Geographic Adjustment in Medicare Payment: Phase II: Implications for Access, Quality, and Efficiency (2012)
Chapter: Front Matter
GEOGRAPHIC ADJUSTMENT
IN MEDICARE PAYMENT
Phase II: Implications for Access, Quality, and Efficiency
Committee on Geographic Adjustment Factors in Medicare Payment
Board on Health Care Services
Margaret Edmunds, Frank A. Sloan, and A. Bruce Steinwald, Editors
INSTITUTE OF MEDICINE
OF THE NATIONAL ACADEMIES
THE NATIONAL ACADEMIES PRESS
Washington, D.C.
THE NATIONAL ACADEMIES PRESS 500 Fifth Street, NW Washington, DC 20001
NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.
This study was supported by Contract No. HHS P23320042509XI, Task Order No. HHS P23337012T between the National Academy of Sciences and the Centers for Medicare & Medicaid Services. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the organizations or agencies that provided support for this project.
Library of Congress Cataloging-in-Publication Data
Institute of Medicine (U.S.). Committee on Geographic Adjustment Factors in Medicare Payment.
Geographic adjustment in Medicare payment. Phase II, Implications for access, quality, and efficiency / Committee on Geographic Adjustment Factors in Medicare Payment, Board on Health Care Services ; Margaret Edmunds and Frank A. Sloan, and A. Bruce Steinwald, editors.
p. ; cm.
Implications for access, quality, and efficiency
Includes bibliographical references and index.
ISBN 978-0-309-25798-5 (pbk.) — ISBN 978-0-309-25799-2 (pdf)
I. Edmunds, Margaret. II. Sloan, Frank A. III. Steinwald, Bruce. IV. Title.
V. Title: Implications for access, quality, and efficiency.
[DNLM: 1. Medicare Part A—economics. 2. Medicare Part B—economics. 3. Fee-for-Service Plans—organization & administration—United States. 4. Professional Practice Location—economics—United States. WT 31]
368.4’20140973—dc23
2012040470
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Copyright 2012 by the National Academy of Sciences. All rights reserved.
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Suggested citation: IOM (Institute of Medicine). 2012. Geographic adjustment in Medicare payment: Phase II: Implications for access, quality, and efficiency. Washington, DC: The National Academies Press.
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Willing is not enough; we must do.”
—Goethe
INSTITUTE OF MEDICINE
OF THE NATIONAL ACADEMIES
Advising the Nation. Improving Health.
THE NATIONAL ACADEMIES
Advisers to the Nation on Science, Engineering and Medicine
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COMMITTEE ON GEOGRAPHIC ADJUSTMENT FACTORS IN MEDICARE PAYMENT
FRANK A. SLOAN (Chair), J. Alexander McMahon Professor of Health Policy and Management, Professor of Economics, Center for Health Policy, Duke University, Durham, NC
M. ROY WILSON (Vice-Chair), Chancellor Emeritus, University of Colorado Denver
JON B. CHRISTIANSON, Professor and James A. Hamilton Chair in Health Policy and Management, University of Minnesota School of Public Health, Minneapolis
STUART GUTERMAN, Vice President, Payment and System Reform, The Commonwealth Fund, Washington, DC
CARLOS R. JAÉN, Chair of Family and Community Medicine and Dr. John M. Smith, Jr. Endowed Professor, University of Texas Health Science Center at San Antonio
JACK KALBFLEISCH, Professor of Biostatistics and Statistics and Director, Kidney Epidemiology and Cost Center, University of Michigan School of Public Health, Ann Arbor
MARILYN MOON, Senior Vice President and Director, Health, American Institutes of Research, Washington, DC
CATHRYN NATION, Associate Vice President, Division of Health Sciences and Services, University of California Office of the President, Oakland
JOANNE M. POHL, Professor Emerita, Division of Health Promotion and Risk Reduction, University of Michigan School of Nursing, Ann Arbor
THOMAS C. RICKETTS III, Managing Director, Cecil G. Sheps Center for Health Services Research, University of North Carolina at Chapel Hill
JANE E. SISK, Institute of Medicine Scholar-in-Residence, and Former Director, Division of Health Care Statistics, Centers for Disease Control and Prevention, National Center for Health Statistics, Washington, DC
A. BRUCE STEINWALD, Independent Consultant, Washington, DC
DAVID VLAHOV, Dean and Professor, School of Nursing, University of California, San Francisco
BARBARA O. WYNN, Senior Policy Analyst, RAND Corporation, Arlington, VA
ALAN M. ZASLAVSKY, Professor, Health Care Policy (Statistics), Harvard Medical School, Boston, MA
STEPHEN ZUCKERMAN, Senior Fellow, Health Policy Center, The Urban Institute, Washington, DC
RTI International Consultants
WALTER ADAMACHE, Research Economist
JUSTINE L.E. ALLPRESS, Research Geospatial Programmer/Analyst
KATHLEEN DALTON, RTI Project Director, Senior Health Policy Analyst
GREGORY C. POPE, Program Director, Health Care Financing and Payment Program
ELIZABETH SEELEY, Health Economist
NATHAN WEST, Health Services Analyst
ALTON WRIGHT, Public Health Analyst
