘‘(A) IN GENERAL.—For services furnished 
on or after January 1, 2015, each of the fol-
lowing categories of services shall be treated as 
a separate ‘service category’: 
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‘‘(i) PRIMARY
CARE.—Primary care 
services (as defined in subparagraph (B)) 
furnished by a qualifying practitioner. 
‘‘(ii) OTHER SERVICES.—Other physi-
cians’ services. 
‘‘(B) PRIMARY
CARE
SERVICES.—In this 
subsection, the term ‘primary care services’ 
means services identified, as of April 1, 2013, 
with the following HCPCS codes (and as subse-
quently modified by the Secretary): 
‘‘(i) OFFICE
AND
OUTPATIENT
VIS-
ITS.—99201 through 99215. 
‘‘(ii) 
HOSPITAL
OBSERVATIONAL 
SERVICES.—99217 through 99220. 
‘‘(iii) HOSPITAL
INPATIENT
VISITS 
SERVICES.—99221 through 99239. 
‘‘(iv) NURSING
HOME, DOMICILIARY, 
REST HOME OR CUSTODIAL CARE VISITS.— 
99304 through 99340. 
‘‘(v) HOME SERVICE VISITS.—99341 
through 99350. 
‘‘(vi) 
WELCOME
TO
MEDICARE 
VISIT.—G0402. 
‘‘(vii) ANNUAL
WELLNESS
VISITS.— 
G0438 and G0439. 
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‘‘(C) INCLUSION
OF
PREVENTIVE
SERV-
ICES.—Such term also includes preventive serv-
ices described in section 1861(ddd)(3) and addi-
tional preventive services described in section 
1861(ddd)(1). 
‘‘(D) INCLUSION
OF
ADDITIONAL
SERV-
ICES.—Such term also includes services, such 
as care coordination services, telemedicine serv-
ices, non-face-to-face care management services, 
preparation and supervision of long-term care 
plans, home care plan oversight services, and 
similar services that the Secretary identifies, by 
regulation, as being similar to the services de-
scribed in subparagraph (B) or (C). 
‘‘(6) QUALIFYING
PRACTITIONER.—The term 
‘qualifying practitioner’ means, with respect to the 
furnishing of primary care services, an individual— 
‘‘(A) for whom primary care services has 
accounted for at least 60 percent of the allowed 
charges under this part (not counting any such 
charges attributable to in-office clinical labora-
tory services) in a prior period as determined by 
the Secretary; or 
‘‘(B) who does not have claims under this 
part during such a prior period and whom the 
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Secretary determines is likely to meet the re-
quirement of subparagraph (A) for the subse-
quent period.’’. 
(2) ESTABLISHMENT
OF
SEPARATE
CONVER-
SION FACTORS FOR EACH SERVICE CATEGORY.—Sec-
tion 1848(d)(1) of the Social Security Act (42 
U.S.C. 1395w–4(d)(1)), as amended by subsection 
(a)(1)(A), is further amended— 
(A) in subparagraph (A)— 
(i) by designating the sentence begin-
ning ‘‘The conversion factor’’ as clause (i) 
with the heading ‘‘APPLICATION OF SIN-
GLE
CONVERSION
FACTOR.—’’ and with 
appropriate indentation; 
(ii) by striking ‘‘The conversion fac-
tor’’ and inserting ‘‘Subject to clause (ii), 
the conversion factor’’; and 
(iii) by adding at the end the fol-
lowing new clause: 
‘‘(ii) APPLICATION OF MULTIPLE CON-
VERSION
FACTORS
BEGINNING
WITH 
2015.— 
‘‘(I) IN
GENERAL.—In applying 
clause (i) for each year beginning with 
2015, separate conversion factors 
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shall be established for each service 
category of physicians’ services (as de-
fined in subsection (j)(5)(A)) and any 
reference in this section to a conver-
sion factor for such years shall be 
deemed a reference to the conversion 
factor for each of such categories. 
‘‘(II) INITIAL CONVERSION FAC-
TORS.—Such factors for 2015 shall be 
based upon the single conversion fac-
tor for the previous year multiplied by 
the update established under para-
graph (16) for such category for 
2015. 
‘‘(III) UPDATING
OF
CONVER-
SION
FACTORS.—Such factor for a 
service category for a subsequent year 
shall be based upon the conversion 
factor for such category for the pre-
vious year and adjusted by the update 
established for such category under 
paragraph (16) or a subsequent para-
graph for the year involved.’’; and 
(B) in subparagraph (D), by striking 
‘‘other physicians’ services’’ and inserting ‘‘for 
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physicians’ services in the service category de-
scribed in subsection (j)(5)(A)(ii))’’. 
