
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document affected by Public Law 106-554 Section 1(a)(6)[104(a)]]
[Document affected by Public Law 106-554 Section 1(a)(6)[542]]
[CITE: 42USC1395w-4]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                       CHAPTER 7--SOCIAL SECURITY
 
        SUBCHAPTER XVIII--HEALTH INSURANCE FOR AGED AND DISABLED
 
 Part B--Supplementary Medical Insurance Benefits for Aged and Disabled
 
Sec. 1395w-4. Payment for physicians' services


(a) Payment based on fee schedule

                           (1) In general

        Effective for all physicians' services (as defined in subsection 
    (j)(3) of this section) furnished under this part during a year 
    (beginning with 1992) for which payment is otherwise made on the 
    basis of a reasonable charge or on the basis of a fee schedule under 
    section 1395m(b) of this title, payment under this part shall 
    instead be based on the lesser of--
            (A) the actual charge for the service, or
            (B) subject to the succeeding provisions of this subsection, 
        the amount determined under the fee schedule established under 
        subsection (b) of this section for services furnished during 
        that year (in this subsection referred to as the ``fee schedule 
        amount'').

                 (2) Transition to full fee schedule

        (A) Limiting reductions and increases to 15 percent in 1992

            (i) Limit on increase

                In the case of a service in a fee schedule area (as 
            defined in subsection (j)(2) of this section) for which the 
            adjusted historical payment basis (as defined in 
            subparagraph (D)) is less than 85 percent of the fee 
            schedule amount for services furnished in 1992, there shall 
            be substituted for the fee schedule amount an amount equal 
            to the adjusted historical payment basis plus 15 percent of 
            the fee schedule amount otherwise established (without 
            regard to this paragraph).
            (ii) Limit in reduction

                In the case of a service in a fee schedule area for 
            which the adjusted historical payment basis exceeds 115 
            percent of the fee schedule amount for services furnished in 
            1992, there shall be substituted for the fee schedule amount 
            an amount equal to the adjusted historical payment basis 
            minus 15 percent of the fee schedule amount otherwise 
            established (without regard to this paragraph).

        (B) Special rule for 1993, 1994, and 1995

            If a physicians' service in a fee schedule area is subject 
        to the provisions of subparagraph (A) in 1992, for physicians' 
        services furnished in the area--
                (i) during 1993, there shall be substituted for the fee 
            schedule amount an amount equal to the sum of--
                    (I) 75 percent of the fee schedule amount determined 
                under subparagraph (A), adjusted by the update 
                established under subsection (d)(3) of this section for 
                1993, and
                    (II) 25 percent of the fee schedule amount 
                determined under paragraph (1) for 1993 without regard 
                to this paragraph;

                (ii) during 1994, there shall be substituted for the fee 
            schedule amount an amount equal to the sum of--
                    (I) 67 percent of the fee schedule amount determined 
                under clause (i), adjusted by the update established 
                under subsection (d)(3) of this section for 1994 and as 
                adjusted under subsection (c)(2)(F)(ii) of this section 
                and under section 13515(b) of the Omnibus Budget 
                Reconciliation Act of 1993, and
                    (II) 33 percent of the fee schedule amount 
                determined under paragraph (1) for 1994 without regard 
                to this paragraph; and

                (iii) during 1995, there shall be substituted for the 
            fee schedule amount an amount equal to the sum of--
                    (I) 50 percent of the fee schedule amount determined 
                under clause (ii) adjusted by the update established 
                under subsection (d)(3) of this section for 1995, and
                    (II) 50 percent of the fee schedule amount 
                determined under paragraph (1) for 1995 without regard 
                to this paragraph.

        (C) Special rule for anesthesia and radiology services

            With respect to physicians' services which are anesthesia 
        services, the Secretary shall provide for a transition in the 
        same manner as a transition is provided for other services under 
        subparagraph (B). With respect to radiology services, ``109 
        percent'' and ``9 percent'' shall be substituted for ``115 
        percent'' and ``15 percent'', respectively, in subparagraph 
        (A)(ii).

        (D) ``Adjusted historical payment basis'' defined

            (i) In general

                In this paragraph, the term ``adjusted historical 
            payment basis'' means, with respect to a physicians' service 
            furnished in a fee schedule area, the weighted average 
            prevailing charge applied in the area for the service in 
            1991 (as determined by the Secretary without regard to 
            physician specialty and as adjusted to reflect payments for 
            services with customary charges below the prevailing charge 
            or other payment limitations imposed by law or regulation) 
            adjusted by the update established under subsection (d)(3) 
            of this section for 1992.
            (ii) Application to radiology services

                In applying clause (i) in the case of physicians' 
            services which are radiology services (including radiologist 
            services, as defined in section 1395m(b)(6) of this title), 
            but excluding nuclear medicine services that are subject to 
            section 6105(b) of the Omnibus Budget Reconciliation Act of 
            1989, there shall be substituted for the weighted average 
            prevailing charge the amount provided under the fee schedule 
            established for the service for the fee schedule area under 
            section 1395m(b) of this title.
            (iii) Nuclear medicine services

                In applying clause (i) in the case of physicians' 
            services which are nuclear medicine services, there shall be 
            substituted for the weighted average prevailing charge the 
            amount provided under section 6105(b) of the Omnibus Budget 
            Reconciliation Act of 1989.

      (3) Incentives for participating physicians and suppliers

        In applying paragraph (1)(B) in the case of a nonparticipating 
    physician or a nonparticipating supplier or other person, the fee 
    schedule amount shall be 95 percent of such amount otherwise applied 
    under this subsection (without regard to this paragraph). In the 
    case of physicians' services (including services which the Secretary 
    excludes pursuant to subsection (j)(3) of this section) of a 
    nonparticipating physician, supplier, or other person for which 
    payment is made under this part on a basis other than the fee 
    schedule amount, the payment shall be based on 95 percent of the 
    payment basis for such services furnished by a participating 
    physician, supplier, or other person.

               (4) Special rule for medical direction

        (A) In general

            With respect to physicians' services furnished on or after 
        January 1, 1994, and consisting of medical direction of two, 
        three, or four concurrent anesthesia cases, the fee schedule 
        amount to be applied shall be equal to one-half of the amount 
        described in subparagraph (B).

        (B) Amount

            The amount described in this subparagraph, for a physician's 
        medical direction of the performance of anesthesia services, is 
        the following percentage of the fee schedule amount otherwise 
        applicable under this section if the anesthesia services were 
        personally performed by the physician alone:
                (i) For services furnished during 1994, 120 percent.
                (ii) For services furnished during 1995, 115 percent.
                (iii) For services furnished during 1996, 110 percent.
                (iv) For services furnished during 1997, 105 percent.
                (v) For services furnished after 1997, 100 percent.

(b) Establishment of fee schedules

                           (1) In general

        Before November 1 of the preceding year, for each year beginning 
    with 1998, the Secretary shall establish, by regulation, fee 
    schedules that establish payment amounts for all physicians' 
    services furnished in all fee schedule areas (as defined in 
    subsection (j)(2) of this section) for the year. Except as provided 
    in paragraph (2), each such payment amount for a service shall be 
    equal to the product of--
            (A) the relative value for the service (as determined in 
        subsection (c)(2) of this section),
            (B) the conversion factor (established under subsection (d) 
        of this section) for the year, and
            (C) the geographic adjustment factor (established under 
        subsection (e)(2) of this section) for the service for the fee 
        schedule area.

     (2) Treatment of radiology services and anesthesia services

        (A) Radiology services

            With respect to radiology services (including radiologist 
        services, as defined in section 1395m(b)(6) of this title), the 
        Secretary shall base the relative values on the relative value 
        scale developed under section 1395m(b)(1)(A) of this title, with 
        appropriate modifications of the relative values to assure that 
        the relative values established for radiology services which are 
        similar or related to other physicians' services are consistent 
        with the relative values established for those similar or 
        related services.

        (B) Anesthesia services

            In establishing the fee schedule for anesthesia services for 
        which a relative value guide has been established under section 
        4048(b) of the Omnibus Budget Reconciliation Act of 1987, the 
        Secretary shall use, to the extent practicable, such relative 
        value guide, with appropriate adjustment of the conversion 
        factor, in a manner to assure that the fee schedule amounts for 
        anesthesia services are consistent with the fee schedule amounts 
        for other services determined by the Secretary to be of 
        comparable value. In applying the previous sentence, the 
        Secretary shall adjust the conversion factor by geographic 
        adjustment factors in the same manner as such adjustment is made 
        under paragraph (1)(C).

        (C) Consultation

            The Secretary shall consult with the Physician Payment 
        Review Commission and organizations representing physicians or 
        suppliers who furnish radiology services and anesthesia services 
        in applying subparagraphs (A) and (B).

        (3) Treatment of interpretation of electrocardiograms

        The Secretary--
            (A) shall make separate payment under this section for the 
        interpretation of electrocardiograms performed or ordered to be 
        performed as part of or in conjunction with a visit to or a 
        consultation with a physician, and
            (B) shall adjust the relative values established for visits 
        and consultations under subsection (c) of this section so as not 
        to include relative value units for interpretations of 
        electrocardiograms in the relative value for visits and 
        consultations.

(c) Determination of relative values for physicians' services

        (1) Division of physicians' services into components

        In this section, with respect to a physicians' service:

        (A) ``Work component'' defined

            The term ``work component'' means the portion of the 
        resources used in furnishing the service that reflects physician 
        time and intensity in furnishing the service. Such portion 
        shall--
                (i) include activities before and after direct patient 
            contact, and
                (ii) be defined, with respect to surgical procedures, to 
            reflect a global definition including pre-operative and 
            post-operative physicians' services.

        (B) ``Practice expense component'' defined

            The term ``practice expense component'' means the portion of 
        the resources used in furnishing the service that reflects the 
        general categories of expenses (such as office rent and wages of 
        personnel, but excluding malpractice expenses) comprising 
        practice expenses.

        (C) ``Malpractice component'' defined

            The term ``malpractice component'' means the portion of the 
        resources used in furnishing the service that reflects 
        malpractice expenses in furnishing the service.

                (2) Determination of relative values

        (A) In general

            (i) Combination of units for components

                The Secretary shall develop a methodology for combining 
            the work, practice expense, and malpractice relative value 
            units, determined under subparagraph (C), for each service 
            in a manner to produce a single relative value for that 
            service. Such relative values are subject to adjustment 
            under subparagraph (F)(i) and section 13515(b) of the 
            Omnibus Budget Reconciliation Act of 1993.
            (ii) Extrapolation

                The Secretary may use extrapolation and other techniques 
            to determine the number of relative value units for 
            physicians' services for which specific data are not 
            available and shall take into account recommendations of the 
            Physician Payment Review Commission and the results of 
            consultations with organizations representing physicians who 
            provide such services.

        (B) Periodic review and adjustments in relative values

            (i) Periodic review

                The Secretary, not less often than every 5 years, shall 
            review the relative values established under this paragraph 
            for all physicians' services.
            (ii) Adjustments

                (I) In general

                    The Secretary shall, to the extent the Secretary 
                determines to be necessary and subject to subclause 
                (II), adjust the number of such units to take into 
                account changes in medical practice, coding changes, new 
                data on relative value components, or the addition of 
                new procedures. The Secretary shall publish an 
                explanation of the basis for such adjustments.
                (II) Limitation on annual adjustments

                    The adjustments under subclause (I) for a year may 
                not cause the amount of expenditures under this part for 
                the year to differ by more than $20,000,000 from the 
                amount of expenditures under this part that would have 
                been made if such adjustments had not been made.
            (iii) Consultation

                The Secretary, in making adjustments under clause (ii), 
            shall consult with the Medicare Payment Advisory Commission 
            and organizations representing physicians.

        (C) Computation of relative value units for components

            For purposes of this section for each physicians' service--
            (i) Work relative value units

                The Secretary shall determine a number of work relative 
            value units for the service based on the relative resources 
            incorporating physician time and intensity required in 
            furnishing the service.
            (ii) Practice expense relative value units

                The Secretary shall determine a number of practice 
            expense relative value units for the service for years 
            before 1999 equal to the product of--
                    (I) the base allowed charges (as defined in 
                subparagraph (D)) for the service, and
                    (II) the practice expense percentage for the service 
                (as determined under paragraph (3)(C)(ii)),

          and for years beginning with 1999 based on the relative 
            practice expense resources involved in furnishing the 
            service. For 1999, such number of units shall be determined 
            based 75 percent on such product and based 25 percent on the 
            relative practice expense resources involved in furnishing 
            the service. For 2000, such number of units shall be 
            determined based 50 percent on such product and based 50 
            percent on such relative practice expense resources. For 
            2001, such number of units shall be determined based 25 
            percent on such product and based 75 percent on such 
            relative practice expense resources. For a subsequent year, 
            such number of units shall be determined based entirely on 
            such relative practice expense resources.
            (iii) Malpractice relative value units

                The Secretary shall determine a number of malpractice 
            relative value units for the service for years before 2000 
            equal to the product of--
                    (I) the base allowed charges (as defined in 
                subparagraph (D)) for the service, and
                    (II) the malpractice percentage for the service (as 
                determined under paragraph (3)(C)(iii)),

          and for years beginning with 2000 based on the malpractice 
            expense resources involved in furnishing the service.

        (D) ``Base allowed charges'' defined

            In this paragraph, the term ``base allowed charges'' means, 
        with respect to a physician's service, the national average 
        allowed charges for the service under this part for services 
        furnished during 1991, as estimated by the Secretary using the 
        most recent data available.

        (E) Reduction in practice expense relative value units for 
                certain services

            (i) In general

                Subject to clause (ii), the Secretary shall reduce the 
            practice expense relative value units applied to services 
            described in clause (iii) furnished in--
                    (I) 1994, by 25 percent of the number by which the 
                number of practice expense relative value units 
                (determined for 1994 without regard to this 
                subparagraph) exceeds the number of work relative value 
                units determined for 1994,
                    (II) 1995, by an additional 25 percent of such 
                excess, and
                    (III) 1996, by an additional 25 percent of such 
                excess.
            (ii) Floor on reductions

                The practice expense relative value units for a 
            physician's service shall not be reduced under this 
            subparagraph to a number less than 128 percent of the number 
            of work relative value units.
            (iii) Services covered

                For purposes of clause (i), the services described in 
            this clause are physicians' services that are not described 
            in clause (iv) and for which--
                    (I) there are work relative value units, and
                    (II) the number of practice expense relative value 
                units (determined for 1994) exceeds 128 percent of the 
                number of work relative value units (determined for such 
                year).
            (iv) Excluded services

                For purposes of clause (iii), the services described in 
            this clause are services which the Secretary determines at 
            least 75 percent of which are provided under this subchapter 
            in an office setting.

