II 

110TH CONGRESS 

1ST SESSION S. 498 

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

program for beneficiaries residing in rural areas. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 6, 2007 

Mr. FEINGOLD (for himself and Ms. COLLINS) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend title XVIII of the Social Security Act to improve 

the Medicare program for beneficiaries residing in rural 

areas. 

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 ‘‘Rural Medicare Equity Act of 2007’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Elimination of geographic physician work adjustment factor from geographic indices used to adjust payments under the physician 

fee schedule. 

Sec. 3. Clinical rotation demonstration project. 


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Sec. 4. Medicare rural health care quality improvement demonstration projects. 

Sec. 5. Ensuring proportional representation of interests of rural areas on the 

Medicare Payment Advisory Commission. 

Sec. 6. Implementation of GAO recommendations regarding geographic adjustment indices under the Medicare physician fee schedule. 

1 SEC. 2. ELIMINATION OF GEOGRAPHIC PHYSICIAN WORK 

2 ADJUSTMENT FACTOR FROM GEOGRAPHIC 

3 INDICES USED TO ADJUST PAYMENTS UNDER 

4 THE PHYSICIAN FEE SCHEDULE. 

5 (a) FINDINGS.—Congress finds the following: 

6 (1) Variations in the geographic physician work 

7 adjustment factors under section 1848(e) of the So8 cial Security Act (42 U.S.C. 1395w–4(e)) result in 

9 inequity between localities in payments under the 

10 Medicare physician fee schedule. 

11 (2) Beneficiaries under the Medicare program 

12 that reside in areas where such adjustment factors 

13 are high have relatively more access to services that 

14 are paid based on such fee schedule. 

15 (3) There are a number of studies indicating 

16 that the market for health care professionals has be17 come nationalized and historically low labor costs in 

18 rural and small urban areas have disappeared. 

19 (4) Elimination of the adjustment factors de20 scribed in paragraph (1) would equalize the reim21 bursement rate for services reimbursed under the 

22 Medicare physician fee schedule while remaining 

23 budget-neutral. 


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1 (b) ELIMINATION.—Section 1848(e) of the Social Se2 curity Act (42 U.S.C. 1395w–4(e)) is amended— 

3 (1) in paragraph (1)(A)(iii), by striking ‘‘an 

4 index’’ and inserting ‘‘for services provided before 

5 January 1, 2008, an index’’; and 

6 (2) in paragraph (2), by inserting ‘‘, for serv7 ices provided before January 1, 2008,’’ after ‘‘para8 graph (4)), and’’. 

9 (c) BUDGET NEUTRALITY ADJUSTMENT FOR ELIMI10 NATION OF GEOGRAPHIC PHYSICIAN WORK ADJUSTMENT

11 FACTOR.—Section 1848(d) of the Social Security Act (42 

12 U.S.C. 1395w–4(d)), as amended by section 101 of the 

13 Medicare Improvement and Extension Act of 2006, is 

14 amended— 

15 (1) in paragraph (1)(A), by striking ‘‘The con16 version’’ and inserting ‘‘Subject to paragraph (8), 

17 the conversion’’; and 

18 (2) by adding at the end the following new 

19 paragraph: 

20 ‘‘(8) BUDGET NEUTRALITY ADJUSTMENT FOR

21 ELIMINATION OF GEOGRAPHIC PHYSICIAN WORK AD22 JUSTMENT FACTOR.—Before applying an update for 

23 a year under this subsection, the Secretary shall (if 

24 necessary) provide for an adjustment to the conver25 sion factor for that year to ensure that the aggreVerDate Aug 31 2005 22:18 Feb 08, 2007 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S498.IS S498

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1 gate payments under this part in that year shall be 

2 equal to aggregate payments that would have been 

3 made under such part in that year if the amend4 ments made by section 2(b) of the Rural Medicare 

5 Equity Act of 2007 had not been enacted.’’. 

6 SEC. 3. CLINICAL ROTATION DEMONSTRATION PROJECT. 

7 (a) ESTABLISHMENT.—Not later than 6 months after 

8 the date of enactment of this Act, the Secretary shall es9 tablish a demonstration project that provides for dem10 onstration grants designed to provide financial or other 

11 incentives to hospitals to attract educators and clinical 

12 practitioners so that hospitals that serve beneficiaries 

13 under the Medicare program under title XVIII of the So14 cial Security Act (42 U.S.C. 1395 et seq.) who are resi15 dents of underserved areas may host clinical rotations. 

16 (b) DURATION OF PROJECT.—The demonstration 

17 project shall be conducted over a 5-year period. 

18 (c) WAIVER.—The Secretary shall waive such provi19 sions of titles XI and XVIII of the Social Security Act 

20 (42 U.S.C. 1301 et seq. and 1395 et seq.) as may be nec21 essary to conduct the demonstration project under this 

22 section. 

23 (d) REPORTS.—The Secretary shall submit to the ap24 propriate committees of Congress interim reports on the 

25 demonstration project and a final report on such project 


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1 within 6 months after the conclusion of the project to2 gether with recommendations for such legislative or ad3 ministrative action as the Secretary determines appro4 priate. 

5 (e) FUNDING.—There are appropriated to the Sec6 retary $20,000,000 to carry out this section. 

