text: 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).
target: 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.
feat_title: 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.