Medicare Fairness in Reimbursement Act of 2000

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare Fairness 
in Reimbursement Act of 2000''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Fairness in payments under the Medicare+Choice program.
Sec. 3. New hospital wage survey.
Sec. 4. Reduction in proportion of payments subject to wage-related 
                            geographic adjustments.
Sec. 5. Permanently removing application of budget neutrality under the 
                            Medicaid+Choice program beginning in 2002.
Sec. 6. Allowing movement to 50:50 percent blend in 2002.
Sec. 7. MedPAC review of impact of wage and other cost adjustments.

SEC. 2. FAIRNESS IN PAYMENTS UNDER THE MEDICARE+CHOICE PROGRAM.

    Section 1853(c) of the Social Security Act (42 U.S.C. 1395w-23(c)) 
is amended--
            (1) in paragraph (1), by striking ``and (7)'' and inserting 
        ``, (7), and (8)'';
            (2) in paragraph (4), by striking ``paragraph (1)(A)'' and 
        inserting ``paragraphs (1)(A) and (8)''; and
            (3) by adding at the end the following new paragraph:
            ``(8) Fairness in payments.--The annual Medicare+Choice 
        capitation rate for a Medicare+Choice payment area for--
                    ``(A) 2002, shall not exceed 150 percent (or be 
                less than 82 percent) of the input-price-adjusted 
                annual national Medicare+Choice capitation rate (as 
                computed under paragraph (4)) for the year;
                    ``(B) 2003, shall not exceed 140 percent (or be 
                less than 86 percent) of the input-price-adjusted 
                annual national Medicare+Choice capitation rate for the 
                year;
                    ``(C) 2004, shall not exceed 130 percent (or be 
                less than 90 percent) of the input-price-adjusted 
                annual national Medicare+Choice capitation rate for the 
                year;
                    ``(D) 2005, shall not exceed 120 percent (or be 
                less than 94 percent) of the input-price-adjusted 
                annual national Medicare+Choice capitation rate for the 
                year;
                    ``(E) 2006, shall not exceed 110 percent (or be 
                less than 98 percent) of the input-price-adjusted 
                annual national Medicare+Choice capitation rate for the 
                year; or
                    ``(F) 2007 or any subsequent year, shall be equal 
                to the input-price-adjusted annual national 
                Medicare+Choice capitation rate for the year.''.

SEC. 3. NEW HOSPITAL WAGE SURVEY.

    (a) In General.--The Secretary of Health and Human Services shall 
promptly conduct a new survey of levels of wages and wage-related costs 
for different occupational categories of hospital employees.
    (b) Application to Hospital Wage Index.--The Secretary shall use 
the data derived from the survey conducted under subsection (a) in 
computing the hospital wage index applied under section 1886(d)(3)(E) 
of the Social Security Act (42 U.S.C. 1395ww(d)(3)(E)) for discharges 
occurring on or after October 1, 2001.

SEC. 4. REDUCTION IN PROPORTION OF PAYMENTS SUBJECT TO WAGE-RELATED 
              GEOGRAPHIC ADJUSTMENTS.

    (a) In General.--Notwithstanding any other provision of law, in 
applying any wage-related geographic area adjustment (as defined in 
subsection (b)) to a portion of a payment amount or rate under title 
XVIII of the Social Security Act, the portion to which the adjustment 
is applied shall be 75 percent of the portion otherwise computed and 25 
percent of such portion shall not be subject to any such geographic 
area adjustment.
    (b) Wage-Related Geographic Area Adjustment Defined.--For purposes 
of this section, the term ``wage-related geographic area adjustment'' 
means an adjustment in a payment rate by geographic area that is based 
on a geographic variation in wages or wage-related costs or similar 
costs.
    (c) Specific Application.--Subsection (a) applies to geographic 
adjustments made under the following provisions of law (as well as 
other provisions identified by the Secretary of Health and Human 
Services):
            (1) Inpatient hospital wage indices.--The area wage 
        adjustment made for inpatient hospital services under section 
        1886(d)(3)(E) of the Social Security Act (42 U.S.C. 
        1395ww(d)(3)(E)) and under section 1886(b)(3)(H)(iii) of such 
        Act (42 U.S.C. 1395ww(b)(3)(H)(iii)).
            (2) Outpatient hospital services.--The wage adjustment 
        factors under section 1833(t)(2)(D) of such Act (42 U.S.C. 
        1395l(t)(2)(D)).
            (3) Home health services.--The area wage adjustment under 
        section 1895(b)(4)(A)(ii) of such Act (42 U.S.C. 
        1395fff(b)(4)(A)(ii)).
            (4) Routine costs of skilled nursing services.--The wage 
        cost adjustment under section 1888(e)(4)(G)(ii) of such Act (42 
        U.S.C. 1395yy(e)(4)(G)(ii)).
            (5) Physicians' services.--The geographic physician work 
        adjustment factor under section 1848(e)(5) of such Act (42 
        U.S.C. 1395w-4(e)(5)).
            (6) Medicare+choice input-price-adjusted annual national 
        medicare+choice capitation rates.--The relative input prices 
        relating to wages and wage-related expenses for input-price-
        adjusted annual national Medicare+Choice capitation rates under 
        section 1853(c)(4)(A)(iii) of such Act (42 U.S.C. 1395w-
        23(c)(4)(A)(iii)).
            (7) Clinical laboratory services.--The wage adjustment 
        under section 1833(h)(4)(A) of such Act (42 U.S.C. 
        1395l(h)(4)(A)).
    (c) Effective Date.--Subsection (a) first applies in the case of 
items and services for which payment adjustments under title XVIII of 
the Social Security Act are updated on a--
            (1) fiscal year basis, to the update made for fiscal year 
        2002; or
            (2) calendar year basis, to the update made for 2002.