        (F) Budget neutrality adjustments

            The Secretary--
                (i) shall reduce the relative values for all services 
            (other than anesthesia services) established under this 
            paragraph (and, in the case of anesthesia services, the 
            conversion factor established by the Secretary for such 
            services) by such percentage as the Secretary determines to 
            be necessary so that, beginning in 1996, the amendment made 
            by section 13514(a) of the Omnibus Budget Reconciliation Act 
            of 1993 would not result in expenditures under this section 
            that exceed the amount of such expenditures that would have 
            been made if such amendment had not been made, and
                (ii) shall reduce the amounts determined under 
            subsection (a)(2)(B)(ii)(I) of this section by such 
            percentage as the Secretary determines to be required to 
            assure that, taking into account the reductions made under 
            clause (i), the amendment made by section 13514(a) of the 
            Omnibus Budget Reconciliation Act of 1993 would not result 
            in expenditures under this section in 1994 that exceed the 
            amount of such expenditures that would have been made if 
            such amendment had not been made.

        (G) Adjustments in relative value units for 1998

            (i) In general

                The Secretary shall--
                    (I) subject to clauses (iv) and (v), reduce the 
                practice expense relative value units applied to any 
                services described in clause (ii) furnished in 1998 to a 
                number equal to 110 percent of the number of work 
                relative value units, and
                    (II) increase the practice expense relative value 
                units for office visit procedure codes during 1998 by a 
                uniform percentage which the Secretary estimates will 
                result in an aggregate increase in payments for such 
                services equal to the aggregate decrease in payments by 
                reason of subclause (I).
            (ii) Services covered

                For purposes of clause (i), the services described in 
            this clause are physicians' services that are not described 
            in clause (iii) and for which--
                    (I) there are work relative value units, and
                    (II) the number of practice expense relative value 
                units (determined for 1998) exceeds 110 percent of the 
                number of work relative value units (determined for such 
                year).
            (iii) Excluded services

                For purposes of clause (ii), the services described in 
            this clause are services which the Secretary determines at 
            least 75 percent of which are provided under this subchapter 
            in an office setting.
            (iv) Limitation on aggregate reallocation

                If the application of clause (i)(I) would result in an 
            aggregate amount of reductions under such clause in excess 
            of $390,000,000, such clause shall be applied by 
            substituting for 110 percent such greater percentage as the 
            Secretary estimates will result in the aggregate amount of 
            such reductions equaling $390,000,000.
            (v) No reduction for certain services

                Practice expense relative value units for a procedure 
            performed in an office or in a setting out of an office 
            shall not be reduced under clause (i) if the in-office or 
            out-of-office practice expense relative value, respectively, 
            for the procedure would increase under the proposed rule on 
            resource-based practice expenses issued by the Secretary on 
            June 18, 1997 (62 Federal Register 33158 et seq.).

                      (3) Component percentages

        For purposes of paragraph (2), the Secretary shall determine a 
    work percentage, a practice expense percentage, and a malpractice 
    percentage for each physician's service as follows:

        (A) Division of services by specialty

            For each physician's service or class of physicians' 
        services, the Secretary shall determine the average percentage 
        of each such service or class of services that is performed, 
        nationwide, under this part by physicians in each of the 
        different physician specialties (as identified by the 
        Secretary).

        (B) Division of specialty by component

            The Secretary shall determine the average percentage 
        division of resources, among the work component, the practice 
        expense component, and the malpractice component, used by 
        physicians in each of such specialties in furnishing physicians' 
        services. Such percentages shall be based on national data that 
        describe the elements of physician practice costs and revenues, 
        by physician specialty. The Secretary may use extrapolation and 
        other techniques to determine practice costs and revenues for 
        specialties for which adequate data are not available.

        (C) Determination of component percentages

            (i) Work percentage

                The work percentage for a service (or class of services) 
            is equal to the sum (for all physician specialties) of--
                    (I) the average percentage division for the work 
                component for each physician specialty (determined under 
                subparagraph (B)), multiplied by
                    (II) the proportion (determined under subparagraph 
                (A)) of such service (or services) performed by 
                physicians in that specialty.
            (ii) Practice expense percentage

                For years before 2002, the practice expense percentage 
            for a service (or class of services) is equal to the sum 
            (for all physician specialties) of--
                    (I) the average percentage division for the practice 
                expense component for each physician specialty 
                (determined under subparagraph (B)), multiplied by
                    (II) the proportion (determined under subparagraph 
                (A)) of such service (or services) performed by 
                physicians in that specialty.
            (iii) Malpractice percentage

                For years before 1999, the malpractice percentage for a 
            service (or class of services) is equal to the sum (for all 
            physician specialties) of--
                    (I) the average percentage division for the 
                malpractice component for each physician specialty 
                (determined under subparagraph (B)), multiplied by
                    (II) the proportion (determined under subparagraph 
                (A)) of such service (or services) performed by 
                physicians in that specialty.

        (D) Periodic recomputation

            The Secretary may, from time to time, provide for the 
        recomputation of work percentages, practice expense percentages, 
        and malpractice percentages determined under this paragraph.

                       (4) Ancillary policies

        The Secretary may establish ancillary policies (with respect to 
    the use of modifiers, local codes, and other matters) as may be 
    necessary to implement this section.

                             (5) Coding

        The Secretary shall establish a uniform procedure coding system 
    for the coding of all physicians' services. The Secretary shall 
    provide for an appropriate coding structure for visits and 
    consultations. The Secretary may incorporate the use of time in the 
    coding for visits and consultations. The Secretary, in establishing 
    such coding system, shall consult with the Physician Payment Review 
    Commission and other organizations representing physicians.

                  (6) No variation for specialists

        The Secretary may not vary the conversion factor or the number 
    of relative value units for a physicians' service based on whether 
    the physician furnishing the service is a specialist or based on the 
    type of specialty of the physician.

(d) Conversion factors

                          (1) Establishment

        (A) In general

            The conversion factor for each year shall be the conversion 
        factor established under this subsection for the previous year 
        (or, in the case of 1992, specified in subparagraph (B)) 
        adjusted by the update (established under paragraph (3)) for the 
        year involved (for years before 2001) and, for years beginning 
        with 2001, multiplied by the update (established under paragraph 
        (4)) for the year involved.

        (B) Special provision for 1992

            For purposes of subparagraph (A), the conversion factor 
        specified in this subparagraph is a conversion factor 
        (determined by the Secretary) which, if this section were to 
        apply during 1991 using such conversion factor, would result in 
        the same aggregate amount of payments under this part for 
        physicians' services as the estimated aggregate amount of the 
        payments under this part for such services in 1991.

        (C) Special rules for 1998

            Except as provided in subparagraph (D), the single 
        conversion factor for 1998 under this subsection shall be the 
        conversion factor for primary care services for 1997, increased 
        by the Secretary's estimate of the weighted average of the three 
        separate updates that would otherwise occur were it not for the 
        enactment of chapter 1 of subtitle F of title IV of the Balanced 
        Budget Act of 1997.

        (D) Special rules for anesthesia services

            The separate conversion factor for anesthesia services for a 
        year shall be equal to 46 percent of the single conversion 
        factor established for other physicians' services, except as 
        adjusted for changes in work, practice expense, or malpractice 
        relative value units.

        (E) Publication and dissemination of information

            The Secretary shall--
                (i) cause to have published in the Federal Register not 
            later than November 1 of each year (beginning with 2000) the 
            conversion factor which will apply to physicians' services 
            for the succeeding year, the update determined under 
            paragraph (4) for such succeeding year, and the allowed 
            expenditures under such paragraph for such succeeding year; 
            and
                (ii) make available to the Medicare Payment Advisory 
            Commission and the public by March 1 of each year (beginning 
            with 2000) an estimate of the sustainable growth rate and of 
            the conversion factor which will apply to physicians' 
            services for the succeeding year and data used in making 
            such estimate.

     (2) Repealed. Pub. L. 105-33, title IV, Sec. 4502(b), Aug. 
                           5, 1997, 111 Stat. 433

                    (3) Update for 1999 and 2000

        (A) In general

            Unless otherwise provided by law, subject to subparagraph 
        (D) and the budget-neutrality factor determined by the Secretary 
        under subsection (c)(2)(B)(ii) of this section, the update to 
        the single conversion factor established in paragraph (1)(C) for 
        1999 and 2000 is equal to the product of--
                (i) 1 plus the Secretary's estimate of the percentage 
            increase in the MEI (as defined in section 1395u(i)(3) of 
            this title) for the year (divided by 100), and
                (ii) 1 plus the Secretary's estimate of the update 
            adjustment factor for the year (divided by 100),

        minus 1 and multiplied by 100.

        (B) Update adjustment factor

            For purposes of subparagraph (A)(ii), the ``update 
        adjustment factor'' for a year is equal (as estimated by the 
        Secretary) to--
                (i) the difference between (I) the sum of the allowed 
            expenditures for physicians' services (as determined under 
            subparagraph (C)) for the period beginning April 1, 1997, 
            and ending on March 31 of the year involved, and (II) the 
            amount of actual expenditures for physicians' services 
            furnished during the period beginning April 1, 1997, and 
            ending on March 31 of the preceding year; divided by
                (ii) the actual expenditures for physicians' services 
            for the 12-month period ending on March 31 of the preceding 
            year, increased by the sustainable growth rate under 
            subsection (f) of this section for the fiscal year which 
            begins during such 12-month period.

        (C) Determination of allowed expenditures

            For purposes of this paragraph and paragraph (4), the 
        allowed expenditures for physicians' services for the 12-month 
        period ending with March 31 of--
                (i) 1997 is equal to the actual expenditures for 
            physicians' services furnished during such 12-month period, 
            as estimated by the Secretary; or
                (ii) a subsequent year is equal to the allowed 
            expenditures for physicians' services for the previous year, 
            increased by the sustainable growth rate under subsection 
            (f) of this section for the fiscal year which begins during 
            such 12-month period.

        (D) Restriction on variation from medicare economic index

            Notwithstanding the amount of the update adjustment factor 
        determined under subparagraph (B) for a year, the update in the 
        conversion factor under this paragraph for the year may not be--
                (i) greater than 100 times the following amount: (1.03 + 
            (MEI percentage/100)) -1; or
                (ii) less than 100 times the following amount: (0.93 + 
            (MEI percentage/100)) -1,

        where ``MEI percentage'' means the Secretary's estimate of the 
        percentage increase in the MEI (as defined in section 
        1395u(i)(3) of this title) for the year involved.

              (4) Update for years beginning with 2001

        (A) In general

            Unless otherwise provided by law, subject to the budget-
        neutrality factor determined by the Secretary under subsection 
        (c)(2)(B)(ii) of this section and subject to adjustment under 
        subparagraph (F), the update to the single conversion factor 
        established in paragraph (1)(C) for a year beginning with 2001 
        is equal to the product of--
                (i) 1 plus the Secretary's estimate of the percentage 
            increase in the MEI (as defined in section 1395u(i)(3) of 
            this title) for the year (divided by 100); and
                (ii) 1 plus the Secretary's estimate of the update 
            adjustment factor under subparagraph (B) for the year.

        (B) Update adjustment factor

            For purposes of subparagraph (A)(ii), subject to 
        subparagraph (D), the ``update adjustment factor'' for a year is 
        equal (as estimated by the Secretary) to the sum of the 
        following:
            (i) Prior year adjustment component

                An amount determined by--
                    (I) computing the difference (which may be positive 
                or negative) between the amount of the allowed 
                expenditures for physicians' services for the prior year 
                (as determined under subparagraph (C)) and the amount of 
                the actual expenditures for such services for that year;
                    (II) dividing that difference by the amount of the 
                actual expenditures for such services for that year; and
                    (III) multiplying that quotient by 0.75.
            (ii) Cumulative adjustment component

                An amount determined by--
                    (I) computing the difference (which may be positive 
                or negative) between the amount of the allowed 
                expenditures for physicians' services (as determined 
                under subparagraph (C)) from April 1, 1996, through the 
                end of the prior year and the amount of the actual 
                expenditures for such services during that period;
                    (II) dividing that difference by actual expenditures 
                for such services for the prior year as increased by the 
                sustainable growth rate under subsection (f) of this 
                section for the year for which the update adjustment 
                factor is to be determined; and
                    (III) multiplying that quotient by 0.33.

        (C) Determination of allowed expenditures

            For purposes of this paragraph:
            (i) Period up to April 1, 1999

                The allowed expenditures for physicians' services for a 
            period before April 1, 1999, shall be the amount of the 
            allowed expenditures for such period as determined under 
            paragraph (3)(C).
            (ii) Transition to calendar year allowed 
                    expenditures

                Subject to subparagraph (E), the allowed expenditures 
            for--
                    (I) the 9-month period beginning April 1, 1999, 
                shall be the Secretary's estimate of the amount of the 
                allowed expenditures that would be permitted under 
                paragraph (3)(C) for such period; and
                    (II) the year of 1999, shall be the Secretary's 
                estimate of the amount of the allowed expenditures that 
                would be permitted under paragraph (3)(C) for such year.
            (iii) Years beginning with 2000

                The allowed expenditures for a year (beginning with 
            2000) is equal to the allowed expenditures for physicians' 
            services for the previous year, increased by the sustainable 
            growth rate under subsection (f) of this section for the 
            year involved.

        (D) Restriction on update adjustment factor

            The update adjustment factor determined under subparagraph 
        (B) for a year may not be less than -0.07 or greater than 0.03.

        (E) Recalculation of allowed expenditures for updates beginning 
                with 2001

            For purposes of determining the update adjustment factor for 
        a year beginning with 2001, the Secretary shall recompute the 
        allowed expenditures for previous periods beginning on or after 
        April 1, 1999, consistent with subsection (f)(3) of this 
        section.

        (F) Transitional adjustment designed to provide for budget 
                neutrality

            Under this subparagraph the Secretary shall provide for an 
        adjustment to the update under subparagraph (A)--
                (i) for each of 2001, 2002, 2003, and 2004, of -0.2 
            percent; and
                (ii) for 2005 of +0.8 percent.

