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performance category described 
in section 1848(q)(2)(B)(i) apply; 
‘‘(bb) certified EHR tech-
nology is used; and 
‘‘(cc) the eligible profes-
sional (AA) bears more than 
nominal financial risk if actual 
aggregate expenditures exceeds 
expected aggregate expenditures; 
or (BB) is a medical home (with 
respect to beneficiaries under 
title XIX) that meets criteria 
comparable to medical homes ex-
panded under section 1115A(c). 
‘‘(C) BEGINNING IN 2022.—With respect to 
2022 and each subsequent year, an eligible pro-
fessional described in either of the following 
clauses: 
‘‘(i) MEDICARE REVENUE THRESHOLD 
OPTION.—An 
eligible 
professional 
for 
whom the Secretary determines that at 
least 75 percent of payments under this 
part for covered professional services fur-
nished by such professional during the 
most recent period for which data are 
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available (which may be less than a year) 
were attributable to such services furnished 
under this part through an entity that par-
ticipates in an eligible alternative payment 
model with respect to such services. 
‘‘(ii) COMBINATION
ALL-PAYER
AND 
MEDICARE
REVENUE
THRESHOLD
OP-
TION.—An eligible professional— 
‘‘(I) for whom the Secretary de-
termines, with respect to items and 
services furnished by such professional 
during the most recent period for 
which data are available (which may 
be less than a year), that at least 75 
percent of the sum of— 
‘‘(aa) payments described in 
clause (i); and 
‘‘(bb) all other payments, re-
gardless of payer (other than 
payments made by the Secretary 
of Defense or the Secretary of 
Veterans Affairs under chapter 
55 of title 10, United States 
Code, or title 38, United States 
Code, or any other provision of 
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law, and other than payments 
made under title XIX in a State 
in which no medical home or al-
ternative payment model is avail-
able under the State program 
under that title), 
meet the requirement described in 
clause (iii)(I) with respect to pay-
ments described in item (aa) and meet 
the requirement described in clause 
(iii)(II) with respect to payments de-
scribed in item (bb); 
‘‘(II) for whom the Secretary de-
termines at least 25 percent of pay-
ments under this part for covered pro-
fessional services furnished by such 
professional during the most recent 
period for which data are available 
(which may be less than a year) were 
attributable to such services furnished 
under this part through an entity that 
participates in an eligible alternative 
payment model with respect to such 
services; and 
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‘‘(III) who provides to the Sec-
retary such information as is nec-
essary for the Secretary to make a de-
termination under subclause (I), with 
respect to such professional. 
‘‘(iii) REQUIREMENT.—For purposes 
of clause (ii)(I)— 
‘‘(I) the requirement described in 
this subclause, with respect to pay-
ments described in item (aa) of such 
clause, is that such payments are 
made under an eligible alternative 
payment model; and 
‘‘(II) the requirement described 
in this subclause, with respect to pay-
ments described in item (bb) of such 
clause, is that such payments are 
made 
under 
an 
arrangement 
in 
which— 
‘‘(aa) quality measures com-
parable to measures under the 
performance category described 
in section 1848(q)(2)(B)(i) apply; 
‘‘(bb) certified EHR tech-
nology is used; and 
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‘‘(cc) the eligible profes-
sional (AA) bears more than 
nominal financial risk if actual 
aggregate expenditures exceeds 
expected aggregate expenditures; 
or (BB) is a medical home (with 
respect to beneficiaries under 
title XIX) that meets criteria 
comparable to medical homes ex-
panded under section 1115A(c). 
‘‘(3) ADDITIONAL DEFINITIONS.—In this sub-
section: 
‘‘(A) 
COVERED
PROFESSIONAL
SERV-
ICES.—The term ‘covered professional services’ 
has the meaning given that term in section 
1848(k)(3)(A). 
‘‘(B) ELIGIBLE PROFESSIONAL.—The term 
‘eligible professional’ has the meaning given 
that term in section 1848(k)(3)(B). 
‘‘(C) 
ALTERNATIVE
PAYMENT
MODEL 
(APM).—The term ‘alternative payment model’ 
means any of the following: 
‘‘(i) A model under section 1115A 
(other than a health care innovation 
award). 
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‘‘(ii) The shared savings program 
under section 1899. 
‘‘(iii) A demonstration under section 
1866C. 
‘‘(iv) A demonstration required by 
Federal law. 
‘‘(D) ELIGIBLE
ALTERNATIVE
PAYMENT 
MODEL (APM).— 
‘‘(i) IN GENERAL.—The term ‘eligible 
alternative payment model’ means, with re-
spect to a year, an alternative payment 
model— 
‘‘(I) that requires use of certified 
EHR technology (as defined in sub-
section (o)(4)); 
‘‘(II) that provides for payment 
for covered professional services based 
on quality measures comparable to 
measures under the performance cat-
egory 
described 
in 
section 
1848(q)(2)(B)(i); and 
‘‘(III) that satisfies the require-
ment described in clause (ii). 
‘‘(ii) ADDITIONAL
REQUIREMENT.— 
For purposes of clause (i)(III), the require-
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ment described in this clause, with respect 
to a year and an alternative payment 
model, is that the alternative payment 
model— 
‘‘(I) is one in which one or more 
entities bear financial risk for mone-
tary losses under such model that are 
in excess of a nominal amount; or 
‘‘(II) is a medical home expanded 
under section 1115A(c). 
‘‘(4) LIMITATION.—There shall be no adminis-
trative or judicial review under section 1869, 1878, 
or otherwise, of the following: 
‘‘(A) The determination that an eligible 
professional is a qualifying APM participant 
under paragraph (2) and the determination 
that an alternative payment model is an eligible 
alternative payment model under paragraph 
(3)(D). 
‘‘(B) The determination of the amount of 
the 5 percent payment incentive under para-
graph (1)(A), including any estimation as part 
of such determination.’’. 
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1848(j)(3)) furnished by physicians who 
are not primary care practitioners. 
‘‘(xxii) Focusing on practices of 15 or 
fewer professionals. 
‘‘(xxiii) Focusing on risk-based models 
for small physician practices which may in-
volve two-sided risk and prospective patient 
assignment, and which examine risk-ad-
justed decreases in mortality rates, hos-
pital readmissions rates, and other relevant 
and appropriate clinical measures. 
‘‘(xxiv) Focusing primarily on title 
XIX, working in conjunction with the Cen-
ter for Medicaid and CHIP Services.’’; and 
(B) in subparagraph (C)(viii), by striking 
‘‘other public sector or private sector payers’’ 
and inserting ‘‘other public sector payers, pri-
vate sector payers, or Statewide payment mod-
els’’. 
(5) CONSTRUCTION
REGARDING
TELEHEALTH 
SERVICES.—Nothing in the provisions of, or amend-
ments made by, this Act shall be construed as pre-
cluding an alternative payment model or a qualifying 
APM participant (as those terms are defined in sec-
tion 1833(z) of the Social Security Act, as added by 
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paragraph (1)) from furnishing a telehealth service 
for which payment is not made under section 
1834(m) of the Social Security Act (42 U.S.C. 