IHS Global Insight Consultants
TIM DALL, IHS Project Director, Managing Director
PAUL GALLO, Project Staff
MIKE STORM, Project Staff
Study Staff
MARGARET EDMUNDS, Study Director
KATHLEEN HADDAD, Senior Program Officer (August 2010 to November 2011)
JENSEN JOSE, Research Associate (December 2011 to March 2012)
SERINA S. RECKLING, Research Associate (September 2010 to November 2011)
SARA SPIZZIRRI, Research Assistant (August 2010 to March 2012)
JOI D. WASHINGTON, Research Assistant (August 2011 to January 2012)
ASHLEY McWILLIAMS, Senior Program Assistant (August 2010 to August 2011)
ROGER C. HERDMAN, Director, Board on Health Care Services
Reviewers
This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Research Council’s Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report:
Robert Berenson, The Urban Institute
Karen Heller, Greater New York Hospital Association
Keith J. Mueller, University of Iowa
Joseph Newhouse, Harvard University
Robert Phillips, Robert Graham Center for Policy Studies in Family Medicine and Primary Care
Douglas Reding, Marshfield Clinic
William Scanlon, Independent Consultant
Susan M. Skillman, University of Washington
George Stamas, Bureau of Labor Statistics
David Torchiana, Massachusetts General Physicians Organization
Lance A. Waller, Emory University, Rollins School of Public Health
Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations, nor did they see the final draft of the report before its release. The review of this report was overseen by
Harold Sox, American College of Physicians, and Charles E. Phelps, Rochester University. Appointed by the National Research Council and Institute of Medicine, they were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.
Acknowledgments
The Committee on Geographic Adjustment Factors in Medicare Payment and the Institute of Medicine (IOM) study staff would like to thank the many individuals and organizations who generously contributed their time, knowledge, and expertise to this Phase II report.
The following individuals shared their expertise through invited presentations at the public session in September 2011: Cindy Bagwell, Vice President for Talent Acquisition, Geisinger Health System, Danville, PA; Blair Childs, Senior Vice President, Premier, Inc.; James Dickson, CEO, Copper Queen Community Hospital, Bisbee, Arizona; Kathy Duckett, Director of Clinical Programs, Partners Home Care, Boston, MA; Jennifer Grebenschikoff, President, The Physician Executive Leadership Center, Tampa, FL; Mark Miller, Executive Director, MedPAC, Washington, DC; Rachel Morgan, National Conference of State Legislatures, Washington, DC; and Anne Rosewarne, President, Michigan Health Council, Okemos, MI.
Several others provided valuable information and technical assistance. Phil Doyle, Laurie Salmon, and George Stamas of the Bureau of Labor Statistics met with committee members and staff and provided statistical consultations and data for the committee’s consideration. Others were instrumental in identifying speakers for the public session and in providing materials and information for the committee’s consideration: Alex Calgano of the Massachusetts Medical Society; Linda Fishman, Don May, and Joanna Kim of the American Hospital Association; Atul Grover of the American Association of Medical Colleges; Elizabeth McNeil of the California Medical Association; Brent Miller of Marshfield Clinic; Mark Miller, Jeffrey Stensland, Kevin Hayes, Cristina Boccutti, and Arielle Mir of MedPAC; Robert Phillips, Director of the Robert Graham Center: Policy Studies in Family Medicine and Primary Care; Edward Salsberg of the Health Resources and Services Administration; and Jan Towers, Health Policy Director of the American Academy of Nurse Practitioners.
Several congressional staff members also provided valuable background information for the study. They include professional staff members Nick Bath of the Senate Health, Energy, Labor and Pensions Committee; Celina Cunningham, Office of Congressman Jay Inslee; Jennifer Friedman and Geoff Gerhardt of the House Committee on Ways and Means, Subcommittee on
Health; Heather Gasper, Office of Congressman Michael E. Capuano; Mike Goodman, Office of Congressman Bruce Braley; Tim Gronniger, House Committee on Energy and Commerce; Jenn Holcomb, Office of Congresswoman Betty McCollum; John Laufer, Office of Congressman Pierluisi; and Travis Robey, Office of Congressman Ron Kind.
The expertise of Jim Jensen, Executive Director of the Office of Congressional and Government Affairs, in facilitating communications with congressional staff and members is gratefully acknowledged.
Special thanks go to the staff at RTI International, whose statistical analyses and technical consultations were both integral and invaluable to the study: Kathleen Dalton, RTI Project Director; Greg Pope, Program Director; and team members Walter Adamache, Justine Allpress, Elizabeth Seeley, Nathan West, and Alton Wright.