7 (f) DEFINITIONS.—In this section: 

8 (1) HOSPITAL.—The term ‘‘hospital’’ means 

9 any subsection (d) hospital (as defined in section 

10 1886(d)(1)(B) of the Social Security Act (42 U.S.C. 

11 1395ww(d)(1)(B)) that had indirect or direct costs 

12 of medical education during the most recent cost re13 porting period preceding the date of enactment of 

14 this Act. 

15 (2) SECRETARY.—The term ‘‘Secretary’’ means 

16 the Secretary of Health and Human Services. 

17 (3) UNDERSERVED AREA.—The term ‘‘under18 served area’’ means such medically underserved 

19 urban areas and medically underserved rural areas 

20 as the Secretary may specify. 

21 SEC. 4. MEDICARE RURAL HEALTH CARE QUALITY IM22 PROVEMENT DEMONSTRATION PROJECTS. 

23 (a) ESTABLISHMENT.— 

24 (1) IN GENERAL.—Not later than 6 months 

25 after the date of enactment of this Act, the SecVerDate Aug 31 2005 22:18 Feb 08, 2007 Jkt 059200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S498.IS S498

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1 retary of Health and Human Services (in this sec2 tion referred to as the ‘‘Secretary’’) shall establish 

3 not more that 10 demonstration projects to provide 

4 for improvements, as recommended by the Institute 

5 of Medicine, in the quality of health care provided to 

6 individuals residing in rural areas. 

7 (2) ACTIVITIES.—Activities under the projects 

8 may include public health surveillance, emergency 

9 room videoconferencing, virtual libraries, telemedi10 cine, electronic health records, data exchange net11 works, and any other activities determined appro12 priate by the Secretary. 

13 (3) CONSULTATION.—The Secretary shall con14 sult with the Rural Health Quality Advisory Com15 mission, the Office of Rural Health Policy of the 

16 Health Resources and Services Administration, the 

17 Agency for Healthcare Research and Quality, and 

18 the Centers for Medicare & Medicaid Services in car19 rying out the provisions of this section. 

20 (b) DURATION.—Each demonstration project under 

21 this section shall be conducted over a 4-year period. 

22 (c) DEMONSTRATION PROJECT SITES.—The Sec23 retary shall ensure that the demonstration projects under 

24 this section are conducted at a variety of sites representing 

25 the diversity of rural communities in the Nation. 


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1 (d) WAIVER.—The Secretary shall waive such provi2 sions of titles XI and XVIII of the Social Security Act 

3 (42 U.S.C. 1301 et seq. and 1395 et seq.) as may be nec4 essary to conduct the demonstration projects under this 

5 section. 

6 (e) INDEPENDENT EVALUATION.—The Secretary 

7 shall enter into an arrangement with an entity that has 

8 experience working directly with rural health systems for 

9 the conduct of an independent evaluation of the projects 

10 conducted under this section. 

11 (f) REPORTS.—The Secretary shall submit to the ap12 propriate committees of Congress interim reports on each 

13 demonstration project and a final report on such project 

14 within 6 months after the conclusion of the project. Such 

15 reports shall include recommendations regarding the ex16 pansion of the project to other areas and recommendations 

17 for such other legislative or administrative action as the 

18 Secretary determines appropriate. 

19 (g) FUNDING.—There are appropriated to the Sec20 retary $50,000,000 to carry out this section. 

21 SEC. 5. ENSURING PROPORTIONAL REPRESENTATION OF 

22 INTERESTS OF RURAL AREAS ON THE MEDI23 CARE PAYMENT ADVISORY COMMISSION. 

24 (a) IN GENERAL.—Section 1805(c)(2) of the Social 

25 Security Act (42 U.S.C. 1395b–6(c)(2)) is amended— 


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1 (1) in subparagraph (A), by inserting ‘‘con2 sistent with subparagraph (E)’’ after ‘‘rural rep3 resentatives’’; and 

4 (2) by adding at the end the following new sub5 paragraph: 

6 ‘‘(E) PROPORTIONAL REPRESENTATION OF

7 INTERESTS OF RURAL AREAS.—In order to pro8 vide a balance between urban and rural rep9 resentatives under subparagraph (A), the pro10 portion of members who represent the interests 

11 of health care providers and Medicare bene12 ficiaries located in rural areas shall be no less 

13 than the proportion, of the total number of 

14 Medicare beneficiaries, who reside in rural 

15 areas.’’. 

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

17 subsection (a) shall apply with respect to appointments 

18 made to the Medicare Payment Advisory Commission after 

19 the date of the enactment of this Act. 

20 SEC. 6. IMPLEMENTATION OF GAO RECOMMENDATIONS RE21 GARDING GEOGRAPHIC ADJUSTMENT INDI22 CES UNDER THE MEDICARE PHYSICIAN FEE 

23 SCHEDULE. 

24 Not later than 180 days after the date of enactment 

25 of this Act, the Secretary of Health and Human Services 


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1 shall implement the recommendations contained in the 

2 March 2005 GAO report 05–119 entitled ‘‘Medicare Phy3 sician Fees: Geographic Adjustment Indices are Valid in 

4 Design, but Data and Methods Need Refinement.’’. 

Æ 


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