Sen. Charles Grassley (R-Iowa), ranking member of the Senate Committee on Finance, has proposed an overhaul of the Medicare physician payment system to prevent geographic adjusters from penalizing doctors in Iowa and other rural parts of the country.
Grassley said he had hoped Congress would provide more equitable payment for rural doctors in the Medicare legislation that became law last week. "What passed takes care of the short-term problem of averting a scheduled payment cut for all Medicare doctors, but it doesn't do anything to improve the way doctors in rural states, including doctors who practice in Des Moines and Cedar Rapids, get shortchanged by the geographic adjusters" in the program's physician payment formula, he said.
The Medicare Physician Payment Equity Act of 2008 would reduce disparities in physician payment resulting from the Geographic Practice Cost Indices (GCPIs), or adjusters, by establishing a 1.0 floor for physician practice expense adjustments as of 2009 and by providing a national 1.0 geographic index for physician work expense after the expiration of the existing 1.0 floor in 2010.
After the GPCI adjustments, Medicare reimbursement for some physician services in Iowa is at least 30 percent lower than payment for the same service in other parts of the country.
"The practice expense formula used by (the) Centers for Medicare and Medicaid Services (CMS) is inaccurate, outdated, and does not represent the actual office rent or employee wage costs for physicians in many areas," Grassley said in his introduction to the bill. "The act provides for a more appropriate recognition of the geographic differences in employee wages and office rents by reducing the impact of this index to reflect more accurately the differences in physician practice costs, as of 2010."
Although geographic adjustments are intended to reflect actual cost differences in a given area compared to a national average of 1.0, Grassley said the existing formulas create significant disparities in physician reimbursement that penalize, rather than equalize, physician payments in rural states.
As a result, he said, rural states have had problems recruiting and retaining physicians and other healthcare professionals because of lower reimbursement rates. This, in turn, leads to reduced beneficiary access to rural healthcare providers, he said.
It is reported that the physician work formula currently used by the CMS to estimate physician wages measures geographic differences in the earnings of six categories of professionals (including lawyers and engineers), rather than differences in physicians' earnings. Also, the data used is reportedly based on outdated proxy data from the 2000 census.
According to the National Rural Health Association, only about 10 percent of physicians practice in rural areas, although nearly a quarter of the country's population is rural. In addition, there are only about 40 specialists per 100,000 residents in rural areas compared to more than three times as many - 134 per 100,000 - in urban areas,
"The quality of life in rural states will be hurt by the physician shortages that will result if Congress doesn't act quickly to make important, credible changes to these formulas," Grassley said. "We must act now to help recruit and retain rural physicians to ensure that beneficiaries in Iowa and other rural areas will continue to have access to health care."
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