II 110th CONGRESS 2d Session S. 3318 IN THE SENATE OF THE UNITED STATES July 23, 2008 Mr. Grassley introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend title XVIII of the Social Security Act to provide for recognition of equality of physician work in all geographic areas and revisions to the practice expense geographic adjustment under the Medicare physician fee schedule.

1.

Short title

This Act may be cited as the Medicare Physician Payment Equity Act of 2008.

2.

Recognition of equality of physician work in all geographic areas under the Medicare 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), in the matter preceding clause (i), by striking subparagraphs (B) through the Secretary and inserting the succeeding provisions of this paragraph, the Secretary; and (2)by inserting after subparagraph (E) the following new subparagraph: (F)

Recognition of equality of physician work in all geographic areas

In recognition of the fact that the physician work for a service is the same in all geographic areas, and should be similarly valued under this title, for services furnished on or after January 1, 2010, the geographic index for physician work under subparagraph (A)(iii) shall be 1.0 in all fee schedule areas. .

3.

Revisions to the practice expense geographic adjustment under the Medicare physician fee schedule

(a)

Establishment of floor

Section 1848(e)(1) of the Social Security Act (42 U.S.C. 1395w–4(e)(1)) is amended by adding at the end the following new subparagraph: (H)

Floor at 1.0 on practice expense geographic index

After calculating the practice expense geographic index in subparagraph (A)(i), for purposes of payment for services furnished in 2009, the Secretary shall increase the practice expense geographic index to 1.0 for any locality for which such practice expense geographic index is less than 1.0. . (b)

More appropriate recognition of practice expense differences in employee wages and office rents among geographic areas

Section 1848(e)(1) of the Social Security Act (42 U.S.C. 1395w–4(e)(1)), as amended by subsection (a), is amended by adding at the end the following new subparagraph: (I)

More appropriate recognition of differences in employee wages and office rents among areas

(i)

In general

In recognition of the limitations on available data (as described in clause (ii)) for use as the employee wage and office rent proxies in the practice expense geographic index described in subparagraph (A)(i), and in order to more appropriately reflect differences among different fee schedule areas, for services furnished on or after January 1, 2010, such practice expense geographic index shall be an index which reflects 1/2 of the difference between the relative costs of employee wages and rents in each of the different fee schedule areas and the national average of such employee wages and rents. (ii)

Limitations on available data

The limitations on available data described in this clause are the following: (I)The need to use proxy data to reflect differences in employee wages and rents among areas. (II)Wages for some categories of employees being determined in national markets. (III)Physicians having to compete for some employees in market areas that cross fee schedule areas. (IV)Physicians in rural areas frequently having to locate their offices close to urban areas and competing with urban rent markets. .