A bill to amend title XVIII of the Social Security Act to improve the recruitment and retention of physicians under the Medicare program.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Rural Physician Recruitment 
and Retention Act of 2010''.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) The United States is facing shortages in a wide range 
        of health workforce professions, including as many as 91,500 
        physicians, consisting of 46,100 specialists and 45,400 primary 
        care physicians, by 2020. Many rural and other underserved 
        areas continue to experience chronic shortages.
            (2) These shortages will be exacerbated as millions of 
        previously uninsured Americans gain access to health insurance 
        and the ``Baby Boomer'' generation enters the Medicare program 
        in greater numbers.
            (3) To address the physician shortage, United States 
        medical schools have already started fulfilling their 
        commitment to expanding class size by 30 percent by the year 
        2015. However, the Medicare program has not yet increased the 
        number of approved medical residency training positions it 
        helps support in order to accommodate a 30 percent increase in 
        medical school graduates.
            (4) From 1966 through 1991, Medicare physician payments 
        reflected physician charges for health care services. The 
        Omnibus Budget Reconciliation Act of 1989 (Public Law 101-239) 
        mandated the creation of a national Medicare physician fee 
        schedule, which was implemented in 1992.
            (5) As mandated by the Balanced Budget Act of 1997 (Public 
        Law 105-33), the statutory method for determining annual 
        updates to the Medicare physician fee schedule, known as the 
        sustainable growth rate system, has resulted in a reduction in 
        physician reimbursement rates each year since 2002. With the 
        exception of 2002, when a 4.8 percent decrease was applied, 
        Congress has passed a series of bills to override the 
        reductions.
            (6) Although a number of modifications to the Medicare 
        sustainable growth rate system have been proposed, Congress has 
        yet to pass legislation that would provide for a long-term 
        alternative to the current system.
            (7) The Medicare physician fee schedule establishes payment 
        rates for more than 7,000 services. Payments for each service 
        on the fee schedule is based on 3 relative value units that 
        correspond to the 3 physician payment components of physician 
        work, practice expense, and malpractice expense.
            (8) Each relative value unit is geographically adjusted to 
        reflect the cost of providing a particular service in a 
        particular location (a ``locality''). Physician payment 
        localities are primarily consolidations of the carrier-defined 
        localities established in 1966.
            (9) Medicare's geographic adjustment for a particular 
        physician payment locality is determined using 3 Geographic 
        Practice Cost Indices that also correspond to the 3 Medicare 
        physician payment components of physician work, practice 
        expense, and malpractice expense.
            (10) In general, Medicare Geographic Practice Cost Indices 
        (and thus, reimbursements) are less in rural areas than in 
        urban areas largely because rural cost-of-living is estimated 
        to be lower.
            (11) Medicare Geographic Practice Cost Indices are based on 
        1990 earnings of professionals with 5 or more years of post 
        high school education, not current physician earnings, and the 
        office rent portion of the practice expense Geographic Practice 
        Cost Index is based on 2000 residential apartment rental data 
        from the Department of Housing and Urban Development, proxy 
        data used in place of actual national data for physician office 
        rents.
            (12) Rural physician employers and rural communities 
        recruiting physicians must pay salaries that are competitive in 
        regional and national, not local, markets.
            (13) Though the percentage difference may seem small, the 
        elderly represent a higher percent of the rural population. 
        Consequently, Medicare patients will represent a greater 
        percentage of a rural physician's practice, and differences in 
        payment due to variation in Medicare Geographic Practice Cost 
        Indices represent many thousands of reimbursement dollars.
            (14) Furthermore, commercial insurers often reimburse 
        physicians at rates directly related to Medicare's fee 
        schedule. As a result, the impact of any Medicare payment 
        disparity is potentially extended to non-Medicare payors as 
        well.
            (15) Recruitment and retention of rural physicians remains 
        problematic.

             TITLE I--RURAL PHYSICIAN RETENTION IN MEDICARE

SEC. 101. MEDICARE PHYSICIAN FEE SCHEDULE UPDATE.

    (a) Update.--
            (1) Remaining portion of 2010.--Section 1848(d)(11) of the 
        Social Security Act (42 U.S.C. 1395w-4(d)(11)) is amended--
                    (A) in the heading, by striking ``november'' and 
                inserting ``december'';
                    (B) in subparagraph (A), by striking ``November 
                30'' and inserting ``December 31''; and
                    (C) in subparagraph (B)--
                            (i) in the heading, by striking ``remaining 
                        portion of 2010'' and inserting ``2011''; and
                            (ii) by striking ``the period beginning on 
                        December 1, 2010, and ending on December 31, 
                        2010, and for''.
            (2) For 2011 and subsequent years.--Section 1848(d) of the 
        Social Security Act (42 U.S.C. 1395w-4(d)) is amended by adding 
        at the end the following new paragraph:
            ``(12) Update for 2011 and subsequent years.--The update to 
        the single conversion factor established in paragraph (1)(C) 
        for 2011 and each subsequent year shall be the percentage 
        increase in the MEI (as defined in section 1842(i)(3)) for that 
        year.''.
    (b) Conforming Sunset of Sustainable Growth Rate.--Section 
1848(f)(1)(B) of the Social Security Act (42 U.S.C. 1395w-4(f)(1)(B)) 
is amended by inserting ``(ending with 2008)'' after ``each succeeding 
year''.

