H. R. 3590—237 
discharges occurring during fiscal year 2014 or a subse-
quent fiscal year, the Secretary shall ensure that meas-
ures selected under subparagraph (A) include efficiency 
measures, including measures of ‘Medicare spending 
per beneficiary’. Such measures shall be adjusted for 
factors such as age, sex, race, severity of illness, and 
other factors that the Secretary determines appro-
priate. 
‘‘(C) LIMITATIONS.— 
‘‘(i) TIME REQUIREMENT FOR PRIOR REPORTING AND 
NOTICE.—The Secretary may not select a measure 
under subparagraph (A) for use under the Program 
with respect to a performance period for a fiscal year 
(as established under paragraph (4)) unless such 
measure 
has 
been 
specified 
under 
subsection 
(b)(3)(B)(viii) and included on the Hospital Compare 
Internet website for at least 1 year prior to the begin-
ning of such performance period. 
‘‘(ii) MEASURE NOT APPLICABLE UNLESS HOSPITAL 
FURNISHES SERVICES APPROPRIATE TO THE MEASURE.— 
A measure selected under subparagraph (A) shall not 
apply to a hospital if such hospital does not furnish 
services appropriate to such measure. 
‘‘(D) REPLACING
MEASURES.—Subclause (VI) of sub-
section (b)(3)(B)(viii) shall apply to measures selected under 
subparagraph (A) in the same manner as such subclause 
applies to measures selected under such subsection. 
‘‘(3) PERFORMANCE STANDARDS.— 
‘‘(A) ESTABLISHMENT.—The Secretary shall establish 
performance standards with respect to measures selected 
under paragraph (2) for a performance period for a fiscal 
year (as established under paragraph (4)). 
‘‘(B) ACHIEVEMENT AND IMPROVEMENT.—The perform-
ance standards established under subparagraph (A) shall 
include levels of achievement and improvement. 
‘‘(C) TIMING.—The Secretary shall establish and 
announce the performance standards under subparagraph 
(A) not later than 60 days prior to the beginning of the 
performance period for the fiscal year involved. 
‘‘(D) CONSIDERATIONS IN ESTABLISHING STANDARDS.— 
In establishing performance standards with respect to 
measures under this paragraph, the Secretary shall take 
into account appropriate factors, such as— 
‘‘(i) 
practical 
experience 
with 
the 
measures 
involved, including whether a significant proportion 
of hospitals failed to meet the performance standard 
during previous performance periods; 
‘‘(ii) historical performance standards; 
‘‘(iii) improvement rates; and 
‘‘(iv) the opportunity for continued improvement. 
‘‘(4) PERFORMANCE PERIOD.—For purposes of the Program, 
the Secretary shall establish the performance period for a fiscal 
year. Such performance period shall begin and end prior to 
the beginning of such fiscal year. 
‘‘(5) HOSPITAL PERFORMANCE SCORE.— 
‘‘(A) IN GENERAL.—Subject to subparagraph (B), the 
Secretary shall develop a methodology for assessing the
H. R. 3590—238 
total performance of each hospital based on performance 
standards with respect to the measures selected under 
paragraph (2) for a performance period (as established 
under paragraph (4)). Using such methodology, the Sec-
retary shall provide for an assessment (in this subsection 
referred to as the ‘hospital performance score’) for each 
hospital for each performance period. 
‘‘(B) APPLICATION.— 
‘‘(i) APPROPRIATE
DISTRIBUTION.—The Secretary 
shall ensure that the application of the methodology 
developed under subparagraph (A) results in an appro-
priate distribution of value-based incentive payments 
under paragraph (6) among hospitals achieving dif-
ferent levels of hospital performance scores, with hos-
pitals achieving the highest hospital performance 
scores receiving the largest value-based incentive pay-
ments. 
‘‘(ii) HIGHER OF ACHIEVEMENT OR IMPROVEMENT.— 
The methodology developed under subparagraph (A) 
shall provide that the hospital performance score is 
determined using the higher of its achievement or 
improvement score for each measure. 
‘‘(iii) WEIGHTS.—The methodology developed under 
subparagraph (A) shall provide for the assignment of 
weights for categories of measures as the Secretary 
determines appropriate. 
‘‘(iv) NO MINIMUM PERFORMANCE STANDARD.—The 
Secretary shall not set a minimum performance 
standard in determining the hospital performance score 
for any hospital. 
‘‘(v) REFLECTION OF MEASURES APPLICABLE TO THE 
HOSPITAL.—The hospital performance score for a hos-
pital shall reflect the measures that apply to the hos-
pital. 
‘‘(6) CALCULATION OF VALUE-BASED INCENTIVE PAYMENTS.— 
‘‘(A) IN GENERAL.—In the case of a hospital that the 
Secretary determines meets (or exceeds) the performance 
standards under paragraph (3) for the performance period 
for a fiscal year (as established under paragraph (4)), the 
Secretary shall increase the base operating DRG payment 
amount (as defined in paragraph (7)(D)), as determined 
after application of paragraph (7)(B)(i), for a hospital for 
each discharge occurring in such fiscal year by the value- 
based incentive payment amount. 
