article: 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 reimbursement has created barriers to care for seniors and the disabled. (2) The regional inequities in medicare reimbursement 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 including 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 reimbursement 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 reimbursement can limit timely access to new technology for beneficiaries in States with lower reimbursement rates. (8) Regional inequities in medicare reimbursement, if left unchecked, will reduce access to medicare services and impact healthy outcomes for beneficiaries. (9) Regional inequities in medicare reimbursement are not just a rural versus urban problem. Many States with large urban centers are at the bottom of the national average for per beneficiary costs. SEC. 3. 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 payment equity 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) Increase for states below the national average.-- Under the system established under subsection (a), if a State average per beneficiary 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 subsequent 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 section 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 subparagraph (A) to a State that-- ``(i) has a State average per beneficiary amount for a year that is greater than the national average per beneficiary amount for such year; and ``(ii) has healthy outcome measurements or quality care measurements that indicate that the applicable payments are being used to improve the access of beneficiaries 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 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 2002), the Secretary shall determine the national average per beneficiary amount which shall be equal to the average of the State average 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 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 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 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.''. SEC. 4. MEDPAC RECOMMENDATIONS ON HEALTHY OUTCOMES 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 implemented, 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 Commission shall submit to Congress the recommendations developed under subsection (a).
summary: MediFair Act of 2002 - Amends title XVIII (Medicare) of the Social Security Act to direct the Secretary of Health and Human Services to establish a system for making adjustments to the amount of payment to entities and individuals for items and services provided under the original Medicare fee-for-service program under Medicare parts A (Hospital Insurance) and B (Supplementary Medical Insurance) for the stated purpose of improving payment equity under such program.Directs the Medicare Payment Advisory Commission to develop recommendations for Congress on policies and practices that, if implemented, would encourage: (1) healthy outcomes and quality care under the Medicare program in States with respect to which payments are reduced under the system under this Act; and (2) the efficient use of payments made under the Medicare program in such States.