1395m(m)). 
(6) INTEGRATING
MEDICARE
ADVANTAGE
AL-
TERNATIVE PAYMENT MODELS.—Not later than July 
1, 2015, the Secretary of Health and Human Serv-
ices shall submit to Congress a study that examines 
the feasibility of integrating alternative payment 
models in the Medicare Advantage payment system. 
The study shall include the feasibility of including a 
value-based modifier and whether such modifier 
should be budget neutral. 
(7) STUDY AND REPORT ON FRAUD RELATED 
TO
ALTERNATIVE
PAYMENT
MODELS
UNDER
THE 
MEDICARE PROGRAM.— 
(A) STUDY.—The Secretary of Health and 
Human Services, in consultation with the In-
spector General of the Department of Health 
and Human Services, shall conduct a study 
that— 
(i) examines the applicability of the 
Federal fraud prevention laws to items and 
services furnished under title XVIII of the 
Social Security Act for which payment is 
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made under an alternative payment model 
(as defined in section 1833(z)(3)(C) of 
such Act (42 U.S.C. 1395l(z)(3)(C))); 
(ii) identifies aspects of such alter-
native payment models that are vulnerable 
to fraudulent activity; and 
(iii) examines the implications of waiv-
ers to such laws granted in support of such 
alternative 
payment 
models, 
including 
under any potential expansion of such 
models. 
(B) REPORT.—Not later than 2 years after 
the date of the enactment of this Act, the Sec-
retary shall submit to Congress a report con-
taining the results of the study conducted under 
subparagraph (A). Such report shall include 
recommendations for actions to be taken to re-
duce the vulnerability of such alternative pay-
ment models to fraudulent activity. Such report 
also shall include, as appropriate, recommenda-
tions of the Inspector General for changes in 
Federal fraud prevention laws to reduce such 
vulnerability. 
(f) IMPROVING PAYMENT ACCURACY.— 
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(1) STUDIES AND REPORTS OF EFFECT OF CER-
TAIN
INFORMATION
ON
QUALITY
AND
RESOURCE 
USE.— 
(A) STUDY
USING
EXISTING
MEDICARE 
DATA.— 
(i) STUDY.—The Secretary of Health 
and Human Services (in this subsection re-
ferred to as the ‘‘Secretary’’) shall conduct 
a study that examines the effect of individ-
uals’ socioeconomic status on quality and 
resource use outcome measures for individ-
uals under the Medicare program (such as 
to recognize that less healthy individuals 
may require more intensive interventions). 
The study shall use information collected 
on such individuals in carrying out such 
program, such as urban and rural location, 
eligibility for Medicaid (recognizing and ac-
counting for varying Medicaid eligibility 
across States), and eligibility for benefits 
under the supplemental security income 
(SSI) program. The Secretary shall carry 
out this paragraph acting through the As-
sistant Secretary for Planning and Evalua-
tion. 
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(ii) REPORT.—Not later than 2 years 
after the date of the enactment of this Act, 
the Secretary shall submit to Congress a 
report on the study conducted under clause 
(i). 
(B) STUDY USING OTHER DATA.— 
(i) STUDY.—The Secretary shall con-
duct a study that examines the impact of 
risk factors, such as those described in sec-
tion 1848(p)(3) of the Social Security Act 
(42 U.S.C. 1395w–4(p)(3)), race, health 
literacy, limited English proficiency (LEP), 
and patient activation, on quality and re-
source use outcome measures under the 
Medicare program (such as to recognize 
that less healthy individuals may require 
more intensive interventions). In con-
ducting such study the Secretary may use 
existing Federal data and collect such ad-
ditional data as may be necessary to com-
plete the study. 
(ii) REPORT.—Not later than 5 years 
after the date of the enactment of this Act, 
the Secretary shall submit to Congress a 
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report on the study conducted under clause 
(i). 
(C) EXAMINATION
OF
DATA
IN
CON-
DUCTING STUDIES.—In conducting the studies 
under subparagraphs (A) and (B), the Sec-
retary shall examine what non-Medicare data 
sets, such as data from the American Commu-
nity Survey (ACS), can be useful in conducting 
the types of studies under such paragraphs and 
how such data sets that are identified as useful 
can be coordinated with Medicare administra-
tive data in order to improve the overall data 
set available to do such studies and for the ad-
ministration of the Medicare program. 
(D) RECOMMENDATIONS TO ACCOUNT FOR 
INFORMATION
IN
PAYMENT
ADJUSTMENT 
MECHANISMS.—If the studies conducted under 
subparagraphs (A) and (B) find a relationship 
between the factors examined in the studies and 
quality and resource use outcome measures, 
then the Secretary shall also provide rec-
ommendations for how the Centers for Medicare 
& Medicaid Services should— 
(i) obtain access to the necessary data 
(if such data is not already being collected) 
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on such factors, including recommenda-
tions on how to address barriers to the 
Centers in accessing such data; and 
(ii) account for such factors in deter-
mining payment adjustments based on 
quality and resource use outcome measures 
under the eligible professional Merit-based 
Incentive Payment System under section 
1848(q) of the Social Security Act (42 
U.S.C. 1395w–4(q)) and, as the Secretary 
determines appropriate, other similar pro-
visions of title XVIII of such Act. 
(E) FUNDING.—There are hereby appro-
priated from the Federal Supplementary Med-
ical Insurance Trust Fund under section 1841 
of the Social Security Act to the Secretary to 
carry out this paragraph $6,000,000, to remain 
available until expended. 
(2) CMS ACTIVITIES.— 
(A) HIERARCHAL
CONDITION
CATEGORY 
(HCC) IMPROVEMENT.—Taking into account the 
relevant studies conducted and recommenda-
tions made in reports under paragraph (1), the 
Secretary, on an ongoing basis, shall, as the 
Secretary determines appropriate, estimate how 
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an individual’s health status and other risk fac-
tors affect quality and resource use outcome 
measures and, as feasible, shall incorporate in-
formation from quality and resource use out-
come measurement (including care episode and 
patient condition groups) into provisions of title 
XVIII of the Social Security Act that are simi-
lar to the eligible professional Merit-based In-
centive Payment System under section 1848(q) 
of such Act. 
(B) ACCOUNTING FOR OTHER FACTORS IN 
PAYMENT ADJUSTMENT MECHANISMS.— 
(i) IN
GENERAL.—Taking into ac-
count the studies conducted and rec-
ommendations made in reports under para-
graph (1) and other information as appro-
priate, the Secretary shall, as the Sec-
retary determines appropriate, account for 
identified factors with an effect on quality 
and resource use outcome measures when 
determining payment adjustment mecha-
nisms under provisions of title XVIII of 
the Social Security Act that are similar to 
the eligible professional Merit-based Incen-
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tive 
Payment 
System 
under 
section 
1848(q) of such Act. 