(e) Geographic adjustment factors

               (1) Establishment of geographic indices

        (A) In general

            Subject to subparagraphs (B) and (C), the Secretary shall 
        establish--
                (i) an index which reflects the relative costs of the 
            mix of goods and services comprising practice expenses 
            (other than malpractice expenses) in the different fee 
            schedule areas compared to the national average of such 
            costs,
                (ii) an index which reflects the relative costs of 
            malpractice expenses in the different fee schedule areas 
            compared to the national average of such costs, and
                (iii) an index which reflects \1/4\ of the difference 
            between the relative value of physicians' work effort in 
            each of the different fee schedule areas and the national 
            average of such work effort.

        (B) Class-specific geographic cost-of-practice indices

            The Secretary may establish more than one index under 
        subparagraph (A)(i) in the case of classes of physicians' 
        services, if, because of differences in the mix of goods and 
        services comprising practice expenses for the different classes 
        of services, the application of a single index under such clause 
        to different classes of such services would be substantially 
        inequitable.

        (C) Periodic review and adjustments in geographic adjustment 
                factors

            The Secretary, not less often than every 3 years, shall, in 
        consultation with appropriate representatives of physicians, 
        review the indices established under subparagraph (A) and the 
        geographic index values applied under this subsection for all 
        fee schedule areas. Based on such review, the Secretary may 
        revise such index and adjust such index values, except that, if 
        more than 1 year has elasped \1\ since the date of the last 
        previous adjustment, the adjustment to be applied in the first 
        year of the next adjustment shall be \1/2\ of the adjustment 
        that otherwise would be made.
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    \1\ So in original. Probably should be ``elapsed''.
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        (D) Use of recent data

            In establishing indices and index values under this 
        paragraph, the Secretary shall use the most recent data 
        available relating to practice expenses, malpractice expenses, 
        and physician work effort in different fee schedule areas.

           (2) Computation of geographic adjustment factor

        For purposes of subsection (b)(1)(C) of this section, for all 
    physicians' services for each fee schedule area the Secretary shall 
    establish a geographic 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 geographic physician work 
    adjustment factor (specified in paragraph (5)) for the service and 
    the area.

          (3) Geographic cost-of-practice adjustment factor

        For purposes of paragraph (2), the ``geographic cost-of-practice 
    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 practice 
        expense component, and
            (B) the geographic cost-of-practice index value for the area 
        for the service, based on the index established under paragraph 
        (1)(A)(i) or (1)(B) (as the case may be).

            (4) Geographic malpractice adjustment factor

        For purposes of paragraph (2), the ``geographic malpractice 
    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 
        malpractice component, and
            (B) the geographic malpractice index value for the area, 
        based on the index established under paragraph (1)(A)(ii).

           (5) Geographic physician work adjustment factor

        For purposes of paragraph (2), the ``geographic physician work 
    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 geographic physician work index value for the area, 
        based on the index established under paragraph (1)(A)(iii).

(f) Sustainable growth rate

                           (1) Publication

        The Secretary shall cause to have published in the Federal 
    Register not later than--
            (A) November 1, 2000, the sustainable growth rate for 2000 
        and 2001; and
            (B) November 1 of each succeeding year the sustainable 
        growth rate for such succeeding year and each of the preceding 2 
        years.

                  (2) Specification of growth rate

        The sustainable growth rate for all physicians' services for a 
    fiscal year (beginning with fiscal year 1998 and ending with fiscal 
    year 2000) and a year beginning with 2000 shall be equal to the 
    product of--
            (A) 1 plus the Secretary's estimate of the weighted average 
        percentage increase (divided by 100) in the fees for all 
        physicians' services in the applicable period involved,
            (B) 1 plus the Secretary's estimate of the percentage change 
        (divided by 100) in the average number of individuals enrolled 
        under this part (other than Medicare+Choice plan enrollees) from 
        the previous applicable period to the applicable period 
        involved,
            (C) 1 plus the Secretary's estimate of the projected 
        percentage growth in real gross domestic product per capita 
        (divided by 100) from the previous applicable period to the 
        applicable period involved, and
            (D) 1 plus the Secretary's estimate of the percentage change 
        (divided by 100) in expenditures for all physicians' services in 
        the applicable period (compared with the previous applicable 
        period) which will result from changes in law and regulations, 
        determined without taking into account estimated changes in 
        expenditures resulting from the update adjustment factor 
        determined under subsection (d)(3)(B) or (d)(4)(B) of this 
        section, as the case may be,

    minus 1 and multiplied by 100.

                         (3) Data to be used

        For purposes of determining the update adjustment factor under 
    subsection (d)(4)(B) of this section for a year beginning with 2001, 
    the sustainable growth rates taken into consideration in the 
    determination under paragraph (2) shall be determined as follows:

        (A) For 2001

            For purposes of such calculations for 2001, the sustainable 
        growth rates for fiscal year 2000 and the years 2000 and 2001 
        shall be determined on the basis of the best data available to 
        the Secretary as of September 1, 2000.

        (B) For 2002

            For purposes of such calculations for 2002, the sustainable 
        growth rates for fiscal year 2000 and for years 2000, 2001, and 
        2002 shall be determined on the basis of the best data available 
        to the Secretary as of September 1, 2001.

        (C) For 2003 and succeeding years

            For purposes of such calculations for a year after 2002--
                (i) the sustainable growth rates for that year and the 
            preceding 2 years shall be determined on the basis of the 
            best data available to the Secretary as of September 1 of 
            the year preceding the year for which the calculation is 
            made; and
                (ii) the sustainable growth rate for any year before a 
            year described in clause (i) shall be the rate as most 
            recently determined for that year under this subsection.

    Nothing in this paragraph shall be construed as affecting the 
    sustainable growth rates established for fiscal year 1998 or fiscal 
    year 1999.

                           (4) Definitions

        In this subsection:

        (A) Services included in physicians' services

            The term ``physicians' services'' includes other items and 
        services (such as clinical diagnostic laboratory tests and 
        radiology services), specified by the Secretary, that are 
        commonly performed or furnished by a physician or in a 
        physician's office, but does not include services furnished to a 
        Medicare+
        Choice plan enrollee.

        (B) Medicare+Choice plan enrollee

            The term ``Medicare+Choice plan enrollee'' means, with 
        respect to a fiscal year, an individual enrolled under this part 
        who has elected to receive benefits under this subchapter for 
        the fiscal year through a Medicare+Choice plan offered under 
        part C of this subchapter, and also includes an individual who 
        is receiving benefits under this part through enrollment with an 
        eligible organization with a risk-sharing contract under section 
        1395mm of this title.

        (C) Applicable period

            The term ``applicable period'' means--
                (i) a fiscal year, in the case of fiscal year 1998, 
            fiscal year 1999, and fiscal year 2000; or
                (ii) a calendar year with respect to a year beginning 
            with 2000;

        as the case may be.

(g) Limitation on beneficiary liability

                  (1) Limitation on actual charges

        (A) In general

            In the case of a nonparticipating physician or 
        nonparticipating supplier or other person (as defined in section 
        1395u(i)(2) of this title) who does not accept payment on an 
        assignment-related basis for a physician's service furnished 
        with respect to an individual enrolled under this part, the 
        following rules apply:
            (i) Application of limiting charge

                No person may bill or collect an actual charge for the 
            service in excess of the limiting charge described in 
            paragraph (2) for such service.
            (ii) No liability for excess charges

                No person is liable for payment of any amounts billed 
            for the service in excess of such limiting charge.
            (iii) Correction of excess charges

                If such a physician, supplier, or other person bills, 
            but does not collect, an actual charge for a service in 
            violation of clause (i), the physician, supplier, or other 
            person shall reduce on a timely basis the actual charge 
            billed for the service to an amount not to exceed the 
            limiting charge for the service.
            (iv) Refund of excess collections

                If such a physician, supplier, or other person collects 
            an actual charge for a service in violation of clause (i), 
            the physician, supplier, or other person shall provide on a 
            timely basis a refund to the individual charged in the 
            amount by which the amount collected exceeded the limiting 
            charge for the service. The amount of such a refund shall be 
            reduced to the extent the individual has an outstanding 
            balance owed by the individual to the physician.

        (B) Sanctions

            If a physician, supplier, or other person--
                (i) knowingly and willfully bills or collects for 
            services in violation of subparagraph (A)(i) on a repeated 
            basis, or
                (ii) fails to comply with clause (iii) or (iv) of 
            subparagraph (A) on a timely basis,

        the Secretary may apply sanctions against the physician, 
        supplier, or other person in accordance with paragraph (2) of 
        section 1395u(j) of this title. In applying this subparagraph, 
        paragraph (4) of such section applies in the same manner as such 
        paragraph applies to such section and any reference in such 
        section to a physician is deemed also to include a reference to 
        a supplier or other person under this subparagraph.

        (C) Timely basis

            For purposes of this paragraph, a correction of a bill for 
        an excess charge or refund of an amount with respect to a 
        violation of subparagraph (A)(i) in the case of a service is 
        considered to be provided ``on a timely basis'', if the 
        reduction or refund is made not later than 30 days after the 
        date the physician, supplier, or other person is notified by the 
        carrier under this part of such violation and of the 
        requirements of subparagraph (A).

                   (2) ``Limiting charge'' defined

        (A) For 1991

            For physicians' services of a physician furnished during 
        1991, other than radiologist services subject to section 
        1395m(b) of this title, the ``limiting charge'' shall be the 
        same percentage (or, if less, 25 percent) above the recognized 
        payment amount under this part with respect to the physician (as 
        a nonparticipating physician) as the percentage by which--
                (i) the maximum allowable actual charge (as determined 
            under section 1395u(j)(1)(C) of this title as of December 
            31, 1990, or, if less, the maximum actual charge otherwise 
            permitted for the service under this part as of such date) 
            for the service of the physician, exceeds
                (ii) the recognized payment amount for the service of 
            the physician (as a nonparticipating physician) as of such 
            date.

        In the case of evaluation and management services (as specified 
        in section 1395u(b)(16)(B)(ii) of this title), the preceding 
        sentence shall be applied by substituting ``40 percent'' for 
        ``25 percent''.

        (B) For 1992

            For physicians' services furnished during 1992, other than 
        radiologist services subject to section 1395m(b) of this title, 
        the ``limiting charge'' shall be the same percentage (or, if 
        less, 20 percent) above the recognized payment amount under this 
        part for nonparticipating physicians as the percentage by 
        which--
                (i) the limiting charge (as determined under 
            subparagraph (A) as of December 31, 1991) for the service, 
            exceeds
                (ii) the recognized payment amount for the service for 
            nonparticipating physicians as of such date.

        (C) After 1992

            For physicians' services furnished in a year after 1992, the 
        ``limiting charge'' shall be 115 percent of the recognized 
        payment amount under this part for nonparticipating physicians 
        or for nonparticipating suppliers or other persons.

        (D) Recognized payment amount

            In this section, the term ``recognized payment amount'' 
        means, for services furnished on or after January 1, 1992, the 
        fee schedule amount determined under subsection (a) of this 
        section (or, if payment under this part is made on a basis other 
        than the fee schedule under this section, 95 percent of the 
        other payment basis), and, for services furnished during 1991, 
        the applicable percentage (as defined in section 
        1395u(b)(4)(A)(iv) of this title) of the prevailing charge (or 
        fee schedule amount) for nonparticipating physicians for that 
        year.

        (3) Limitation on charges for medicare beneficiaries 
                       eligible for medicaid benefits

        (A) In general

            Payment for physicians' services furnished on or after April 
        1, 1990, to an individual who is enrolled under this part and 
        eligible for any medical assistance (including as a qualified 
        medicare beneficiary, as defined in section 1396d(p)(1) of this 
        title) with respect to such services under a State plan approved 
        under subchapter XIX of this chapter may only be made on an 
        assignment-related basis and the provisions of section 
        1396a(n)(3)(A) of this title apply to further limit permissible 
        charges under this section.

        (B) Penalty

            A person may not bill for physicians' services subject to 
        subparagraph (A) other than on an assignment-related basis. No 
        person is liable for payment of any amounts billed for such a 
        service in violation of the previous sentence. If a person 
        knowingly and willfully bills for physicians' services in 
        violation of the first sentence, the Secretary may apply 
        sanctions against the person in accordance with section 
        1395u(j)(2) of this title.

                 (4) Physician submission of claims

        (A) In general

            For services furnished on or after September 1, 1990, within 
        1 year after the date of providing a service for which payment 
        is made under this part on a reasonable charge or fee schedule 
        basis, a physician, supplier, or other person (or an employer or 
        facility in the cases described in section 1395u(b)(6)(A) of 
        this title)--
                (i) shall complete and submit a claim for such service 
            on a standard claim form specified by the Secretary to the 
            carrier on behalf of a beneficiary, and
                (ii) may not impose any charge relating to completing 
            and submitting such a form.

        (B) Penalty

            (i) With respect to an assigned claim wherever a physician, 
        provider, supplier or other person (or an employer or facility 
        in the cases described in section 1395u(b)(6)(A) of this title) 
        fails to submit such a claim as required in subparagraph (A), 
        the Secretary shall reduce by 10 percent the amount that would 
        otherwise be paid for such claim under this part.
            (ii) If a physician, supplier, or other person (or an 
        employer or facility in the cases described in section 
        1395u(b)(6)(A) of this title) fails to submit a claim required 
        to be submitted under subparagraph (A) or imposes a charge in 
        violation of such subparagraph, the Secretary shall apply the 
        sanction with respect to such a violation in the same manner as 
        a sanction may be imposed under section 1395u(p)(3) of this 
        title for a violation of section 1395u(p)(1) of this title.

               (5) Electronic billing; direct deposit

        The Secretary shall encourage and develop a system providing for 
    expedited payment for claims submitted electronically. The Secretary 
    shall also encourage and provide incentives allowing for direct 
    deposit as payments for services furnished by participating 
    physicians. The Secretary shall provide physicians with such 
    technical information as necessary to enable such physicians to 
    submit claims electronically. The Secretary shall submit a plan to 
    Congress on this paragraph by May 1, 1990.

                      (6) Monitoring of charges

        (A) In general

            The Secretary shall monitor--
                (i) the actual charges of nonparticipating physicians 
            for physicians' services furnished on or after January 1, 
            1991, to individuals enrolled under this part, and
                (ii) changes (by specialty, type of service, and 
            geographic area) in (I) the proportion of expenditures for 
            physicians' services provided under this part by 
            participating physicians, (II) the proportion of 
            expenditures for such services for which payment is made 
            under this part on an assignment-related basis, and (III) 
            the amounts charged above the recognized payment amounts 
            under this part.