‘‘(B) VALUE-BASED INCENTIVE PAYMENT AMOUNT.—The 
value-based incentive payment amount for each discharge 
of a hospital in a fiscal year shall be equal to the product 
of— 
‘‘(i) the base operating DRG payment amount (as 
defined in paragraph (7)(D)) for the discharge for the 
hospital for such fiscal year; and 
‘‘(ii) the value-based incentive payment percentage 
specified under subparagraph (C) for the hospital for 
such fiscal year. 
‘‘(C) VALUE-BASED INCENTIVE PAYMENT PERCENTAGE.—
H. R. 3590—239 
‘‘(i) IN GENERAL.—The Secretary shall specify a 
value-based incentive payment percentage for a hos-
pital for a fiscal year. 
‘‘(ii) REQUIREMENTS.—In specifying the value- 
based incentive payment percentage for each hospital 
for a fiscal year under clause (i), the Secretary shall 
ensure that— 
‘‘(I) such percentage is based on the hospital 
performance score of the hospital under paragraph 
(5); and 
‘‘(II) the total amount of value-based incentive 
payments under this paragraph to all hospitals 
in such fiscal year is equal to the total amount 
available for value-based incentive payments for 
such fiscal year under paragraph (7)(A), as esti-
mated by the Secretary. 
‘‘(7) FUNDING FOR VALUE-BASED INCENTIVE PAYMENTS.— 
‘‘(A) AMOUNT.—The total amount available for value- 
based incentive payments under paragraph (6) for all hos-
pitals for a fiscal year shall be equal to the total amount 
of reduced payments for all hospitals under subparagraph 
(B) for such fiscal year, as estimated by the Secretary. 
‘‘(B) ADJUSTMENT TO PAYMENTS.— 
‘‘(i) IN GENERAL.—The Secretary shall reduce the 
base operating DRG payment amount (as defined in 
subparagraph (D)) for a hospital for each discharge 
in a fiscal year (beginning with fiscal year 2013) by 
an amount equal to the applicable percent (as defined 
in subparagraph (C)) of the base operating DRG pay-
ment amount for the discharge for the hospital for 
such fiscal year. The Secretary shall make such reduc-
tions for all hospitals in the fiscal year involved, 
regardless of whether or not the hospital has been 
determined by the Secretary to have earned a value- 
based incentive payment under paragraph (6) for such 
fiscal year. 
‘‘(ii) NO EFFECT ON OTHER PAYMENTS.—Payments 
described in items (aa) and (bb) of subparagraph 
(D)(i)(II) for a hospital shall be determined as if this 
subsection had not been enacted. 
‘‘(C) APPLICABLE PERCENT DEFINED.—For purposes of 
subparagraph (B), the term ‘applicable percent’ means— 
‘‘(i) with respect to fiscal year 2013, 1.0 percent; 
‘‘(ii) with respect to fiscal year 2014, 1.25 percent; 
‘‘(iii) with respect to fiscal year 2015, 1.5 percent; 
‘‘(iv) with respect to fiscal year 2016, 1.75 percent; 
and 
‘‘(v) with respect to fiscal year 2017 and succeeding 
fiscal years, 2 percent. 
‘‘(D) 
BASE
OPERATING
DRG
PAYMENT
AMOUNT 
DEFINED.— 
‘‘(i) IN
GENERAL.—Except as provided in clause 
(ii), in this subsection, the term ‘base operating DRG 
payment amount’ means, with respect to a hospital 
for a fiscal year— 
‘‘(I) the payment amount that would otherwise 
be made under subsection (d) (determined without
H. R. 3590—240 
regard to subsection (q)) for a discharge if this 
subsection did not apply; reduced by 
‘‘(II) any portion of such payment amount that 
is attributable to— 
‘‘(aa) payments under paragraphs (5)(A), 
(5)(B), (5)(F), and (12) of subsection (d); and 
‘‘(bb) such other payments under sub-
section (d) determined appropriate by the Sec-
retary. 
‘‘(ii) SPECIAL RULES FOR CERTAIN HOSPITALS.— 
‘‘(I) SOLE
COMMUNITY
HOSPITALS
AND
MEDI-
CARE-DEPENDENT, SMALL RURAL HOSPITALS.—In the 
case of a medicare-dependent, small rural hospital 
(with respect to discharges occurring during fiscal 
year 2012 and 2013) or a sole community hospital, 
in applying subparagraph (A)(i), the payment 
amount that would otherwise be made under sub-
section (d) shall be determined without regard to 
subparagraphs (I) and (L) of subsection (b)(3) and 
subparagraphs (D) and (G) of subsection (d)(5). 
‘‘(II) HOSPITALS PAID UNDER SECTION 1814.— 
In the case of a hospital that is paid under section 
1814(b)(3), the term ‘base operating DRG payment 
amount’ means the payment amount under such 
section. 