SEC. 102. RECOGNITION OF EQUALITY OF PHYSICIAN WORK IN ALL GEOGRAPHIC 
              AREAS UNDER THE MEDICARE PHYSICIAN FEE SCHEDULE.

    Section 1848(e)(1) of the Social Security Act (42 U.S.C. 1395w-
4(e)(1)) is amended--
            (1) in subparagraph (A), in the matter preceding clause 
        (i), by striking ``subparagraphs (B)'' through ``the 
        Secretary'' and inserting ``the succeeding provisions of this 
        paragraph, the Secretary''; and
            (2) in subparagraph (E)--
                    (A) by striking ``and before January 1, 2011,''; 
                and
                    (B) by adding at the end the following new 
                sentence. ``For services furnished on or after January 
                1, 2011, the preceding sentence shall not be applied in 
                a budget neutral manner.''.

SEC. 103. REVISIONS TO THE PRACTICE EXPENSE GEOGRAPHIC ADJUSTMENT UNDER 
              THE MEDICARE PHYSICIAN FEE SCHEDULE.

    (a) Repeal.--Effective as if included in the enactment of the 
Patient Protection and Affordable Care Act (Public Law 111-148), the 
provisions of, and amendments made by, sections 3102(b) and 10324(c) of 
such Act and section 1108 of the Health Care and Education 
Reconciliation Act of 2010 (Public Law 111-152) are repealed.
    (b) Establishment of Floor.--Section 1848(e)(1) of the Social 
Security Act (42 U.S.C. 1395w-4(e)(1)) is amended by adding at the end 
the following new subparagraph:
                    ``(F) Floor at 1.0 on practice expense geographic 
                index.--After calculating the practice expense 
                geographic index in subparagraph (A)(i), for purposes 
                of payment for services furnished on or after January 
                1, 2010, the Secretary shall increase the practice 
                expense geographic index to 1.0 for any locality for 
                which such practice expense geographic index is less 
                than 1.0. The preceding sentence shall not be applied 
                in a budget neutral manner.''.

           TITLE II--RURAL PHYSICIAN RECRUITMENT IN MEDICARE

SEC. 201. DISTRIBUTION OF ADDITIONAL RESIDENCY POSITIONS.

