I
107TH CONGRESS
2D SESSION
H. R. 4850
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 HOUSE OF REPRESENTATIVES
MAY 23, 2002
Mr. SMITH of Washington (for himself, Mr. LARSEN of Washington, Mr. INS-
LEE, Mr. BAIRD, Mr. DICKS, and Mr. MCDERMOTT) introduced the fol-
lowing 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 consider-
ation 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
the provision of items and services provided to Medicare
beneficiaries residing in rural areas.
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 ‘‘MediFair Act of
2002’’.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) Regional inequities in medicare reimburse-
ment has created barriers to care for seniors and the
disabled.
(2) The regional inequities in medicare reim-
bursement penalize States that have cost-effective
health care delivery systems and rewards those
States with high utilization rates and that provide
inefficient care.
(3) Over a lifetime, those inequities can mean
as much as a $50,000 difference in the cost of care
provided per beneficiary.
(4) Regional inequities have resulted in creating
very different medicare programs for seniors and the
disabled based on where they live.
(5) Because the Medicare+Choice rate is based
on the fee-for-service reimbursement rate, regional
inequities have allowed some medicare beneficiaries
access to plans with significantly more benefits in-
cluding prescription drugs. Beneficiaries in States
with lower reimbursement rates have not benefited
to the same degree as beneficiaries in other parts of
the country.
(6) Regional inequities in medicare reimburse-
ment have created an unfair competitive advantage
for hospitals and other health care providers in
States that receive above average payments. Higher
payments mean that those providers can pay higher
salaries in a tight, competitive market.
(7) Regional inequities in medicare reimburse-
ment can limit timely access to new technology for
beneficiaries in States with lower reimbursement
rates.
(8) Regional inequities in medicare reimburse-
ment, if left unchecked, will reduce access to medi-
care services and impact healthy outcomes for bene-
ficiaries.
(9) Regional inequities in medicare reimburse-
ment are not just a rural versus urban problem.
Many States with large urban centers are at the bot-
tom of the national average for per beneficiary costs.
SEC. 3. IMPROVING FAIRNESS OF PAYMENTS TO PRO-
VIDERS UNDER THE MEDICARE FEE-FOR-
SERVICE PROGRAM.
Title XVIII of the Social Security Act (42 U.S.C.
1395 et seq.) is amended by adding at the end the fol-
lowing new section:
‘‘IMPROVING PAYMENT EQUITY UNDER THE ORIGINAL
MEDICARE FEE-FOR-SERVICE PROGRAM
‘‘SEC. 1897. (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 entities and individuals for
items and services provided under the original medicare
fee-for-service program under parts A and B.
‘‘(b) SYSTEM REQUIREMENTS.—
‘‘(1) INCREASE FOR STATES BELOW THE NA-
TIONAL
AVERAGE.—Under the system established
under subsection (a), if a State average per bene-
ficiary amount for a year is less than the national
average per beneficiary amount for such year, then
the Secretary (beginning in 2003) shall increase the
amount of applicable payments in such a manner as
will result (as estimated by the Secretary) in the
State average per beneficiary amount for the subse-
quent year being equal to the national average per
beneficiary amount for such subsequent year.
‘‘(2) REDUCTION FOR CERTAIN STATES ABOVE
THE
NATIONAL
AVERAGE
TO
ENHANCE
QUALITY
CARE AND MAINTAIN BUDGET NEUTRALITY.—
‘‘(A) IN
GENERAL.—The Secretary shall
ensure that the increase in payments under
paragraph (1) does not cause the estimated
amount of expenditures under this title for a
year to increase or decrease from the estimated
amount of expenditures under this title that
would have been made in such year if this sec-
tion had not been enacted by reducing the
amount of applicable payments in each State
that the Secretary determines has—
‘‘(i) a State average per beneficiary
amount for a year that is greater than the
national average per beneficiary amount
for such year; and
‘‘(ii) healthy outcome measurements
or quality care measurements that indicate
that a reduction in applicable payments
would encourage more efficient use of, and
reduce overuse of, items and services for
which payment is made under this title.
‘‘(B) LIMITATION.—The Secretary shall
not reduce applicable payments under subpara-
graph (A) to a State that—
‘‘(i) has a State average per bene-
ficiary amount for a year that is greater
than the national average per beneficiary
amount for such year; and
‘‘(ii) has healthy outcome measure-
ments or quality care measurements that
indicate that the applicable payments are
being used to improve the access of bene-
ficiaries to quality care.
‘‘(3) DETERMINATION OF AVERAGES.—
‘‘(A) STATE AVERAGE PER BENEFICIARY
AMOUNT.—Each year (beginning in 2002), 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
2002), 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 amount determined under
subparagraph (A) for the year.
‘‘(4) DEFINITIONS.—In this section:
‘‘(A) APPLICABLE PAYMENTS.—The term
‘applicable payments’ means payments made to
entities and individuals for items and services
provided under the original medicare fee-for-
service program under parts A and B to bene-
ficiaries enrolled under such parts that reside in
the State.
‘‘(B) STATE.—The term ‘State’ has the
meaning given such term in section 210(h).
‘‘(c) BENEFICIARIES HELD HARMLESS.—The provi-
sions of this section shall not affect—
‘‘(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.
‘‘(d) REGULATIONS.—
‘‘(1) IN GENERAL.—The Secretary, in consulta-
tion with the Medicare Payment Advisory Commis-
sion, shall promulgate regulations to carry out this
section.
‘‘(2) PROTECTING
RURAL
COMMUNITIES.—In
promulgating the regulations pursuant to paragraph
(1), the Secretary shall give special consideration to
rural areas.’’.
SEC. 4. MEDPAC RECOMMENDATIONS ON HEALTHY OUT-
COMES AND QUALITY CARE.
(a) RECOMMENDATIONS.—The Medicare Payment
Advisory Commission established under section 1805 of
the Social Security Act (42 U.S.C. 1395b–6) shall develop
recommendations on policies and practices that, if imple-
mented, would encourage—
(1) healthy outcomes and quality care under the
medicare program in States with respect to which
payments are reduced under section 1897(b)(2) of
such Act (as added by section 3); and
(2) the efficient use of payments made under
the medicare program in such States.
(b) SUBMISSION.—Not later than the date that is 9
months after the date of enactment of this Act, the Com-
mission shall submit to Congress the recommendations de-
veloped under subsection (a).
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