II 

108TH CONGRESS 

2D SESSION S. 2135 

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

of items and services provided to Medicare beneficiaries residing in rural 

areas. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 26, 2004 

Mrs. MURRAY (for herself and Ms. CANTWELL) 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 provision of items and services provided to Medicare 

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. 

4 This Act may be cited as the ‘‘MediFair Act of 

5 2004’’. 

6 SEC. 2. FINDINGS. 

7 Congress makes the following findings: 
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1 (1) Regional inequities in medicare reimburse2 ment has created barriers to care for seniors and the 

3 disabled. 

4 (2) The regional inequities in medicare reim5 bursement penalize States that have cost-effective 

6 health care delivery systems and rewards those 

7 States with high utilization rates and that provide 

8 inefficient care. 

9 (3) Over a lifetime, those inequities can mean 

10 as much as a $50,000 difference in the cost of care 

11 provided per beneficiary. 

12 (4) Regional inequities have resulted in creating 

13 very different medicare programs for seniors and the 

14 disabled based on where they live. 

15 (5) Because the Medicare+Choice rate is based 

16 on the fee-for-service reimbursement rate, regional 

17 inequities have allowed some medicare beneficiaries 

18 access to plans with significantly more benefits in19 cluding prescription drugs. Beneficiaries in States 

20 with lower reimbursement rates have not benefited 

21 to the same degree as beneficiaries in other parts of 

22 the country. 

23 (6) Regional inequities in medicare reimburse24 ment have created an unfair competitive advantage 

25 for hospitals and other health care providers in 
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1 States that receive above average payments. Higher 

2 payments mean that those providers can pay higher 

3 salaries in a tight, competitive market. 

4 (7) Regional inequities in medicare reimburse5 ment can limit timely access to new technology for 

6 beneficiaries in States with lower reimbursement 

7 rates. 

8 (8) Regional inequities in medicare reimburse9 ment, if left unchecked, will reduce access to medi10 care services and impact healthy outcomes for bene11 ficiaries. 

12 (9) Regional inequities in medicare reimburse13 ment are not just a rural versus urban problem. 

14 Many States with large urban centers are at the bot15 tom of the national average for per beneficiary costs. 

16 SEC. 3. IMPROVING FAIRNESS OF PAYMENTS TO PRO17 VIDERS UNDER THE MEDICARE FEE-FOR18 SERVICE PROGRAM. 

19 Title XVIII of the Social Security Act (42 U.S.C. 

20 1395 et seq.), as amended by section 1016 of the Medicare 

21 Prescription Drug, Improvement, and Modernization Act 

22 of 2003 (Public Law 108–173), is amended by adding at 

23 the end the following new section: 
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1 ‘‘IMPROVING PAYMENT EQUITY UNDER THE ORIGINAL

2 MEDICARE FEE-FOR-SERVICE PROGRAM

3 ‘‘SEC. 1898. (a) ESTABLISHMENT OF SYSTEM.—Not4 withstanding any other provision of law, the Secretary 

5 shall establish a system for making adjustments to the 

6 amount of payment made to entities and individuals for 

7 items and services provided under the original medicare 

8 fee-for-service program under parts A and B. 

9 ‘‘(b) SYSTEM REQUIREMENTS.— 

10 ‘‘(1) INCREASE FOR STATES BELOW THE NA11 TIONAL AVERAGE.—Under the system established 

12 under subsection (a), if a State average per bene13 ficiary amount for a year is less than the national 

14 average per beneficiary amount for such year, then 

15 the Secretary (beginning in 2005) shall increase the 

16 amount of applicable payments in such a manner as 

17 will result (as estimated by the Secretary) in the 

18 State average per beneficiary amount for the subse19 quent year being equal to the national average per 

20 beneficiary amount for such subsequent year. 