        (B) Report

            The Secretary shall, by not later than April 15 of each year 
        (beginning in 1992), report to the Congress information on the 
        extent to which actual charges exceed limiting charges, the 
        number and types of services involved, and the average amount of 
        excess charges and information regarding the changes described 
        in subparagraph (A)(ii).

        (C) Plan

            If the Secretary finds that there has been a significant 
        decrease in the proportions described in subclauses (I) and (II) 
        of subparagraph (A)(ii) or an increase in the amounts described 
        in subclause (III) of that subparagraph, the Secretary shall 
        develop a plan to address such a problem and transmit to 
        Congress recommendations regarding the plan. The Medicare 
        Payment Advisory Commission shall review the Secretary's plan 
        and recommendations and transmit to Congress its comments 
        regarding such plan and recommendations.

              (7) Monitoring of utilization and access

        (A) In general

            The Secretary shall monitor--
                (i) changes in the utilization of and access to services 
            furnished under this part within geographic, population, and 
            service related categories,
                (ii) possible sources of inappropriate utilization of 
            services furnished under this part which contribute to the 
            overall level of expenditures under this part, and
                (iii) factors underlying these changes and their 
            interrelationships.

        (B) Report

            The Secretary shall by not later than April 15,\2\ of each 
        year (beginning with 1991) report to the Congress on the changes 
        described in subparagraph (A)(i) and shall include in the report 
        an examination of the factors (including factors relating to 
        different services and specific categories and groups of 
        services and geographic and demographic variations in 
        utilization) which may contribute to such changes.
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    \2\ So in original. The comma probably should not appear.
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        (C) Recommendations

            The Secretary shall include in each annual report under 
        subparagraph (B) recommendations--
                (i) addressing any identified patterns of inappropriate 
            utilization,
                (ii) on utilization review,
                (iii) on physician education or patient education,
                (iv) addressing any problems of beneficiary access to 
            care made evident by the monitoring process, and
                (v) on such other matters as the Secretary deems 
            appropriate.

        The Medicare Payment Advisory Commission shall comment on the 
        Secretary's recommendations and in developing its comments, the 
        Commission shall convene and consult a panel of physician 
        experts to evaluate the implications of medical utilization 
        patterns for the quality of and access to patient care.

(h) Sending information to physicians

    Before the beginning of each year (beginning with 1992), the 
Secretary shall send to each physician or nonparticipating supplier or 
other person furnishing physicians' services (as defined in subsection 
(j)(3) of this section) furnishing physicians' services under this part, 
for services commonly performed by the physician, supplier, or other 
person, information on fee schedule amounts that apply for the year in 
the fee schedule area for participating and non-participating 
physicians, and the maximum amount that may be charged consistent with 
subsection (g)(2) of this section. Such information shall be transmitted 
in conjunction with notices to physicians, suppliers, and other persons 
under section 1395u(h) of this title (relating to the participating 
physician program) for a year.

(i) Miscellaneous provisions

        (1) Restriction on administrative and judicial review

        There shall be no administrative or judicial review under 
    section 1395ff of this title or otherwise of--
            (A) the determination of the adjusted historical payment 
        basis (as defined in subsection (a)(2)(D)(i) of this section),
            (B) the determination of relative values and relative value 
        units under subsection (c) of this section, including 
        adjustments under subsection (c)(2)(F) of this section and 
        section 13515(b) of the Omnibus Budget Reconciliation Act of 
        1993,
            (C) the determination of conversion factors under subsection 
        (d) of this section,
            (D) the establishment of geographic adjustment factors under 
        subsection (e) of this section, and
            (E) the establishment of the system for the coding of 
        physicians' services under this section.

                      (2) Assistants-at-surgery

        (A) In general

            Subject to subparagraph (B), in the case of a surgical 
        service furnished by a physician, if payment is made separately 
        under this part for the services of a physician serving as an 
        assistant-at-surgery, the fee schedule amount shall not exceed 
        16 percent of the fee schedule amount otherwise determined under 
        this section for the global surgical service involved.

        (B) Denial of payment in certain cases

            If the Secretary determines, based on the most recent data 
        available, that for a surgical procedure (or class of surgical 
        procedures) the national average percentage of such procedure 
        performed under this part which involve the use of a physician 
        as an assistant at surgery is less than 5 percent, no payment 
        may be made under this part for services of an assistant at 
        surgery involved in the procedure.

                   (3) No comparability adjustment

        For physicians' services for which payment under this part is 
    determined under this section--
            (A) a carrier may not make any adjustment in the payment 
        amount under section 1395u(b)(3)(B) of this title on the basis 
        that the payment amount is higher than the charge applicable, 
        for a \3\ comparable services and under comparable 
        circumstances, to the policyholders and subscribers of the 
        carrier,
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    \3\ So in original. The word ``a'' probably should not appear.
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            (B) no payment adjustment may be made under section 
        1395u(b)(8) of this title, and
            (C) section 1395u(b)(9) of this title shall not apply.

(j) Definitions

    In this section:

                            (1) Category

        For services furnished before January 1, 1998, the term 
    ``category'' means, with respect to physicians' services, surgical 
    services, and all physicians' services other than surgical services 
    (as defined by the Secretary and including anesthesia services), 
    primary care services (as defined in section 1395u(i)(4) of this 
    title), and all other physicians' services. The Secretary shall 
    define surgical services and publish such definition in the Federal 
    Register no later than May 1, 1990, after consultation with 
    organizations representing physicians.

                        (2) Fee schedule area

        The term ``fee schedule area'' means a locality used under 
    section 1395u(b) of this title for purposes of computing payment 
    amounts for physicians' services.

                      (3) Physicians' services

        The term ``physicians' services'' includes items and services 
    described in paragraphs (1), (2)(A), (2)(D), (2)(G), (2)(P) (with 
    respect to services described in subparagraphs (A) and (C) of 
    section 1395x(oo)(2) of this title), (2)(R) (with respect to 
    services described in subparagraphs (B), (C), and (D) of section 
    1395x(pp)(1) of this title), (2)(S), (3), (4), (14) (with respect to 
    services described in section 1395x(nn)(2) of this title), and (15) 
    of section 1395x(s) of this title (other than clinical diagnostic 
    laboratory tests and, except for purposes of subsections (a)(3), 
    (g), and (h) of this section \4\ such other items and services as 
    the Secretary may specify).
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    \4\ So in original. Probably should be followed by a comma.
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                        (4) Practice expenses

        The term ``practice expenses'' includes all expenses for 
    furnishing physicians' services, excluding malpractice expenses, 
    physician compensation, and other physician fringe benefits.

(Aug. 14, 1935, ch. 531, title XVIII, Sec. 1848, as added Pub. L. 101-
239, title VI, Sec. 6102(a), Dec. 19, 1989, 103 Stat. 2169; amended Pub. 
L. 101-508, title IV, Secs. 4102(b), (g)(2), 4104(b)(2), 4105(a)(3), 
(c), 4106(b)(1), 4107(a)(1), 4109(a), 4116, 4118(b)-(f)(1), (k), Nov. 5, 
1990, 104 Stat. 1388-56, 1388-57, 1388-59 to 1388-63, 1388-65, 1388-67, 
1388-68, 1388-71; Pub. L. 103-66, title XIII, Secs. 13511(a), 13512-
13514(c), 13515(a)(1), (c), 13516(a)(1), 13517(a), 13518(a), Aug. 10, 
1993, 107 Stat. 580-583, 585, 586; Pub. L. 103-432, title I, 
Secs. 121(b)(1), (2), 122(a), (b), 123(a), (d), 126(b)(6), (g)(2)(B), 
(5)-(7), (10)(A), Oct. 31, 1994, 108 Stat. 4409, 4410, 4412, 4415, 4416; 
Pub. L. 105-33, title IV, Secs. 4022(b)(2)(B), (C), 4102(d), 4103(d), 
4104(d), 4105(a)(2), 4106(b), 4501, 4502(a)(1), (b), 4503, 4504(a), 
4505(a), (b), (e), (f)(1), 4644(d), 4714(b)(2), Aug. 5, 1997, 111 Stat. 
354, 355, 361, 362, 365, 366, 368, 432-437, 488, 510; Pub. L. 106-113, 
div. B, Sec. 1000(a)(6) [title II, Sec. 211(a)(1), (2)(A), (3)(A), (b), 
title III, Sec. 321(k)(5)], Nov. 29, 1999, 113 Stat. 1536, 1501A-345 to 
1501A-348, 1501A-366.)

                       References in Text

    Section 13515(b) of the Omnibus Budget Reconciliation Act of 1993, 
referred to in subsecs. (a)(2)(B)(ii)(I), (c)(2)(A)(i), and (i)(1)(B), 
is section 13515(b) of Pub. L. 103-66, which is set out as a note under 
section 1395u of this title.
    Section 6105(b) of the Omnibus Budget Reconciliation Act of 1989, 
referred to in subsec. (a)(2)(D)(ii), (iii), is section 6105(b) of Pub. 
L. 101-239, which is set out as a note under section 1395m of this 
title.
    Section 4048(b) of the Omnibus Budget Reconciliation Act of 1987, 
referred to in subsec. (b)(2)(B), is section 4048(b) of Pub. L. 100-203, 
which is set out as a note under section 1395u of this title.
    Section 13514(a) of the Omnibus Budget Reconciliation Act of 1993, 
referred to in subsec. (c)(2)(F), is section 13514(a) of Pub. L. 103-66, 
which amended subsec. (b)(3) of this section. See 1993 Amendment note 
below.
    The Balanced Budget Act of 1997, referred to in subsec. (d)(1)(C), 
is Pub. L. 105-33, Aug. 5, 1997, 111 Stat. 251. Chapter 1 of subtitle F 
of title IV of the Act is chapter 1 (Secs. 4501-4513) of subtitle F of 
title IV of Pub. L. 105-33, which amended this section and sections 
1395a, 1395k, 1395l, 1395u, 1395x, 1395y, 1395cc, and 1395yy of this 
title and enacted provisions set out as notes under this section and 
sections 1395a, 1395k, 1395l, 1395x, and 1395ww of this title. For 
complete classification of this Act to the Code, see Tables.
    Part C of this subchapter, referred to in subsec. (f)(4)(B), is 
classified to section 1395w-21 et seq. of this title.


