Fair Medicare Hospital Payments Act of 2016

To amend title XVIII of the Social Security Act to ensure fairness in Medicare hospital payments by establishing a floor for the area wage index applied with respect to certain hospitals. 1. Short title This Act may be cited as the Fair Medicare Hospital Payments Act of 2016 2. Ensuring fairness in Medicare hospital payments in a budget neutral manner (a) Hospital inpatient services Section 1886(d)(3)(E) of the Social Security Act ( 42 U.S.C. 1395www(d)(3)(E) (1) in clause (i), by striking clause (ii) or (iii) clause (ii), (iii), or (iv) (2) by adding at the end the following new clause: (iv) Floor on area wage index for hospitals in certain other areas (I) In general For discharges occurring on or after October 1, 2016, the area wage index applicable under this subparagraph to any hospital which is not located in a frontier State (as defined in clause (iii)(II)) may not be less than 0.874. (II) Ensuring budget neutrality In order to ensure that the aggregate payments made under this subsection for a fiscal year (beginning with fiscal year 2017) are not greater than the aggregate payments that would have been made under this subsection for such fiscal year without the application of subclause (I), as estimated by the Secretary, the Secretary shall establish pursuant to rulemaking a maximum area wage index to apply under this subparagraph to any hospital which is not located in a frontier State (as defined in clause (iii)(II)). (III) No impact for hospitals with an area wage index between the floor and the maximum index Subclauses (I) and (II) shall have no affect on the area wage index applicable in a fiscal year to a hospital with an area wage index that is greater than the floor under subclause (I) but less than the maximum area wage index established under subclause (II) for the fiscal year. . (b) Hospital outpatient department services Section 1833(t) of the Social Security Act ( 42 U.S.C. 1395l(t) (1) in paragraph (2)(D), by striking paragraph (19), the Secretary paragraphs (19) and (22), the Secretary (2) by adding at the end the following new paragraph: (22) Floor on area wage adjustment factor for hospital outpatient department services in areas other than in frontier States (A) In general With respect to covered OPD services furnished on or after January 1, 2017, the area wage adjustment factor applicable under the payment system established under this subsection to any hospital outpatient department which is not located in a frontier State (as defined in section 1886(d)(3)(E)(iii)(II)) may not be less than 0.874. (B) Ensuring budget neutrality In order to ensure that the aggregate payments made under this subsection for a year (beginning with 2017) are not greater than the aggregate payments that would have been made under this subsection for such year without the application of subparagraph (A), as estimated by the Secretary, the Secretary shall establish pursuant to rulemaking a maximum area wage adjustment factor to apply under the payment system established under this subsection to any hospital outpatient department which is not located in a frontier State (as defined in clause (iii)(II)). (C) No impact for hospitals with an area wage adjustment factor between the floor and the maximum factor Subparagraphs (A) and (B) shall have no affect on the area wage adjustment factor applicable in a year to a hospital with an area wage adjustment factor that is greater than the floor under subparagraph (A) but less than the maximum area wage adjustment factor established under subparagraph (B) for the year. .

Summary: Fair Medicare Hospital Payments Act of 2016 This bill amends title XVIII (Medicare) of the Social Security Act to establish, with respect to hospitals not located in a frontier state, a floor on the area wage adjustment factor for hospital inpatient and outpatient services covered under Medicare. (Such a floor already applies with respect to hospitals located in frontier states.)