article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Medicare Payment Improvement Act of 2009''. 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 adding at the end the following new paragraph: ``(6) Value index.-- ``(A) In general.--The Secretary shall determine a value index for each hospital referral area (as defined by the Secretary). The value index shall be the ratio of the quality component under subparagraph (B) to the cost component under subparagraph (C) for that hospital referral area. ``(B) Quality component.-- ``(i) In general.--The quality component shall be based on a composite score that reflects quality measures available on a State or hospital referral area (as so defined) 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 Agency for Healthcare Research and Quality and with private entities that compile quality data. ``(ii) Advisory group.-- ``(I) In general.--Not later than 60 days after the date of enactment of the Medicare Payment Improvement Act of 2009, the Secretary shall establish a group of experts and stakeholders to make consensus recommendations to the Secretary regarding development of the quality component. The membership of the advisory group shall at least reflect providers, purchasers, health plans, researchers, relevant Federal agencies, and individuals with technical expertise on health care quality. ``(II) Duties.--In the development of recommendations with respect to the quality component, the group established under subclause (I) shall consider at least the following areas: ``(aa) High variation and high cost per capita utilization of resources, including rates of hospitalizations, number of visits and subspecialty referrals, and number of procedures (as determined by data under this title). ``(bb) Health outcomes and functional status of patients. ``(cc) The continuity, management, and coordination of health care and care transitions, including episodes of care, for patients across the continuum of providers, health care settings, and health plans. ``(dd) Patient, caregiver, and authorized representative experience, quality and relevance of information provided to patients, caregivers, and authorized representatives, and use of information by patients, caregivers, and authorized representatives to inform decision making. ``(ee) The safety, effectiveness, and timeliness of care. ``(ff) The appropriate use of health care resources and services. ``(gg) Other items determined appropriate by the Secretary. ``(iii) Requirement.--In establishing the quality component under this subparagraph, the Secretary shall-- ``(I) take into account the recommendations of the group established under clause (ii)(I); and ``(II) provide for an open and transparent process for the activities conducted pursuant to the convening of such group with respect to the development of the quality component. ``(iv) Establishment.--The quality component for each hospital referral area (as so defined) shall be the ratio of the quality score for such area to the national average quality score. ``(v) Quality baseline.--If the quality component for a hospital referral area (as so defined) does not rank in the top 25th percentile as compared to the national average (as determined by the Secretary) and the amount of reimbursement for services under this section is greater than the amount of reimbursement for such services that would have applied under this section if the amendments made by section 2 of the Medicare Payment Improvement Act of 2009 had not been enacted, this section shall be applied as if such amendments had not been enacted. ``(vi) Application.--In the case of a hospital referral area (as so defined) that is less than an entire State, if available quality data is not sufficient to measure quality at the sub-State level, the quality component for a sub-State hospital referral area shall be the quality component for the entire State. ``(C) Cost component.-- ``(i) In general.--The cost component shall be total annual per beneficiary Medicare expenditures under part A and this part for the hospital referral area (as so defined). The Secretary may use total per beneficiary expenditures under such parts in the last two years of life as an alternative measure if the Secretary determines that such measure better takes into account severity differences among hospital referral areas. ``(ii) Establishment.--The cost component for a hospital referral area (as so defined) 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 amended-- (1) in subsection (b)(1)(C), by striking ``geographic'' and inserting ``geographic and value''; and (2) in subsection (e)-- (A) in paragraph (1)-- (i) in the heading, by inserting ``and value'' after ``geographic''; (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 inserting the following new paragraph: ``(2) Computation of geographic and value adjustment factor.--For purposes of subsection (b)(1)(C), for all physicians' services for each hospital referral area (as defined by the Secretary) the Secretary shall establish a geographic 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 paragraph (4)), and the value adjustment factor (specified in paragraph (5)) for the service and the area.''; and (C) by striking paragraph (5) and inserting the following new paragraph: ``(5) Physician work value adjustment factor.--For purposes of paragraph (2), the `physician work value adjustment factor' for a service for a hospital referral area (as defined by the Secretary), 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 described in section 1848(c)(6)(B) of the Social Security Act, as added by subsection (a), for each hospital referral area (as defined by the Secretary) available to the public by not later than July 1, 2011. (d) Effective Date.--Subject to subsection (e), the amendments made by this section shall apply to the Medicare physician fee schedule for 2012 and each subsequent year. (e) Transition.--Notwithstanding the amendments made by the preceding provisions of this section, the Secretary of Health and Human Services shall provide for an appropriate transition to the amendments made by this section. Under such transition, in the case of payments under such fee schedule for services furnished during-- (1) 2012, 25 percent of such payments shall be based on the amount of payment that would have applied to the services if such amendments had not been enacted and 75 percent of such payment shall be based on the amount of payment that would have applied to the services if such amendments had been fully implemented; (2) 2013, 50 percent of such payment shall be based on the amount of payment that would have applied to the services if such amendments had not been enacted and 50 percent of such payment shall be based on the amount of payment that would have applied to the services if such amendments had been fully implemented; and (3) 2014 and subsequent years, 100 percent of such payment shall be based on the amount of payment that is applicable under such amendments.
summary: Medicare Payment Improvement Act of 2009 - Amends title XVIII (Medicare) of the Social Security Act to require the Secretary of Health and Human Services (HHS) to determine a value index for the physician work component for each Medicare hospital referral area.