‘‘(8) ANNOUNCEMENT OF NET RESULT OF ADJUSTMENTS.— 
Under the Program, the Secretary shall, not later than 60 
days prior to the fiscal year involved, inform each hospital 
of the adjustments to payments to the hospital for discharges 
occurring in such fiscal year under paragraphs (6) and (7)(B)(i). 
‘‘(9) NO EFFECT IN SUBSEQUENT FISCAL YEARS.—The value- 
based incentive payment under paragraph (6) and the payment 
reduction under paragraph (7)(B)(i) shall each apply only with 
respect to the fiscal year involved, and the Secretary shall 
not take into account such value-based incentive payment or 
payment reduction in making payments to a hospital under 
this section in a subsequent fiscal year. 
‘‘(10) PUBLIC REPORTING.— 
‘‘(A) HOSPITAL SPECIFIC INFORMATION.— 
‘‘(i) IN
GENERAL.—The Secretary shall make 
information available to the public regarding the 
performance of individual hospitals under the Program, 
including— 
‘‘(I) the performance of the hospital with 
respect to each measure that applies to the hos-
pital; 
‘‘(II) the performance of the hospital with 
respect to each condition or procedure; and 
‘‘(III) the hospital performance score assessing 
the total performance of the hospital. 
‘‘(ii) OPPORTUNITY TO REVIEW AND SUBMIT CORREC-
TIONS.—The Secretary shall ensure that a hospital has 
the opportunity to review, and submit corrections for, 
the information to be made public with respect to 
the hospital under clause (i) prior to such information 
being made public.
H. R. 3590—241 
‘‘(iii) WEBSITE.—Such information shall be posted 
on the Hospital Compare Internet website in an easily 
understandable format. 
‘‘(B) AGGREGATE
INFORMATION.—The Secretary shall 
periodically post on the Hospital Compare Internet website 
aggregate information on the Program, including— 
‘‘(i) the number of hospitals receiving value-based 
incentive payments under paragraph (6) and the range 
and total amount of such value-based incentive pay-
ments; and 
‘‘(ii) the number of hospitals receiving less than 
the maximum value-based incentive payment available 
to the hospital for the fiscal year involved and the 
range and amount of such payments. 
‘‘(11) IMPLEMENTATION.— 
‘‘(A) APPEALS.—The Secretary shall establish a process 
by which hospitals may appeal the calculation of a hos-
pital’s performance assessment with respect to the perform-
ance standards established under paragraph (3)(A) and 
the hospital performance score under paragraph (5). The 
Secretary shall ensure that such process provides for reso-
lution of such appeals in a timely manner. 
‘‘(B) LIMITATION ON REVIEW.—Except as provided in 
subparagraph (A), there shall be no administrative or 
judicial review under section 1869, section 1878, or other-
wise of the following: 
‘‘(i) The methodology used to determine the amount 
of the value-based incentive payment under paragraph 
(6) and the determination of such amount. 
‘‘(ii) The determination of the amount of funding 
available for such value-based incentive payments 
under paragraph (7)(A) and the payment reduction 
under paragraph (7)(B)(i). 
‘‘(iii) The establishment of the performance stand-
ards under paragraph (3) and the performance period 
under paragraph (4). 
‘‘(iv) The measures specified under subsection 
(b)(3)(B)(viii) and the measures selected under para-
graph (2). 
‘‘(v) The methodology developed under paragraph 
(5) that is used to calculate hospital performance scores 
and the calculation of such scores. 
‘‘(vi) The validation methodology specified in sub-
section (b)(3)(B)(viii)(XI). 
‘‘(C) CONSULTATION WITH SMALL HOSPITALS.—The Sec-
retary shall consult with small rural and urban hospitals 
on the application of the Program to such hospitals. 
‘‘(12) PROMULGATION OF REGULATIONS.—The Secretary shall 
promulgate regulations to carry out the Program, including 
the selection of measures under paragraph (2), the methodology 
developed under paragraph (5) that is used to calculate hospital 
performance scores, and the methodology used to determine 
the amount of value-based incentive payments under paragraph 
(6).’’. 
(2) AMENDMENTS
FOR
REPORTING
OF
HOSPITAL
QUALITY 
INFORMATION.—Section 1886(b)(3)(B)(viii) of the Social Security 
Act (42 U.S.C. 1395ww(b)(3)(B)(viii)) is amended—
H. R. 3590—242 
(A) in subclause (II), by adding at the end the following 
sentence: ‘‘The Secretary may require hospitals to submit 
data on measures that are not used for the determination 
of value-based incentive payments under subsection (o).’’; 
(B) in subclause (V), by striking ‘‘beginning with fiscal 
year 2008’’ and inserting ‘‘for fiscal years 2008 through 
2012’’; 
(C) in subclause (VII), in the first sentence, by striking 
‘‘data submitted’’ and inserting ‘‘information regarding 
measures submitted’’; and 
(D) by adding at the end the following new subclauses: 
‘‘(VIII) Effective for payments beginning with fiscal year 2013, 
with respect to quality measures for outcomes of care, the Secretary 
shall provide for such risk adjustment as the Secretary determines 
to be appropriate to maintain incentives for hospitals to treat 
patients with severe illnesses or conditions. 
