I 
109TH CONGRESS 
2D SESSION 
H. R. 5866 
To amend titles XI and XVIII of the Social Security Act to reform physician 
payment under the Medicare Program, to modernize the quality improve-
ment organization (QIO) program, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 24, 2006 
Mr. BURGESS (for himself, Mr. NORWOOD, Mr. WELDON of Florida, and Mr. 
BOUSTANY) introduced the following bill; which was referred to the Com-
mittee on Energy and Commerce, and in addition to the Committee on 
Ways and Means, for a period to be subsequently determined by the 
Speaker, in each case for consideration of such provisions as fall within 
the jurisdiction of the committee concerned 
A BILL 
To amend titles XI and XVIII of the Social Security Act 
to reform physician payment under the Medicare Pro-
gram, to modernize the quality improvement organization 
(QIO) program, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Medicare Physician Payment Reform and Quality Im-
provement Act of 2006’’. 
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(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—MEDICARE PHYSICIAN PAYMENT REFORM 
Sec. 101. Medicare physician payment update reform. 
Sec. 102. Voluntary reporting of quality measures for physicians’ services. 
Sec. 103. Removing limitations on balance billing with beneficiary notice for 
highest income beneficiaries. 
TITLE II—QUALITY IMPROVEMENT ORGANIZATION (QIO) 
MODERNIZATION 
Sec. 201. Quality improvement activities. 
Sec. 202. Improved program administration. 
Sec. 203. Data disclosure. 
Sec. 204. Use of evaluation and competition. 
Sec. 205. Quality improvement funding. 
Sec. 206. Qualifications for QIOs. 
Sec. 207. Coordination with medicaid. 
TITLE III—MEDICARE SAVINGS AND OTHER PROVISIONS 
Sec. 301. Elimination of stabilization fund for regional PPOs. 
Sec. 302. Ongoing examination of medicare funding. 
Sec. 303. One-year delay in medicare adjustments in payments for imaging 
services; IOM study on utilization and appropriateness of imag-
ing services. 
Sec. 304. Eliminating phase-in for implementation of reduction in part B pre-
mium subsidy for higher income beneficiaries. 
Sec. 305. Exclusion of indirect graduate medical education payment in com-
putation of payments to medicare advantage organizations. 
TITLE I—MEDICARE PHYSICIAN 
PAYMENT REFORM 
SEC. 101. MEDICARE PHYSICIAN PAYMENT UPDATE RE-
FORM. 
(a) SUBSTITUTION OF MEI INCREASE FOR SGR AD-
JUSTMENTS.—Section 1848(d) of the Social Security Act 
(42 U.S.C. 1395w–4(d)) is amended— 
(1) in paragraph (1)(A), by inserting ‘‘and be-
fore 2007’’ after ‘‘beginning with 2001’’; 
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(2) in paragraph (1)(A), by inserting before the 
period at the end the following: ‘‘, and for years be-
ginning with 2007, multiplied by the update estab-
lished under paragraph (7) applicable to the year in-
volved’’; and 
(3) in paragraph (4)— 
(A) in the heading by striking ‘‘YEARS BE-
GINNING WITH 2001’’ and inserting ‘‘2001, 2002, 
AND 2003’’; and 
(B) in subparagraph (A), by inserting 
‘‘and ending with 2003’’ after ‘‘beginning with 
2001’’; and 
(4) by adding at the end the following new 
paragraph: 
‘‘(7) UPDATE BEGINNING WITH 2007.—The up-
date to the single conversion factor established in 
paragraph (1)(C) for 2007 and each succeeding year 
shall be the percentage increase in the MEI (as de-
fined in section 1842(i)(3)) for the year involved 
minus 1 percentage point.’’. 
(b) 
ENDING
APPLICATION
OF
SUSTAINABLE 
GROWTH RATE (SGR).—Section 1848(f)(1)(B) of such 
Act (42 U.S.C. 1395w–4(f)(1)(B)) is amended by insert-
ing ‘‘(and before 2006)’’ after ‘‘each succeeding year’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to payment for services furnished 
on or after January 1, 2007. 