(3) ESTABLISHMENT
OF
SEPARATE
UPDATES 
FOR CONVERSION FACTORS FOR EACH SERVICE CAT-
EGORY.—Section 1848(d) of the Social Security Act 
(42 U.S.C. 1395w–4(d)), as amended by subsection 
(b), is amended by adding at the end the following 
new paragraph: 
‘‘(16) UPDATES BY SERVICE CATEGORY BEGIN-
NING
WITH
2015; UPDATES
FOR
2015
THROUGH 
2018.—In applying paragraph (4) for each year be-
ginning with 2015, the following rules apply: 
‘‘(A) APPLICATION OF SEPARATE UPDATE 
ADJUSTMENTS
FOR
EACH
SERVICE
CAT-
EGORY.—Pursuant to paragraph (1)(A)(ii)(I), 
for each year beginning with 2014, the update 
shall be made to the conversion factor for each 
service category (as defined in subsection 
(j)(5)(A)). 
‘‘(B) UPDATES FOR 2015 THROUGH 2018.— 
The updates for 2015, 2016, 2017, and 2018 
for the conversion factor for the services cat-
egory described in— 
‘‘(i) subsection (j)(5)(A)(i) shall be 
2.5 percent; and 
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‘‘(ii) subsection (j)(5)(A)(ii) shall be 
0.5 percent.’’. 
(d) PROMOTING TESTING AND EVALUATION OF NEW 
PAYMENT AND DELIVERY MODELS (PHASE I).— 
(1) EXPANSION OF TESTING IN MULTIPLE GEO-
GRAPHIC REGIONS.—Section 1115A(a)(5) of the So-
cial Security Act (42 U.S.C. 1315a(a)(5)) is amend-
ed by inserting before the period at the end the fol-
lowing: ‘‘, but shall (to the maximum extent feasible) 
including testing of each such model in geographic 
areas in at least 3 regions’’. 
(2) INCLUSION
OF
PHYSICIAN
IMPLEMENTA-
TION
COSTS
IN
EVALUATIONS.—Section 
1115A(b)(4)(A) of the Social Security Act (42 
U.S.C. 1315a(b)(4)(A)) is amended— 
(A) by striking ‘‘and’’ at the end of clause 
(i); 
(B) by striking the period at the end of 
clause (ii) and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
clause: 
‘‘(iii) the average cost, per physician, 
of implementation of the model with re-
spect to physicians’ services.’’. 
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(3) ACCELERATING TESTING AND EVALUATION 
PROCESS.—Section 1115A(b) of the Social Security 
Act (42 U.S.C. 1315a(b)) is amended by adding at 
the end the following new paragraph: 
‘‘(5) TIMING.—The Secretary, acting through 
the CMI, shall conduct activities under this sub-
section in such a timely manner so that evaluations 
of initial models can be initially completed so that 
physicians and other providers can begin to transi-
tion to implementation of such models with respect 
to services for which payment is made under section 
1848 beginning not later than January 1, 2018.’’. 
(4) INVOLVEMENT OF PROVIDER GROUPS IN SE-
LECTION OF MODELS.—Section 1115A(b)(4) of such 
Act is amended by adding at the end the following 
subparagraph: 
‘‘(D) INVOLVEMENT OF PROVIDER GROUPS 
IN
MODEL
SELECTION.—The Secretary shall 
consult and work closely with physician and 
other provider groups in the selection of models 
under this subsection and subsection (c).’’. 
(5) USE OF OTHER MODELS.—Section 1115A 
of such Act is further amended— 
(A) by adding at the end of subsection 
(b)(2)(B) the following new clause: 
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‘‘(xxi) Providing payment for out-
patient therapy services and speech lan-
guage pathology services on the basis of a 
treatment session, an episode of care, or 
other bundled payment methodology that 
takes into account varying levels of severity 
and complexity of patient diagnoses, condi-
tions, and comorbidities and the varying 
intensity of services needed for effective 
treatment of patients.’’; and 
(B) in subsection (c), in the matter pre-
ceding paragraph (1), by— 
(i) striking ‘‘or’’ after ‘‘tested under 
subsection (b)’’ and inserting a comma; 
and 
(ii) by inserting ‘‘, or other model (in-
cluding a model that was not tested under 
subsection (b))’’ after ‘‘section 1866C’’. 
(6) GAO REVIEW
AND
STUDY.—The Comp-
troller General of the United States shall conduct a 
study of the evaluations made under subsection (b) 
of section 1115A of the Social Security Act, as 
amended by this section. Such study shall include an 
analysis of the alternative payment and delivery 
models identified under such section for payment for 
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physicians’ services (and other services) under the 
Medicare program. Not later than April 1, 2017, the 
Comptroller General shall submit a report to Con-
gress on such study and shall include in the report 
such recommendations as the Comptroller General 
deems appropriate for— 
(A) changes in the development and imple-
mentation process under such section; and 
(B) alternative payment and delivery mod-
els identified under such section as being appro-
priate for expansion under subsection (c) of 
such section. 