‘‘(IX)(aa) Subject to item (bb), effective for payments beginning 
with fiscal year 2013, each measure specified by the Secretary 
under this clause shall be endorsed by the entity with a contract 
under section 1890(a). 
‘‘(bb) In the case of a specified area or medical topic determined 
appropriate by the Secretary for which a feasible and practical 
measure has not been endorsed by the entity with a contract under 
section 1890(a), the Secretary may specify a measure that is not 
so endorsed as long as due consideration is given to measures 
that have been endorsed or adopted by a consensus organization 
identified by the Secretary. 
‘‘(X) To the extent practicable, the Secretary shall, with input 
from consensus organizations and other stakeholders, take steps 
to ensure that the measures specified by the Secretary under this 
clause are coordinated and aligned with quality measures applicable 
to— 
‘‘(aa) physicians under section 1848(k); and 
‘‘(bb) other providers of services and suppliers under this 
title. 
‘‘(XI) The Secretary shall establish a process to validate meas-
ures specified under this clause as appropriate. Such process shall 
include the auditing of a number of randomly selected hospitals 
sufficient to ensure validity of the reporting program under this 
clause as a whole and shall provide a hospital with an opportunity 
to appeal the validation of measures reported by such hospital.’’. 
(3) WEBSITE IMPROVEMENTS.—Section 1886(b)(3)(B) of the 
Social Security Act (42 U.S.C. 1395ww(b)(3)(B)), as amended 
by section 4102(b) of the HITECH Act (Public Law 111–5), 
is amended by adding at the end the following new clause: 
‘‘(x)(I) The Secretary shall develop standard Internet website 
reports tailored to meet the needs of various stakeholders such 
as hospitals, patients, researchers, and policymakers. The Secretary 
shall seek input from such stakeholders in determining the type 
of information that is useful and the formats that best facilitate 
the use of the information. 
‘‘(II) The Secretary shall modify the Hospital Compare Internet 
website to make the use and navigation of that website readily 
available to individuals accessing it.’’. 
(4) GAO STUDY AND REPORT.— 
(A) STUDY.—The Comptroller General of the United 
States shall conduct a study on the performance of the
H. R. 3590—243 
hospital value-based purchasing program established under 
section 1886(o) of the Social Security Act, as added by 
paragraph (1). Such study shall include an analysis of 
the impact of such program on— 
(i) the quality of care furnished to Medicare bene-
ficiaries, including diverse Medicare beneficiary popu-
lations (such as diverse in terms of race, ethnicity, 
and socioeconomic status); 
(ii) expenditures under the Medicare program, 
including any reduced expenditures under Part A of 
title XVIII of such Act that are attributable to the 
improvement in the delivery of inpatient hospital serv-
ices by reason of such hospital value-based purchasing 
program; 
(iii) the quality performance among safety net hos-
pitals and any barriers such hospitals face in meeting 
the performance standards applicable under such hos-
pital value-based purchasing program; and 
(iv) the quality performance among small rural 
and small urban hospitals and any barriers such hos-
pitals face in meeting the performance standards 
applicable under such hospital value-based purchasing 
program. 
(B) REPORTS.— 
(i) INTERIM
REPORT.—Not later than October 1, 
2015, the Comptroller General of the United States 
shall submit to Congress an interim report containing 
the results of the study conducted under subparagraph 
(A), together with recommendations for such legislation 
and administrative action as the Comptroller General 
determines appropriate. 
(ii) FINAL REPORT.—Not later than July 1, 2017, 
the Comptroller General of the United States shall 
submit to Congress a report containing the results 
of the study conducted under subparagraph (A), 
together with recommendations for such legislation and 
administrative action as the Comptroller General 
determines appropriate. 
(5) HHS STUDY AND REPORT.— 
(A) STUDY.—The Secretary of Health and Human Serv-
ices shall conduct a study on the performance of the hos-
pital value-based purchasing program established under 
section 1886(o) of the Social Security Act, as added by 
paragraph (1). Such study shall include an analysis— 
(i) of ways to improve the hospital value-based 
purchasing program and ways to address any unin-
tended consequences that may occur as a result of 
such program; 
(ii) of whether the hospital value-based purchasing 
program resulted in lower spending under the Medi-
care program under title XVIII of such Act or other 
financial savings to hospitals; 
(iii) the appropriateness of the Medicare program 
sharing in any savings generated through the hospital 
value-based purchasing program; and 
(iv) any other area determined appropriate by the 
Secretary.
H. R. 3590—244 
(B) REPORT.—Not later than January 1, 2016, the Sec-
retary of Health and Human Services shall submit to Con-
gress a report containing the results of the study conducted 
under subparagraph (A), together with recommendations 
for such legislation and administrative action as the Sec-
retary determines appropriate. 