SEC. 102. VOLUNTARY REPORTING OF QUALITY MEASURES 
FOR PHYSICIANS’ SERVICES. 
(a) REPORTING PROGRAM.—Section 1848 of the So-
cial Security Act (42 U.S.C. 1395w–4) is amended by add-
ing at the end the following new subsection: 
‘‘(k) QUALITY IMPROVEMENT.— 
‘‘(1) SELECTION
OF
QUALITY
MEASURES
(Q 
MEASURES).— 
‘‘(A) IN GENERAL.—Not later than Janu-
ary 1, 2009, the Secretary shall provide for the 
selection of quality measures (in this subsection 
referred to as ‘Q-measures’) consistent with and 
in accordance with this paragraph and para-
graph (2). 
‘‘(B) LEVEL OF MEASUREMENT.—Q-meas-
ures shall be measures that provide for assess-
ment of quality in the provision of services to 
individuals enrolled under this part at the level 
of a billing unit under this part. 
‘‘(C) CHARACTERISTICS OF MEASURES.— 
To the extent feasible and practicable, Q meas-
ures shall— 
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‘‘(i) include a mixture of outcome 
measures, process measures (such as fur-
nishing a service), and structural measures 
(such as the use of physician extenders, 
disease management, and health informa-
tion technology for submission of meas-
ures); 
‘‘(ii) include measures of care fur-
nished to frail individuals over the age of 
75 and to individuals with multiple com-
plex chronic conditions; 
‘‘(iii) be evidence-based, if pertaining 
to clinical care; 
‘‘(iv) be consistent, valid, practicable, 
and not overly burdensome to collect; 
‘‘(v) be relevant to physicians and 
other practitioners and individuals enrolled 
under this part; 
‘‘(vi) include measures that, taken as 
a whole, provide a balanced measure of 
performance of a billing unit under this 
part; and 
‘‘(vii) include measures that capture 
individuals’ assessment of clinical care pro-
vided. 
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‘‘(D) FAIRNESS.—To the extent feasible 
and practicable, this subsection shall be imple-
mented in a manner that— 
‘‘(i) takes into account differences in 
individual health status; 
‘‘(ii) takes into account individual’s 
compliance with orders; 
‘‘(iii) does not directly or indirectly 
encourage patient selection or de-selection 
by billing units under this part; 
‘‘(iv) reduces health disparities across 
groups and areas; and 
‘‘(v) uses appropriate statistical tech-
niques to ensure valid results. 
‘‘(E) APPLICATION
TO
NON-PHYSICIAN 
PRACTITIONERS
AND
OTHER
SUPPLIERS
FOR 
WHICH PAYMENT IS MADE UNDER OR IN RELA-
TION TO PHYSICIAN FEE SCHEDULE.—Insofar 
as physicians’ services under this section are 
furnished by non-physician practitioner or a 
supplier other than a physician— 
‘‘(i) any reference in this subsection to 
a physician shall be a reference to such 
practitioner or supplier; and 
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‘‘(ii) any reference to a physician spe-
cialty organization is deemed a reference to 
a specialty organization representing the 
speciality of such practitioners or sup-
pliers. 
‘‘(F) DEVELOPMENT.—In developing Q 
measures, the Secretary shall provide for— 
‘‘(i) measurement of quality by strati-
fied groups and the review of the absolute 
level of quality provided by a physician or 
medical group; and 
‘‘(ii) including practicing physicians 
with expertise in eliminating racial and 
ethnic health disparities in the design, im-
plementation and evaluation of the pro-
gram. 
‘‘(2) SELECTION PROCESS FOR MEASURES.— 
‘‘(A) SUBMISSION
OF
PROPOSED
MEAS-
URES
TO
CONSENSUS-BUILDING
ORGANIZA-
TION.— 
‘‘(i) BY PHYSICIAN SPECIALTY ORGA-
NIZATIONS.—The Secretary shall request 
each physician specialty organization to 
submit to the consensus-building organiza-
tion by January 1, 2008, proposed Q 
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measures described in clauses (i) through 
(vi) of paragraph (1)(C) that would be ap-
plicable to core clinical services that billing 
units under this part practicing in the spe-
cialty provide to individuals enrolled under 
this part. 
