SEC. 223. PAYMENT RATES FOR ITEMS AND SERVICES.

[a] Rates Established by Secretary-

[1] IN GENERAL- The Secretary shall establish payment rates for the public health insurance option for services and health care providers consistent with this section and may change such payment rates in accordance with section 224.

[2] INITIAL PAYMENT RULES-

[A] IN GENERAL- Except as provided in subparagraph [B] and subsection [b][1], during Y1, Y2, and Y3, the Secretary shall base the payment rates under this section for services and providers described in paragraph [1] on the payment rates for similar services and providers under parts A and B of Medicare.

[B] EXCEPTIONS-

[i] Practitioners' SERVICES- Payment rates for practitioners' services otherwise established under the fee schedule under section 1848 of the Social Security Act shall be applied without regard to the provisions under subsection [f] of such section and the update under subsection [d][4] under such section for a year as applied under this paragraph shall be not less than 1 percent.

[ii] ADJUSTMENTS- The Secretary may determine the extent to which Medicare adjustments applicable to base payment rates under parts A and B of Medicare shall apply under this subtitle.

[3] FOR NEW SERVICES- The Secretary shall modify payment rates described in paragraph [2] in order to accommodate payments for services, such as well-child visits, that are not otherwise covered under Medicare.

[4] PRESCRIPTION DRUGS- Payment rates under this section for prescription drugs that are not paid for under part A or part B of Medicare shall be at rates negotiated by the Secretary.

[b] Incentives for Participating Providers-

[1] INITIAL INCENTIVE PERIOD-

[A] IN GENERAL- The Secretary shall provide, in the case of services described in subparagraph [B] furnished during Y1, Y2, and Y3, for payment rates that are 5 percent greater than the rates established under subsection [a].

[B] SERVICES DESCRIBED- The services described in this subparagraph are items and professional services, under the public health insurance option by a physician or other health care practitioner who participates in both Medicare and the public health insurance option.

[C] SPECIAL RULES- A pediatrician and any other health care practitioner who is a type of practitioner that does not typically participate in Medicare [as determined by the Secretary] shall also be eligible for the increased payment rates under subparagraph [A].

[2] SUBSEQUENT PERIODS- Beginning with Y4 and for subsequent years, the Secretary shall continue to use an administrative process to set such rates in order to promote payment accuracy, to ensure adequate beneficiary access to providers, and to promote affordablility and the efficient delivery of medical care consistent with section 221[a]. Such rates shall not be set at levels expected to increase overall medical costs under the option beyond what would be expected if the process under subsection [a][2] and paragraph [1] of this subsection were continued.

[3] ESTABLISHMENT OF A PROVIDER NETWORK- Health care providers participating under Medicare are participating providers in the public health insurance option unless they opt out in a process established by the Secretary.

[c] Administrative Process for Setting Rates- Chapter 5 of title 5, United States Code shall apply to the process for the initial establishment of payment rates under this section but not to the specific methodology for establishing such rates or the calculation of such rates.

[d] Construction- Nothing in this subtitle shall be construed as limiting the Secretary's authority to correct for payments that are excessive or deficient, taking into account the provisions of section 221[a] and the amounts paid for similar health care providers and services under other Exchange-participating health benefits plans.

[e] Construction- Nothing in this subtitle shall be construed as affecting the authority of the Secretary to establish payment rates, including payments to provide for the more efficient delivery of services, such as the initiatives provided for under section 224.

[f] Limitations on Review- There shall be no administrative or judicial review of a payment rate or methodology established under this section or under section 224.