I 
108TH CONGRESS 
2D SESSION 
H. R. 3935
To amend title XVIII of the Social Security Act to provide geographic equity 
in fee-for-service reimbursement for providers under the Medicare Program. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 10, 2004
Mr. WU introduced the following bill; which was referred to the Committee 
on Ways and Means, and in addition to the Committee on Energy and 
Commerce, for a period to be subsequently determined by the Speaker, 
in each case for consideration of such provisions as fall within the juris-
diction of the committee concerned 
A BILL 
To amend title XVIII of the Social Security Act to provide 
geographic equity in fee-for-service reimbursement for 
providers under the Medicare Program.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Medicare Equity and 
Fairness in Fee-for-Service Reimbursement Act of 2004’’.
SEC. 2. IMPROVING FAIRNESS OF PAYMENTS TO PRO-
VIDERS UNDER THE MEDICARE FEE-FOR-
SERVICE PROGRAM. 
Title XVIII of the Social Security Act, as amended 
by section 1016 of the Medicare Prescription Drug, Im-
provement, and Modernization Act of 2003 (Public Law 
108–173), is amended by adding at the end the following 
new section: 
‘‘IMPROVING FAIRNESS OF PAYMENTS UNDER THE 
ORIGINAL MEDICARE FEE-FOR-SERVICE PROGRAM 
‘‘SEC. 1898. (a) ESTABLISHMENT OF SYSTEM.—Not-
withstanding any other provision of law, the Secretary 
shall establish a system for making adjustments to the 
amount of payment made to providers of services and 
health care professionals for services provided under the 
original medicare fee-for-service program under parts A 
and B. 
‘‘(b) SYSTEM REQUIREMENTS.—
‘‘(1) ADJUSTMENTS.—Under the system de-
scribed in subsection (a), the Secretary (beginning in 
fiscal year 2005 or calendar year 2005, as the Sec-
retary determines appropriate for the type of serv-
ices involved) shall make the following adjustments: 
‘‘(A) STATES
ABOVE
NATIONAL
AVER-
AGE.—Subject to subparagraph (C), if a State 
average per beneficiary amount, but for the ap-
plication of this section, for a year is greater 
than 100 percent of the national average per 
beneficiary amount for such year, then the Sec-
retary shall reduce the amount of applicable 
payments in such a manner as will result (as 
estimated by the Secretary) in the State aver-
age per beneficiary amount for the subsequent 
year being at 100 percent of the national aver-
age per beneficiary amount for such subsequent 
year. 
‘‘(B) STATES
BELOW
NATIONAL
AVER-
AGE.—Subject to subparagraph (C), if such a 
State average per beneficiary amount for a year 
is less than 100 percent of the national average 
per beneficiary amount for such year, then the 
Secretary shall increase the amount of applica-
ble payments in such a manner as will result 
(as estimated by the Secretary) in the State av-
erage per beneficiary amount for the subse-
quent year being at 100 percent of the national 
average per beneficiary amount for such subse-
quent year. 
‘‘(C) 3-YEAR PHASE IN.—In applying this 
paragraph for—
‘‘(i) fiscal year 2005 or calendar year 
2005, the amount of any increase or de-
crease under subparagraph (A) or (B) 
shall be 25 percent of the amount of the 
increase or decrease otherwise provided; 
‘‘(ii) fiscal year 2006 or calendar year 
2006, the amount of any increase or de-
crease under subparagraph (A) or (B) 
shall be 50 percent of the amount of the 
increase or decrease otherwise provided; 
and 
‘‘(iii) fiscal year 2007 or calendar 
year 2007, the amount of any increase or 
decrease under subparagraph (A) or (B) 
shall be 75 percent of the amount of the 
increase or decrease otherwise provided. 
‘‘(2) DETERMINATION OF AVERAGES.—
‘‘(A) STATE AVERAGE PER BENEFICIARY 
AMOUNT.—Each year (beginning in 2004), the 
Secretary shall determine a State average per 
beneficiary amount for each State which shall 
be equal to the Secretary’s estimate of the aver-
age amount of expenditures under the original 
medicare fee-for-service program under parts A
and B for the year for a beneficiary enrolled 
under such parts that resides in the State. 
‘‘(B) NATIONAL
AVERAGE
PER
BENE-
FICIARY
AMOUNT.—Each year (beginning in 
2004), the Secretary shall determine the na-
tional average per beneficiary amount which 
shall be equal to the average of the State aver-
age per beneficiary amounts determined under 
subparagraph (B) for the year. 
‘‘(3) APPLICABLE
PAYMENTS
DEFINED.—In 
this section, the term ‘applicable payments’ means 
payments made to providers of services and health 
care professionals for services provided under the 
original medicare fee-for-service program under 
parts A and B to beneficiaries enrolled under such 
parts that reside in the State. 
‘‘(c) BENEFICIARIES HELD HARMLESS.—The provi-
sions of this section shall not effect—
‘‘(1) the entitlement to items and services of a 
beneficiary under this title, including the scope of 
such items and services; or 
‘‘(2) any liability of the beneficiary with respect 
to such items and services.