‘‘(ii) BY
SECRETARY.—If the physi-
cian specialty organization for a physician 
specialty has not submitted proposed Q 
measures under clause (i) by January 1, 
2008, the Secretary shall submit, as soon 
as possible but not later than February 1, 
2008, proposed Q measures described in 
clauses (i) through (vi) of paragraph 
(1)(C) for such specialty to the consensus- 
building organization. 
‘‘(iii) CONSENSUS-BUILDING
ORGANI-
ZATION
DEFINED.—For purposes of this 
paragraph, the term ‘consensus-building 
organization’ means an organization, such 
as the National Quality Forum, that the 
Secretary identifies as— 
‘‘(I) having experience in using a 
process (such as the process described 
in OMB circular A–119 published in 
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the Federal Register on February 10, 
1998) for reaching a group consensus 
with respect to measures, such as Q 
measures, relating to performance of 
those providing health care services; 
and 
‘‘(II) including in such process 
representatives of the Secretary, prac-
ticing physicians (and, as provided 
under paragraph (1)(E), practicing 
non-physician practitioners and other 
suppliers), practitioners with experi-
ence in the care of the frail elderly 
and individuals with multiple complex 
chronic conditions, organizations and 
individuals representative of the spe-
cialty involved, individuals enrolled 
under this part, experts in health care 
quality, and individuals with experi-
ence in the delivery of health care in 
urban, rural, and frontier areas and 
to underserved populations and those 
who serve a disproportionate number 
of minority patients. 
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‘‘(B) RECOMMENDATIONS BY CONSENSUS- 
BUILDING
ORGANIZATION.—The 
consensus- 
building organization that receives proposed 
measures under subparagraph (A) is requested 
to submit to the Secretary by May 1, 2008, rec-
ommendations respecting the Q measures de-
scribed in clauses (i) through (vi) of paragraph 
(1)(C) to be implemented under this subsection. 
‘‘(C) SECRETARIAL SELECTION.—The Sec-
retary shall select Q measures described in 
paragraph (1)(C) for purposes of this sub-
section consistent with the following: 
‘‘(i) USE OF RECOMMENDATIONS FOR 
CLINICAL CARE MEASURES SUBMITTED BY 
CERTAIN ORGANIZATIONS.—Except as pro-
vided in clause (ii), the Secretary shall not 
select a Q measure described in clauses (i) 
through (vi) of paragraph (1)(C) and relat-
ing to clinical care unless that measure has 
been submitted by a physician specialty or-
ganization (or through a physician-con-
sensus building process, such as the Physi-
cian Consortium for Performance Improve-
ment) and recommended by the consensus- 
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building organization under subparagraph 
(B). 
‘‘(ii) PROVISION
BY
REGULATION.— 
The Secretary may by regulation select— 
‘‘(I) Q measures described in 
clauses (i) through (vi) of paragraph 
(1)(C) and relating to clinical care 
that do not meet the requirements of 
clause (i) only if the Secretary deter-
mines that there were no, or insuffi-
cient, 
recommendations 
regarding 
such Q measures under such clause 
and only if the Secretary takes into 
account research-based peer-reviewed 
medical publications in selecting such 
measures; and 
‘‘(II) Q measures described in 
clause (vii) or (viii) of paragraph 
(1)(C) and Q measures described in 
clause (i) through (vi) of such para-
graph that do not relate to clinical 
care. 
‘‘(D) PERIODIC
REVISION
OF
SELEC-
TION.—The Secretary shall provide for the peri-
odic revision and selection of Q measures con-
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sistent with the provisions of this paragraph 
and paragraph (1) and the application of such 
revised Q measures on a prospective basis for a 
following year. 
‘‘(3) RATINGS OF PHYSICIANS BASED ON MEAS-
URES.— 
‘‘(A) RATINGS
AND
IDENTIFICATION
OF 
QUALITY PERFORMANCE.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall determine a single rating of each bill-
ing unit under this part based on Q meas-
ures selected under paragraph (2) and in-
formation reported under paragraph (4). 