(b) VALUE-BASED PURCHASING DEMONSTRATION PROGRAMS.— 
(1) VALUE-BASED
PURCHASING
DEMONSTRATION
PROGRAM 
FOR INPATIENT CRITICAL ACCESS HOSPITALS.— 
(A) ESTABLISHMENT.— 
(i) IN GENERAL.—Not later than 2 years after the 
date of enactment of this Act, the Secretary of Health 
and Human Services (in this subsection referred to 
as the ‘‘Secretary’’) shall establish a demonstration pro-
gram under which the Secretary establishes a value- 
based purchasing program under the Medicare pro-
gram under title XVIII of the Social Security Act for 
critical access hospitals (as defined in paragraph (1) 
of section 1861(mm) of such Act (42 U.S.C. 1395x(mm))) 
with respect to inpatient critical access hospital serv-
ices (as defined in paragraph (2) of such section) in 
order to test innovative methods of measuring and 
rewarding quality and efficient health care furnished 
by such hospitals. 
(ii) DURATION.—The demonstration program under 
this paragraph shall be conducted for a 3-year period. 
(iii) SITES.—The Secretary shall conduct the dem-
onstration program under this paragraph at an appro-
priate number (as determined by the Secretary) of 
critical access hospitals. The Secretary shall ensure 
that such hospitals are representative of the spectrum 
of such hospitals that participate in the Medicare pro-
gram. 
(B) WAIVER
AUTHORITY.—The Secretary may waive 
such requirements of titles XI and XVIII of the Social 
Security Act as may be necessary to carry out the dem-
onstration program under this paragraph. 
(C) BUDGET NEUTRALITY REQUIREMENT.—In conducting 
the demonstration program under this section, the Sec-
retary shall ensure that the aggregate payments made 
by the Secretary do not exceed the amount which the 
Secretary would have paid if the demonstration program 
under this section was not implemented. 
(D) REPORT.—Not later than 18 months after the 
completion of the demonstration program under this para-
graph, the Secretary shall submit to Congress a report 
on the demonstration program together with— 
(i) recommendations on the establishment of a 
permanent value-based purchasing program under the 
Medicare program for critical access hospitals with 
respect to inpatient critical access hospital services; 
and 
(ii) recommendations for such other legislation and 
administrative action as the Secretary determines 
appropriate.
H. R. 3590—245 
(2) VALUE-BASED
PURCHASING
DEMONSTRATION
PROGRAM 
FOR HOSPITALS EXCLUDED FROM HOSPITAL VALUE-BASED PUR-
CHASING PROGRAM AS A RESULT OF INSUFFICIENT NUMBERS OF 
MEASURES AND CASES.— 
(A) ESTABLISHMENT.— 
(i) IN GENERAL.—Not later than 2 years after the 
date of enactment of this Act, the Secretary shall estab-
lish a demonstration program under which the Sec-
retary establishes a value-based purchasing program 
under the Medicare program under title XVIII of the 
Social Security Act for applicable hospitals (as defined 
in clause (ii)) with respect to inpatient hospital services 
(as defined in section 1861(b) of the Social Security 
Act (42 U.S.C. 1395x(b))) in order to test innovative 
methods of measuring and rewarding quality and effi-
cient health care furnished by such hospitals. 
(ii) APPLICABLE HOSPITAL DEFINED.—For purposes 
of this paragraph, the term ‘‘applicable hospital’’ means 
a hospital described in subclause (III) or (IV) of section 
1886(o)(1)(C)(ii) of the Social Security Act, as added 
by subsection (a)(1). 
(iii) 
DURATION.—The 
demonstration 
program 
under this paragraph shall be conducted for a 3-year 
period. 
(iv) SITES.—The Secretary shall conduct the dem-
onstration program under this paragraph at an appro-
priate number (as determined by the Secretary) of 
applicable hospitals. The Secretary shall ensure that 
such hospitals are representative of the spectrum of 
such hospitals that participate in the Medicare pro-
gram. 
(B) WAIVER
AUTHORITY.—The Secretary may waive 
such requirements of titles XI and XVIII of the Social 
Security Act as may be necessary to carry out the dem-
onstration program under this paragraph. 
(C) BUDGET NEUTRALITY REQUIREMENT.—In conducting 
the demonstration program under this section, the Sec-
retary shall ensure that the aggregate payments made 
by the Secretary do not exceed the amount which the 
Secretary would have paid if the demonstration program 
under this section was not implemented. 
(D) REPORT.—Not later than 18 months after the 
completion of the demonstration program under this para-
graph, the Secretary shall submit to Congress a report 
on the demonstration program together with— 
(i) recommendations on the establishment of a 
permanent value-based purchasing program under the 
Medicare program for applicable hospitals with respect 
to inpatient hospital services; and 
(ii) recommendations for such other legislation and 
administrative action as the Secretary determines 
appropriate. 
SEC. 3002. IMPROVEMENTS TO THE PHYSICIAN QUALITY REPORTING 
SYSTEM. 
