A bill to amend title XVIII of the Social Security Act to sunset the sustainable growth rate formula as of January 1, 2009, in order to expedite Congressional action in establishing a new physician payment system that would appropriately reimburse physicians by keeping pace with increases in medical practice costs and providing stable, positive Medicare updates.

Summary: Fix And Improve Reimbursement (FAIR) for Physicians Act of 2006 - Amends title XVIII (Medicare) of the Social Security Act to repeal the sustainable growth rate (SGR) formula.

Establishes the Physician Payment Update Commission to study and report to the appropriate congressional committees and the Medicare Payment Advisory Commission (MEDPAC) on all matters relating to payment rates under the Medicare physician fee schedule. Requires the Commission to develop recommendations for establishment of a new Medicare physician payment system that would keep pace with increases in medical practice costs and provide stable, positive Medicare updates.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fix And Improve Reimbursement (FAIR) 
for Physicians Act of 2006''.

SEC. 2. FINDINGS; PURPOSE.

    (a) Findings.--Congress makes the following findings:
            (1) The Medicare sustainable growth rate (SGR) formula, 
        used in establishing payment rates under the physician fee 
        schedule under the Medicare program, resulted in significant 
        payment cuts to physicians and health care professionals in 
        2002.
            (2) The Medicare SGR formula would have resulted in payment 
        cuts to physicians and health care professionals in 2003, 2004, 
        2005, and 2006 had Congress not intervened.
            (3) The Medicare SGR formula will result in a 5 percent 
        payment cut to physicians and health care professionals 
        effective January 1, 2007.
            (4) According to the Medicare Payment Advisory Commission 
        (MedPAC) and the Board of Trustees of the Federal Hospital 
        Insurance Trust Fund and the Federal Supplementary Medical 
        Insurance Trust Fund, the Medicare SGR formula will result in 
        substantial payment cuts to physicians and health care 
        professionals through at least 2015.
            (5) MedPAC does not support the impending payment cuts 
        described in paragraphs (3) and (4) and is concerned that such 
        consecutive annual payment cuts would threaten access to 
        physician services over time, particularly primary care 
        services.
            (6) MedPAC has raised concerns over current payment 
        policies that may discourage medical students and residents 
        from becoming primary care physicians because many Medicare 
        beneficiaries rely on primary care providers for important 
        health care management.
            (7) According to a 2006 American Medical Association 
        survey, if payment cuts to physicians under the Medicare 
        program go into effect, 45 percent of physicians plan to 
        decrease the number of new Medicare patients they accept, 50 
        percent of physicians plan to defer the purchase of information 
        technology, 37 percent of physicians who treat patients living 
        in rural communities will discontinue rural outreach services, 
        and 43 percent of physicians will decrease the number of new 
        TRICARE patients they accept.
            (8) MedPAC, who considers the Medicare SGR formula a 
        flawed, inequitable mechanism for controlling the volume of 
        services, first recommended repeal of the Medicare SGR formula 
        in 2001 and since then has consistently recommended repealing 
        the formula.
            (9) Annual actions by Congress to override the Medicare SGR 
        formula result in instability and unpredictability for 
        physicians, health care professionals, seniors, and individuals 
        with disabilities.
            (10) Annual actions by Congress to override the Medicare 
        SGR formula do not solve the long-term problem as the formula 
        extracts the added spending in future years by imposing ever 
        more drastic cuts.
            (11) Stable, positive updates under the Medicare physician 
        fee schedule that accurately reflect medical practice cost 
        increases are vital for encouraging and economically supporting 
        physicians' ability to make the significant financial 
        investment required for health information technology and 
        participation in quality improvement programs.
            (12) A stable payment system for physicians is critical to 
        preserve Medicare beneficiaries' access to high-quality health 
        care.
            (13) Adopting MedPAC's recommendation to update payments 
        for physicians' services under the Medicare program in 2007 and 
        2008 by the projected change in input prices less MedPAC's 
        expectation for productivity growth is necessary to allow 
        M.D.s, D.O.s, and health care professionals to continue to 
        provide access to high-quality Medicare services for all 
        Medicare beneficiaries while giving Congress time to develop an 
        alternative payment system that accurately reflects the costs 
        of providing care to Medicare beneficiaries
    (b) Purpose.--The purpose of this Act is to sunset the Medicare 
sustainable growth rate formula as of January 1, 2009, in order to 
expedite Congressional action in establishing a new physician payment 
system under the Medicare program that would appropriately reimburse 
physicians by keeping pace with increases in medical practice costs and 
providing stable, positive Medicare updates.

SEC. 3. SUNSET OF MEDICARE SUSTAINABLE GROWTH RATE FORMULA.

    (a) In General.--Subsection (f) of section 1848 of the Social 
Security Act (42 U.S.C. 1395w-4) is repealed.
    (b) Effective Date.--The repeal made by subsection (a) shall apply 
to services furnished on or after January 1, 2009.

SEC. 4. ESTABLISHMENT OF PHYSICIAN PAYMENT UPDATE COMMISSION.