(ii) ACCESSING DATA.—The Secretary 
shall collect or otherwise obtain access to 
the data necessary to carry out this para-
graph through existing and new data 
sources. 
(iii) PERIODIC ANALYSES.—The Sec-
retary shall carry out periodic analyses, at 
least every 3 years, based on the factors 
referred to in clause (i) so as to monitor 
changes in possible relationships. 
(C) FUNDING.—There are hereby appro-
priated from the Federal Supplementary Med-
ical Insurance Trust Fund under section 1841 
of the Social Security Act to the Secretary to 
carry out this paragraph and the application of 
this paragraph to the Merit-based Incentive 
Payment System under section 1848(q) of such 
Act $10,000,000, to remain available until ex-
pended. 
(3) STRATEGIC
PLAN
FOR
ACCESSING
RACE 
AND ETHNICITY DATA.—Not later than 18 months 
after the date of the enactment of this Act, the Sec-
retary shall develop and report to Congress on a 
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strategic plan for collecting or otherwise accessing 
data on race and ethnicity for purposes of carrying 
out the eligible professional Merit-based Incentive 
Payment System under section 1848(q) of the Social 
Security Act and, as the Secretary determines ap-
propriate, other similar provisions of title XVIII of 
such Act. 
(g) COLLABORATING WITH THE PHYSICIAN, PRACTI-
TIONER, AND OTHER STAKEHOLDER COMMUNITIES TO 
IMPROVE RESOURCE USE MEASUREMENT.—Section 1848 
of the Social Security Act (42 U.S.C. 1395w–4), as 
amended by subsection (c), is further amended by adding 
at the end the following new subsection: 
‘‘(r) COLLABORATING WITH THE PHYSICIAN, PRAC-
TITIONER, AND OTHER STAKEHOLDER COMMUNITIES TO 
IMPROVE RESOURCE USE MEASUREMENT.— 
‘‘(1) IN GENERAL.—In order to involve the phy-
sician, practitioner, and other stakeholder commu-
nities in enhancing the infrastructure for resource 
use measurement, including for purposes of the 
value-based performance incentive program under 
subsection (q) and alternative payment models under 
section 1833(z), the Secretary shall undertake the 
steps described in the succeeding provisions of this 
subsection. 
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‘‘(2) DEVELOPMENT OF CARE EPISODE AND PA-
TIENT
CONDITION
GROUPS
AND
CLASSIFICATION 
CODES.— 
‘‘(A) IN
GENERAL.—In order to classify 
similar patients into care episode groups and 
patient condition groups, the Secretary shall 
undertake the steps described in the succeeding 
provisions of this paragraph. 
‘‘(B) PUBLIC AVAILABILITY OF EXISTING 
EFFORTS TO DESIGN AN EPISODE GROUPER.— 
Not later than 120 days after the date of the 
enactment of this subsection, the Secretary 
shall post on the Internet website of the Cen-
ters for Medicare & Medicaid Services a list of 
the episode groups developed pursuant to sub-
section (n)(9)(A) and related descriptive infor-
mation. 
‘‘(C) STAKEHOLDER
INPUT.—The Sec-
retary shall accept, through the date that is 60 
days after the day the Secretary posts the list 
pursuant to subparagraph (B), suggestions 
from physician specialty societies, applicable 
practitioner organizations, and other stake-
holders for episode groups in addition to those 
posted pursuant to such subparagraph, and 
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specific clinical criteria and patient characteris-
tics to classify patients into— 
‘‘(i) care episode groups; and 
‘‘(ii) patient condition groups. 
‘‘(D) DEVELOPMENT OF PROPOSED CLAS-
SIFICATION CODES.— 
‘‘(i) IN
GENERAL.—Taking into ac-
count the information described in sub-
paragraph (B) and the information re-
ceived under subparagraph (C), the Sec-
retary shall— 
‘‘(I) establish care episode groups 
and patient condition groups, which 
account for a target of an estimated 
2⁄3 of expenditures under parts A and 
B; and 
‘‘(II) 
assign 
codes 
to 
such 
groups. 
‘‘(ii) CARE EPISODE GROUPS.—In es-
tablishing the care episode groups under 
clause (i), the Secretary shall take into ac-
count— 
‘‘(I) the patient’s clinical prob-
lems at the time items and services 
are furnished during an episode of 
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care, such as the clinical conditions or 
diagnoses, whether or not inpatient 
hospitalization is anticipated or oc-
curs, and the principal procedures or 
services planned or furnished; and 
‘‘(II) other factors determined 
appropriate by the Secretary. 
‘‘(iii) PATIENT CONDITION GROUPS.— 
In 
establishing 
the 
patient 
condition 
groups under clause (i), the Secretary shall 
take into account— 
‘‘(I) the patient’s clinical history 
at the time of each medical visit, such 
as the patient’s combination of chron-
ic conditions, current health status, 
and recent significant history (such as 
hospitalization and major surgery dur-
ing a previous period, such as 3 
months); and 
‘‘(II) other factors determined 
appropriate by the Secretary, such as 
eligibility status under this title (in-
cluding 
eligibility 
under 
section 
226(a), 226(b), or 226A, and dual eli-
gibility under this title and title XIX). 
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‘‘(E) DRAFT CARE EPISODE AND PATIENT 
CONDITION
GROUPS
AND
CLASSIFICATION 
CODES.—Not later than 180 days after the end 
of the comment period described in subpara-
graph (C), the Secretary shall post on the 
Internet website of the Centers for Medicare & 
Medicaid Services a draft list of the care epi-
sode and patient condition codes established 
under subparagraph (D) (and the criteria and 
characteristics assigned to such code). 
‘‘(F) SOLICITATION OF INPUT.—The Sec-
retary shall seek, through the date that is 60 
days after the Secretary posts the list pursuant 
to subparagraph (E), comments from physician 
specialty societies, applicable practitioner orga-
nizations, and other stakeholders, including rep-
resentatives of individuals entitled to benefits 
under part A or enrolled under this part, re-
garding the care episode and patient condition 
groups (and codes) posted under subparagraph 
(E). In seeking such comments, the Secretary 
shall use one or more mechanisms (other than 
notice and comment rulemaking) that may in-
clude use of open door forums, town hall meet-
ings, or other appropriate mechanisms. 
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‘‘(G) OPERATIONAL
LIST
OF
CARE
EPI-
SODE AND PATIENT CONDITION GROUPS AND 
CODES.—Not later than 180 days after the end 
of the comment period described in subpara-
graph (F), taking into account the comments 
received under such subparagraph, the Sec-
retary shall post on the Internet website of the 
Centers for Medicare & Medicaid Services an 
operational list of care episode and patient con-
dition codes (and the criteria and characteris-
tics assigned to such code). 