(a) EXTENSION.—Section 1848(m) of the Social Security Act 
(42 U.S.C. 1395w–4(m)) is amended—
H. R. 3590—246 
(1) in paragraph (1)— 
(A) in subparagraph (A), in the matter preceding clause 
(i), by striking ‘‘2010’’ and inserting ‘‘2014’’; and 
(B) in subparagraph (B)— 
(i) in clause (i), by striking ‘‘and’’ at the end; 
(ii) in clause (ii), by striking the period at the 
end and inserting a semicolon; and 
(iii) by adding at the end the following new clauses: 
‘‘(iii) for 2011, 1.0 percent; and 
‘‘(iv) for 2012, 2013, and 2014, 0.5 percent.’’; 
(2) in paragraph (3)— 
(A) in subparagraph (A), in the matter preceding clause 
(i), by inserting ‘‘(or, for purposes of subsection (a)(8), for 
the quality reporting period for the year)’’ after ‘‘reporting 
period’’; and 
(B) in subparagraph (C)(i), by inserting ‘‘, or, for pur-
poses of subsection (a)(8), for a quality reporting period 
for the year’’ after ‘‘(a)(5), for a reporting period for a 
year’’; 
(3) in paragraph (5)(E)(iv), by striking ‘‘subsection (a)(5)(A)’’ 
and inserting ‘‘paragraphs (5)(A) and (8)(A) of subsection (a)’’; 
and 
(4) in paragraph (6)(C)— 
(A) in clause (i)(II), by striking ‘‘, 2009, 2010, and 
2011’’ and inserting ‘‘and subsequent years’’; and 
(B) in clause (iii)— 
(i) by inserting ‘‘(a)(8)’’ after ‘‘(a)(5)’’; and 
(ii) by striking ‘‘under subparagraph (D)(iii) of such 
subsection’’ 
and 
inserting 
‘‘under 
subsection 
(a)(5)(D)(iii) or the quality reporting period under sub-
section (a)(8)(D)(iii), respectively’’. 
(b) 
INCENTIVE
PAYMENT
ADJUSTMENT
FOR
QUALITY 
REPORTING.—Section 1848(a) of the Social Security Act (42 U.S.C. 
1395w–4(a)) is amended by adding at the end the following new 
paragraph: 
‘‘(8) INCENTIVES FOR QUALITY REPORTING.— 
‘‘(A) ADJUSTMENT.— 
‘‘(i) IN GENERAL.—With respect to covered profes-
sional services furnished by an eligible professional 
during 2015 or any subsequent year, if the eligible 
professional does not satisfactorily submit data on 
quality measures for covered professional services for 
the quality reporting period for the year (as determined 
under subsection (m)(3)(A)), the fee schedule amount 
for such services furnished by such professional during 
the year (including the fee schedule amount for pur-
poses of determining a payment based on such amount) 
shall be equal to the applicable percent of the fee 
schedule amount that would otherwise apply to such 
services under this subsection (determined after 
application of paragraphs (3), (5), and (7), but without 
regard to this paragraph). 
‘‘(ii) APPLICABLE PERCENT.—For purposes of clause 
(i), the term ‘applicable percent’ means— 
‘‘(I) for 2015, 98.5 percent; and 
‘‘(II) for 2016 and each subsequent year, 98 
percent.
H. R. 3590—247 
‘‘(B) APPLICATION.— 
‘‘(i) PHYSICIAN REPORTING SYSTEM RULES.—Para-
graphs (5), (6), and (8) of subsection (k) shall apply 
for purposes of this paragraph in the same manner 
as they apply for purposes of such subsection. 
‘‘(ii) INCENTIVE
PAYMENT
VALIDATION
RULES.— 
Clauses (ii) and (iii) of subsection (m)(5)(D) shall apply 
for purposes of this paragraph in a similar manner 
as they apply for purposes of such subsection. 
‘‘(C) DEFINITIONS.—For purposes of this paragraph: 
‘‘(i) ELIGIBLE
PROFESSIONAL; COVERED
PROFES-
SIONAL SERVICES.—The terms ‘eligible professional’ and 
‘covered professional services’ have the meanings given 
such terms in subsection (k)(3). 
‘‘(ii) PHYSICIAN
REPORTING
SYSTEM.—The term 
‘physician reporting system’ means the system estab-
lished under subsection (k). 
‘‘(iii) QUALITY
REPORTING
PERIOD.—The term 
‘quality reporting period’ means, with respect to a year, 
a period specified by the Secretary.’’. 
(c) MAINTENANCE OF CERTIFICATION PROGRAMS.— 
(1) IN GENERAL.—Section 1848(k)(4) of the Social Security 
Act (42 U.S.C. 1395w–4(k)(4)) is amended by inserting ‘‘or 
through a Maintenance of Certification program operated by 
a specialty body of the American Board of Medical Specialties 
that meets the criteria for such a registry’’ after ‘‘Database)’’. 
(2) EFFECTIVE DATE.—The amendment made by paragraph 
(1) shall apply for years after 2010. 
(d) INTEGRATION OF PHYSICIAN QUALITY REPORTING AND EHR 
REPORTING.—Section 1848(m) of the Social Security Act (42 U.S.C. 