                               Amendments

    1999--Subsec. (d)(1)(A). Pub. L. 106-113, Sec. 1000(a)(6) [title II, 
Sec. 211(a)(3)(A)(i)], inserted ``(for years before 2001) and, for years 
beginning with 2001, multiplied by the update (established under 
paragraph (4)) for the year involved'' before period at end.
    Subsec. (d)(1)(E). Pub. L. 106-113, Sec. 1000(a)(6) [title II, 
Sec. 211(a)(2)(A)], amended heading and text of subpar. (E) generally. 
Prior to amendment, text read as follows: ``The Secretary shall cause to 
have published in the Federal Register, during the last 15 days of 
October of--
        ``(i) 1991, the conversion factor which will apply to 
    physicians' services for 1992, and the update determined under 
    paragraph (3) for 1992; and
        ``(ii) each succeeding year, the conversion factor which will 
    apply to physicians' services for the following year and the update 
    determined under paragraph (3) for such year.''
    Subsec. (d)(3). Pub. L. 106-113, Sec. 1000(a)(6) [title II, 
Sec. 211(a)(1)(A)(i)], inserted ``for 1999 and 2000'' after ``Update'' 
in heading.
    Subsec. (d)(3)(A). Pub. L. 106-113, Sec. 1000(a)(6) [title II, 
Sec. 211(a)(1)(A)(ii)], substituted ``1999 and 2000'' for ``a year 
beginning with 1999'' in introductory provisions.
    Subsec. (d)(3)(C). Pub. L. 106-113, Sec. 1000(a)(6) [title II, 
Sec. 211(a)(1)(A)(iii)], inserted ``and paragraph (4)'' after ``For 
purposes of this paragraph'' in introductory provisions.
    Subsec. (d)(4). Pub. L. 106-113, Sec. 1000(a)(6) [title II, 
Sec. 211(a)(1)(B)], added par. (4).
    Subsec. (f)(1). Pub. L. 106-113, Sec. 1000(a)(6) [title II, 
Sec. 211(b)(1)], amended heading and text of par. (1) generally. Prior 
to amendment, text read as follows: ``The Secretary shall cause to have 
published in the Federal Register the sustainable growth rate for each 
fiscal year beginning with fiscal year 1998. Such publication shall 
occur by not later than August 1 before each fiscal year, except that 
such rate for fiscal year 1998 shall be published not later than 
November 1, 1997.''
    Subsec. (f)(2). Pub. L. 106-113, Sec. 1000(a)(6) [title II, 
Sec. 211(b)(2)(A)], substituted ``fiscal year 1998 and ending with 
fiscal year 2000) and a year beginning with 2000'' for ``fiscal year 
1998)'' in introductory provisions.
    Subsec. (f)(2)(A). Pub. L. 106-113, Sec. 1000(a)(6) [title II, 
Sec. 211(b)(2)(B)], substituted ``applicable period'' for ``fiscal 
year''.
    Subsec. (f)(2)(B), (C). Pub. L. 106-113, Sec. 1000(a)(6) [title II, 
Sec. 211(b)(2)(B)], substituted ``applicable period'' for ``fiscal 
year'' in two places.
    Subsec. (f)(2)(D). Pub. L. 106-113, Sec. 1000(a)(6) [title II, 
Sec. 211(a)(3)(A)(ii), (b)(2)(B)], substituted ``applicable period'' for 
``fiscal year'' in two places and ``subsection (d)(3)(B) or (d)(4)(B) of 
this section, as the case may be'' for ``subsection (d)(3)(B) of this 
section''.
    Subsec. (f)(3). Pub. L. 106-113, Sec. 1000(a)(6) [title II, 
Sec. 211(b)(5)], added par. (3). Former par. (3) redesignated (4).
    Subsec. (f)(3)(C). Pub. L. 106-113, Sec. 1000(a)(6) [title II, 
Sec. 211(b)(3)], added subpar. (C).
    Subsec. (f)(4). Pub. L. 106-113, Sec. 1000(a)(6) [title II, 
Sec. 211(b)(4)], redesignated par. (3) as (4).
    Subsec. (j)(3). Pub. L. 106-113, Sec. 1000(a)(6) [title III, 
Sec. 321(k)(5)], substituted ``section 1395x(oo)(2) of this title)'' for 
``section 1395x(oo)(2) of this title,'', ``(B),'' for ``(B),'', and ``, 
and (15)'' for ``and (15)''.
    1997--Subsec. (b)(1). Pub. L. 105-33, Sec. 4644(d), substituted 
``Before November 1 of the preceding year, for each year beginning with 
1998'' for ``Before January 1 of each year beginning with 1992'' in 
introductory provisions.
    Subsec. (c)(2)(B)(iii). Pub. L. 105-33, Sec. 4022(b)(2)(C), 
substituted ``Medicare Payment Advisory Commission'' for ``Physician 
Payment Review Commission''.
    Subsec. (c)(2)(C)(ii). Pub. L. 105-33, Sec. 4505(b)(1)(A), which 
directed an amendment striking the comma at the end of cl. (ii) and 
inserting a period and the following: ``For 1999, such number of units 
shall be determined based 75 percent on such product and based 25 
percent on the relative practice expense resources involved in 
furnishing the service. For 2000, such number of units shall be 
determined based 50 percent on such product and based 50 percent on such 
relative practice expense resources. For 2001, such number of units 
shall be determined based 25 percent on such product and based 75 
percent on such relative practice expense resources. For a subsequent 
year, such number of units shall be determined based entirely on such 
relative practice expense resources.'', was executed by making the 
insertion at end of cl. (ii) to reflect the probable intent of Congress, 
because cl. (ii) ended with a period rather than a comma.
    Pub. L. 105-33, Sec. 4505(a)(1), substituted ``1999'' for ``1998'' 
in two places.
    Subsec. (c)(2)(C)(iii). Pub. L. 105-33, Sec. 4505(f)(1)(A), inserted 
``for the service for years before 2000'' before ``equal'' in 
introductory provisions, substituted comma for period at end of subcl. 
(II), and inserted concluding provisions.
    Subsec. (c)(2)(G). Pub. L. 105-33, Sec. 4505(e), added subpar. (G).
    Subsec. (c)(3)(C)(ii). Pub. L. 105-33, Sec. 4505(b)(2), substituted 
``2002'' for ``1999'' in introductory provisions.
    Pub. L. 105-33, Sec. 4505(a)(2), substituted ``1999'' for ``1998'' 
in introductory provisions.
    Subsec. (c)(3)(C)(iii). Pub. L. 105-33, Sec. 4505(f)(1)(B), 
substituted ``For years before 1999, the malpractice'' for ``The 
malpractice'' in introductory provisions.
    Subsec. (d)(1)(A). Pub. L. 105-33, Sec. 4501(b)(1), (2), struck out 
``(or factors)'' after ``conversion factor'' in two places and struck 
out ``or updates'' after ``update''.
    Subsec. (d)(1)(C). Pub. L. 105-33, Sec. 4504(a)(1), substituted 
``Except as provided in subparagraph (D), the single conversion factor'' 
for ``The single conversion factor''.
    Pub. L. 105-33, Sec. 4501(a)(2), added subpar. (C). Former subpar. 
(C) redesignated (D).
    Subsec. (d)(1)(D). Pub. L. 105-33, Sec. 4504(a)(3), added subpar. 
(D). Former subpar. (D) redesignated (E).
    Pub. L. 105-33, Sec. 4501(b)(1), (3), struck out ``(or updates)'' 
after ``update'' in two places and struck out ``(or factors)'' after 
``conversion factor'' in cl. (ii).
    Pub. L. 105-33, Sec. 4501(a)(1), redesignated subpar. (C) as (D).
    Subsec. (d)(1)(E). Pub. L. 105-33, Sec. 4504(a)(2), redesignated 
subpar. (D) as (E).
    Subsec. (d)(2). Pub. L. 105-33, Sec. 4502(b), struck out heading and 
text of par. (2) which related to recommendation of update.
    Subsec. (d)(2)(F). Pub. L. 105-33, Sec. 4022(b)(1)(B)(i), struck out 
heading and text of subpar. (F). Text read as follows: ``The Physician 
Payment Review Commission shall review the report submitted under 
subparagraph (A) in a year and shall submit to the Congress, by not 
later than May 15 of the year, a report including its recommendations 
respecting the update (or updates) in the conversion factor (or factors) 
for the following year.''
    Subsec. (d)(3). Pub. L. 105-33, Sec. 4502(a)(1), amended heading and 
text generally. Prior to amendment, text related to updates of 
conversion factor based on index and made provision for adjustments in 
update.
    Subsec. (f). Pub. L. 105-33, Sec. 4503(b), amended subsec. heading 
and heading and text of par. (1) generally. Prior to amendment, par. (1) 
related to process for establishing medicare volume performance standard 
rates of increase.
    Subsec. (f)(1)(B). Pub. L. 105-33, Sec. 4022(b)(2)(B)(ii), struck 
out heading and text of subpar. (B). Text read as follows: ``The 
Physician Payment Review Commission shall review the recommendation 
transmitted during a year under subparagraph (A) and shall make its 
recommendation to Congress, by not later than May 15 of the year, 
respecting the performance standard rates of increase for the fiscal 
year beginning in that year.''
    Subsec. (f)(2). Pub. L. 105-33, Sec. 4503(a), added par. (2) and 
struck out heading and text of former par. (2) which related to 
specification of performance standard rates of increase for physician 
services for fiscal years beginning in 1991.
    Subsec. (f)(3). Pub. L. 105-33, Sec. 4503(a), added par. (3) and 
struck out heading and text of former par. (3). Text read as follows: 
``The Secretary shall establish procedures for providing, on a quarterly 
basis to the the Congressional Budget Office, the Congressional Research 
Service, the Committees on Ways and Means and Energy and Commerce of the 
House of Representatives, and the Committee on Finance of the Senate, 
information on compliance with performance standard rates of increase 
established under this subsection.''
    Pub. L. 105-33, Sec. 4022(b)(2)(B)(iii), struck out ``Physician 
Payment Review Commission,'' before ``the Congressional Budget Office''.
    Subsec. (f)(4), (5). Pub. L. 105-33, Sec. 4503(a), struck out 
heading and text of par. (4) which related to separate group-specific 
performance standard rates of increase and par. (5) which defined 
``physicians' services'' and ``HMO enrollee''.
    Subsec. (g)(3)(A). Pub. L. 105-33, Sec. 4714(b)(2), inserted before 
period at end ``and the provisions of section 1396a(n)(3)(A) of this 
title apply to further limit permissible charges under this section''.
    Subsec. (g)(6)(C), (7)(C). Pub. L. 105-33, Sec. 4022(b)(2)(C), 
substituted ``Medicare Payment Advisory Commission'' for ``Physician 
Payment Review Commission''.
    Subsec. (j)(1). Pub. L. 105-33, Sec. 4501(b)(4), substituted ``For 
services furnished before January 1, 1998, the term'' for ``The term''.
    Subsec. (j)(3). Pub. L. 105-33, Sec. 4106(b), substituted ``(4), 
(14)'' for ``(4) and (14)'' and inserted ``and (15)'' after 
``1395x(nn)(2) of this title)''.
    Pub. L. 105-33, Sec. 4105(a)(2), inserted ``(2)(S),'' before 
``(3)''.
    Pub. L. 105-33, Sec. 4103(d), inserted ``(2)(P) (with respect to 
services described in subparagraphs (A) and (C) of section 1395x(oo)(2) 
of this title,'' after ``(2)(G)''.
    Pub. L. 105-33, Secs. 4102(d), 4104(d), inserted ``(2)(R) (with 
respect to services described in subparagraphs (B) , (C), and (D) of 
section 1395x(pp)(1) of this title),'' before ``(3)'' and substituted 
``(4) and (14) (with respect to services described in section 
1395x(nn)(2) of this title)'' for ``and (4)''.
    1994--Subsec. (a)(2)(D)(iii). Pub. L. 103-432, Sec. 126(b)(6), 
struck out ``that are subject to section 6105(b) of the Omnibus Budget 
Reconciliation Act of 1989'' after ``nuclear medicine services'' and 
substituted ``provided under section 6105(b) of the Omnibus Budget 
Reconciliation Act of 1989'' for ``provided under such section''.
    Subsec. (c)(2)(C)(ii). Pub. L. 103-432, Sec. 121(b)(1), inserted 
``for the service for years before 1998'' before ``equal to'' in 
introductory provisions, substituted comma for period at end of subcl. 
(II), and inserted ``and for years beginning with 1998 based on the 
relative practice expense resources involved in furnishing the 
service.'' as closing provisions.
    Subsec. (c)(3)(C)(ii). Pub. L. 103-432, Sec. 121(b)(2), substituted 
``For years before 1998, the practice'' for ``The practice''.
    Subsec. (c)(4). Pub. L. 103-432, Sec. 126(g)(6), made technical 
amendment to directory language of Pub. L. 101-508, Sec. 4118(f)(1)(D). 
See 1990 Amendment note below.
    Subsec. (e)(1)(C). Pub. L. 103-432, Sec. 126(g)(5), inserted ``date 
of the'' before ``last previous adjustment''.
    Pub. L. 103-432, Sec. 122(a), substituted ``shall, in consultation 
with appropriate representatives of physicians, review'' for ``shall 
review''.
    Subsec. (e)(1)(D). Pub. L. 103-432, Sec. 122(b), added subpar. (D).
    Subsec. (f)(2)(A)(i). Pub. L. 103-432, Sec. 126(g)(7), made 
technical amendment to directory language of Pub. L. 101-508, 
Sec. 4118(f)(1)(N)(ii). See 1990 Amendment note below.
    Subsec. (f)(2)(C). Pub. L. 103-432, Sec. 126(g)(2)(B), inserted 
heading.
    Subsec. (g)(1). Pub. L. 103-432, Sec. 123(a)(1), amended heading and 
text of par. (1) generally. Prior to amendment, text read as follows: 
``If a nonparticipating physician or nonparticipating supplier or other 
person (as defined in section 1395u(i)(2) of this title) knowingly and 
willfully bills on a repeated basis for physicians' services (including 
services which the Secretary excludes pursuant to subsection (j)(3) of 
this section, furnished with respect to an individual enrolled under 
this part on or after January 1, 1991) an actual charge in excess of the 
limiting charge described in paragraph (2) and for which payment is not 
made on an assignment-related basis under this part, the Secretary may 
apply sanctions against such physician, supplier, or other person in 
accordance with section 1395u(j)(2) of this title. In applying this 
subparagraph, any reference in such section to a physician is deemed 
also to include a reference to a supplier or other person under this 
subparagraph.''
    Subsec. (g)(3)(B). Pub. L. 103-432, Sec. 123(a)(2), inserted after 
first sentence ``No person is liable for payment of any amounts billed 
for such a service in violation of the previous sentence.'' and in last 
sentence substituted ``first sentence'' for ``previous sentence''.
    Subsec. (g)(6)(B). Pub. L. 103-432, Sec. 123(d), inserted 
``information on the extent to which actual charges exceed limiting 
charges, the number and types of services involved, and the average 
amount of excess charges and information'' after ``report to the 
Congress''.
    Subsec. (i)(3). Pub. L. 103-432, Sec. 126(g)(10)(A), struck out 
space before the period at end.
    1993--Subsec. (a)(2)(B)(ii)(I). Pub. L. 103-66, Sec. 13515(c)(1), 
inserted ``and under section 13515(b) of the Omnibus Budget 
Reconciliation Act of 1993'' after ``subsection (c)(2)(F)(ii) of this 
section''.
    Pub. L. 103-66, Sec. 13514(c)(1), inserted ``and as adjusted under 
subsection (c)(2)(F)(ii) of this section'' after ``for 1994''.
    Subsec. (a)(3). Pub. L. 103-66, Sec. 13517(a)(1), in heading 
inserted ``and suppliers'' after ``physicians'' and in text inserted 
``or a nonparticipating supplier or other person'' after 
``nonparticipating physician'' and inserted at end ``In the case of 
physicians' services (including services which the Secretary excludes 