(7) PUBLICATION
OF
LIST
OF
SUCCESSFUL 
MODELS.—Beginning on October 1, 2017, and each 
year thereafter, the Secretary of Health and Human 
Services shall publicly release a comprehensive list of 
such health care delivery and payment models identi-
fied, under section 1115A of the Social Security Act 
or otherwise, as meeting (or likely to meet) the re-
quirements of subsection (c)(1) of such section. Such 
list shall include at least 4 health care delivery and 
payment models and may include models not tested 
under subsection (b) of such section. 
(8) CONSIDERATIONS.—The Comptroller Gen-
eral in making recommendations under paragraph 
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(6) and the Secretary in releasing the list of models 
under paragraph (7) shall take into account vari-
ations among providers in size, specialty mix, case 
mix, and patient demographics, as well as regional 
health care infrastructure variations and variations 
in cost of living among areas, and shall specifically 
consider appropriate variations that take into ac-
count the special circumstances of providers in rural 
and other underserved areas. 
(e) IMPLEMENTATION OF PAYMENT AND DELIVERY 
MODEL OPTIONS (PHASE II).— 
(1) IN GENERAL.—Based on the report of the 
Comptroller General under subsection (d)(4) and not 
later than October 1, 2017, the Secretary of Health 
and Human Services shall provide information to 
physicians (and nurse practitioners and other pro-
viders for which payment is determined based on the 
fee schedule under section 1848 of the Social Secu-
rity Act) or group practices and institutions employ-
ing Medicare part B providers on how best to transi-
tion to alternative health care delivery and payment 
models that are aimed at improving the coordina-
tion, quality and efficiency of health care, including 
those developed under section 1115A or 1866E of 
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the Social Security Act (42 U.S.C. 1315a, 1395cc– 
5). 
(2) INCREASING FLEXIBILITY IN IMPLEMENTA-
TION.—Section 1115A(c) of the Social Security Act 
(42 U.S.C. 1315a(c)), as amended by subsection 
(c)(5), is further amended, in the matter preceding 
paragraph (1), by inserting, after ‘‘through rule-
making’’, the following: ‘‘(which may include the 
issuance of interim final rules) or through publica-
tion of a directive or other guidance’’. 
(3) TIMING.—Section 1115A of such Act is fur-
ther amended by adding at the end the following: 
‘‘The Secretary shall seek to effect such expansion 
to the maximum extent feasible so that physicians 
(and other providers paid in amounts determined 
based on the fee schedule under section 1848) may 
begin to transition to implementation of such models 
beginning not later than January 1, 2018.’’. 
(f) TRANSITION DURING 2019.— 
(1) FREEZE
IN
FEE
SCHEDULE
FOR
2019.— 
Subsection (d) of section 1848 of the Social Security 
Act (42 U.S.C. 1395w–4), as amended by sub-
sections (b) and (c)(3), is amended by adding at the 
end the following new paragraph: 
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‘‘(17) UPDATE FOR 2019.—The update to both 
of the conversion factors for 2019 shall be 0 per-
cent.’’. 
(2) EXPANDED
ASSISTANCE
THROUGH
RE-
GIONAL EXTENSION CENTERS AND OTHER QUALI-
FIED ENTITIES.—Section 1115A(d) of the Social Se-
curity Act (42 U.S.C. 1315a(d)) is amended by add-
ing at the end the following new paragraph: 
‘‘(4) ASSISTANCE IN IMPLEMENTATION.— 
‘‘(A) IN GENERAL.—Using funds available 
under subsection (f)(1) and consistent with this 
paragraph, the Secretary shall enter into con-
tracts and agreements with regional extension 
centers, in coordination with the National Coor-
dinator for Health Information Technology, and 
other appropriate entities to provide guidance 
and assistance on how physicians (and other 
providers paid in amounts determined based on 
the fee schedule under section 1848) may tran-
sition to implementation of alternative health 
care delivery models identified as representing 
best practices under this section. 
‘‘(B) DEDICATED FUNDING.— 
‘‘(i) IN
GENERAL.—Of the amounts 
available under subsection (f)(1)(B), the 
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Secretary shall make $720,000,000 avail-
able to the Office of the National Coordi-
nator for Health Information Technology 
for the awarding of grants and incentive 
payments under a competitive process to 
regional extension centers (receiving fund-
ing under section 3012(c) of the Public 
Health Service Act) and other qualified en-
tities for activities described in subpara-
graph (A). Such grants and payments shall 
not be available for assistance after De-
cember 31, 2019. 
‘‘(ii) PROCESS.—Under clause (i), the 
Office shall— 
‘‘(I) establish a competitive selec-
tion process for the selection of re-
gional extension centers (and other 
qualified entities) in the third quarter 
of 2015; and 
‘‘(II) provide for the initial dis-
tribution of funds to such centers and 
entities by January 1, 2016. 
‘‘(iii) COLLABORATION.—The Center 
shall collaborate with the Office in pro-
viding direction to such centers and enti-
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