1395w–4(m)) is amended by adding at the end the following new 
paragraph: 
‘‘(7) INTEGRATION OF PHYSICIAN QUALITY REPORTING AND 
EHR REPORTING.—Not later than January 1, 2012, the Secretary 
shall develop a plan to integrate reporting on quality measures 
under this subsection with reporting requirements under sub-
section (o) relating to the meaningful use of electronic health 
records. Such integration shall consist of the following: 
‘‘(A) The selection of measures, the reporting of which 
would both demonstrate— 
‘‘(i) meaningful use of an electronic health record 
for purposes of subsection (o); and 
‘‘(ii) quality of care furnished to an individual. 
‘‘(B) Such other activities as specified by the Sec-
retary.’’. 
(e) FEEDBACK.—Section 1848(m)(5) of the Social Security Act 
(42 U.S.C. 1395w–4(m)(5)) is amended by adding at the end the 
following new subparagraph: 
‘‘(H) FEEDBACK.—The Secretary shall provide timely 
feedback to eligible professionals on the performance of 
the eligible professional with respect to satisfactorily 
submitting data on quality measures under this sub-
section.’’. 
(f) APPEALS.—Such section is further amended— 
(1) in subparagraph (E), by striking ‘‘There shall’’ and 
inserting ‘‘Except as provided in subparagraph (I), there shall’’; 
and
H. R. 3590—248 
(2) by adding at the end the following new subparagraph: 
‘‘(I) INFORMAL APPEALS PROCESS.—The Secretary shall, 
by not later than January 1, 2011, establish and have 
in place an informal process for eligible professionals to 
seek a review of the determination that an eligible profes-
sional did not satisfactorily submit data on quality meas-
ures under this subsection.’’. 
SEC. 3003. IMPROVEMENTS TO THE PHYSICIAN FEEDBACK PROGRAM. 
(a) IN GENERAL.—Section 1848(n) of the Social Security Act 
(42 U.S.C. 1395w–4(n)) is amended— 
(1) in paragraph (1)— 
(A) in subparagraph (A)— 
(i) by striking ‘‘GENERAL.—The Secretary’’ and 
inserting ‘‘GENERAL.— 
‘‘(i) ESTABLISHMENT.—The Secretary’’; 
(ii) in clause (i), as added by clause (i), by striking 
‘‘the ‘Program’)’’ and all that follows through the period 
at the end of the second sentence and inserting ‘‘the 
‘Program’).’’; and 
(iii) by adding at the end the following new clauses: 
‘‘(ii) REPORTS ON RESOURCES.—The Secretary shall 
use claims data under this title (and may use other 
data) to provide confidential reports to physicians (and, 
as determined appropriate by the Secretary, to groups 
of physicians) that measure the resources involved in 
furnishing care to individuals under this title. 
‘‘(iii) INCLUSION
OF
CERTAIN
INFORMATION.—If 
determined appropriate by the Secretary, the Secretary 
may include information on the quality of care fur-
nished to individuals under this title by the physician 
(or group of physicians) in such reports.’’; and 
(B) in subparagraph (B), by striking ‘‘subparagraph 
(A)’’ and inserting ‘‘subparagraph (A)(ii)’’; 
(2) in paragraph (4)— 
(A) in the heading, by inserting ‘‘INITIAL’’ after ‘‘FOCUS’’; 
and 
(B) in the matter preceding subparagraph (A), by 
inserting ‘‘initial’’ after ‘‘focus the’’; 
(3) in paragraph (6), by adding at the end the following 
new sentence: ‘‘For adjustments for reports on utilization under 
paragraph (9), see subparagraph (D) of such paragraph.’’; and 
(4) by adding at the end the following new paragraphs: 
‘‘(9) REPORTS ON UTILIZATION.— 
‘‘(A) DEVELOPMENT OF EPISODE GROUPER.— 
‘‘(i) IN GENERAL.—The Secretary shall develop an 
episode grouper that combines separate but clinically 
related items and services into an episode of care for 
an individual, as appropriate. 
‘‘(ii) TIMELINE
FOR
DEVELOPMENT.—The episode 
grouper described in subparagraph (A) shall be devel-
oped by not later than January 1, 2012. 
‘‘(iii) PUBLIC
AVAILABILITY.—The Secretary shall 
make the details of the episode grouper described in 
subparagraph (A) available to the public. 
‘‘(iv) ENDORSEMENT.—The Secretary shall seek 
endorsement of the episode grouper described in
H. R. 3590—249 
subparagraph (A) by the entity with a contract under 
section 1890(a). 
‘‘(B) REPORTS
ON
UTILIZATION.—Effective beginning 
with 2012, the Secretary shall provide reports to physicians 
that compare, as determined appropriate by the Secretary, 
patterns of resource use of the individual physician to 
such patterns of other physicians. 
‘‘(C) ANALYSIS OF DATA.—The Secretary shall, for pur-
poses of preparing reports under this paragraph, establish 
methodologies as appropriate, such as to— 
‘‘(i) attribute episodes of care, in whole or in part, 
to physicians; 
‘‘(ii) identify appropriate physicians for purposes 
of comparison under subparagraph (B); and 
‘‘(iii) aggregate episodes of care attributed to a 
physician under clause (i) into a composite measure 
per individual. 