Such a rating shall be determined for a 
billing unit based on its performance on Q 
measures relative to the performance of its 
peers taking into account the voluntary na-
ture of the reporting system under this 
subsection. 
‘‘(ii) NO DIRECT DISCLOSURE OF RAT-
ING.—Subject to subparagraph (B), the 
Secretary shall not make such ratings of 
identifiable billing units under this part 
available other than to the respective unit. 
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‘‘(iii) IMPROVEMENT
AND
PERFORM-
ANCE THRESHOLDS.—For specification of 
improvement and performance thresholds, 
see paragraph (5)(C). 
‘‘(B) DISCLOSURE
OF
PERFORMANCE
IN 
RELATION TO PERFORMANCE THRESHOLDS.— 
‘‘(i) IN
GENERAL.—Subject to the 
succeeding provisions of this subparagraph, 
each year the Secretary shall make widely 
available to the public the following infor-
mation regarding a billing unit’s perform-
ance on the Q measures: 
‘‘(I) Whether the unit was a new 
billing unit or otherwise had insuffi-
cient data to provide for a measure-
ment of whether it met the perform-
ance 
objectives 
under 
paragraph 
(5)(C). 
‘‘(II) For any other unit, whether 
the unit met the performance objec-
tives under such paragraph. 
‘‘(ii) LIMITATION
DURING
FIRST
YEARS.—During 2009 and 2010, the Sec-
retary shall not make the information 
under clause (i) with respect to an identifi-
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able billing unit available other than to the 
respective unit. 
‘‘(iii) PHYSICIAN
NOTIFICATION
AND 
OPPORTUNITY
FOR
COMMENT
OR
AP-
PEAL.—Before making information under 
clause (i) available with respect to a billing 
unit under this part for years beginning 
with 2010, the Secretary shall notify the 
unit of the performance on Q measures 
(including information on the unit’s per-
formance in relation to performance objec-
tives and aggregate information regarding 
the performance of peers) and provide the 
opportunity for the unit to provide written 
comments regarding the unit’s perform-
ance. The Secretary shall respond in writ-
ing to the comments and seek to reach 
agreement on the unit’s performance and 
shall establish a formal appeals process in 
the event of continued disagreement con-
cerning such performance. Upon conclusion 
of the appeals process, if the unit provides 
comments relating directly to the final de-
termination under clause (i) respecting 
such performance, the Secretary shall dis-
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close such comments with the disclosure of 
the information under such clause. 
‘‘(iv) APPLICATION OF HIPAA PRIVACY 
RULES.—Nothing in this subparagraph 
shall be construed as changing or affecting 
the application of rules promulgated under 
section 264(c) of the Health Insurance 
Portability and Accountability Act of 1996. 
‘‘(C) PEERS DEFINED.—For purposes of 
this subsection, the term ‘peers’ means, with re-
spect to a billing unit under this part that prac-
tices in a specialty in an MA region (as estab-
lished under section 1858(a)(2)), other billing 
units under this part that practice in the same 
specialty in the same region, or, beginning with 
the update for 2013, or in the United States. 
‘‘(4) REPORTING ON PERFORMANCE BEGINNING 
WITH 2008.—Beginning with 2008, each billing unit 
under this part may submit information on perform-
ance on the Q measures selected under this sub-
section with respect to individuals enrolled under 
this part. Such information shall be submitted in a 
form and manner and time specified by the Sec-
retary, which may include submission as part of 
claims data under this part. The Secretary shall pro-
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vide a process for auditing the accuracy of the infor-
mation submitted under this paragraph. 
‘‘(5) INFORMATIONAL
PERFORMANCE
STAND-
ARDS AND THRESHOLDS.— 
‘‘(A) IN GENERAL.—For purposes of dis-
closure under paragraph (3)(B), the Secretary 
shall establish quality performance objectives 
for billing units under this part. 
‘‘(B) DISCLOSURE.—For purposes of para-
graph (3)(B), such a billing unit is considered 
to meet performance objectives for a year if, 
based on the unit’s rating under paragraph 
(3)(A), the unit’s performance meets or exceeds 
the performance thresholds specified by the 
Secretary under subparagraph (C). 
