I 
111TH CONGRESS 
1ST SESSION H. R. 2844 
To amend title XVIII of the Social Security Act to create a value indexing 
mechanism for the physician work component of the Medicare physician 
fee schedule. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 12, 2009 
Mr. KIND (for himself, Mr. BRALEY of Iowa, Mr. BLUMENAUER, Mr. WALZ, 
and Mr. INSLEE) introduced the following bill; which was referred to the 
Committee 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 title XVIII of the Social Security Act to create 
a value indexing mechanism for the physician work com-
ponent of the Medicare physician fee schedule. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Medicare Payment Im-
provement Act of 2009’’. 
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SEC. 2. VALUE INDEX UNDER THE MEDICARE PHYSICIAN 
FEE SCHEDULE. 
(a) IN GENERAL.—Section 1848(e)(5) of the Social 
Security Act (42 U.S.C. 1395w–4(e)) is amended by add-
ing at the end the following new paragraph: 
‘‘(6) VALUE INDEX.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
determine a value index for each fee schedule 
area. The value index shall be the ratio of the 
quality component under subparagraph (B) to 
the cost component under subparagraph (C) for 
that fee schedule area. 
‘‘(B) QUALITY COMPONENT.— 
‘‘(i) IN GENERAL.—The quality com-
ponent shall be based on a composite score 
that reflects quality measures available on 
a State or fee schedule area basis. The 
measures shall reflect health outcomes and 
health status for the Medicare population, 
patient safety, and patient satisfaction. 
The Secretary shall use the best data 
available, after consultation with the Agen-
cy for Healthcare Research and Quality 
and with private entities that compile qual-
ity data. 
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‘‘(ii) REQUIREMENT.—In establishing 
the quality component under this subpara-
graph, the Secretary shall take into ac-
count the following: 
‘‘(I) Hospital readmission rates. 
‘‘(II) Hospital emergency depart-
ment utilization for ambulatory care- 
sensitive conditions. 
‘‘(III) Hospital admissions for 
ambulatory care-sensitive conditions. 
‘‘(IV) 
Mortality 
amenable 
to 
health care. 
‘‘(V) Other items determined ap-
propriate by the Secretary. 
‘‘(iii) ESTABLISHMENT.—The quality 
component for each fee schedule area shall 
be the ratio of the quality score for such 
area to the national average quality score. 
‘‘(iv) APPLICATION.—In the case of a 
fee schedule area that is less than an en-
tire State, if available quality data is not 
sufficient to measure quality at the sub- 
State level, the quality component for a 
sub-State fee schedule area shall be the 
quality component for the entire State. 
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‘‘(C) COST COMPONENT.— 
‘‘(i) IN GENERAL.—The cost compo-
nent shall be total annual per beneficiary 
Medicare expenditures under part A and 
this part for the fee schedule area. The 
Secretary may use total per beneficiary ex-
penditures under such parts in the last two 
years of life as an alternative measure if 
the Secretary determines that such meas-
ure better takes into account severity dif-
ferences among fee schedule areas. 
‘‘(ii) 
ESTABLISHMENT.—The 
cost 
component for a fee schedule area shall be 
the ratio of the cost per beneficiary for 
such area to the national average cost per 
beneficiary.’’. 
(b) CONFORMING AMENDMENTS.—Section 1848 of 
the Social Security Act (42 U.S.C. 1395w–4) is amend-
ed— 
(1) in subparagraph (b)(1)(C), by striking ‘‘ge-
ographic’’ and inserting ‘‘geographic and value’’; and 
(2) in subsection (e)— 
(A) in paragraph (1)— 
(i) in the heading, by inserting ‘‘AND 
VALUE’’ after ‘‘GEOGRAPHIC’’; 
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(ii) in subparagraph (A), by striking 
clause (iii) and inserting the following new 
clause: 
‘‘(iii) a value index (as defined in 
paragraph (6)) applicable to physician 
work.’’; 
(iii) in subparagraph (C), by inserting 
‘‘and value’’ after ‘‘geographic’’ in the first 
sentence; 
(iv) in subparagraph (D), by striking 
‘‘physician work effort’’ and inserting 
‘‘value’’; 
(v) by striking subparagraph (E); and 
(vi) by striking subparagraph (G); 
(B) by striking paragraph (2) and insert-
ing the following new paragraph: 
‘‘(2) COMPUTATION
OF
GEOGRAPHIC
AND 
VALUE ADJUSTMENT FACTOR.—For purposes of sub-
section (b)(1)(C), for all physicians’ services for each 
fee schedule area the Secretary shall establish a geo-
graphic and value adjustment factor equal to the 
sum of the geographic cost-of-practice adjustment 
factor (specified in paragraph (3)), the geographic 
malpractice adjustment factor (specified in para-
graph (4)), and the value adjustment factor (speci-
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fied in paragraph (5)) for the service and the area.’’; 
and 
(C) by striking paragraph (5) and insert-
ing the following new paragraph: 
‘‘(5) PHYSICIAN
WORK
VALUE
ADJUSTMENT 
FACTOR.—For purposes of paragraph (2), the ‘phy-
sician work value adjustment factor’ for a service for 
a fee schedule area, is the product of— 
‘‘(A) the proportion of the total relative 
value for the service that reflects the relative 
value units for the work component; and 
‘‘(B) the value index score for the area, 
based on the value index established under 
paragraph (6).’’. 
(c) AVAILABILITY OF QUALITY COMPONENT PRIOR 
TO IMPLEMENTATION.—The Secretary of Health and 
Human Services shall make the quality component de-
scribed in section 1848(c)(6)(B) of the Social Security 
Act, as added by subsection (a), for each fee schedule area 
available to the public by not later than January 1, 2011. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to the Medicare physician fee 
schedule for 2012 and each subsequent year. 
Æ 
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