    (a) In General.--Section 1886(h) of the Social Security Act (42 
U.S.C. 1395ww(h)) is amended--
            (1) in paragraph (4)(F)(i), by striking ``and (8)'' and 
        inserting ``, (8), and (9)'';
            (2) in paragraph (4)(H)(i), by striking ``and (8)'' and 
        inserting ``, (8), and (9)'';
            (3) in paragraph (7)(E), by striking ``this paragraph, 
        paragraph (8),'' and inserting ``paragraph, paragraph (8), 
        paragraph (9),''; and
            (4) by adding at the end the following new paragraph:
            ``(9) Distribution of additional residency positions.--
                    ``(A) Number available for distribution.--The 
                number of additional residency positions available for 
                distribution under subparagraph (B) shall be an amount 
                that the Secretary determines would result in a 15 
                percent increase in the aggregate number of full-time 
                equivalent residents in approved medical residency 
                training programs (as determined based on the most 
                recent cost reports available at the time of 
                distribution).
                    ``(B) Distribution.--The Secretary shall increase 
                the otherwise applicable resident limit for each 
                qualifying hospital that submits an application under 
                this subparagraph by such number as the Secretary may 
                approve for portions of cost reporting periods 
                occurring on or after July 1, 2011. The aggregate 
                number of increases in the otherwise applicable 
                resident limit under this subparagraph shall be equal 
                to the number of additional residency positions 
                available for distribution under subparagraph (A).
                    ``(C) Considerations in distribution.--In 
                determining for which hospitals the increase in the 
                otherwise applicable resident limit is provided under 
                subparagraph (B), the Secretary shall take into account 
                the demonstrated likelihood of the hospital filling the 
                positions within the first 3 cost reporting periods 
                beginning on or after July 1, 2011, made available 
                under this paragraph, as determined by the Secretary.
                    ``(D) Priority for certain areas.--
                            ``(i) In general.--In determining for which 
                        hospitals the increase in the otherwise 
                        applicable resident limit is provided under 
                        subparagraph (B), the Secretary shall give 
                        preference to hospitals located in States that 
                        are in the lowest quartile of active physician-
                        to-population ratio.
                            ``(ii) Hospitals in other states.--In the 
                        case where the Secretary does not distribute 
                        all of the positions available for distribution 
                        under subparagraph (A) to hospitals located in 
                        States described in clause (i), the Secretary 
                        shall distribute the remaining positions 
                        available to qualifying hospitals in other 
                        States.
                    ``(E) Application of per resident amounts for 
                primary care and nonprimary care.--With respect to 
                additional residency positions in a hospital 
                attributable to the increase provided under this 
                paragraph, the approved FTE resident amounts are deemed 
                to be equal to the hospital per resident amounts for 
                primary care and nonprimary care computed under 
                paragraph (2)(D) for that hospital.
                    ``(F) Definitions.--In this paragraph:
                            ``(i) Reference resident level.--
                                    ``(I) In general.--Except as 
                                otherwise provided in subclause (II), 
                                the reference resident level specified 
                                in this clause for a hospital is the 
                                resident level for the most recent cost 
                                reporting period of the hospital ending 
                                on or before the date of enactment of 
                                this paragraph, for which a cost report 
                                has been settled (or, if not, submitted 
                                (subject to audit)), as determined by 
                                the Secretary.
                                    ``(II) Use of most recent 
                                accounting period to recognize 
                                expansion of existing program or 
                                establishment of new program.--If a 
                                hospital submits a timely request to 
                                increase its resident level due to an 
                                expansion of an existing residency 
                                training program or the establishment 
                                of a new residency training program 
                                that is not reflected on the most 
                                recent cost report that has been 
                                settled (or, if not, submitted (subject 
                                to audit)), after audit and subject to 
                                the discretion of the Secretary, the 
                                reference resident level for such 
                                hospital is the resident level for the 
                                cost reporting period that includes the 
                                additional residents attributable to 
                                such expansion or establishment, as 
                                determined by the Secretary.
                            ``(ii) Resident level.--The term `resident 
                        level' has the meaning given such term in 
                        paragraph (7)(C)(i).
                            ``(iii) Otherwise applicable resident 
                        level.--The term `otherwise applicable resident 
                        limit' means, with respect to a hospital, the 
                        limit otherwise applicable under subparagraphs 
                        (F)(i) and (H) of paragraph (4) on the resident 
                        level for the hospital determined without 
                        regard to this paragraph but taking into 
                        account paragraphs (7)(A) and (8)(A)''.
    (b) IME.--
            (1) In general.--The second sentence of section 
        1886(d)(5)(B)(v) of the Social Security Act (42 U.S.C. 
        1395ww(d)(5)(B)(v)) is amended to read as follows: ``The 
        provisions of subsections (h)(4)(H)(vi), (h)(7), (h)(8), and 
        (h)(9) shall apply with respect to the first sentence of this 
        clause in the same manner as they apply with respect to 
        subsection (h)(4)(F)(i).''.
            (2) Conforming amendment.--Section 1886(d)(5)(B)(x) of the 
        Social Security Act (42 U.S.C. 1395ww(d)(5)(B)(x)), as added by 
        section 5503(b)(2) of the Patient Protection and Affordable 
        Care Act (Public Law 111-148) is redesignated as clause (xi) 
        and amended by striking ``subsection (h)(8)(B)'' and inserting 
        ``subsection (h)(8)(B) or (h)(9)(B)''.
    (c) Conforming Amendment.--Section 422(b)(2) of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (Public 
Law 108-173) is amendment by striking ``paragraphs (7) and (8)'' and 
inserting ``paragraphs (7), (8), and (9)''.

Summary: Medicare Rural Physician Recruitment and Retention Act of 2010 - Amends title XVIII (Medicare) of the Social Security Act to: (1) extend the current update to the single conversion factor in the formula for the Medicare physician fee schedule through December 31, 2010. And (2) add an update for 2011 and subsequent years. Repeals the January 1, 2001, termination of the increase in the work geographic index to 1.00 for certain localities. Declares, however, that for services furnished on or after January 1, 2011, such 1.00 index shall not be applied in a budget neutral manner. Amends the Patient Protection and Affordable Care Act (PPACA) to repeal its revisions to requirements for calculation of the practice expense portion of the geographic adjustment factor applied in a fee schedule area for services furnished in 2010 or 2011. Repeals also the requirement that the Secretary analyze current methods of establishing practice expense geographic adjustments and make appropriate further adjustments to such adjustments for 2010 and subsequent years. Amends PPACA to repeal the practice expense index for services furnished in frontier states. Amends the Health Care and Education Reconciliation Act of 2010 (HCERA) to repeal certain modifications in the employee wage and rent portions of the practice expense geographic index adjustment for 2010 and subsequent years. (Such modifications require that such portions reflect 12 Restores as though never amended corresponding previous provisions of law revised by PPACA and HCERA. Directs the Secretary of Health and Human Services (HHS) to increase the practice expense geographic index for services furnished on or after January 1, 2010, to 1.0 for certain localities. Declares that, as with the work geographic index, such increase shall not be applied in a budget neutral manner. Revises requirements for determination of full-time-equivalent (FTE) residents in an approved medical residency training program for purposes of payments for direct graduate medical education (GME) costs. Directs the Secretary to increase the limit on residents for each qualifying hospital that applies for additional residency positions. Requires an overall 15 increase in the aggregate number of FTE residency positions in approved medical residency training programs. Requires the Secretary to give preference to hospitals located in states in the lowest quartile of active physician-to-population ratio .