pursuant to subsection (j)(3) of this section) of a nonparticipating 
physician, supplier, or other person for which payment is made under 
this part on a basis other than the fee schedule amount, the payment 
shall be based on 95 percent of the payment basis for such services 
furnished by a participating physician, supplier, or other person.''
    Subsec. (a)(4). Pub. L. 103-66, Sec. 13516(a)(1), added par. (4).
    Pub. L. 103-66, Sec. 13515(a)(1), struck out heading and text of 
par. (4). Text read as follows: ``In the case of physicians' services 
furnished by a physician before the end of the physician's first full 
calendar year of furnishing services for which payment may be made under 
this part, and during each of the 3 succeeding years, the fee schedule 
amount to be applied shall be 80 percent, 85 percent, 90 percent, and 95 
percent, respectively, of the fee schedule amount applicable to 
physicians who are not subject to this paragraph. The preceding sentence 
shall not apply to primary care services or services furnished in a 
rural area (as defined in section 1395ww(d)(2) of this title) that is 
designated under section 249(a)(1)(A) of this title as a health manpower 
shortage area.''
    Subsec. (b)(3). Pub. L. 103-66, Sec. 13514(a), amended heading and 
text of par. (3) generally. Prior to amendment, text read as follows: 
``If payment is made under this part for a visit to a physician or 
consultation with a physician and, as part of or in conjunction with the 
visit or consultation there is an electrocardiogram performed or ordered 
to be performed, no payment may be made under this part with respect to 
the interpretation of the electrocardiogram and no physician may bill an 
individual enrolled under this part separately for such an 
interpretation. If a physician knowingly and willfully bills one or more 
individuals in violation of the previous sentence, the Secretary may 
apply sanctions against the physician or entity in accordance with 
section 1395u(j)(2) of this title.''
    Subsec. (c)(2)(A)(i). Pub. L. 103-66, Sec. 13515(c)(2), inserted 
before period at end ``and section 13515(b) of the Omnibus Budget 
Reconciliation Act of 1993''.
    Pub. L. 103-66, Sec. 13514(c)(2), inserted at end ``Such relative 
values are subject to adjustment under subparagraph (F)(i).''
    Subsec. (c)(2)(E). Pub. L. 103-66, Sec. 13513, added subpar. (E).
    Subsec. (c)(2)(F). Pub. L. 103-66, Sec. 13514(b), added subpar. (F).
    Subsec. (d)(3)(A)(i). Pub. L. 103-66, Sec. 13511(a)(1)(A), 
substituted ``clauses (iii) through (v)'' for ``clause (iii)''.
    Subsec. (d)(3)(A)(iv) to (vi). Pub. L. 103-66, Sec. 13511(a)(1)(B), 
added cls. (iv) to (vi).
    Subsec. (d)(3)(B)(ii). Pub. L. 103-66, Sec. 13512(b), substituted 
``1994'' for ``1994 or 1995'' in subcl. (II) and ``5'' for ``3'' in 
subcl. (III).
    Subsec. (f)(2)(B). Pub. L. 103-66, Sec. 13512(a), added cls. (iii) 
to (v) and struck out former cl. (iii) which read as follows: ``for each 
succeeding year is 2 percentage points.''
    Subsec. (g)(1). Pub. L. 103-66, Sec. 13517(a)(2)(C), (D), inserted 
``, supplier, or other person'' after ``such physician'' and inserted at 
end ``In applying this subparagraph, any reference in such section to a 
physician is deemed also to include a reference to a supplier or other 
person under this subparagraph.''
    Pub. L. 103-66, Sec. 13517(a)(2)(B), which directed insertion of 
``including services which the Secretary excludes pursuant to subsection 
(j)(3) of this section,'' after ``physician's services ('', was executed 
by making the insertion after ``physicians' services ('' to reflect the 
probable intent of Congress.
    Pub. L. 103-66, Sec. 13517(a)(2)(A), inserted ``or nonparticipating 
supplier or other person (as defined in section 1395u(i)(2) of this 
title)'' after ``nonparticipating physician''.
    Subsec. (g)(2)(C). Pub. L. 103-66, Sec. 13517(a)(3), inserted ``or 
for nonparticipating suppliers or other persons'' after 
``nonparticipating physicians''.
    Subsec. (g)(2)(D). Pub. L. 103-66, Sec. 13517(a)(4), inserted ``(or, 
if payment under this part is made on a basis other than the fee 
schedule under this section, 95 percent of the other payment basis)'' 
after ``subsection (a) of this section''.
    Subsec. (h). Pub. L. 103-66, Sec. 13517(a)(5), inserted ``or 
nonparticipating supplier or other person furnishing physicians' 
services (as defined in subsection (j)(3) of this section)'' after 
``each physician'', inserted ``, supplier, or other person'' after ``by 
the physician'', and inserted ``, suppliers, and other persons'' after 
``notices to physicians''.
    Subsec. (i)(1)(B). Pub. L. 103-66, Sec. 13515(c)(3), inserted ``and 
section 13515(b) of the Omnibus Budget Reconciliation Act of 1993'' 
after ``subsection (c)(2)(F) of this section''.
    Pub. L. 103-66, Sec. 13514(c)(3), inserted at end ``including 
adjustments under subsection (c)(2)(F) of this section,''.
    Subsec. (j)(1). Pub. L. 103-66, Sec. 13511(a)(2), substituted 
``Secretary and including anesthesia services), primary care services 
(as defined in section 1395u(i)(4) of this title),'' for ``Secretary)''.
    Subsec. (j)(3). Pub. L. 103-66, Sec. 13518(a), inserted ``(2)(G),'' 
after ``(2)(D),''.
    Pub. L. 103-66, Sec. 13517(a)(6), inserted ``, except for purposes 
of subsections (a)(3), (g), and (h) of this section'' after ``tests 
and''.
    1990--Subsec. (a)(1). Pub. L. 101-508, Sec. 4104(b)(2), struck out 
``or 1395m(f)'' after ``section 1395m(b)'' in introductory provisions.
    Subsec. (a)(2)(C). Pub. L. 101-508, Sec. 4102(b), inserted ``and 
radiology'' after ``Special rule for anesthesia'' in heading and 
inserted at end ``With respect to radiology services, `109 percent' and 
`9 percent' shall be substituted for `115 percent' and `15 percent', 
respectively, in subparagraph (A)(ii).''
    Subsec. (a)(2)(D)(ii). Pub. L. 101-508, Sec. 4102(g)(2)(A), inserted 
``, but excluding nuclear medicine services that are subject to section 
6105(b) of the Omnibus Budget Reconciliation Act of 1989'' after 
``section 1395m(b)(6) of this title)''.
    Subsec. (a)(2)(D)(iii). Pub. L. 101-508, Sec. 4102(g)(2)(B), added 
cl. (iii).
    Subsec. (a)(4). Pub. L. 101-508, Sec. 4106(b)(1), added par. (4).
    Subsec. (b)(3). Pub. L. 101-508, Sec. 4109(a), added par. (3).
    Subsec. (c)(1)(B). Pub. L. 101-508, Sec. 4118(f)(1)(A), struck out 
at end ``In this subparagraph, the term `practice expenses' includes all 
expenses for furnishing physicians' services, excluding malpractice 
expenses, physician compensation, and other physician fringe benefits.''
    Subsec. (c)(3). Pub. L. 101-508, Sec. 4118(f)(1)(C), redesignated 
par. (3), relating to ancillary policies, as (4).
    Subsec. (c)(3)(C)(ii)(II), (iii)(II). Pub. L. 101-508, 
Sec. 4118(f)(1)(B), struck out ``by'' before ``the proportion''.
    Subsec. (c)(4). Pub. L. 101-508, Sec. 4118(f)(1)(D), as amended by 
Pub. L. 103-432, Sec. 126(g)(6), substituted ``section'' for 
``subsection''.
    Pub. L. 101-508, Sec. 4118(f)(1)(C), redesignated par. (3), relating 
to ancillary policies, as (4). Former par. (4) redesignated (5).
    Pub. L. 101-508, Sec. 4118(d), struck out ``only for services 
furnished on or after January 1, 1993'' after ``visits and 
consultations''.
    Subsec. (c)(5), (6). Pub. L. 101-508, Sec. 4118(f)(1)(C), 
redesignated pars. (4) and (5) as (5) and (6), respectively.
    Subsec. (d)(1)(A). Pub. L. 101-508, Sec. 4118(f)(1)(E), (F)(i)(III), 
amended subpar. (A) identically, substituting ``paragraph (3)'' for 
``subparagraph (C)''.
    Pub. L. 101-508, Sec. 4118(f)(1)(F)(i)(I), (II), substituted 
``conversion factor (or factors)'' for ``conversion factor'' in two 
places and ``update or updates'' for ``update''.
    Subsec. (d)(1)(C)(i). Pub. L. 101-508, Sec. 4118(f)(1)(F)(ii)(I), 
substituted ``conversion factor'' for ``conversion factor (or 
factors)''.
    Subsec. (d)(1)(C)(ii). Pub. L. 101-508, Sec. 4118(f)(1)(F)(ii)(II), 
inserted ``the conversion factor (or factors) which will apply to 
physicians' services for the following year and'' before ``the update 
(or updates)'' and substituted ``such year'' for ``the following year''.
    Subsec. (d)(2)(A). Pub. L. 101-508, Sec. 4118(f)(1)(G), (I), 
substituted ``physicians' services (as defined in subsection (f)(5)(A) 
of this section)'' for ``physicians' services'' in first sentence and 
``proportion of individuals who are enrolled under this part who are HMO 
enrollees'' for ``proportion of HMO enrollees'' in last sentence.
    Subsec. (d)(2)(A)(ii). Pub. L. 101-508, Sec. 4118(f)(1)(H), 
substituted ``and for the services involved'' for ``(as defined in 
subsection (f)(5)(A) of this section)'' and ``such services'' for ``all 
such physicians' services''.
    Subsec. (d)(2)(E)(i). Pub. L. 101-508, Sec. 4118(f)(1)(J), inserted 
``the'' before ``most recent''.
    Subsec. (d)(2)(E)(ii)(I). Pub. L. 101-508, Sec. 4118(f)(1)(K), 
substituted ``payments for physicians' services'' for ``physicians' 
services''.
    Subsec. (d)(3)(A)(i). Pub. L. 101-508, Sec. 4105(a)(3)(A), inserted 
``except as provided in clause (iii),'' after ``subparagraph (B),''.
    Subsec. (d)(3)(A)(iii). Pub. L. 101-508, Sec. 4105(a)(3)(B), added 
cl. (iii).
    Subsec. (d)(3)(B)(i). Pub. L. 101-508, Sec. 4118(f)(1)(L)(i)(II), 
which directed amendment of cl. (i) by substituting ``services in such 
category'' for ``physicians' services (as defined in subsection 
(f)(5)(A))'', was executed by making the substitution for ``physicians' 
services (as defined in section (f)(5)(A))'' to reflect the probable 
intent of Congress.
    Pub. L. 101-508, Sec. 4118(f)(1)(L)(i)(I), substituted ``update for 
a category of physicians' services for a year'' for ``update for a 
year''.
    Subsec. (d)(3)(B)(ii). Pub. L. 101-508, Sec. 4118(f)(1)(L)(ii), 
inserted ``more than'' after ``decrease of'' in introductory provisions 
and struck out ``more than'' before ``2 percentage points'' in subcl. 
(I).
    Subsec. (e)(1)(A). Pub. L. 101-508, Sec. 4118(c)(1), substituted 
``subparagraphs (B) and (C)'' for ``subparagraph (B)'' in introductory 
provisions.
    Subsec. (e)(1)(C). Pub. L. 101-508, Sec. 4118(c)(2), added subpar. 
(C).
    Subsec. (f)(1)(C). Pub. L. 101-508, Sec. 4105(c)(1), substituted 
``1991'' for ``1990'' after ``beginning with''.
    Subsec. (f)(1)(D)(i). Pub. L. 101-508, Sec. 4118(f)(1)(M), 
substituted ``portions of calendar years'' for ``calendar years''.
    Subsec. (f)(2)(A). Pub. L. 101-508, Sec. 4118(b)(1), (f)(1)(N)(i), 
in introductory provisions, substituted ``the performance standard rate 
of increase, for all physicians' services and for each category of 
physicians' services,'' for ``each performance standard rate of 
increase'' and ``product'' for ``sum''.
    Pub. L. 101-508, Sec. 4118(b)(6), substituted ``minus 1, multiplied 
by 100, and reduced'' for ``reduced'' in concluding provisions.
    Subsec. (f)(2)(A)(i). Pub. L. 101-508, Sec. 4118(f)(1)(N)(ii), as 
amended by Pub. L. 103-432, Sec. 126(g)(7), substituted ``all 
physicians' services or for the category of physicians' services, 
respectively,'' for ``physicians' services (as defined in subsection 
(f)(5)(A) of this section)''.
    Pub. L. 101-508, Sec. 4118(f)(1)(M), substituted ``portions of 
calendar years'' for ``calendar years''.
    Pub. L. 101-508, Sec. 4118(b)(2), (3), substituted ``1 plus the 
Secretary's'' for ``the Secretary's'' and ``percentage increase (divided 
by 100)'' for ``percentage increase''.
    Subsec. (f)(2)(A)(ii). Pub. L. 101-508, Sec. 4118(b)(2), (4), 
substituted ``1 plus the Secretary's'' for ``the Secretary's'' and 
inserted ``(divided by 100)'' after ``decrease''.
    Subsec. (f)(2)(A)(iii). Pub. L. 101-508, Sec. 4118(f)(1)(N)(iii), 
substituted ``all physicians' services or of the category of physicians' 
services, respectively,'' for ``physicians' services''.
    Pub. L. 101-508, Sec. 4118(b)(2), (5), substituted ``1 plus the 
Secretary's'' for ``the Secretary's'' and inserted ``(divided by 100)'' 
after ``percentage growth''.
    Subsec. (f)(2)(A)(iv). Pub. L. 101-508, Sec. 4118(e), (f)(1)(N)(iv), 
substituted ``all physicians' services or of the category of physicians' 
services, respectively,'' for ``physicians' services (as defined in 
subsection (f)(5)(A) of this section)'' and inserted ``including changes 
in law and regulations affecting the percentage increase described in 
clause (i)'' after ``law or regulations''.
    Pub. L. 101-508, Sec. 4118(b)(2), (4), substituted ``1 plus the 
Secretary's'' for ``the Secretary's'' and ``decrease (divided by 100)'' 
for ``decrease''.
    Subsec. (f)(2)(C). Pub. L. 101-508, Sec. 4105(c)(2), added subpar. 
(C).
    Subsec. (f)(4)(A). Pub. L. 101-508, Sec. 4118(f)(1)(O), substituted 
``subparagraph (B)'' for ``paragraph (B)''.
    Subsec. (f)(4)(B). Pub. L. 101-508, Sec. 4118(f)(1)(P), substituted 
``specifically approved by law'' for ``Congress specifically approves 
the plan''.
    Subsec. (g)(2)(A). Pub. L. 101-508, Sec. 4118(f)(1)(Q), inserted 
``other than radiologist services subject to section 1395m(b) of this 
title,'' after ``during 1991,'' in introductory provisions.
    Pub. L. 101-508, Sec. 4116, inserted at end ``In the case of 
evaluation and management services (as specified in section 
1395u(b)(16)(B)(ii) of this title), the preceding sentence shall be 
applied by substituting `40 percent' for `25 percent'.''
    Subsec. (g)(2)(B). Pub. L. 101-508, Sec. 4118(f)(1)(Q), inserted 
``other than radiologist services subject to section 1395m(b) of this 
title,'' after ``during 1992,'' in introductory provisions.
    Subsec. (i)(1)(A). Pub. L. 101-508, Sec. 4118(f)(1)(R), substituted 
``adjusted historical payment basis (as defined in subsection 
(a)(2)(D)(i)'' for ``historical payment basis (as defined in subsection 
(a)(2)(C)(i)''.
    Subsec. (i)(2). Pub. L. 101-508, Sec. 4107(a)(1), added par. (2).
    Subsec. (i)(3). Pub. L. 101-508, Sec. 4118(k), added par. (3).
    Subsec. (j)(1). Pub. L. 101-508, Sec. 4118(f)(1)(S), which directed 
the amendment of par. (1) by substituting ``(as defined by the 
Secretary) and all other physicians' services'' for ``, and such other'' 
and all that follows through the period was executed by making the 
substitution for ``, and such other category or categories of 
physicians' services as the Secretary, from time to time, defines in 
regulation.'' to reflect the probable intent of Congress.

