104 
(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 
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-
105 
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) 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 
Merit-based Incentive Payment System under sub-
section (q) and alternative payment models under
106 
section 1833(z), the Secretary shall undertake the 
steps described in the succeeding provisions of this 
subsection. 
‘‘(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 180 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 
120 days after the day the Secretary posts the 
list pursuant to subparagraph (B), suggestions 
from physician specialty societies, applicable
107 
practitioner organizations, and other stake-
holders for episode groups in addition to those 
posted pursuant to such subparagraph, and 
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 
1⁄2 of expenditures under parts A and 
B (with such target increasing over 
time as appropriate); and 
‘‘(II) 
assign 
codes 
to 
such 
groups. 
‘‘(ii) CARE EPISODE GROUPS.—In es-
tablishing the care episode groups under
108 
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 
care, such as the clinical conditions or 
diagnoses, whether or not inpatient 
hospitalization occurs, and the prin-
cipal procedures or services 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 a medical visit, such as 
the patient’s combination of chronic 
conditions, current health status, and 
recent significant history (such as 
hospitalization and major surgery dur-
ing a previous period, such as 3 
months); and
109 
‘‘(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). 
‘‘(E) DRAFT CARE EPISODE AND PATIENT 
CONDITION
GROUPS
AND
CLASSIFICATION 
CODES.—Not later than 270 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 120 
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
110 
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. 
‘‘(G) OPERATIONAL
LIST
OF
CARE
EPI-
SODE AND PATIENT CONDITION GROUPS AND 
CODES.—Not later than 270 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 
2018), 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
111 
(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. 
‘‘(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),
112 
such as a physician or applicable practitioner 
who— 
‘‘(i) considers themself to have the 
primary responsibility for the general and 
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
113 
one year 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-
lationship categories and codes developed under 
subparagraph (B). 
‘‘(D) STAKEHOLDER
INPUT.—The Sec-
retary shall seek, through the date that is 120 
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, web-based fo-
rums, or other appropriate mechanisms. 
‘‘(E) OPERATIONAL LIST OF PATIENT RE-
LATIONSHIP
CATEGORIES
AND
CODES.—Not 
later than 240 days after the end of the com-
ment period described in subparagraph (D),
114 
taking into account the comments received 
under such subparagraph, the Secretary shall 
post on the Internet website of the Centers for 
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 
2018), 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, 2018, shall, 
as determined appropriate by the Secretary, in-
clude—
115 
‘‘(A) applicable codes established under 
paragraphs (2) and (3); and 
‘‘(B) the national provider identifier of the 
ordering physician or applicable practitioner (if 
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, as the Secretary 
determines appropriate— 
‘‘(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
116 
‘‘(iii) conduct an analysis of resource 
use (with respect to care episodes and pa-
tient condition groups of such patients). 
‘‘(B) ANALYSIS OF PATIENTS OF PHYSI-
CIANS AND PRACTITIONERS.—In conducting the 
analysis described in subparagraph (A)(iii) with 
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.
117 
‘‘(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 
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
118 
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, web-based forums, or 
other appropriate mechanisms. 
‘‘(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-
119 
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 subsection: 
‘‘(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, 2019, 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.’’.
120 
SEC. 102. 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 (f) of sec-
tion 101, is further amended by inserting at the end the 
following new subsection: 
‘‘(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, 2016, 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