‘‘(H) SUBSEQUENT REVISIONS.—Not later 
than November 1 of each year (beginning with 
2017), the Secretary shall, through rulemaking, 
make revisions to the operational lists of care 
episode and patient condition codes as the Sec-
retary determines may be appropriate. Such re-
visions may be based on experience, new infor-
mation 
developed 
pursuant 
to 
subsection 
(n)(9)(A), and input from the physician spe-
cialty societies, applicable practitioner organiza-
tions, and other stakeholders, including rep-
resentatives of individuals entitled to benefits 
under part A or enrolled under this part. 
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‘‘(3) ATTRIBUTION
OF
PATIENTS
TO
PHYSI-
CIANS OR PRACTITIONERS.— 
‘‘(A) IN GENERAL.—In order to facilitate 
the attribution of patients and episodes (in 
whole or in part) to one or more physicians or 
applicable practitioners furnishing items and 
services, the Secretary shall undertake the steps 
described in the succeeding provisions of this 
paragraph. 
‘‘(B) DEVELOPMENT
OF
PATIENT
RELA-
TIONSHIP CATEGORIES AND CODES.—The Sec-
retary shall develop patient relationship cat-
egories and codes that define and distinguish 
the relationship and responsibility of a physi-
cian or applicable practitioner with a patient at 
the time of furnishing an item or service. Such 
patient relationship categories shall include dif-
ferent relationships of the physician or applica-
ble practitioner to the patient (and the codes 
may reflect combinations of such categories), 
such as a physician or applicable practitioner 
who— 
‘‘(i) considers themself to have the 
primary responsibility for the general and 
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ongoing care for the patient over extended 
periods of time; 
‘‘(ii) considers themself to be the lead 
physician or practitioner and who furnishes 
items and services and coordinates care 
furnished by other physicians or practi-
tioners for the patient during an acute epi-
sode; 
‘‘(iii) furnishes items and services to 
the patient on a continuing basis during an 
acute episode of care, but in a supportive 
rather than a lead role; 
‘‘(iv) furnishes items and services to 
the patient on an occasional basis, usually 
at the request of another physician or 
practitioner; or 
‘‘(v) furnishes items and services only 
as ordered by another physician or practi-
tioner. 
‘‘(C) DRAFT LIST OF PATIENT RELATION-
SHIP CATEGORIES AND CODES.—Not later than 
270 days after the date of the enactment of this 
subsection, the Secretary shall post on the 
Internet website of the Centers for Medicare & 
Medicaid Services a draft list of the patient re-
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lationship categories and codes developed under 
subparagraph (B). 
‘‘(D) STAKEHOLDER
INPUT.—The Sec-
retary shall seek, through the date that is 60 
days after the Secretary posts the list pursuant 
to subparagraph (C), comments from physician 
specialty societies, applicable practitioner orga-
nizations, and other stakeholders, including rep-
resentatives of individuals entitled to benefits 
under part A or enrolled under this part, re-
garding the patient relationship categories and 
codes posted under subparagraph (C). In seek-
ing such comments, the Secretary shall use one 
or more mechanisms (other than notice and 
comment rulemaking) that may include open 
door forums, town hall meetings, or other ap-
propriate mechanisms. 
‘‘(E) OPERATIONAL LIST OF PATIENT RE-
LATIONSHIP
CATEGORIES
AND
CODES.—Not 
later than 180 days after the end of the com-
ment period described in subparagraph (D), 
taking into account the comments received 
under such subparagraph, the Secretary shall 
post on the Internet website of the Centers for 
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Medicare & Medicaid Services an operational 
list of patient relationship categories and codes. 
‘‘(F) SUBSEQUENT REVISIONS.—Not later 
than November 1 of each year (beginning with 
2017), the Secretary shall, through rulemaking, 
make revisions to the operational list of patient 
relationship categories and codes as the Sec-
retary determines appropriate. Such revisions 
may be based on experience, new information 
developed pursuant to subsection (n)(9)(A), and 
input from the physician specialty societies, ap-
plicable practitioner organizations, and other 
stakeholders, including representatives of indi-
viduals entitled to benefits under part A or en-
rolled under this part. 
‘‘(4) REPORTING
OF
INFORMATION
FOR
RE-
SOURCE USE MEASUREMENT.—Claims submitted for 
items and services furnished by a physician or appli-
cable practitioner on or after January 1, 2017, shall, 
as determined appropriate by the Secretary, in-
clude— 
‘‘(A) applicable codes established under 
paragraphs (2) and (3); and 
‘‘(B) the national provider identifier of the 
ordering physician or applicable practitioner (if 
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different from the billing physician or applicable 
practitioner). 
‘‘(5) METHODOLOGY FOR RESOURCE USE ANAL-
YSIS.— 
‘‘(A) IN GENERAL.—In order to evaluate 
the resources used to treat patients (with re-
spect to care episode and patient condition 
groups), the Secretary shall— 
‘‘(i) use the patient relationship codes 
reported on claims pursuant to paragraph 
(4) to attribute patients (in whole or in 
part) to one or more physicians and appli-
cable practitioners; 
‘‘(ii) use the care episode and patient 
condition codes reported on claims pursu-
ant to paragraph (4) as a basis to compare 
similar patients and care episodes and pa-
tient condition groups; and 
‘‘(iii) conduct an analysis of resource 
use (with respect to care episodes and pa-
tient condition groups of such patients), as 
the Secretary determines appropriate. 
‘‘(B) ANALYSIS OF PATIENTS OF PHYSI-
CIANS AND PRACTITIONERS.—In conducting the 
analysis described in subparagraph (A)(iii) with 
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respect to patients attributed to physicians and 
applicable practitioners, the Secretary shall, as 
feasible— 
‘‘(i) use the claims data experience of 
such patients by patient condition codes 
during a common period, such as 12 
months; and 
‘‘(ii) use the claims data experience of 
such patients by care episode codes— 
‘‘(I) in the case of episodes with-
out a hospitalization, during periods 
of time (such as the number of days) 
determined appropriate by the Sec-
retary; and 
‘‘(II) in the case of episodes with 
a hospitalization, during periods of 
time (such as the number of days) be-
fore, during, and after the hospitaliza-
tion. 
‘‘(C) MEASUREMENT OF RESOURCE USE.— 
In measuring such resource use, the Sec-
retary— 
‘‘(i) shall use per patient total allowed 
charges for all services under part A and 
this part (and, if the Secretary determines 
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appropriate, part D) for the analysis of pa-
tient resource use, by care episode codes 
and by patient condition codes; and 
‘‘(ii) may, as determined appropriate, 
use other measures of allowed charges 
(such as subtotals for categories of items 
and services) and measures of utilization of 
items and services (such as frequency of 
specific items and services and the ratio of 
specific items and services among attrib-
uted patients or episodes). 