‘‘(C) IMPROVEMENT STANDARDS AND PER-
FORMANCE THRESHOLDS.—The Secretary shall 
specify the performance thresholds under sub-
paragraphs (B) before the beginning of the year 
involved. 
‘‘(D) TREATMENT OF CASES OF INSUFFI-
CIENT INFORMATION.—A billing unit is deemed 
to meet performance objectives under subpara-
graphs (B) and (C) if the unit complied with 
the reporting requirement under paragraph (4) 
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but there was insufficient information, as deter-
mined by the Secretary, to provide a valid 
measure of performance. 
‘‘(6) REVIEW OF ADDITIONAL EXPENSES.—Not 
later than January 1, 2010, and after consultation 
with the medical community, the Secretary shall re-
view, and report to Congress on, the extent to which 
billing unit compliance with the reporting provisions 
of paragraph (4) results in increased work and prac-
tice expenses to billing units and whether partici-
pating billing units showed a demonstrable improve-
ment in the delivery of quality health care. 
‘‘(7) 
PHYSICIAN
AND
BENEFICIARY
EDU-
CATION.—During 2008, the Secretary shall establish 
a program to educate billing units under this part 
and individuals enrolled under this part about the 
voluntary quality disclosure system under this sub-
section and recommendations on training opportuni-
ties to improve ratings and performance on Q meas-
ures . 
‘‘(8) ANNUAL REPORT ON GROWTH IN VOLUME 
OF PHYSICIANS’ SERVICES.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
report to the Medicare Payment Advisory Com-
mission and Congress by April 1 of each year 
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(beginning with 2008) information on the 
growth in volume of services per enrollee and 
growth in expenditures per enrollee, based upon 
services and expenditures for which payment is 
based, or related to, the fee schedule established 
under this section. 
‘‘(B) DETAILS.—The information under 
subparagraph (A) shall— 
‘‘(i) be disaggregated by type of serv-
ice, by geographic area, and by specialty of 
physicians (or, if applicable, of non-physi-
cian practitioners or suppliers); 
‘‘(ii) distinguish between growth in ex-
penditures due to price change versus vol-
ume change and intensity change, includ-
ing growth due to the development and im-
provement of procedures; and 
‘‘(iii) identify types of service or geo-
graphic areas where changes in volume or 
expenditures are inappropriate or unjusti-
fied, taking into account clinical outcomes. 
‘‘(C) RECOMMENDATIONS.—Each such re-
port shall include recommendations to respond 
to inappropriate growth in service volume. Such 
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recommendations may include regulatory or leg-
islative changes, or both. 
‘‘(D) MEDPAC RESPONSE.—The Medicare 
Payment Advisory Committee shall review each 
report submitted under this paragraph, includ-
ing recommendations included under subpara-
graph (C). The Commission shall include in its 
report to Congress in June following each such 
report an analysis of the Secretary’s findings 
and recommendations. 
‘‘(9) EVALUATION; REPORT.— 
‘‘(A) EVALUATION.—The Secretary shall 
provide for an evaluation of the operation of 
this subsection during the 5-year period in 
which this subsection is first applied. Such eval-
uation shall review the impact of this subsection 
on improving the quality of services and on ac-
cess to such services and on the fairness of its 
implementation. Such evaluation shall include a 
study of the extent to which— 
‘‘(i) payment policies under this sec-
tion exacerbate or diminish racial and eth-
nic health disparities; and 
‘‘(ii) there has been improvement in 
meeting performance measures for racial 
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and ethnic minorities through the oper-
ation of this section. 
The Secretary is authorized to enter into a con-
tract with the Institute of Medicine of the Na-
tional Academy of Sciences for the conduct of 
the evaluation under this subparagraph. 
‘‘(B) REPORT.—The Secretary shall sub-
mit to Congress a report on such evaluation by 
not later than September 30, 2012. 
