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 
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— 
(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 
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 
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-
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 
2017 through 2020, 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-
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.
‘‘(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 2017. 
‘‘(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.’’.
(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 2017, 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 2017, for serv-
ices that are not new or revised codes, 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 compared to 
the total relative value units for the previous year,
the applicable adjustments in work, practice 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. 
(g) GAO STUDY AND REPORT ON RELATIVE VALUE 
SCALE UPDATE COMMITTEE.— 
(1) STUDY.—The Comptroller General of the 
United States (in this subsection referred to as the 
‘‘Comptroller General’’) shall conduct a study of the 
processes used by the Relative Value Scale Update 
Committee (RUC) to provide recommendations to 
the Secretary of Health and Human Services regard-
ing relative values for specific services under the 
Medicare physician fee schedule under section 1848 
of the Social Security Act (42 U.S.C. 1395w–4). 
(2) REPORT.—Not later than 1 year after the 
date of the enactment of this Act, the Comptroller 
General shall submit to Congress a report containing 
the results of the study conducted under paragraph 
(1). 
(h) ADJUSTMENT TO MEDICARE PAYMENT LOCAL-
ITIES.— 
(1) IN GENERAL.—Section 1848(e) of the So-
cial Security Act (42 U.S.C. 1395w–4(e)) is amend-
ed by adding at the end the following new para-
graph:
‘‘(6) USE OF MSAS AS FEE SCHEDULE AREAS IN 
CALIFORNIA.— 
‘‘(A) IN
GENERAL.—Subject to the suc-
ceeding provisions of this paragraph and not-
withstanding the previous provisions of this 
subsection, for services furnished on or after 
January 1, 2017, the fee schedule areas used 
for payment under this section applicable to 
California shall be the following: 
‘‘(i) Each Metropolitan Statistical 
Area (each in this paragraph referred to as 
an ‘MSA’), as defined by the Director of 
the Office of Management and Budget as 
of December 31 of the previous year, shall 
be a fee schedule area. 
‘‘(ii) All areas not included in an MSA 
shall be treated as a single rest-of-State 
fee schedule area. 
‘‘(B) TRANSITION FOR MSAS PREVIOUSLY 
IN REST-OF-STATE PAYMENT LOCALITY OR IN 
LOCALITY 3.— 
‘‘(i) IN GENERAL.—For services fur-
nished in California during a year begin-
ning with 2017 and ending with 2021 in 
an MSA in a transition area (as defined in