‘‘(D) STAKEHOLDER
INPUT.—The Sec-
retary shall seek comments from the physician 
specialty societies, applicable practitioner orga-
nizations, and other stakeholders, including rep-
resentatives of individuals entitled to benefits 
under part A or enrolled under this part, re-
garding the resource use methodology estab-
lished pursuant to this paragraph. In seeking 
comments the Secretary shall use one or more 
mechanisms (other than notice and comment 
rulemaking) that may include open door fo-
rums, town hall meetings, or other appropriate 
mechanisms. 
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‘‘(6) IMPLEMENTATION.—To the extent that 
the Secretary contracts with an entity to carry out 
any part of the provisions of this subsection, the 
Secretary may not contract with an entity or an en-
tity with a subcontract if the entity or subcon-
tracting entity currently makes recommendations to 
the Secretary on relative values for services under 
the fee schedule for physicians’ services under this 
section. 
‘‘(7) LIMITATION.—There shall be no adminis-
trative or judicial review under section 1869, section 
1878, or otherwise of— 
‘‘(A) care episode and patient condition 
groups and codes established under paragraph 
(2); 
‘‘(B) patient relationship categories and 
codes established under paragraph (3); and 
‘‘(C) measurement of, and analyses of re-
source use with respect to, care episode and pa-
tient condition codes and patient relationship 
codes pursuant to paragraph (5). 
‘‘(8) ADMINISTRATION.—Chapter 35 of title 44, 
United States Code, shall not apply to this section. 
‘‘(9) DEFINITIONS.—In this section: 
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‘‘(A) PHYSICIAN.—The term ‘physician’ 
has the meaning given such term in section 
1861(r)(1). 
‘‘(B) APPLICABLE
PRACTITIONER.—The 
term ‘applicable practitioner’ means— 
‘‘(i) a physician assistant, nurse prac-
titioner, and clinical nurse specialist (as 
such 
terms 
are 
defined 
in 
section 
1861(aa)(5)), and a certified registered 
nurse anesthetist (as defined in section 
1861(bb)(2)); and 
‘‘(ii) beginning January 1, 2018, such 
other eligible professionals (as defined in 
subsection (k)(3)(B)) as specified by the 
Secretary. 
‘‘(10) CLARIFICATION.—The provisions of sec-
tions 1890(b)(7) and 1890A shall not apply to this 
subsection.’’. 
SEC. 3. PRIORITIES AND FUNDING FOR MEASURE DEVEL-
OPMENT. 
Section 1848 of the Social Security Act (42 U.S.C. 
1395w–4), as amended by subsections (c) and (g) of sec-
tion 2, is further amended by inserting at the end the fol-
lowing new subsection: 
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‘‘(s) PRIORITIES AND FUNDING FOR MEASURE DE-
VELOPMENT.— 
‘‘(1) PLAN IDENTIFYING MEASURE DEVELOP-
MENT PRIORITIES AND TIMELINES.— 
‘‘(A) DRAFT
MEASURE
DEVELOPMENT 
PLAN.—Not later than January 1, 2015, the 
Secretary shall develop, and post on the Inter-
net website of the Centers for Medicare & Med-
icaid Services, a draft plan for the development 
of quality measures for application under the 
applicable provisions (as defined in paragraph 
(5)). Under such plan the Secretary shall— 
‘‘(i) address how measures used by 
private payers and integrated delivery sys-
tems could be incorporated under title 
XVIII; 
‘‘(ii) describe how coordination, to the 
extent possible, will occur across organiza-
tions developing such measures; and 
‘‘(iii) take into account how clinical 
best practices and clinical practice guide-
lines should be used in the development of 
quality measures. 
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‘‘(B) QUALITY DOMAINS.—For purposes of 
this subsection, the term ‘quality domains’ 
means at least the following domains: 
‘‘(i) Clinical care. 
‘‘(ii) Safety. 
‘‘(iii) Care coordination. 
‘‘(iv) Patient and caregiver experience. 
‘‘(v) Population health and preven-
tion. 
‘‘(C) CONSIDERATION.—In developing the 
draft plan under this paragraph, the Secretary 
shall consider— 
‘‘(i) gap analyses conducted by the en-
tity with a contract under section 1890(a) 
or other contractors or entities; 
‘‘(ii) whether measures are applicable 
across health care settings; 
‘‘(iii) clinical practice improvement ac-
tivities 
submitted 
under 
subsection 
(q)(2)(C)(iv) for identifying possible areas 
for future measure development and identi-
fying existing gaps with respect to such 
measures; and 
‘‘(iv) the quality domains applied 
under this subsection. 
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‘‘(D) PRIORITIES.—In developing the draft 
plan under this paragraph, the Secretary shall 
give priority to the following types of measures: 
‘‘(i) Outcome measures, including pa-
tient reported outcome and functional sta-
tus measures. 
‘‘(ii) Patient experience measures. 
‘‘(iii) Care coordination measures. 
‘‘(iv) Measures of appropriate use of 
services, including measures of over use. 
‘‘(E) STAKEHOLDER
INPUT.—The Sec-
retary shall accept through March 1, 2015, 
comments on the draft plan posted under para-
graph (1)(A) from the public, including health 
care providers, payers, consumers, and other 
stakeholders. 
‘‘(F) 
FINAL
MEASURE
DEVELOPMENT 
PLAN.—Not later than May 1, 2015, taking 
into account the comments received under this 
subparagraph, the Secretary shall finalize the 
plan and post on the Internet website of the 
Centers for Medicare & Medicaid Services an 
operational plan for the development of quality 
measures for use under the applicable provi-
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sions. Such plan shall be updated as appro-
priate. 
‘‘(2) CONTRACTS AND OTHER ARRANGEMENTS 
FOR QUALITY MEASURE DEVELOPMENT.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
enter into contracts or other arrangements with 
entities for the purpose of developing, improv-
ing, updating, or expanding in accordance with 
the plan under paragraph (1) quality measures 
for application under the applicable provisions. 
Such entities shall include organizations with 
quality measure development expertise. 
‘‘(B) PRIORITIZATION.— 
‘‘(i) IN
GENERAL.—In entering into 
contracts or other arrangements under 
subparagraph (A), the Secretary shall give 
priority to the development of the types of 
measures described in paragraph (1)(D). 
‘‘(ii) CONSIDERATION.—In selecting 
measures for development under this sub-
section, the Secretary shall consider— 
‘‘(I) 
whether 
such 
measures 
would be electronically specified; and 
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‘‘(II) clinical practice guidelines 
to the extent that such guidelines 
exist. 
‘‘(3) ANNUAL REPORT BY THE SECRETARY.— 
‘‘(A) IN GENERAL.—Not later than May 1, 
2016, and annually thereafter, the Secretary 
shall post on the Internet website of the Cen-
ters for Medicare & Medicaid Services a report 
on the progress made in developing quality 
measures for application under the applicable 
provisions. 
‘‘(B) REQUIREMENTS.—Each report sub-
mitted pursuant to subparagraph (A) shall in-
clude the following: 
‘‘(i) A description of the Secretary’s 
efforts to implement this paragraph. 
