To establish under the Medicare Program under title XVIII of the Social Security Act incentives to health care providers for delivering high-quality, cost-effective health care to Medicare beneficiaries.

June 24, 2003

Mr. KING of Iowa introduced the following bill; which was referred to the Committee on Ways and Means

To establish under the Medicare Program under title XVIII of the Social Security Act incentives to health care providers for delivering high-quality, cost-effective health care to Medicare beneficiaries.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Medicare Value and Quality Act of 2003'.

SEC. 2. FINDINGS.

The House makes the following findings:

(1) The United States Government should reward physicians, hospitals, and other health care providers that provide high-quality, cost-effective health care to beneficiaries under the medicare program.

(2) The Journal of the American Medical Association has published quality indicators in an article entitled `Quality of Medical Care Delivered to Medicare Beneficiaries: A Profile at State and National Levels'.

(3) The cost of health care is--

(A) reflected in the type and volume of physicians' services and in physician ordering and prescribing behavior; and

(B) reflected in the amount of the average payment to hospitals under the medicare program for each medicare beneficiary in each State.

(4) Physician and hospital practice patterns contribute to the total cost and quality of care for each medicare beneficiary in each State.

(5) The original medicare fee-for-service program under parts A and B of title XVIII of the Social Security Act does not include a mechanism to pay for interventions designed to improve quality of care.

SEC. 3. TO ENCOURAGE THE PROVISION OF HIGH-QUALITY, COST-EFFECTIVE INPATIENT HOSPITAL SERVICES.

(a) PURPOSE- The purpose under this section is to encourage the provision of high-quality, cost-effective health care to beneficiaries under the medicare program under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) by providing incentive payments to hospitals located in States in which high-quality and cost-effective services are being provided in order to finance further quality improvements.

(b) INTENT- It is the intent of Congress to provide incentives for States to deliver high quality health care and to create incentives that assure medicare recognizes value in the products and services that the program purchases on behalf of medicare beneficiaries.

(c) MECHANISM-

(1) ESTABLISHMENT- Not later than 6 months after the date of enactment of this Act, the Secretary shall establish a mechanism under which--

(A) the Secretary provides economic incentives to providers of inpatient hospital services that deliver high-quality health care at low costs in accordance with the methodology established by the Agency for Healthcare Research and Quality under paragraph (2) with a 5 percent add-on bonus payment to providers of inpatient hospital services within the top ten performing States; and

(B) the Secretary necessarily recognizes and includes measurements that factor both the quality of care delivered in a medicare purchasing region or in the event that purchasing regions are not developed, then in a State, to medicare beneficiaries and consumption of resources, including but not limited to labor, technology, capital infrastructure and pharmaceuticals in the delivery of services to medicare beneficiaries under the medicare program under title XVIII of the Social Security Act.

(2) VALUE AND QUALITY RANKING METHODOLOGY-

(A) IN GENERAL- The Agency for Healthcare Research and Quality shall establish a value and quality ranking methodology under which the Secretary awards bonus payments to providers of inpatient hospital services located in those States that demonstrate that such providers in the State are providing high value because of the high-quality, cost-effective health care services being provided to medicare beneficiaries.

(B) BASIS- The methodology established under subparagraph (A) shall be based on the rank and performance on medicare quality indicators published annually in the Journal of the American Medical Association (JAMA) that uses Medicare's current quality of care measures. Cost rankings will be based on the Centers for Medicare and Medicaid Services (CMS) annual report ranking States based on average Medicare spending per recipient for each State.

(d) DEFINITIONS- In this section:

(1) PROVIDER OF INPATIENT HOSPITAL SERVICES- The term `provider of inpatient hospital services' means any individual or entity that receives payment under the medicare program under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) for providing an inpatient hospital service (as defined in section 1861(b) of such Act (42 U.S.C. 1395x(b))).

(2) SECRETARY- The term `Secretary' means the Secretary of Health and Human Services.

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