To amend title XVIII of the Social Security Act to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the physician fee schedule, to provide the incentives necessary to attract educators and clinical practitioners to underserved areas, and to revise the area wage adjustment applicable under the prospective payment system for skilled nursing facilities.

January 7, 2003

Mr. FEINGOLD (for himself, Ms. COLLINS, and Mr. KOHL) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend title XVIII of the Social Security Act to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the physician fee schedule, to provide the incentives necessary to attract educators and clinical practitioners to underserved areas, and to revise the area wage adjustment applicable under the prospective payment system for skilled nursing facilities.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the `Medicare Equity Act of 2003'.

(b) TABLE OF CONTENTS-

Sec. 1. Short title; table of contents.

Sec. 2. Elimination of geographic physician work adjustment factor from geographic indices used to adjust payments under the physician fee schedule.

Sec. 3. Clinical rotation demonstration project.

Sec. 4. Use of skilled nursing facility wage data under the prospective payment system for skilled nursing facility services.

SEC. 2. ELIMINATION OF GEOGRAPHIC PHYSICIAN WORK ADJUSTMENT FACTOR FROM GEOGRAPHIC INDICES USED TO ADJUST PAYMENTS UNDER THE PHYSICIAN FEE SCHEDULE.

(a) FINDINGS- Congress finds the following:

(1) Variations in the geographic physician work adjustment factors under section 1848(e) of the Social Security Act (42 U.S.C. 1395w-4(e)) result in inequity between localities in payments under the medicare physician fee schedule.

(2) Beneficiaries under the medicare program that reside in areas where such adjustment factors are high have relatively more access to services that are paid based on such fee schedule.

(3) There are a number of studies indicating that the market for health care professionals has become nationalized and historically low labor costs in rural and small urban areas have disappeared.

(4) Elimination of the adjustment factors described in paragraph (1) would equalize the reimbursement rate for services reimbursed under the medicare physician fee schedule while remaining budget-neutral.

(b) ELIMINATION- Section 1848(e) of the Social Security Act (42 U.S.C. 1395w-4(e)) is amended--

(1) in paragraph (1)(A)(iii), by striking `an index' and inserting `for services provided before January 1, 2003, an index'; and

(2) in paragraph (2), by inserting `, for services provided before January 1, 2003,' after `paragraph (4)), and'.

(c) BUDGET NEUTRALITY ADJUSTMENT FOR ELIMINATION OF GEOGRAPHIC PHYSICIAN WORK ADJUSTMENT FACTOR- 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 ELIMINATION OF GEOGRAPHIC PHYSICIAN WORK ADJUSTMENT FACTOR- 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 the amendments made by section 2(b) of the Medicare Equity Act of 2003 had not been enacted.'.

SEC. 3. CLINICAL ROTATION DEMONSTRATION PROJECT.

(a) ESTABLISHMENT- Not later than 6 months after the date of enactment of this Act, the Secretary shall establish a demonstration project that provides for demonstration grants designed to provide financial or other incentives to hospitals to attract educators and clinical practitioners so that hospitals that serve beneficiaries under the medicare program under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) who are residents of underserved areas may host clinical rotations.

(b) DURATION OF PROJECT- The demonstration project shall be conducted over a 5-year period.

(c) FUNDING-

(1) IN GENERAL- Subject to paragraph (2), the Secretary shall pay the costs of the demonstration project conducted under this section from the Federal Hospital Insurance Trust Fund under section 1817 of the Social Security Act (42 U.S.C. 1395i).

(2) CAP ON FUNDING- The Secretary may not expend more than $20,000,000 to conduct the demonstration project under this section.

(3) BUDGET NEUTRALITY FOR DEMONSTRATION PROJECT- Notwithstanding any other provision of law, the Secretary shall provide for an appropriate reduction in the aggregate amount of additional payments made under subsection (d)(5)(B) of section 1886 of the Social Security Act (42 U.S.C. 1395ww) for the indirect costs of medical education and for direct graduate medical education costs under subsection (h) of such section to reflect any increase in amounts expended from the Federal Hospital Insurance Trust Fund as a result of the demonstration project conducted under this section.

(d) REPORTS- The Secretary shall submit to the appropriate committees of Congress interim reports on the demonstration project and a final report on such project within 6 months after the conclusion of the project together with recommendations for such legislative or administrative action as the Secretary determines appropriate.

(e) WAIVER- The Secretary shall waive such provisions of titles XI and XVIII of the Social Security Act (42 U.S.C. 1301 et seq. and 1395 et seq.) as may be necessary to conduct the demonstration project under this section.

(f) DEFINITIONS- In this section:

(1) HOSPITAL- The term `hospital' means any subsection (d) hospital (as defined in section 1886(d)(1)(B) of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)) that had indirect or direct costs of medical education during the most recent cost reporting period preceding the date of enactment of this Act.

(2) SECRETARY- The term `Secretary' means the Secretary of Health and Human Services.

(3) UNDERSERVED AREA- The term `underserved area' means such medically underserved urban areas and medically underserved rural areas as the Secretary may specify.

SEC. 4. USE OF SKILLED NURSING FACILITY WAGE DATA UNDER THE PROSPECTIVE PAYMENT SYSTEM FOR SKILLED NURSING FACILITY SERVICES.

(a) FINDINGS- Congress finds the following:

(1) Skilled nursing facilities (as defined in section 1819(a) of the Social Security Act (42 U.S.C. 1395i-3(a))) employ a significantly different group of health care professionals than the health care professionals employed by hospitals (as defined in section 1861(e) of such Act (42 U.S.C. 1395x(e))).

(2) Because of the difference described in paragraph (1) the wage variation in skilled nursing facilities also differs from that of hospitals.

(3) The Centers for Medicare & Medicaid Services is currently collecting skilled nursing facility wage data but has not set a date for implementation of an area wage index for such facilities under the prospective payment system for skilled nursing facility services under section 1888(e) of such Act (42 U.S.C. 1395yy(e)) that is based on such wage data.

(b) USE OF SKILLED NURSING FACILITY WAGE DATA- Section 1888(e)(4)(G)(ii) of the Social Security Act (42 U.S.C. 1395yy(e)(4)(G)(ii)) is amended--

(1) in the second sentence, by striking `Such adjustment' and inserting `The area wage adjustment under this clause'; and

(2) by inserting after the first sentence the following new sentence: `Beginning on October 1, 2003, the area wage adjustment under this clause shall be based on the wages of individuals employed at skilled nursing facilities.'.

END