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Q: SECTION 1. SHORT TITLE.

This Act may be cited as the ''Medicare Fairness in Reimbursement
Act of 2001''.

SEC. 2. IMPROVING FAIRNESS OF PAYMENTS TO PROVIDERS 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 following new section:

''improving fairness of payments under the original medicare fee-for-
service program

''Sec. 1897. (a) Establishment of System.--Notwithstanding 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) Adjustments.--Under the system described in
subsection (a), the Secretary (beginning in 2002) shall make
the following adjustments:
''(A) Certain states above national average.--If a
State average per beneficiary amount for a year is
greater than 105 percent (or 110 percent in the case of
the determination made in 2001) of the national average
per beneficiary amount for such year, then the
Secretary shall reduce 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 subsequent year being at 105 percent (or
110 percent in the case of payments made in 2002) of
the national average per beneficiary amount for such
subsequent year.
''(B) Certain states below national average.--If a
State average per beneficiary amount for a year is less
than 95 percent (or 90 percent in the case of the
determination made in 2001) of the national average per
beneficiary amount for such year, then the Secretary
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 subsequent year being at 95 percent (or 90
percent in the case of payments made in 2002) of the
national average per beneficiary amount for such
subsequent year.
''(2) Determination of averages.--
''(A) State average per beneficiary amount.--Each
year (beginning in 2001), the Secretary shall determine
a State average per beneficiary amount for each State
which shall be equal to the Secretary's estimate of the
average 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 beneficiary amount.--
Each year (beginning in 2001), the Secretary shall
determine the national average per beneficiary amount
which shall be equal to the average of the State
average per beneficiary amounts determined under
subparagraph (B) for the year.
''(3) 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 beneficiaries 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 provisions 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.
''(d) Regulations.--
''(1) In general.--The Secretary, in consultation with the
Medicare Payment Advisory Commission, 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.
''(e) Budget Neutrality.--The Secretary shall ensure that the
provisions contained in this section do 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 section had not been enacted.''.

SEC. 3. IMPROVING FAIRNESS OF PAYMENTS FOR PHYSICIANS' SERVICES UNDER
THE MEDICARE FEE-FOR-SERVICE PROGRAM.

(a) Adjustment to Geographic Indices Under the Physician Fee
Schedule.--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 ''(B) and (C)'' and
inserting (B), (C), and (D)'' in the matter preceding clause
(i);
(2) by redesignating subparagraph (D) as subparagraph (E);
and
(3) by adding after subparagraph (C) the following new
subparagraph:
''(D) Floor and ceiling on geographic indices.--If
any index established under clause (i), (ii), or (iii)
of subparagraph (A) or under subparagraph (B), after
application of the second sentence of subparagraph (C),
is--
''(i) less that 0.950, the Secretary shall
increase such index to 0.950; and
''(ii) greater that 1.05, the Secretary
shall reduce such index to 1.05.''.
(b) Budget Neutrality Adjustment for Application of Floor and
Ceiling on Geographic Adjustment.--Section 1848(d) of the Social
Security Act (42 U.S.C. 1395w-4(d)) is amended--
(1) in paragraph (1)(A), by striking ''The conversion'' and
inserting ''Subject to paragraph (5), the conversion''; and
(2) by adding at the end the following new paragraph:
''(5) Budget neutrality adjustment for application
of floor and ceiling on geographic adjustment.--Before
applying an update for a year under this subsection,
the Secretary shall (if necessary) provide for an
adjustment to the conversion factor for that year to
ensure that the aggregate payments under this part in
that year shall be equal to aggregate payments that
would have been made under such part in that year if
subsection (e)(1)(D) had not been enacted.''.
(c) Effective Date.--The amendments made by this section shall
apply to payments for items and services provided on and after January
1, 2002.
A:
Medicare Fairness in Reimbursement Act of 2001 - Amends title XVIII (Medicare) of the Social Security Act to instruct the Secretary of Health and Human Services to establish a system for making adjustments to payments for items and services provided under the original Medicare fee-for-service program, with specified formulae for States whose average per beneficiary amount is: (1) greater than 105 percent of the national average; or (2) less than 95 percent of the national average. Authorizes the Secretary to make specified related adjustments to geographic indices under the Medicare physician fee schedule in certain circumstances.