I

106TH CONGRESS

2D SESSION H. R. 5070

To amend title XVIII of the Social Security Act to improve geographic

fairness in Medicare+Choice payments and hospital payments under

the Medicare Program.

IN THE HOUSE OF REPRESENTATIVES

JULY 27, 2000

Mr. MINGE (for himself, Mr. BAIRD, Ms. HOOLEY of Oregon, Mr. KIND, Mr.

MCINTYRE, Mr. LUTHER, Mr. KANJORSKI, Ms. BALDWIN, Mr. KOLBE,

and Mr. SABO) introduced the following bill; which was referred to the

Committee on Ways and Means, and in addition to the Committee on

Commerce, for a period to be subsequently determined by the Speaker,

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend title XVIII of the Social Security Act to improve

geographic fairness in Medicare+Choice payments and

hospital payments under the Medicare Program.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Medicare Fairness in Reimbursement Act of 2000’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:
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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.

1 SEC. 2. FAIRNESS IN PAYMENTS UNDER THE

2 MEDICARE+CHOICE PROGRAM.

3 Section 1853(c) of the Social Security Act (42 U.S.C.

4 1395w–23(c)) is amended—

5 (1) in paragraph (1), by striking ‘‘and (7)’’ and

6 inserting ‘‘, (7), and (8)’’;

7 (2) in paragraph (4), by striking ‘‘paragraph

8 (1)(A)’’ and inserting ‘‘paragraphs (1)(A) and (8)’’;

9 and

10 (3) by adding at the end the following new

11 paragraph:

12 ‘‘(8) FAIRNESS IN PAYMENTS.—The annual

13 Medicare+Choice capitation rate for a

14 Medicare+Choice payment area for—

15 ‘‘(A) 2002, shall not exceed 150 percent

16 (or be less than 82 percent) of the input-price17 adjusted annual national Medicare+Choice

18 capitation rate (as computed under paragraph

19 (4)) for the year;

20 ‘‘(B) 2003, shall not exceed 140 percent

21 (or be less than 86 percent) of the input-price-
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1 adjusted annual national Medicare+Choice

2 capitation rate for the year;

3 ‘‘(C) 2004, shall not exceed 130 percent

4 (or be less than 90 percent) of the input-price5 adjusted annual national Medicare+Choice

6 capitation rate for the year;

7 ‘‘(D) 2005, shall not exceed 120 percent

8 (or be less than 94 percent) of the input-price9 adjusted annual national Medicare+Choice

10 capitation rate for the year;

11 ‘‘(E) 2006, shall not exceed 110 percent

12 (or be less than 98 percent) of the input-price13 adjusted annual national Medicare+Choice

14 capitation rate for the year; or

15 ‘‘(F) 2007 or any subsequent year, shall be

16 equal to the input-price-adjusted annual na17 tional Medicare+Choice capitation rate for the

18 year.’’.

19 SEC. 3. NEW HOSPITAL WAGE SURVEY.

20 (a) IN GENERAL.—The Secretary of Health and

21 Human Services shall promptly conduct a new survey of

22 levels of wages and wage-related costs for different occu23 pational categories of hospital employees.

24 (b) APPLICATION TO HOSPITAL WAGE INDEX.—The

25 Secretary shall use the data derived from the survey con-
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1 ducted under subsection (a) in computing the hospital

2 wage index applied under section 1886(d)(3)(E) of the So3 cial Security Act (42 U.S.C. 1395ww(d)(3)(E)) for dis4 charges occurring on or after October 1, 2001.

5 SEC. 4. REDUCTION IN PROPORTION OF PAYMENTS SUB6 JECT TO WAGE-RELATED GEOGRAPHIC AD7 JUSTMENTS.

8 (a) IN GENERAL.—Notwithstanding any other provi9 sion of law, in applying any wage-related geographic area

10 adjustment (as defined in subsection (b)) to a portion of

11 a payment amount or rate under title XVIII of the Social

12 Security Act, the portion to which the adjustment is ap13 plied shall be 75 percent of the portion otherwise com14 puted and 25 percent of such portion shall not be subject

15 to any such geographic area adjustment.

16 (b) WAGE-RELATED GEOGRAPHIC AREA ADJUST17 MENT DEFINED.—For purposes of this section, the term

18 ‘‘wage-related geographic area adjustment’’ means an ad19 justment in a payment rate by geographic area that is

20 based on a geographic variation in wages or wage-related

21 costs or similar costs.