                         Change of Name

    Committee on Energy and Commerce of House of Representatives treated 
as referring to Committee on Commerce of House of Representatives by 
section 1(a) of Pub. L. 104-14, set out as a note preceding section 21 
of Title 2, The Congress.


                    Effective Date of 1999 Amendment

    Pub. L. 106-113, div. B, Sec. 1000(a)(6) [title II, Sec. 211(d)], 
Nov. 29, 1999, 113 Stat. 1536, 1501A-350, provided that: ``The 
amendments made by this section [amending this section and sections 
1395b-6 and 1395l of this title] shall be effective in determining the 
conversion factor under section 1848(d) of the Social Security Act (42 
U.S.C. 1395w-4(d)) for years beginning with 2001 and shall not apply to 
or affect any update (or any update adjustment factor) for any year 
before 2001.''
    Amendment by section 1000(a)(6) [title III, Sec. 321(k)(5)] of Pub. 
L. 106-113 effective as if included in the enactment of the Balanced 
Budget Act of 1997, Pub. L. 105-33, except as otherwise provided, see 
section 1000(a)(6) [title III, Sec. 321(m)] of Pub. L. 106-113, set out 
as a note under section 1395d of this title.


                    Effective Date of 1997 Amendment

    Amendment by section 4022(b)(2)(B), (C) of Pub. L. 105-33 effective 
Nov. 1, 1997, the date of termination of the Prospective Payment 
Assessment Commission and the Physician Payment Review Commission, see 
section 4022(c)(2) of Pub. L. 105-33 set out as an Effective Date; 
Transition; Transfer of Functions note under section 1395b-6 of this 
title.
    Amendment by section 4102(d) of Pub. L. 105-33 applicable to items 
and services furnished on or after Jan. 1, 1998, see section 4102(e) of 
Pub. L. 105-33, set out as a note under section 1395l of this title.
    Amendment by section 4103(d) of Pub. L. 105-33 applicable to items 
and services furnished on or after Jan. 1, 2000, see section 4103(e) of 
Pub. L. 105-33, set out as a note under section 1395l of this title.
    Amendment by section 4104(d) of Pub. L. 105-33 applicable to items 
and services furnished on or after Jan. 1, 1998, see section 4104(e) of 
Pub. L. 105-33, set out as a note under section 1395l of this title.
    Amendment by section 4105(a)(2) of Pub. L. 105-33 applicable to 
items and services furnished on or after July 1, 1998, see section 
4105(d)(1) of Pub. L. 105-33, set out as a note under section 1395m of 
this title.
    Amendment by section 4106(b) of Pub. L. 105-33 applicable to bone 
mass measurements performed on or after July 1, 1998, see section 
4106(d) of Pub. L. 105-33, set out as a note under section 1395x of this 
title.
    Section 4502(a)(2) of Pub. L. 105-33 provided that: ``The amendment 
made by this subsection [amending this section] shall apply to the 
update for years beginning with 1999.''
    Section 4504(b) of Pub. L. 105-33 provided that: ``The amendments 
made by subsection (a) [amending this section] shall apply to services 
furnished on or after January 1, 1998.''
    Amendment by section 4714(b)(2) of Pub. L. 105-33 applicable to 
payment for (and with respect to provider agreements with respect to) 
items and services furnished on or after Aug. 5, 1997, see section 
4714(c) of Pub. L. 105-33, set out as a note under section 1396a of this 
title.


                    Effective Date of 1994 Amendment

    Amendment by section 123(a) of Pub. L. 103-432 applicable to 
services furnished on or after Oct. 31, 1994, but inapplicable to 
services of nonparticipating supplier or other person furnished before 
Jan. 1, 1995, see section 123(f)(1) of Pub. L. 103-432, set out as a 
note under section 1395l of this title.
    Section 123(f)(5) of Pub. L. 103-432 provided that: ``The amendment 
made by subsection (d) [amending this section] shall apply to reports 
for years beginning with 1995.''
    Amendment by section 126(b)(6), (g)(2)(B), (5)-(7), (10)(A) of Pub. 
L. 103-432 effective as if included in the enactment of Pub. L. 101-508, 
see section 126(i) of Pub. L. 103-432, set out as a note under section 
1395m of this title.


                    Effective Date of 1993 Amendment

    Section 13511(b) of Pub. L. 103-66 provided that: ``The amendments 
made by this section [amending this section] shall apply to services 
furnished on or after January 1, 1994; except that amendment made by 
subsection (a)(2) shall not apply--
        ``(1) to volume performance standard rates of increase 
    established under section 1848(f) of the Social Security Act 
    [subsec. (f) of this section] for fiscal years before fiscal year 
    1994, and
        ``(2) to adjustment in updates in the conversion factors for 
    physicians' services under section 1848(d)(3)(B) of such Act for 
    physicians' services to be furnished in calendar years before 
    1996.''
    Section 13514(d) of Pub. L. 103-66 provided that: ``The amendments 
made by this section [amending this section] shall apply to services 
furnished on or after January 1, 1994.''
    Amendment by section 13515(a)(1) of Pub. L. 103-66 applicable to 
services furnished on or after Jan. 1, 1994, see section 13515(d) of 
Pub. L. 103-66, set out as a note under section 1395u of this title.
    Section 13517(c) of Pub. L. 103-66 provided that: ``The amendments 
made by subsection (a) [amending this section] shall apply to services 
furnished on or after January 1, 1994.''
    Section 13518(c) of Pub. L. 103-66 provided that: ``The amendment 
made by subsection (a) [amending this section] shall apply to services 
furnished on or after January 1, 1995.''


                    Effective Date of 1990 Amendment

    Amendment by section 4102(b), (g)(2) of Pub. L. 101-508 applicable 
to services furnished on or after Jan. 1, 1991, see section 4102(i)(1) 
of Pub. L. 101-508, set out as a note under section 1395m of this title.
    Amendment by section 4104(b)(2) of Pub. L. 101-508 applicable to 
services furnished on or after Jan. 1, 1991, see section 4104(d) of Pub. 
L. 101-508, set out as a note under section 1395l of this title.
    Amendment by section 4106(b)(1) of Pub. L. 101-508 applicable to 
services furnished after 1991, see section 4106(d)(2) of Pub. L. 101-
508, set out as a note under section 1395u of this title.
    Section 4107(a)(2) of Pub. L. 101-508, as amended by Pub. L. 103-
432, title I, Sec. 126(d)(2), Oct. 31, 1994, 108 Stat. 4415, provided 
that: ``Section 1848(i)(2) of the Social Security Act [subsec. (i)(2) of 
this section], as added by the amendment made by paragraph (1), shall 
apply to services furnished in 1991 in the same manner as it applies to 
services furnished after 1991. In applying the previous sentence, the 
prevailing charge shall be substituted for the fee schedule amount. In 
applying section 1848(g)(2)(D) of the Social Security Act for services 
of an assistant-at-surgery furnished during 1991, the recognized payment 
amount shall not exceed the maximum amount specified under section 
1848(i)(2)(A) of such Act (as applied under this paragraph in such 
year).''
    Section 4107(c) of Pub. L. 101-508, as amended by Pub. L. 103-432, 
title I, Sec. 126(d)(1), Oct. 31, 1994, 108 Stat. 4415, provided that: 
``The amendment made by subsection (a)(1) [amending this section] shall 
apply with respect to services furnished on or after January 1, 1992.''
    Section 4109(b) of Pub. L. 101-508 provided that: ``The amendment 
made by subsection (a) [amending this section] shall apply to services 
furnished on or after January 1, 1992. In applying section 1848(d)(1)(B) 
of the Social Security Act [subsec. (d)(1)(B) of this section] (in 
computing the initial budget-neutral conversion factor for 1991), the 
Secretary shall compute such factor assuming that section 1848(b)(3) of 
such Act (as added by the amendment made by subsection (a)) had applied 
to physicians' services furnished during 1991.''

                          Transfer of Functions

    Physician Payment Review Commission (PPRC) was terminated and its 
assets and staff transferred to the Medicare Payment Advisory Commission 
(MedPAC) by section 4022(c)(2), (3) of Pub. L. 105-33, set out as a note 
under section 1395b-6 of this title. Section 4022(c)(2), (3) further 
provided that MedPAC was to be responsible for preparation and 
submission of reports required by law to be submitted by PPRC, and that, 
for that purpose, any reference in law to PPRC was to be deemed, after 
the appointment of MedPAC, to refer to MedPAC.


            One-Time Publication of Information on Transition

    Pub. L. 106-113, div. B, Sec. 1000(a)(6) [title II, 
Sec. 211(a)(2)(C)], Nov. 29, 1999, 113 Stat. 1536, 1501A-347, provided 
that: ``The Secretary of Health and Human Services shall cause to have 
published in the Federal Register, not later than 90 days after the date 
of the enactment of this section [Nov. 29, 1999], the Secretary's 
determination, based upon the best available data, of--
        ``(i) the allowed expenditures under subclauses (I) and (II) of 
    subsection (d)(4)(C)(ii) of section 1848 of the Social Security Act 
    (42 U.S.C. 1395w-4), as added by subsection (a)(1)(B), for the 9-
    month period beginning on April 1, 1999, and for 1999;
        ``(ii) the estimated actual expenditures described in subsection 
    (d) of such section for 1999; and
        ``(iii) the sustainable growth rate under subsection (f) of such 
    section for 2000.''


   Use of Data Collected by Organizations and Entities in Determining 
                    Practice Expense Relative Values

    Pub. L. 106-113, div. B, Sec. 1000(a)(6) [title II, Sec. 212], Nov. 
29, 1999, 113 Stat. 1536, 1501A-350, provided that:
    ``(a) In General.--The Secretary of Health and Human Services shall 
establish by regulation (after notice and opportunity for public 
comment) a process (including data collection standards) under which the 
Secretary will accept for use and will use, to the maximum extent 
practicable and consistent with sound data practices, data collected or 
developed by entities and organizations (other than the Department of 
Health and Human Services) to supplement the data normally collected by 
that Department in determining the practice expense component under 
section 1848(c)(2)(C)(ii) of the Social Security Act (42 U.S.C. 1395w-
4(c)(2)(C)(ii)) for purposes of determining relative values for payment 
for physicians' services under the fee schedule under section 1848 of 
such Act (42 U.S.C. 1395w-4). The Secretary shall first promulgate such 
regulation on an interim final basis in a manner that permits the 
submission and use of data in the computation of practice expense 
relative value units for payment rates for 2001.
    ``(b) Publication of Information.--The Secretary shall include, in 
the publication of the estimated and final updates under section 1848(c) 
of such Act (42 U.S.C. 1395w-4(c)) for payments for 2001 and for 2002, a 
description of the process established under subsection (a) for the use 
of external data in making adjustments in relative value units and the 
extent to which the Secretary has used such external data in making such 
adjustments for each such year, particularly in cases in which the data 
otherwise used are inadequate because such data are not based upon a 
large enough sample size to be statistically reliable.''


  Consultation With Organizations in Establishing Payment Amounts for 
                     Services Provided by Physicians

    Section 4105(a)(3) of Pub. L. 105-33 provided that: ``In 
establishing payment amounts under section 1848 of the Social Security 
Act [this section] for physicians' services consisting of diabetes 
outpatient self-management training services, the Secretary of Health 
and Human Services shall consult with appropriate organizations, 
including such organizations representing individuals or medicare 
beneficiaries with diabetes.''


Requirements for Developing New Resource-Based Practice Expense Relative 
                               Value Units

    Section 4505(d) of Pub. L. 105-33 provided that:
    ``(1) Development.--For purposes of section 1848(c)(2)(C)(ii) of the 
Social Security Act [subsec. (c)(2)(C)(ii) of this section], the 
Secretary of Health and Human Services shall develop new resource-based 
relative value units. In developing such units the Secretary shall--
        ``(A) utilize, to the maximum extent practicable, generally 
    accepted cost accounting principles which (i) recognize all staff, 
    equipment, supplies, and expenses, not just those which can be tied 
    to specific procedures, and (ii) use actual data on equipment 
    utilization and other key assumptions;
        ``(B) consult with organizations representing physicians 
    regarding methodology and data to be used; and
        ``(C) develop a refinement process to be used during each of the 
    4 years of the transition period.
    ``(2) Report.--The Secretary shall transmit a report by March 1, 
1998, on the development of resource-based relative value units under 
paragraph (1) to the Committee on Ways and Means and the Committee on 
Commerce of the House of Representatives and the Committee on Finance of 
the Senate. The report shall include a presentation of data to be used 
in developing the value units and an explanation of the methodology.
    ``(3) Notice of proposed rulemaking.--The Secretary shall publish a 
notice of proposed rulemaking with the new resource-based relative value 
units on or before May 1, 1998, and shall allow for a 90-day public 
comment period.
    ``(4) Items included.--The new proposed rule shall consider the 
following:
        ``(A) Impact projections which compare new proposed payment 
    amounts on data on actual physician practice expenses.
        ``(B) Impact projections for hospital-based and other 
    specialties, geographic payment localities, and urban versus rural 
    localities.''


           Application of Certain Budget Neutrality Provisions

    Section 4505(f)(2) of Pub. L. 105-33 provided that: ``In 
implementing the amendment made by paragraph (1)(A)(ii) [amending this 
section], the provisions of clauses (ii)(II) and (iii) of section 
1848(c)(2)(B) of the Social Security Act (42 U.S.C. 1395w-4(c)(2)(B)) 
shall apply in the same manner as they apply to adjustments under clause 
(ii)(I) of such section.''


     Development of Resource-Based Methodology for Practice Expenses

    Section 121(a) of Pub. L. 103-432 provided that:
    ``(1) In general.--The Secretary of Health and Human Services shall 
develop a methodology for implementing in 1998 a resource-based system 
for determining practice expense relative value units for each 
physicians' service. The methodology utilized shall recognize the staff, 
equipment, and supplies used in the provision of various medical and 
surgical services in various settings.
    ``(2) Report.--The Secretary shall transmit a report by June 30, 
1996, on the methodology developed under paragraph (1) to the Committees 
on Ways and Means and Energy and Commerce [Committee on Energy and 
Commerce now Committee on Commerce] of the House of Representatives and 
the Committee on Finance of the Senate. The report shall include a 
presentation of data utilized in developing the methodology and an 
explanation of the methodology.''


           Application of Subsection (c)(2)(B)(ii)(II), (iii)

    Section 121(b)(3) of Pub. L. 103-432 provided that: ``In 
implementing the amendment made by paragraph (1)(C) [amending this 
section], the provisions of clauses (ii)(II) and (iii) of section 
1848(c)(2)(B) of the Social Security Act [subsec. (c)(2)(B)(ii)(II), 
(iii) of this section] shall apply in the same manner as they apply to 
adjustments under clause (ii)(I) of such section.''