‘‘(10) WAIVER OF ADMINISTRATIVE AND JUDI-
CIAL REVIEW.—There shall be no administrative or 
judicial review under section 1869 or otherwise of— 
‘‘(A) the selection of Q measures under 
paragraphs (1) and (2); 
‘‘(B) the development and computation of 
ratings under paragraph (3)(A), standards and 
thresholds under paragraph (5)(C), and the ap-
plication of such standards and thresholds 
under paragraphs (3)(B) and (5)(B); and 
‘‘(C) the definition of peers and new billing 
units under this subsection.’’. 
(b) 
CONFORMING
MEDPAC 
DUTIES.—Section 
1805(b)(2) of such Act (42 U.S.C. 1395b–6(b)(2)) is 
amended by adding at the end the following new subpara-
graph: 
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‘‘(D) REVIEW OF REPORT ON GROWTH IN 
PHYSICIAN SERVICES.—Specifically, under sec-
tion 1848(k)(8)(D), the Commission shall re-
view and make recommendations concerning the 
Secretary’s report on the growth of physicians’ 
services under section 1848.’’. 
SEC. 103. REMOVING LIMITATIONS ON BALANCE BILLING 
WITH BENEFICIARY NOTICE FOR HIGHEST IN-
COME BENEFICIARIES. 
(a) IN GENERAL.—Section 1848(g) of the Social Se-
curity Act (42 U.S.C. 1395w–4(g)) is amended— 
(1) in paragraph (1)(A), in the matter before 
clause (i), by inserting ‘‘, subject to subparagraph 
(D),’’ after ‘‘enrolled under this part’’; 
(2) in paragraph (1), by adding at the end the 
following new subparagraph: 
‘‘(D) EXCEPTION
FOR
HIGHEST
INCOME 
BENEFICIARIES.—Subparagraph (A) shall not 
apply with respect to physicians’ services fur-
nished in a month to an individual with respect 
to whom and for such month a reduction in 
premium subsidy is in effect under section 
1839(i) if the individual furnishing such serv-
ices provides the advance notice of such non- 
participation and non-acceptance of assignment 
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under paragraph (8) and (for services furnished 
on or after January 1, 2008) submits informa-
tion in accordance with subsection (k)(4).’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(8) NOTICE OF NON-PARTICIPATION AND NON- 
ACCEPTANCE
OF
ASSIGNMENT.—For purposes of 
paragraph (1)(D), the advance notice of non-partici-
pation and non-acceptance of assignment shall be, 
with respect to an item or service furnished under 
this part by (or under the supervision of) a physi-
cian, a notice (that may be in the form of a posting 
in a conspicuous place in a physician’s office or on 
patient information forms) that is posted or other-
wise furnished in a manner so as to inform the indi-
vidual receiving the item or service that— 
‘‘(A) the physician furnishing (or super-
vising the furnishing of) the items or service is 
not a participating physician and does not ac-
cept assignment with respect to the service; and 
‘‘(B) because of such non-acceptance, in 
the case of physicians’ services furnished in a 
month to an individual with respect to whom 
and for such month a reduction in premium 
subsidy is in effect under section 1839(i), the 
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charge imposed is not limited and may exceed 
the limiting charge described in paragraph 
(2).’’. 
(b) CONFORMING AMENDMENT TO PRIVATE CON-
TRACT PROVISIONS.—Section 1802 of such Act (42 
U.S.C. 1395a) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(6) EXCEPTION FOR HIGHEST INCOME BENE-
FICIARIES.—The previous provisions of this sub-
section shall not apply to physicians’ services fur-
nished in a month to an individual with respect to 
whom and for such month a reduction in premium 
subsidy is in effect under section 1839(i) if the ad-
vance notice described in section 1848(g)(8) has 
been provided and (for services furnished on or after 
January 1, 2008) the physician furnishing the serv-
ices submits information in accordance with section 
1848(k)(4).’’. 
(c) CONFORMING AMENDMENT TO PARTICIPATION 
PROVISIONS.—Section 1842(h) of such Act (42 U.S.C. 
1395u) is amended by adding at the end the following new 
paragraph: 
‘‘(8) The previous provisions of this subsection, inso-
far as they limit the charges that a participating physician 
may impose, shall not apply to physicians’ services fur-
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sroberts on PROD1PC70 with BILLS