‘‘(ii) With respect to the measures de-
veloped during the previous year— 
‘‘(I) a description of the total 
number of quality measures developed 
and the types of such measures, such 
as an outcome or patient experience 
measure; 
‘‘(II) the name of each measure 
developed; 
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‘‘(III) the name of the developer 
and steward of each measure; 
‘‘(IV) with respect to each type 
of measure, an estimate of the total 
amount expended under this title to 
develop all measures of such type; and 
‘‘(V) whether the measure would 
be electronically specified. 
‘‘(iii) With respect to measures in de-
velopment at the time of the report— 
‘‘(I) the information described in 
clause (ii), if available; and 
‘‘(II) a timeline for completion of 
the development of such measures. 
‘‘(iv) A description of any updates to 
the plan under paragraph (1) (including 
newly identified gaps and the status of pre-
viously identified gaps) and the inventory 
of measures applicable under the applicable 
provisions. 
‘‘(v) Other information the Secretary 
determines to be appropriate. 
‘‘(4) STAKEHOLDER
INPUT.—With respect to 
paragraph (1), the Secretary shall seek stakeholder 
input with respect to— 
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‘‘(A) the identification of gaps where no 
quality measures exist, particularly with respect 
to the types of measures described in paragraph 
(1)(D); 
‘‘(B) prioritizing quality measure develop-
ment to address such gaps; and 
‘‘(C) other areas related to quality measure 
development determined appropriate by the Sec-
retary. 
‘‘(5) 
DEFINITION
OF
APPLICABLE
PROVI-
SIONS.—In this subsection, the term ‘applicable pro-
visions’ means the following provisions: 
‘‘(A) Subsection (q)(2)(B)(i). 
‘‘(B) Section 1833(z)(2)(C). 
‘‘(6) FUNDING.—For purposes of carrying out 
this subsection, the Secretary shall provide for the 
transfer, from the Federal Supplementary Medical 
Insurance Trust Fund under section 1841, of 
$15,000,000 to the Centers for Medicare & Medicaid 
Services Program Management Account for each of 
fiscal years 2014 through 2018. Amounts trans-
ferred under this paragraph shall remain available 
through the end of fiscal year 2021.’’. 
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SEC. 4. ENCOURAGING CARE MANAGEMENT FOR INDIVID-
UALS WITH CHRONIC CARE NEEDS. 
(a) IN GENERAL.—Section 1848(b) of the Social Se-
curity Act (42 U.S.C. 1395w–4(b)) is amended by adding 
at the end the following new paragraph: 
‘‘(8) ENCOURAGING
CARE
MANAGEMENT
FOR 
INDIVIDUALS WITH CHRONIC CARE NEEDS.— 
‘‘(A) IN GENERAL.—In order to encourage 
the management of care by an applicable pro-
vider (as defined in subparagraph (B)) for indi-
viduals with chronic care needs the Secretary 
shall— 
‘‘(i) establish one or more HCPCS 
codes for chronic care management serv-
ices for such individuals; and 
‘‘(ii) subject to subparagraph (D), 
make payment (as the Secretary deter-
mines to be appropriate) under this section 
for such management services furnished on 
or after January 1, 2015, by an applicable 
provider. 
‘‘(B) APPLICABLE PROVIDER DEFINED.— 
For purposes of this paragraph, the term ‘ap-
plicable provider’ means a physician (as defined 
in section 1861(r)(1)), physician assistant or 
nurse practitioner (as defined in section 
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1861(aa)(5)(A)), or clinical nurse specialist (as 
defined in section 1861(aa)(5)(B)) who fur-
nishes services as part of a patient-centered 
medical home or a comparable specialty practice 
that— 
‘‘(i) is recognized as such a medical 
home or comparable specialty practice by 
an organization that is recognized by the 
Secretary for purposes of such recognition 
as such a medical home or practice; or 
‘‘(ii) meets such other comparable 
qualifications as the Secretary determines 
to be appropriate. 
‘‘(C) BUDGET NEUTRALITY.—The budget 
neutrality 
provision 
under 
subsection 
(c)(2)(B)(ii)(II) shall apply in establishing the 
payment under subparagraph (A)(ii). 
‘‘(D) POLICIES RELATING TO PAYMENT.— 
In carrying out this paragraph, with respect to 
chronic care management services, the Sec-
retary shall— 
‘‘(i) make payment to only one appli-
cable provider for such services furnished 
to an individual during a period; 
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‘‘(ii) not make payment under sub-
paragraph (A) if such payment would be 
duplicative of payment that is otherwise 
made under this title for such services 
(such as in the case of hospice care or 
home health services); and 
‘‘(iii) not require that an annual 
wellness visit (as defined in section 
1861(hhh)) or an initial preventive phys-
ical examination (as defined in section 
1861(ww)) be furnished as a condition of 
payment for such management services.’’. 
(b) EDUCATION AND OUTREACH.— 
(1) CAMPAIGN.— 
(A) 
IN
GENERAL.—The 
Secretary 
of 
Health and Human Services (in this subsection 
referred to as the ‘‘Secretary’’) shall conduct an 
education and outreach campaign to inform 
professionals who furnish items and services 
under part B of title XVIII of the Social Secu-
rity Act and individuals enrolled under such 
part of the benefits of chronic care management 
services described in section 1848(b)(8) of the 
Social Security Act, as added by subsection (a), 
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and encourage such individuals with chronic 
care needs to receive such services. 
(B) 
REQUIREMENTS.—Such 
campaign 
shall— 
(i) be directed by the Office of Rural 
Health Policy of the Department of Health 
and Human Services and the Office of Mi-
nority Health of the Centers for Medicare 
& Medicaid Services; and 
(ii) focus on encouraging participation 
by underserved rural populations and ra-
cial and ethnic minority populations. 
(2) REPORT.— 
(A) IN GENERAL.—Not later than Decem-
ber 31, 2017, the Secretary shall submit to 
Congress a report on the use of chronic care 
management services described in such section 
1848(b)(8) by individuals living in rural areas 
and by racial and ethnic minority populations. 
Such report shall— 
(i) identify barriers to receiving chron-
ic care management services; and 
(ii) make recommendations for in-
creasing the appropriate use of chronic 
care management services. 
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SEC. 5. ENSURING ACCURATE VALUATION OF SERVICES 
UNDER THE PHYSICIAN FEE SCHEDULE. 
(a) AUTHORITY TO COLLECT AND USE INFORMA-
TION ON PHYSICIANS’ SERVICES IN THE DETERMINATION 
OF RELATIVE VALUES.— 
(1) IN
GENERAL.—Section 1848(c)(2) of the 
Social Security Act (42 U.S.C. 1395w–4(c)(2)) is 
amended by adding at the end the following new 
subparagraph: 
‘‘(M) AUTHORITY TO COLLECT AND USE 
INFORMATION
ON
PHYSICIANS’ SERVICES
IN 
THE DETERMINATION OF RELATIVE VALUES.— 
‘‘(i) COLLECTION OF INFORMATION.— 
Notwithstanding any other provision of 
law, the Secretary may collect or obtain in-
formation on the resources directly or indi-
rectly related to furnishing services for 
which payment is made under the fee 
schedule established under subsection (b). 