SEC. 5. PERMANENTLY REMOVING APPLICATION OF 
              BUDGET NEUTRALITY UNDER THE MEDICAID+CHOICE PROGRAM 
              BEGINNING IN 2002.

    Section 1853(c) of the Social Security Act (42 U.S.C. 1395w-23(c)) 
is amended--
            (1) in paragraph (1)(A), in the matter following clause 
        (ii), by inserting ``(for years before 2002)'' after 
        ``multiplied''; and
            (2) in paragraph (5), by inserting ``(before 2002)'' after 
        ``for each year''.

SEC. 6. ALLOWING MOVEMENT TO 50:50 PERCENT BLEND IN 2002.

    Section 1853(c)(2) of the Social Security Act (42 U.S.C. 1395w-
23(c)(2)) is amended--
            (1) by striking the period at the end of subparagraph (F) 
        and inserting a semicolon; and
            (2) by adding after and below subparagraph (F) the 
        following:
        ``except that a Medicare+Choice organization may elect to apply 
        subparagraph (F) (rather than subparagraph (E)) for 2002.''.

SEC. 7. MEDPAC REVIEW OF IMPACT OF WAGE AND OTHER COST ADJUSTMENTS.

    (a) In General.--Section 1805(b)(2)(B) of the Social Security Act 
(42 U.S.C. 1395b-6(b)(2)(B)) is amended--
            (1) by striking ``and'' at the end of clause (ii);
            (2) by striking the period at the end of clause (iii) and 
        inserting ``; and''; and
            (3) by adding at the end the following new clause:
                            ``(iv) the extent to which the adjustments 
                        made (through wage indices and other measures) 
                        in payment rates on a geographic basis for 
                        variations in costs accurately reflect the 
                        actual costs of items and services in low 
                        reimbursement areas and the impact of such 
                        adjustments on the health infrastructure in 
                        such areas.''.
    (b) Effective Date.--The amendments made by subsection (a) take 
effect on the date of the enactment of this Act and the Medicare 
Payment Advisory Commission shall first report on the review conducted 
pursuant to such amendments in its report submitting in June 2001.

Summary: Directs the Secretary of Health and Human Services to promptly conduct a new survey of levels of wages and wage-related costs for different occupational categories of hospital employees and to use the survey data in computing a certain hospital wage index for discharges occurring on or after October 1, 2001. Provides that, in applying any wage-related geographic area adjustment to a portion of a payment amount or rate under Medicare, the portion to which the adjustment is applied shall be 75 percent of the portion otherwise computed, and 25 percent of such portion shall not be subject to any such geographic area adjustment. Applies such provision to geographic adjustments made under specified Medicare provisions, including those with regard to home health and clinical laboratory services. Amends part C (MedicareChoice) of title XVIII to permanently remove application of the budget neutrality factor under the MedicareChoice program beginning in 2002. Allows a MedicareChoice organization to elect to apply an area-specific percentage of 50 percent and a national percentage of 50 percent for 2002 rather than the rate currently applicable for that year in determining the blended capitation rate used in determining the calculation of annual MedicareChoice capitation rates. Amends SSA title XVIII to require the Medicare Payment Advisory Commission to review the extent to which the adjustments made in payment rates on a geographical basis for variations in costs accurately reflect the actual costs of items and services in low reimbursement areas and the impact of such adjustments on the health infrastructure in such areas.