‘‘(D) DATA ADJUSTMENT.—In preparing reports under 
this paragraph, the Secretary shall make appropriate 
adjustments, including adjustments— 
‘‘(i) to account for differences in socioeconomic and 
demographic characteristics, ethnicity, and health 
status of individuals (such as to recognize that less 
healthy individuals may require more intensive inter-
ventions); and 
‘‘(ii) to eliminate the effect of geographic adjust-
ments in payment rates (as described in subsection 
(e)). 
‘‘(E) PUBLIC AVAILABILITY OF METHODOLOGY.—The Sec-
retary shall make available to the public— 
‘‘(i) the methodologies established under subpara-
graph (C); 
‘‘(ii) information regarding any adjustments made 
to data under subparagraph (D); and 
‘‘(iii) aggregate reports with respect to physicians. 
‘‘(F) DEFINITION OF PHYSICIAN.—In this paragraph: 
‘‘(i) IN
GENERAL.—The term ‘physician’ has the 
meaning given that term in section 1861(r)(1). 
‘‘(ii) TREATMENT OF GROUPS.—Such term includes, 
as the Secretary determines appropriate, a group of 
physicians. 
‘‘(G) LIMITATIONS
ON
REVIEW.—There shall be no 
administrative or judicial review under section 1869, sec-
tion 1878, or otherwise of the establishment of the method-
ology under subparagraph (C), including the determination 
of an episode of care under such methodology. 
‘‘(10) COORDINATION WITH OTHER VALUE-BASED PURCHASING 
REFORMS.—The Secretary shall coordinate the Program with 
the value-based payment modifier established under subsection 
(p) and, as the Secretary determines appropriate, other similar 
provisions of this title.’’. 
(b) CONFORMING AMENDMENT.—Section 1890(b) of the Social 
Security Act (42 U.S.C. 1395aaa(b)) is amended by adding at the 
end the following new paragraph: 
‘‘(6) REVIEW AND ENDORSEMENT OF EPISODE GROUPER UNDER 
THE PHYSICIAN FEEDBACK PROGRAM.—The entity shall provide 
for the review and, as appropriate, the endorsement of the
H. R. 3590—250 
episode grouper developed by the Secretary under section 
1848(n)(9)(A). Such review shall be conducted on an expedited 
basis.’’. 
SEC. 3004. QUALITY REPORTING FOR LONG-TERM CARE HOSPITALS, 
INPATIENT REHABILITATION HOSPITALS, AND HOSPICE 
PROGRAMS. 
(a) LONG-TERM CARE HOSPITALS.—Section 1886(m) of the Social 
Security Act (42 U.S.C. 1395ww(m)), as amended by section 3401(c), 
is amended by adding at the end the following new paragraph: 
‘‘(5) QUALITY REPORTING.— 
‘‘(A) REDUCTION IN UPDATE FOR FAILURE TO REPORT.— 
‘‘(i) IN GENERAL.—Under the system described in 
paragraph (1), for rate year 2014 and each subsequent 
rate year, in the case of a long-term care hospital 
that does not submit data to the Secretary in accord-
ance with subparagraph (C) with respect to such a 
rate year, any annual update to a standard Federal 
rate for discharges for the hospital during the rate 
year, and after application of paragraph (3), shall be 
reduced by 2 percentage points. 
‘‘(ii) SPECIAL
RULE.—The application of this 
subparagraph may result in such annual update being 
less than 0.0 for a rate year, and may result in payment 
rates under the system described in paragraph (1) 
for a rate year being less than such payment rates 
for the preceding rate year. 
‘‘(B) NONCUMULATIVE
APPLICATION.—Any reduction 
under subparagraph (A) shall apply only with respect to 
the rate year involved and the Secretary shall not take 
into account such reduction in computing the payment 
amount under the system described in paragraph (1) for 
a subsequent rate year. 
‘‘(C) SUBMISSION OF QUALITY DATA.—For rate year 2014 
and each subsequent rate year, each long-term care hospital 
shall submit to the Secretary data on quality measures 
specified under subparagraph (D). Such data shall be sub-
mitted in a form and manner, and at a time, specified 
by the Secretary for purposes of this subparagraph. 
‘‘(D) QUALITY MEASURES.— 
‘‘(i) IN
GENERAL.—Subject to clause (ii), any 
measure specified by the Secretary under this subpara-
graph must have been endorsed by the entity with 
a contract under section 1890(a). 
‘‘(ii) EXCEPTION.—In the case of a specified area 
or medical topic determined appropriate by the Sec-
retary for which a feasible and practical measure has 
not been endorsed by the entity with a contract under 
section 1890(a), the Secretary may specify a measure 
that is not so endorsed as long as due consideration 
is given to measures that have been endorsed or 
adopted by a consensus organization identified by the 
Secretary. 
‘‘(iii) TIME FRAME.—Not later than October 1, 2012, 
the Secretary shall publish the measures selected 
under this subparagraph that will be applicable with 
respect to rate year 2014.