Such information may be collected or ob-
tained from any eligible professional or any 
other source. 
‘‘(ii) USE
OF
INFORMATION.—Not-
withstanding any other provision of law, 
subject to clause (v), the Secretary may 
(as the Secretary determines appropriate) 
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use information collected or obtained pur-
suant to clause (i) in the determination of 
relative values for services under this sec-
tion. 
‘‘(iii) TYPES OF INFORMATION.—The 
types of information described in clauses 
(i) and (ii) may, at the Secretary’s discre-
tion, include any or all of the following: 
‘‘(I) Time involved in furnishing 
services. 
‘‘(II) Amounts and types of prac-
tice expense inputs involved with fur-
nishing services. 
‘‘(III) Prices (net of any dis-
counts) for practice expense inputs, 
which may include paid invoice prices 
or other documentation or records. 
‘‘(IV) Overhead and accounting 
information for practices of physicians 
and other suppliers. 
‘‘(V) Any other element that 
would improve the valuation of serv-
ices under this section. 
‘‘(iv) 
INFORMATION
COLLECTION 
MECHANISMS.—Information may be col-
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lected or obtained pursuant to this sub-
paragraph from any or all of the following: 
‘‘(I) Surveys of physicians, other 
suppliers, providers of services, manu-
facturers, and vendors. 
‘‘(II) Surgical logs, billing sys-
tems, or other practice or facility 
records. 
‘‘(III) Electronic health records. 
‘‘(IV) Any other mechanism de-
termined appropriate by the Sec-
retary. 
‘‘(v) TRANSPARENCY OF USE OF IN-
FORMATION.— 
‘‘(I) IN
GENERAL.—Subject to 
subclauses (II) and (III), if the Sec-
retary uses information collected or 
obtained under this subparagraph in 
the determination of relative values 
under this subsection, the Secretary 
shall disclose the information source 
and discuss the use of such informa-
tion in such determination of relative 
values through notice and comment 
rulemaking. 
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‘‘(II) THRESHOLDS FOR USE.— 
The Secretary may establish thresh-
olds in order to use such information, 
including the exclusion of information 
collected or obtained from eligible pro-
fessionals who use very high resources 
(as determined by the Secretary) in 
furnishing a service. 
‘‘(III) DISCLOSURE OF INFORMA-
TION.—The Secretary shall make ag-
gregate information available under 
this subparagraph but shall not dis-
close information in a form or manner 
that identifies an eligible professional 
or a group practice, or information 
collected or obtained pursuant to a 
nondisclosure agreement. 
‘‘(vi) INCENTIVE TO PARTICIPATE.— 
The Secretary may provide for such pay-
ments under this part to an eligible profes-
sional that submits such solicited informa-
tion under this subparagraph as the Sec-
retary determines appropriate in order to 
compensate such eligible professional for 
such submission. Such payments shall be 
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provided in a form and manner specified 
by the Secretary. 
‘‘(vii) ADMINISTRATION.—Chapter 35 
of title 44, United States Code, shall not 
apply to information collected or obtained 
under this subparagraph. 
‘‘(viii) DEFINITION OF ELIGIBLE PRO-
FESSIONAL.—In this subparagraph, the 
term ‘eligible professional’ has the meaning 
given such term in subsection (k)(3)(B). 
‘‘(ix) FUNDING.—For purposes of car-
rying out this subparagraph, in addition to 
funds otherwise appropriated, the Sec-
retary shall provide for the transfer, from 
the Federal Supplementary Medical Insur-
ance Trust Fund under section 1841, of 
$2,000,000 to the Centers for Medicare & 
Medicaid Services Program Management 
Account for each fiscal year beginning with 
fiscal year 2014. Amounts transferred 
under the preceding sentence for a fiscal 
year shall be available until expended.’’. 
(2) 
LIMITATION
ON
REVIEW.—Section 
1848(i)(1) of the Social Security Act (42 U.S.C. 
1395w–4(i)(1)) is amended— 
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(A) in subparagraph (D), by striking 
‘‘and’’ at the end; 
(B) in subparagraph (E), by striking the 
period at the end and inserting ‘‘, and’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(F) the collection and use of information 
in the determination of relative values under 
subsection (c)(2)(M).’’. 
(b) AUTHORITY FOR ALTERNATIVE APPROACHES TO 
ESTABLISHING
PRACTICE
EXPENSE
RELATIVE
VAL-
UES.—Section 1848(c)(2) of the Social Security Act (42 
U.S.C. 1395w–4(c)(2)), as amended by subsection (a), is 
amended by adding at the end the following new subpara-
graph: 
‘‘(N) AUTHORITY FOR ALTERNATIVE AP-
PROACHES
TO
ESTABLISHING
PRACTICE
EX-
PENSE RELATIVE VALUES.—The Secretary may 
establish or adjust practice expense relative val-
ues under this subsection using cost, charge, or 
other data from suppliers or providers of serv-
ices, including information collected or obtained 
under subparagraph (M).’’. 
(c) REVISED AND EXPANDED IDENTIFICATION OF 
POTENTIALLY
MISVALUED
CODES.—Section 
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1848(c)(2)(K)(ii) of the Social Security Act (42 U.S.C. 
1395w–4(c)(2)(K)(ii)) is amended to read as follows: 
‘‘(ii) 
IDENTIFICATION
OF
POTEN-
TIALLY MISVALUED CODES.—For purposes 
of identifying potentially misvalued codes 
pursuant to clause (i)(I), the Secretary 
shall examine codes (and families of codes 
as appropriate) based on any or all of the 
following criteria: 
‘‘(I) Codes that have experienced 
the fastest growth. 
‘‘(II) Codes that have experi-
enced substantial changes in practice 
expenses. 
‘‘(III) Codes that describe new 
technologies or services within an ap-
propriate time period (such as 3 
years) after the relative values are ini-
tially established for such codes. 
‘‘(IV) Codes which are multiple 
codes that are frequently billed in con-
junction with furnishing a single serv-
ice. 
‘‘(V) Codes with low relative val-
ues, particularly those that are often 
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billed multiple times for a single treat-
ment. 
‘‘(VI) Codes that have not been 
subject to review since implementation 
of the fee schedule. 
‘‘(VII) Codes that account for 
the majority of spending under the 
physician fee schedule. 
‘‘(VIII) Codes for services that 
have experienced a substantial change 
in the hospital length of stay or proce-
dure time. 
‘‘(IX) Codes for which there may 
be a change in the typical site of serv-
ice since the code was last valued. 
‘‘(X) Codes for which there is a 
significant difference in payment for 
the same service between different 
sites of service. 