    (a) Establishment.--
            (1) In general.--There is established a commission to be 
        known as the ``Physician Payment Update Commission'' (referred 
        to in this section as the ``Commission'').
            (2) Membership.--
                    (A) Composition.--The Commission shall be composed 
                of 17 members appointed by the Comptroller General of 
                the United States, upon the recommendation of the 
                Majority and Minority Leaders of the Senate.
                    (B) Date of appointments.--Members of the 
                Commission shall be appointed not later than 3 months 
                after the date of enactment of this Act.
            (3) Qualifications.--
                    (A) In general.--The membership of the Commission 
                shall include individuals with national recognition for 
                their expertise in health finance and economics, 
                actuarial science, integrated delivery systems, 
                allopathic and osteopathic medicine and other areas of 
                health services, and other related fields, who provide 
                a mix of different professionals, broad geographic 
                representation, and a balance between urban and rural 
                representatives.
                    (B) Inclusion.--The members of the Commission shall 
                include (but not be limited to) physicians and other 
                health professionals, employers, third-party payers, 
                individuals skilled in the conduct and interpretation 
                of biomedical, health services, and health economics 
                research and technology assessment. Such membership 
                shall also include representatives of consumers and the 
                elderly.
                    (C) Majority physicians and other health 
                professionals.--Individuals who are physicians or other 
                health professionals shall constitute a majority of the 
                membership of the Commission.
            (4) Term; vacancies.--
                    (A) Term.--A member shall be appointed for the life 
                of the Commission.
                    (B) Vacancies.--A vacancy on the Commission--
                            (i) shall not affect the powers of the 
                        Commission; and
                            (ii) shall be filled in the same manner as 
                        the original appointment was made.
            (5) Meetings.--The Commission shall meet at the call of the 
        Chairperson.
            (6) Quorum.--A majority of the members of the Commission 
        shall constitute a quorum, but a lesser number of members may 
        hold hearings.
            (7) Chairperson.--The Comptroller General shall designate a 
        member of the Commission, at the time of the appointment of the 
        member, as Chairperson.
    (b) Duties.--
            (1) Study.--The Commission shall conduct a study of all 
        matters relating to payment rates under the Medicare physician 
        fee schedule under section 1848 of the Social Security Act (42 
        U.S.C. 1395w-4).
            (2) Recommendations.--The Commission shall develop 
        recommendations on the establishment of a new physician payment 
        system under the Medicare program that would appropriately 
        reimburse physicians by keeping pace with increases in medical 
        practice costs and providing stable, positive Medicare updates.
            (3) Report.--Not later than December 1, 2007, the 
        Commission shall submit to the appropriate Committees of 
        Congress and the Medicare Payment Advisory Commission--
                    (A) a detailed statement of the findings and 
                conclusions of the Commission; and
                    (B) the recommendations of the Commission for such 
                legislation and administrative actions as the 
                Commission considers appropriate.
    (c) Powers.--
            (1) Hearings.--The Commission may hold such hearings, meet 
        and act at such times and places, take such testimony, and 
        receive such evidence as the Commission considers advisable to 
        carry out this section.
            (2) Information from federal agencies.--
                    (A) In general.--The Commission may secure directly 
                from a Federal agency such information as the 
                Commission considers necessary to carry out this 
                section.
                    (B) Provision of information.--On request of the 
                Chairperson of the Commission, the head of the agency 
                shall provide the information to the Commission.
            (3) Postal services.--The Commission may use the United 
        States mails in the same manner and under the same conditions 
        as other agencies of the Federal Government.
    (d) Commission Personnel Matters.--
            (1) Compensation of members.--
                    (A) In general.--Members of the Commission shall 
                serve without compensation in addition to the 
                compensation received for the services of the member as 
                an officer or employee of the Federal Government.
                    (B) Travel expenses.--A member of the Commission 
                shall be allowed travel expenses, including per diem in 
                lieu of subsistence, at rates authorized for an 
                employee of an agency under subchapter I of chapter 57 
                of title 5, United States Code, while away from the 
                home or regular place of business of the member in the 
                performance of the duties of the Commission.
            (2) Staff and support services.--
                    (A) Executive director.--The Chairperson shall 
                appoint an executive director of the Commission.
                    (B) Staff.--With the approval of the Commission, 
                the executive director may appoint such personnel as 
                the executive director considers appropriate.
                    (C) Applicability of civil service laws.--The staff 
                of the Commission shall be appointed without regard to 
                the provisions of title 5, United States Code, 
                governing appointments in the competitive service, and 
                shall be paid without regard to the provisions of 
                chapter 51 and subchapter III of chapter 53 of such 
                title (relating to classification and General Schedule 
                pay rates.
                    (D) Experts and consultants.--With the approval of 
                the Commission, the executive director may procure 
                temporary and intermittent services under section 
                3109(b) of title 5, United States Code.
    (e) Termination of Commission.--The Commission shall terminate 30 
days after the date on which the Commission submits the report of the 
Commission under subsection (b)(3).
    (f) Review and Response to Recommendations by the Medicare Payment 
Advisory Commission.--
            (1) In general.--Not later than January 1, 2008, the 
        Medicare Payment Advisory Commission shall--
                    (A) review the recommendations included in the 
                report submitted under subsection (b)(3); and
                    (B) submit to the appropriate Committees of 
                Congress a report on such review.
            (2) Contents of report on review of commission 
        recommendations.--The report submitted under paragraph (1)(B) 
        shall include the following:
                    (A) If the Medicare Payment Advisory Commission 
                supports such recommendations, the reasons for such 
                support; or
                    (B) If the Medicare Payment Advisory Commission 
                does not support such recommendations, the 
                recommendations of the Medicare Payment Advisory 
                Commission, together with an explanation as to why the 
                Medicare Payment Advisory Commission does not support 
                the recommendations of the Commission.
    (g) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this section. 
Such appropriation shall be payable from the Federal Supplementary 
Medical Insurance Trust Fund under section 1841 of the Social Security 
Act (42 U.S.C. 1395t).