                        Report on Review Process

    Section 122(c) of Pub. L. 103-432 provided that: ``Not later than 1 
year after the date of the enactment of this Act [Oct. 31, 1994], the 
Secretary of Health and Human Services shall study and report to the 
Committee on Finance of the Senate and the Committee on Ways and Means 
and the Committee on Energy and Commerce [now Committee on Commerce] of 
the House of Representatives on--
        ``(1) the data necessary to review and revise the indices 
    established under section 1848(e)(1)(A) of the Social Security Act 
    [subsec. (e)(1)(A) of this section], including--
            ``(A) the shares allocated to physicians' work effort, 
        practice expenses (other than malpractice expenses), and 
        malpractice expenses;
            ``(B) the weights assigned to the input components of such 
        shares; and
            ``(C) the index values assigned to such components;
        ``(2) any limitations on the availability of data necessary to 
    review and revise such indices at least every three years;
        ``(3) ways of addressing such limitations, with particular 
    attention to the development of alternative data sources for input 
    components for which current index values are based on data 
    collected less frequently than every three years; and
        ``(4) the costs of developing more accurate and timely data.''


                  Relative Value for Pediatric Services

    Section 124(a) of Pub. L. 103-432 provided that: ``The Secretary of 
Health and Human Services shall fully develop, by not later than July 1, 
1995, relative values for the full range of pediatric physicians' 
services which are consistent with the relative values developed for 
other physicians' services under section 1848(c) of the Social Security 
Act [subsec. (c) of this section]. In developing such values, the 
Secretary shall conduct such refinements as may be necessary to produce 
appropriate estimates for such relative values.''


                      Budget Neutrality Adjustment

    For provisions requiring reduction of relative values established 
under subsec. (c) of this section and amounts determined under subsec. 
(a)(2)(B)(ii)(I) of this section for 1994 (to be applied for that year 
and subsequent years) in order to assure that the amendments to this 
section and section 1395u of this title by section 13515(a) of Pub. L. 
103-66 will not result in expenditures under this part that exceed the 
amount of such expenditures that would have been made if such amendments 
had not been made, see section 13515(b) of Pub. L. 103-66, set out as a 
note under section 1395u of this title.
    Section 13518(b) of Pub. L. 103-66 provided that: ``Notwithstanding 
any other provision of law, the Secretary of Health and Human Services 
shall implement the amendment made by subsection (a) [amending this 
section] in a manner to assure that such amendment will result in 
expenditures under part B of title XVIII of the Social Security Act 
[this part] in 1995 for services described in such amendment that shall 
be equal to the amount of expenditures for such services that would have 
been made if such amendment had not been made.''


 Ancillary Policies; Adjustment for Independent Laboratories Furnishing 
                      Physician Pathology Services

    Section 4104(c) of Pub. L. 101-508 provided: ``The Secretary of 
Health and Human Services, in establishing ancillary policies under 
section 1848(c)(3) of the Social Security Act [subsec. (c)(3) of this 
section], shall consider an appropriate adjustment to reflect the 
technical component of furnishing physician pathology services through a 
laboratory that is independent of a hospital and separate from an 
attending or consulting physician's office.''


                Computation of Conversion Factor for 1992

    Section 4105(b)(2) of Pub. L. 101-508, as amended by Pub. L. 103-
432, title I, Sec. 126(g)(2)(A)(i), Oct. 31, 1994, 108 Stat. 4415, 
provided that: ``In computing the conversion factor under section 
1848(d)(1)(B) of the Social Security Act for 1992 [subsec. (d)(1)(B) of 
this section], the Secretary of Health and Human Services shall 
determine the estimated aggregate amount of payments under part B of 
title XVIII of such Act [this part] for physicians' services in 1991 
assuming that the amendment made by this subsection [amending section 
1395u of this title] did not apply.''
    Section 4106(c) of Pub. L. 101-508, as amended by Pub. L. 103-432, 
title I, Sec. 126(g)(3), Oct. 31, 1994, 108 Stat. 4416, provided that: 
``In computing the conversion factor under section 1848(d)(1)(B) of the 
Social Security Act [subsec. (d)(1)(B) of this section] for 1992, the 
Secretary of Health and Human Services shall determine the estimated 
aggregate amount of payments under part B [this part] for physicians' 
services in 1991 assuming that the amendments made by this section 
[amending this section, section 1395u of this title, and provisions set 
out as a note under section 1395u of this title] (notwithstanding 
subsection (d) [set out as an Effective Date of 1990 Amendment note 
under section 1395u of this title]) applied to all services furnished 
during such year.''


                Publication of Performance Standard Rates

    Section 4105(d) of Pub. L. 101-508, as amended by Pub. L. 103-432, 
title I, Sec. 126(g)(2)(C), Oct. 31, 1994, 108 Stat. 4416, provided 
that: ``Not later than 45 days after the date of the enactment of this 
Act [Nov. 5, 1990], the Secretary of Health and Human Services, based on 
the most recent data available, shall estimate and publish in the 
Federal Register the performance standard rates of increase specified in 
section 1848(f)(2)(C) of the Social Security Act [subsec. (f)(2)(C) of 
this section] for fiscal year 1991.''


  Study of Regional Variations in Impact of Medicare Physician Payment 
                                 Reform

    Section 4115 of Pub. L. 101-508 provided that:
    ``(a) Study.--The Secretary of Health and Human Services shall 
conduct a study of--
        ``(1) factors that may explain geographic variations in Medicare 
    reasonable charges for physicians' services that are not 
    attributable to variations in physician practice costs (including 
    the supply of physicians in an area and area variations in the mix 
    of services furnished);
        ``(2) the extent to which the geographic practice cost indices 
    applied under the fee schedule established under section 1848 of the 
    Social Security Act [this section] accurately reflect variations in 
    practice costs and malpractice costs (and alternative sources of 
    information upon which to base such indices);
        ``(3) the impact of the transition to a national, resource-based 
    fee schedule for physicians' services under Medicare on access to 
    physicians' services in areas that experience a disproportionately 
    large reduction in payments for physicians' services under the fee 
    schedule by reason of such variations; and
        ``(4) appropriate adjustments or modifications in the transition 
    to, or manner of determining payments under, the fee schedule 
    established under section 1848 of the Social Security Act, to 
    compensate for such variations and ensure continued access to 
    physicians' services for Medicare beneficiaries in such areas.
    ``(b) Report.--By not later than July 1, 1992, the Secretary shall 
submit to Congress a report on the study conducted under subsection 
(a).''


          Statewide Fee Schedule Areas for Physicians' Services

    Section 4117 of Pub. L. 101-508, as amended by Pub. L. 103-432, 
title I, Sec. 126(f), Oct. 31, 1994, 108 Stat. 4415, provided that: 
``Notwithstanding section 1848(j)(2) of the Social Security Act (42 
U.S.C. 1395w-4(j)(2)), in the case of the States of Nebraska and 
Oklahoma the Secretary of Health and Human Services (Secretary) shall 
treat the State as a single fee schedule area for purposes of 
determining--
        ``(1) the adjusted historical payment basis (as defined in 
    section 1848(a)(2)(D) of such Act (42 U.S.C. 1395w-4(a)(2)(D))), and
        ``(2) the fee schedule amount (as referred to in section 1848(a) 
    (42 U.S.C. 1395w-4(a)) of such Act),
for physicians' services (as defined in section 1848(j)(3) of such Act 
(42 U.S.C. 1395w-4(j)(3))) furnished on or after January 1, 1992.''


                                 Studies

    Pub. L. 101-239, title VI, Sec. 6102(d), Dec. 19, 1989, 103 Stat. 
2185, as amended by Pub. L. 103-432, title I, Sec. 126(h)(1), Oct. 31, 
1994, 108 Stat. 4416; Pub. L. 105-362, title VI, Sec. 601(b)(5), Nov. 
10, 1998, 112 Stat. 3286, provided that:
    ``(1) GAO study of alternative payment methodology for malpractice 
component.--The Comptroller General shall provide for--
        ``(A) a study of alternative ways of paying, under section 1848 
    of the Social Security Act [this section], for the malpractice 
    component for physicians' services, in a manner that would assure, 
    to the extent practicable, payment for medicare's share of 
    malpractice insurance premiums, and
        ``(B) a study to examine alternative resolution procedures for 
    malpractice claims respecting professional services furnished under 
    the medicare program.
The examination under subparagraph (B) shall include review of the 
feasibility of establishing procedures that involve no-fault payment or 
that involve mandatory arbitration. By not later than April 1, 1991, the 
Comptroller General shall submit a report to Congress on the results of 
the studies.
    ``(2) Study of payments to risk-contracting plans.--The Secretary of 
Health and Human Services (in this subsection referred to as the 
`Secretary') shall conduct a study of how payments under section 1848 of 
the Social Security Act may affect payments to eligible organizations 
with risk-sharing contracts under section 1876 of such Act [section 
1395mm of this title]. By not later than April 1, 1990, the Secretary 
shall submit a report to Congress on such study and shall include in the 
report such recommendations for such changes in the methodology for 
payment under such risk-sharing contracts as the Secretary deems 
appropriate.
    ``(3) Study of volume performance standard rates of increase by 
geography, specialty, and type of service.--The Secretary shall conduct 
a study of the feasibility of establishing, under section 1848(f) of the 
Social Security Act [subsec. (f) of this section], separate performance 
standard rates of increase for services furnished by or within each of 
the following (including combinations of the following):
        ``(A) Geographic area (such as a region, State, or other area).
        ``(B) Specialty or group of specialties of physicians.
        ``(C) Type of services (such as primary care, services of 
    hospital-based physicians, and other inpatient services).
Such study shall also include the scope of services included within, or 
excluded from, the rate of increase in expenditure system. By not later 
than July 1, 1990, the Secretary shall submit a report to Congress on 
such study and shall include in the report such recommendations 
respecting the feasibility of establishing separate performance standard 
rates of increase in expenditures as the Secretary deems appropriate.
    ``[(4) Repealed. Pub. L. 105-362, title VI, Sec. 601(b)(5), Nov. 10, 
1998, 112 Stat. 3286.]
    ``(5) Commission study of payment for practice expenses.--The 
Physician Payment Review Commission shall conduct a study of--
        ``(A) the extent to which practice costs and malpractice costs 
    vary by geographic locality (including region, State, Metropolitan 
    Statistical Areas, or other areas and by specialty),
        ``(B) the extent to which available geographic practice-cost 
    indices accurately reflect practice costs and malpractice costs in 
    rural areas,
        ``(C) which geographic units would be most appropriate to use in 
    measuring and adjusting practice costs and malpractice costs,
        ``(D) appropriate methods for allocating malpractice expenses to 
    particular procedures which could be incorporated into the 
    determination of relative values for particular procedures using a 
    consensus panel and other appropriate methodologies,
        ``(E) the effect of alternative methods of allocating 
    malpractice expenses on medicare expenditures by specialty, type of 
    service, and by geographic area, and
        ``(F) the special circumstances of rural independent 
    laboratories in determining the geographic cost-of-practice index.
By not later than July 1, 1991, the Commission shall submit a report to 
the Committees on Ways and Means and Energy and Commerce of the House of 
Representatives and the Committee on Finance of the Senate on the study 
and shall include in the report such recommendations as it deems 
appropriate.
    ``(6) Commission study of geographic payment areas.--The Physician 
Payment Review Commission shall conduct a study of the feasibility and 
desirability of using Metropolitan Statistical Areas or other payment 
areas for purposes of payment for physicians' services under part B of 
title XVIII of the Social Security Act [this part]. By not later than 
July 1, 1991, the Commission shall submit a report to Congress on such 
study and shall include in the report recommendations on the 
desirability of retaining current carrier-wide localities, changing to a 
system of statewide localities, or adopting Metropolitan Statistical 
Areas or other payment areas for purposes of payment under such part B.
    ``(7) Commission study of payment for non-physician providers of 
medicare services.--The Physician Payment Review Commission shall 
conduct a study of the implications of a resource-based fee schedule for 
physicians' services for non-physician practitioners, such as physician 
assistants, clinical psychologists, nurse midwives, and other health 
practitioners whose services can be billed under the medicare program on 
a fee-for-service basis. The study shall address (A) what the proper 
level of payment should be for these practitioners, (B) whether or not 
adjustments to their payments should be subject to the medicare volume 
performance standard process, and (C) what update to use for services 
outside the medicare volume performance standard process. The Commission 
shall submit a report to Congress on such study by not later than July 
1, 1991.
    ``(8) Commission study of physician fees under medicaid.--The 
Physician Payment Review Commission shall conduct a study on physician 
fees under State medicaid programs established under title XIX of the 
Social Security Act [subchapter XIX of this chapter]. The Commission 
shall specifically examine in such study the adequacy of physician 
reimbursement under such programs, physician participation in such 
programs, and access to care by medicaid beneficiaries. By no later than 
July 1, 1991, the Commission shall submit a report to Congress on such 
study and shall include such recommendations as the Commission deems 
appropriate.
    ``(9) GAO study on physician anti-trust issues.--The Comptroller 
General shall conduct a study of the effect of anti-trust laws on the 
ability of physicians to act in groups to educate and discipline peers 
of such physicians in order to reduce and eliminate ineffective practice 
patterns and inappropriate utilization. The study shall further address 
anti-trust issues as they relate to the adoption of practice guidelines 
by third-party payers and the role that practice guidelines might play 
as a defense in malpractice cases. By no later than July 1, 1991, the 
Comptroller General shall submit a report to Congress on such study and 
shall make such recommendations as the Comptroller General deems 
appropriate.''
    [Section 126(h)(1) of Pub. L. 103-432 provided that the amendment 
made by that section to section 6102(d) of Pub. L. 101-239, set out 
above, is effective Oct. 31, 1994.]


                   Distribution of Model Fee Schedule

    Section 6102(e)(11) of Pub. L. 101-239, as amended by Pub. L. 101-
508, title IV, Sec. 4118(f)(2)(E), Nov. 5, 1990, 104 Stat. 1388-70, 
provided that: ``By September 1, 1990, the Secretary of Health and Human 
Services shall develop a Model Fee Schedule, using the methodology set 
forth in section 1848 of the Social Security Act [this section]. The 
Model Fee Schedule shall include as many services as the Secretary of 
Health and Human Services concludes can be assigned valid relative 
values. The Secretary of Health and Human Services shall submit the 
Model Fee Schedule to the appropriate committees of Congress and make it 
generally available to the public.''

                  Section Referred to in Other Sections

    This section is referred to in sections 1395a, 1395b-6, 1395l, 
1395m, 1395u, 1395w-22, 1395w-23, 1395y, 1395rr, 1395ww of this title; 
title 5 section 8904.