‘‘(XI) Codes for which there may 
be anomalies in relative values within 
a family of codes. 
‘‘(XII) Codes for services where 
there may be efficiencies when a serv-
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ice is furnished at the same time as 
other services. 
‘‘(XIII) Codes with high intra- 
service work per unit of time. 
‘‘(XIV) Codes with high practice 
expense relative value units. 
‘‘(XV) Codes with high cost sup-
plies. 
‘‘(XVI) Codes as determined ap-
propriate by the Secretary.’’. 
(d) TARGET FOR RELATIVE VALUE ADJUSTMENTS 
FOR MISVALUED SERVICES.— 
(1) IN
GENERAL.—Section 1848(c)(2) of the 
Social Security Act (42 U.S.C. 1395w–4(c)(2)), as 
amended by subsections (a) and (b), is amended by 
adding at the end the following new subparagraph: 
‘‘(O) TARGET FOR RELATIVE VALUE AD-
JUSTMENTS FOR MISVALUED SERVICES.—With 
respect to fee schedules established for each of 
2015 through 2018, the following shall apply: 
‘‘(i) DETERMINATION OF NET REDUC-
TION IN EXPENDITURES.—For each year, 
the Secretary shall determine the esti-
mated net reduction in expenditures under 
the fee schedule under this section with re-
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spect to the year as a result of adjust-
ments to the relative values established 
under this paragraph for misvalued codes. 
‘‘(ii) BUDGET NEUTRAL REDISTRIBU-
TION
OF
FUNDS
IF
TARGET
MET
AND 
COUNTING OVERAGES TOWARDS THE TAR-
GET FOR THE SUCCEEDING YEAR.—If the 
estimated net reduction in expenditures de-
termined under clause (i) for the year is 
equal to or greater than the target for the 
year— 
‘‘(I) reduced expenditures attrib-
utable to such adjustments shall be 
redistributed for the year in a budget 
neutral manner in accordance with 
subparagraph (B)(ii)(II); and 
‘‘(II) the amount by which such 
reduced expenditures exceeds the tar-
get for the year shall be treated as a 
reduction in expenditures described in 
clause (i) for the succeeding year, for 
purposes of determining whether the 
target has or has not been met under 
this subparagraph with respect to that 
year. 
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‘‘(iii) 
EXEMPTION
FROM
BUDGET 
NEUTRALITY IF TARGET NOT MET.—If the 
estimated net reduction in expenditures de-
termined under clause (i) for the year is 
less than the target for the year, reduced 
expenditures in an amount equal to the 
target recapture amount shall not be taken 
into account in applying subparagraph 
(B)(ii)(II) with respect to fee schedules be-
ginning with 2015. 
‘‘(iv) TARGET RECAPTURE AMOUNT.— 
For purposes of clause (iii), the target re-
capture amount is, with respect to a year, 
an amount equal to the difference be-
tween— 
‘‘(I) the target for the year; and 
‘‘(II) the estimated net reduction 
in expenditures determined under 
clause (i) for the year. 
‘‘(v) TARGET.—For purposes of this 
subparagraph, with respect to a year, the 
target is calculated as 0.5 percent of the 
estimated amount of expenditures under 
the fee schedule under this section for the 
year.’’. 
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(2) 
CONFORMING
AMENDMENT.—Section 
1848(c)(2)(B)(v) of the Social Security Act (42 
U.S.C. 1395w–4(c)(2)(B)(v)) is amended by adding 
at the end the following new subclause: 
‘‘(VIII) 
REDUCTIONS
FOR 
MISVALUED SERVICES IF TARGET NOT 
MET.—Effective for fee schedules be-
ginning with 2015, reduced expendi-
tures attributable to the application of 
the target recapture amount described 
in subparagraph (O)(iii).’’. 
(e) PHASE-IN
OF SIGNIFICANT RELATIVE VALUE 
UNIT (RVU) REDUCTIONS.— 
(1) IN GENERAL.—Section 1848(c) of the So-
cial Security Act (42 U.S.C. 1395w–4(c)) is amend-
ed by adding at the end the following new para-
graph: 
‘‘(7) PHASE-IN
OF
SIGNIFICANT
RELATIVE 
VALUE UNIT (RVU) REDUCTIONS.—Effective for fee 
schedules established beginning with 2015, if the 
total relative value units for a service for a year 
would otherwise be decreased by an estimated 
amount equal to or greater than 20 percent as com-
pared to the total relative value units for the pre-
vious year, the applicable adjustments in work, prac-
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tice expense, and malpractice relative value units 
shall be phased-in over a 2-year period.’’. 
(2) 
CONFORMING
AMENDMENTS.—Section 
1848(c)(2) of the Social Security Act (42 U.S.C. 
1395w–4(c)(2)) is amended— 
(A) in subparagraph (B)(ii)(I), by striking 
‘‘subclause (II)’’ and inserting ‘‘subclause (II) 
and paragraph (7)’’; and 
(B) in subparagraph (K)(iii)(VI)— 
(i) by striking ‘‘provisions of subpara-
graph (B)(ii)(II)’’ and inserting ‘‘provi-
sions of subparagraph (B)(ii)(II) and para-
graph (7)’’; and 
(ii) by striking ‘‘under subparagraph 
(B)(ii)(II)’’ and inserting ‘‘under subpara-
graph (B)(ii)(I)’’. 
(f) AUTHORITY TO SMOOTH RELATIVE VALUES 
WITHIN GROUPS OF SERVICES.—Section 1848(c)(2)(C) of 
the Social Security Act (42 U.S.C. 1395w–4(c)(2)(C)) is 
amended— 
(1) in each of clauses (i) and (iii), by striking 
‘‘the service’’ and inserting ‘‘the service or group of 
services’’ each place it appears; and 
(2) in the first sentence of clause (ii), by insert-
ing ‘‘or group of services’’ before the period. 
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scribed in paragraph (9)(A)(iv) unless the 
issuer is providing the qualified entity with 
data under section 1874(e)(4)(B)(iii) of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395kk(e)(4)(B)(iii)). 
(2) ACCESS TO CERTAIN DATA.— 
(A) ACCESS.—To the extent consistent 
with applicable information, privacy, security, 
and disclosure laws (including paragraph (3)), 
notwithstanding paragraph (4)(B) of section 
1874(e) of the Social Security Act (42 U.S.C. 
1395kk(e)) and the second sentence of para-
graph (4)(D) of such section, beginning July 1, 
2015, a qualified entity may— 
(i) provide or sell the combined data 
described in paragraph (4)(B)(iii) of such 
section to authorized users described in 
clauses (i), (ii), and (v) of paragraph 
(9)(A) for non-public use, including for the 
purposes described in subparagraph (B); 
or 
(ii) subject to subparagraph (C), pro-
vide Medicare claims data to authorized 
users described in clauses (i), (ii), and (v), 
of paragraph (9)(A) for non-public use, in-
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