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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 pe-
riod 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 mechanism to measure resource use on a per capita and 
an episode basis in order to provide confidential feedback 
to physicians in the Medicare program on how their prac-
tice patterns compare to physicians generally, both in the 
same locality as well as nationally. Such feedback shall 
not be subject to disclosure under section 552 of title 5, 
United States Code). The Secretary shall consider extend-
ing such mechanism 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 sec-
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tion 1848 on or after January 1, 2009, and before 
January 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 
payment 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 as standard-
ized to eliminate the effect of geographic ad-
justments in payment rates. 
‘‘(B) 
IDENTIFICATION
OF
COUNTIES 
WHERE
SERVICE
IS
FURNISHED..—For pur-
poses of paying the additional amount specified 
in paragraph (1), if the Secretary uses the 5- 
digit postal ZIP Code where the service is fur-
nished, the dominant county of the postal ZIP 
Code (as determined by the United States Post-
al Service, or otherwise) shall be used to deter-
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mine whether the postal ZIP Code is in a coun-
ty described in subparagraph (A). 
‘‘(C) JUDICIAL
REVIEW.—There shall be 
no administrative or judicial review under sec-
tion 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 
schedule under section 1848 for the applicable 
year. The Secretary shall post the list of coun-
ties identified 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.— 
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Not later than December 31, 2008, the Comptroller Gen-
eral of the United States shall— 
(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 anal-
ysis and include in the report recommendations on 
whether an adjustment should be made to the rel-
ative value units for such combined code. 
(b) RECOMMENDATIONS
ON INCREASED USE
OF 
BUNDLED 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 anal-
ysis and include in the report recommendations on 
increasing the use of ‘‘bundled’’ payment method-
ology under such schedule. 
(c) MEDICARE PHYSICIAN FEE SCHEDULE.—In this 
section, the term ‘‘Medicare physician fee schedule’’ means 
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the fee schedule established under section 1848 of the So-
cial Security Act (42 U.S.C. 1395w–4). 
SEC. 306. IMPROVED AND EXPANDED MEDICAL HOME DEM-
ONSTRATION PROJECT. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the ‘‘Sec-
retary’’) shall establish under title XVIII of the Social Se-
curity Act an expanded medical home demonstration 
project (in this section referred to as the ‘‘expanded 
project’’) under this section. The expanded project super-
sedes the project that was initiated under section 204 of 
the Medicare Improvement and Extension Act of 2006 (di-
vision B of Public Law 109–432). The purpose of the ex-
panded project is— 
(1) to guide the redesign of the health care de-
livery system to provide accessible, continuous, com-
prehensive, and coordinated, care to Medicare bene-
ficiaries; and 
(2) to provide care management fees to per-
sonal physicians delivering continuous and com-
prehensive care in qualified medical homes. 
(b) NATURE AND SCOPE OF PROJECT.— 
(1) DURATION; SCOPE.—The expanded project 
shall operate during a period of three years, begin-
ning not later than October 1, 2009, and shall in-
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clude a nationally representative sample of physi-
cians serving urban, rural, and underserved areas 
throughout the United States. 
(2) ENCOURAGING
PARTICIPATION
OF
SMALL 
PHYSICIAN PRACTICES.— 
(A) IN GENERAL.—The expanded project 
shall be designed to include the participation of 
physicians in practices with fewer than four 
full-time equivalent physicians, as well as physi-
cians in larger practices particularly in rural 
and underserved areas. 
(B) TECHNICAL ASSISTANCE.—In order to 
facilitate the participation under the expanded 
project of physicians in such practices, the Sec-
retary shall make available additional technical 
assistance to such practices during the first 
year of the expanded project. 
(3) SELECTION OF HOMES TO PARTICIPATE.— 
The Secretary shall select up to 500 medical homes 
to participate in the expanded project and shall give 
priority to— 
(A) the selection of up to 100 HIT-en-
hanced medical homes; and 
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(B) the selection of other medical homes 
that serve communities whose populations are 
at higher risk for health disparities. 
(4) BENEFICIARY
PARTICIPATION.—The Sec-
retary shall establish a process for any Medicare 
beneficiary who is served by a medical home partici-
pating in the expanded project to elect to participate 
in the project. Each beneficiary who elects to so par-
ticipate shall be eligible— 
(A) for enhanced medical home services 
under the project with no cost sharing for the 
additional services; and 
(B) for a reduction of up to 50 percent in 
the coinsurance for services furnished under the 
physician fee schedule under section 1848 of 
the Social Security Act by the medical home. 
The Secretary shall develop standard recruitment 
materials and election processes for Medicare bene-
ficiaries who are electing to participate in the ex-
panded project. 
(c) STANDARDS
FOR MEDICAL HOMES, HIT-EN-
HANCED MEDICAL HOMES.— 
(1) STANDARD
SETTING
AND
CERTIFICATION 
PROCESS.—The Secretary shall establish a process 
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