21 ‘‘(2) REDUCTION FOR CERTAIN STATES ABOVE

22 THE NATIONAL AVERAGE TO ENHANCE QUALITY

23 CARE AND MAINTAIN BUDGET NEUTRALITY.— 

24 ‘‘(A) IN GENERAL.—The Secretary shall 

25 ensure that the increase in payments under 
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1 paragraph (1) does not cause the estimated 

2 amount of expenditures under this title for a 

3 year to increase or decrease from the estimated 

4 amount of expenditures under this title that 

5 would have been made in such year if this sec6 tion had not been enacted by reducing the 

7 amount of applicable payments in each State 

8 that the Secretary determines has— 

9 ‘‘(i) a State average per beneficiary 

10 amount for a year that is greater than the 

11 national average per beneficiary amount 

12 for such year; and 

13 ‘‘(ii) healthy outcome measurements 

14 or quality care measurements that indicate 

15 that a reduction in applicable payments 

16 would encourage more efficient use of, and 

17 reduce overuse of, items and services for 

18 which payment is made under this title. 

19 ‘‘(B) LIMITATION.—The Secretary shall 

20 not reduce applicable payments under subpara21 graph (A) to a State that— 

22 ‘‘(i) has a State average per bene23 ficiary amount for a year that is greater 

24 than the national average per beneficiary 

25 amount for such year; and 
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1 ‘‘(ii) has healthy outcome measure2 ments or quality care measurements that 

3 indicate that the applicable payments are 

4 being used to improve the access of bene5 ficiaries to quality care. 

6 ‘‘(3) DETERMINATION OF AVERAGES.— 

7 ‘‘(A) STATE AVERAGE PER BENEFICIARY

8 AMOUNT.—Each year (beginning in 2004), the 

9 Secretary shall determine a State average per 

10 beneficiary amount for each State which shall 

11 be equal to the Secretary’s estimate of the aver12 age amount of expenditures under the original 

13 medicare fee-for-service program under parts A 

14 and B for the year for a beneficiary enrolled 

15 under such parts that resides in the State. 

16 ‘‘(B) NATIONAL AVERAGE PER BENE17 FICIARY AMOUNT.—Each year (beginning in 

18 2004), the Secretary shall determine the na19 tional average per beneficiary amount which 

20 shall be equal to the average of the State aver21 age per beneficiary amount determined under 

22 subparagraph (A) for the year. 

23 ‘‘(4) DEFINITIONS.—In this section: 

24 ‘‘(A) APPLICABLE PAYMENTS.—The term 

25 ‘applicable payments’ means payments made to 
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1 entities and individuals for items and services 

2 provided under the original medicare fee-for3 service program under parts A and B to bene4 ficiaries enrolled under such parts that reside in 

5 the State. 

6 ‘‘(B) STATE.—The term ‘State’ has the 

7 meaning given such term in section 210(h). 

8 ‘‘(c) BENEFICIARIES HELD HARMLESS.—The provi9 sions of this section shall not affect— 

10 ‘‘(1) the entitlement to items and services of a 

11 beneficiary under this title, including the scope of 

12 such items and services; or 

13 ‘‘(2) any liability of the beneficiary with respect 

14 to such items and services. 

15 ‘‘(d) REGULATIONS.— 

16 ‘‘(1) IN GENERAL.—The Secretary, in consulta17 tion with the Medicare Payment Advisory Commis18 sion, shall promulgate regulations to carry out this 

19 section. 

20 ‘‘(2) PROTECTING RURAL COMMUNITIES.—In 

21 promulgating the regulations pursuant to paragraph 

22 (1), the Secretary shall give special consideration to 

23 rural areas.’’. 
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1 SEC. 4. MEDPAC RECOMMENDATIONS ON HEALTHY OUT2 COMES AND QUALITY CARE. 

3 (a) RECOMMENDATIONS.—The Medicare Payment 

4 Advisory Commission established under section 1805 of 

5 the Social Security Act (42 U.S.C. 1395b–6) shall develop 

6 recommendations on policies and practices that, if imple7 mented, would encourage— 

8 (1) healthy outcomes and quality care under the 

9 medicare program in States with respect to which 

10 payments are reduced under section 1898(b)(2) of 

11 such Act (as added by section 3); and 

12 (2) the efficient use of payments made under 

13 the medicare program in such States. 

14 (b) SUBMISSION.—Not later than the date that is 9 

15 months after the date of enactment of this Act, the Com16 mission shall submit to Congress the recommendations de17 veloped under subsection (a). 

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