22 (c) SPECIFIC APPLICATION.—Subsection (a) applies

23 to geographic adjustments made under the following provi24 sions of law (as well as other provisions identified by the

25 Secretary of Health and Human Services):
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1 (1) INPATIENT HOSPITAL WAGE INDICES.—The

2 area wage adjustment made for inpatient hospital

3 services under section 1886(d)(3)(E) of the Social

4 Security Act (42 U.S.C. 1395ww(d)(3)(E)) and

5 under section 1886(b)(3)(H)(iii) of such Act (42

6 U.S.C. 1395ww(b)(3)(H)(iii)).

7 (2) OUTPATIENT HOSPITAL SERVICES.—The

8 wage adjustment factors under section

9 1833(t)(2)(D) of such Act (42 U.S.C.

10 1395l(t)(2)(D)).

11 (3) HOME HEALTH SERVICES.—The area wage

12 adjustment under section 1895(b)(4)(A)(ii) of such

13 Act (42 U.S.C. 1395fff(b)(4)(A)(ii)).

14 (4) ROUTINE COSTS OF SKILLED NURSING

15 SERVICES.—The wage cost adjustment under section

16 1888(e)(4)(G)(ii) of such Act (42 U.S.C.

17 1395yy(e)(4)(G)(ii)).

18 (5) PHYSICIANS’ SERVICES.—The geographic

19 physician work adjustment factor under section

20 1848(e)(5) of such Act (42 U.S.C. 1395w–4(e)(5)).

21 (6) MEDICARE+CHOICE INPUT-PRICE-AD22 JUSTED ANNUAL NATIONAL MEDICARE+CHOICE

23 CAPITATION RATES.—The relative input prices relat24 ing to wages and wage-related expenses for input25 price-adjusted annual national Medicare+Choice
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1 capitation rates under section 1853(c)(4)(A)(iii) of

2 such Act (42 U.S.C. 1395w–23(c)(4)(A)(iii)).

3 (7) CLINICAL LABORATORY SERVICES.—The

4 wage adjustment under section 1833(h)(4)(A) of

5 such Act (42 U.S.C. 1395l(h)(4)(A)).

6 (c) EFFECTIVE DATE.—Subsection (a) first applies

7 in the case of items and services for which payment ad8 justments under title XVIII of the Social Security Act are

9 updated on a—

10 (1) fiscal year basis, to the update made for fis11 cal year 2002; or

12 (2) calendar year basis, to the update made for

13 2002.

14 SEC. 5. PERMANENTLY REMOVING APPLICATION OF

15 BUDGET NEUTRALITY UNDER THE

16 MEDICAID+CHOICE PROGRAM BEGINNING IN

17 2002.

18 Section 1853(c) of the Social Security Act (42 U.S.C.

19 1395w–23(c)) is amended—

20 (1) in paragraph (1)(A), in the matter following

21 clause (ii), by inserting ‘‘(for years before 2002)’’

22 after ‘‘multiplied’’; and

23 (2) in paragraph (5), by inserting ‘‘(before

24 2002)’’ after ‘‘for each year’’.
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1 SEC. 6. ALLOWING MOVEMENT TO 50:50 PERCENT BLEND IN

2 2002.

3 Section 1853(c)(2) of the Social Security Act (42

4 U.S.C. 1395w–23(c)(2)) is amended—

5 (1) by striking the period at the end of sub6 paragraph (F) and inserting a semicolon; and

7 (2) by adding after and below subparagraph

8 (F) the following:

9 ‘‘except that a Medicare+Choice organization may

10 elect to apply subparagraph (F) (rather than sub11 paragraph (E)) for 2002.’’.

12 SEC. 7. MEDPAC REVIEW OF IMPACT OF WAGE AND OTHER

13 COST ADJUSTMENTS.

14 (a) IN GENERAL.—Section 1805(b)(2)(B) of the So15 cial Security Act (42 U.S.C. 1395b–6(b)(2)(B)) is

16 amended—

17 (1) by striking ‘‘and’’ at the end of clause (ii);

18 (2) by striking the period at the end of clause

19 (iii) and inserting ‘‘; and’’; and

20 (3) by adding at the end the following new

21 clause:

22 ‘‘(iv) the extent to which the adjust23 ments made (through wage indices and

24 other measures) in payment rates on a ge25 ographic basis for variations in costs accu26 rately reflect the actual costs of items and
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1 services in low reimbursement areas and

2 the impact of such adjustments on the

3 health infrastructure in such areas.’’.

4 (b) EFFECTIVE DATE.—The amendments made by

5 subsection (a) take effect on the date of the enactment

6 of this Act and the Medicare Payment Advisory Commis7 sion shall first report on the review conducted pursuant

8 to such amendments in its report submitting in June

9 2001.

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