A bill to amend title XVIII of the Social Security Act to establish a minimum geographic cost-of-practice index value for physicians' services furnished under the medicare program.

SECTION 1. SHORT TITLE; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``Rural Equity 
Payment Index Reform Act of 2003''.
    (b) Findings.--Congress makes the following findings:
            (1) Variations in the physician work adjustment factors 
        under section 1848(e) of the Social Security Act (42 U.S.C. 
        1395w-4w(e)) result in a physician work payment inequity 
        between urban and rural localities under the medicare physician 
        fee schedule.
            (2) The amount the medicare program spends on its 
        beneficiaries varies substantially across the country, far more 
        than can be accounted for by differences in the cost of living 
        or differences in health status.
            (3) Since beneficiaries and others pay into the program on 
        the basis of income and wages and beneficiaries pay the same 
        premium for part B services, these payments result in 
        substantial cross-subsidies from people living in low payment 
        States with conservative practice styles or beneficiary 
        preferences to people living in higher payment States with 
        aggressive practice styles or beneficiary preferences.
            (4) Congress has been mindful of these variations when it 
        comes to capitation payments made to managed care plans under 
        the Medicare+Choice program and has put in place floors that 
        increase monthly payments by more than one-third in some of the 
        lowest payment counties over what would otherwise occur. But 
        this change addresses only a very small fraction of medicare 
        beneficiaries who are presently enrolled in Medicare+Choice 
        plans operating in low payment counties.
            (5) Unfortunately, Congress has only begun to address the 
        underlying problem of substantial geographic variations in fee-
        for-service spending under traditional medicare.
            (6) Improvements in rural hospital payment systems under 
        the medicare program help to reduce aggregate per capita 
        payment variation as rural hospitals are in large part located 
        in low payment counties.
            (7) Many rural communities have great difficulty attracting 
        and retaining physicians and other skilled health 
        professionals.
            (8) Targeted efforts to provide relief to rural doctors in 
        low payment localities would further reduce variation by 
        improving access to primary and tertiary services along with 
        more equitable payment.
            (9) Geographic adjustment factors in the medicare program's 
        resource-based relative value scale unfairly suppress fee-for-
        service payments to rural providers.
            (10) Actual costs are not presently being measured 
        accurately and payments do not reflect the costs of providing 
        care.
            (11) Unless something is done about medicare payment in 
        rural areas, as the baby boom cohort ages into medicare, the 
        financial demands on rural communities to subsidize care for 
        their aged and disabled medicare beneficiaries will progress 
        from difficult to impossible in another 10 years.
            (12) The impact on rural health care infrastructure will be 
        first felt in economically depressed rural areas where the 
        ability to shift costs is already limited.

SEC. 2. PHYSICIAN FEE SCHEDULE WAGE INDEX REVISION.

    Section 1848(e)(1) of the Social Security Act (42 U.S.C. 1395w-
4(e)(1)) is amended--
            (1) in subparagraph (A), by striking ``subparagraphs (B) 
        and (C)'' and inserting ``subparagraphs (B), (C), and (E)''; 
        and
            (2) by adding at the end the following new subparagraph:
                    ``(E) Floor for work geographic indices.--
                            ``(i) In general.--Notwithstanding the work 
                        geographic index otherwise calculated under 
                        subparagraph (A)(iii), in no case may the work 
                        geographic index applied for payment under this 
                        section be less than--
                                    ``(I) 0.976 for services furnished 
                                during 2004;
                                    ``(II) 0.987 for services furnished 
                                during 2005;
                                    ``(III) 0.995 for services 
                                furnished during 2006; and
                                    ``(IV) 1.000 for services furnished 
                                during 2007 and subsequent years.
                            ``(ii) Exemption from limitation on annual 
                        adjustments.--The increase in expenditures 
                        attributable to clause (i) shall not be taken 
                        into account in applying subsection 
                        (c)(2)(B)(ii)(II).''.

Summary: Rural Equity Payment Index Reform Act of 2003 - Amends title XVIII (Medicare) of the Social Security Act (SSA) to establish a minimum geographic cost-of-practice index value for physicians' services furnished under the Medicare program.