Several members of the IOM staff offered their guidance and support to the study staff and committee, including Roger Herdman, Director of the Board on Health Care Services; Senior Program Officers Jill Eden, Robin Grant, and Cheryl Ulmer and Program Officers Meg McCoy and Rob Saunders. Assistance and project support from Chelsea Frakes, Jillian Laffrey, and Michael Park is also gratefully acknowledged. Harvey Fineberg, President, and Judith Salerno, the Leonard D. Schaeffer Executive Officer, also provided valuable advice at key stages of the study. The guidance of Porter Coggeshall, Executive Director of the Report Review Committee, was especially valuable throughout the report review process. The Study Director would like to thank Marton Cavani, Web Communications Manager; Laura Harbold DeStefano, Editorial Projects Manager; Diedtra Henderson, Office of Reports and Communications; Stephen Mautner, Executive Editor, The National Academies Press; Abbey Meltzer, Deputy Communications Director; Christine Stencel, Senior Media Relations Officer; and Lauren Tobias, Director of Communications, for their creative approaches to helping the staff plan for report dissemination.
The committee could not have accomplished its tasks without the leadership of the Study Director, Margo Edmunds, whose management skills and foresight were exemplary.
Finally, the committee and staff would like to thank the Centers for Medicare & Medicaid Services (CMS), whose funding made this study possible. We especially thank Jonathan Blum, Deputy CMS Administrator; Marc Hartstein, Acting Director, Hospital and Ambulatory Policy Group; and Judith Richter, Division of Acute Care.
Contents
BOXES, EXHIBITS, FIGURES, AND TABLES
SUMMARY: IMPLICATIONS OF GEOGRAPHIC ADJUSTMENT FOR ACCESS, QUALITY, AND EFFICIENCY OF CARE
Conceptual Approach to Geographic Adjustment
Results of Impact Analyses from Phase I Recommendations
3 EVIDENCE OF GEOGRAPHIC VARIATION IN ACCESS, QUALITY, AND WORKFORCE DISTRIBUTION
Geographic Variation in Access to Health Care
Expanding Opportunities to Improve Access
4 PROGRAMS AND POLICIES TO IMPROVE ACCESS AND QUALITY OF CARE FOR BENEFICIARIES
Medicare Payment Policies Intended to Maintain Access to Hospital Care
Programs That Encourage Clinical Practice in Underserved Areas
Current Programs to Improve Quality
Current Programs to Improve Workforce Supply and Access
Delivery System Reform Initiatives to Promote Access and Quality of Care
Policy Considerations Affecting Workforce Distribution
5 OBSERVATIONS ON THE LARGER POLICY CONTEXT
Unintended Effects of Medicare Payment Policies
Geographic Adjustment and Payment Reform
APPENDIXES
A-2 Payment Simulations: Data Tables
B Methods for the Analysis of Associations of Quality Measures with Payments in Chapter 3
C Quality Assurance for RTI Payment Simulations
Boxes, Exhibits, Figures, and Tables
Box
Boxes
1-2 Principles from the Phase I Report
1-3 Definitions Used in This Report
Table
1-1 Policy Context for Evidence Review
Boxes
2-1 Phase I Recommendations Pertaining to Payment Simulations
2-2 Summary of the Committee's Commuter Smoothing Recommendation
Figures
2-2 Distribution of payment effects of IOM committee recommendations on the hospital index
2-3 Distribution of payment effects of IOM committee recommendations on the GPCIs
2-4 Payment effects attributed to market redefinition, by county status and type of payment locality
2-5 Combined physician payment effects by Rural–Urban Continuum Code
2-6 Sample state map identifying payment impact and HPSA status by county
Tables
2-2 Differences in Payments by IPPS Hospital Reclassification
2-3 Differences in IPPS Payments by Special Rural Status
2-5 Distribution of Counties and Beneficiaries Across Newly Constructed HPSA Categories
Boxes
3-1 Health Professional Shortage Areas (HPSAs): History and Methodology
3-2 State Variations in Nurse Practitioners' Scope of Practice
Figures
3-1 County designations for nonmetropolitan primary care service shortage areas
3-2 HPSA county designations for metropolitan primary care service shortage areas
3-3 National occupational employment estimates, 2000–2010, for selected populations
3-4 Number of primary care professionals
3-5 Change in physicians per 100,000 population, 2004–2009
3-6 Distribution of primary care physicians among urban and nonurban areas
3-7 Change in primary care physicians per 100,000 population, 2004–2009
3-8 Change in general surgeons-to-population ratios
3-9 Registered nurses per 100,000 population, 2011
3-10 Rural per capita supply of nurse practitioners by state, 2010
3-11 Urban per capita supply of nurse practitioners by state, 2010
3-12 Growth of PAs per 100,000 population
Tables
3-1 Sample Measures Included in the Evidence Review
3-3 Geographic Distribution of Primary Care Health Care Professionals, 2010
3-4 Medicare Payments for Telehealth Services
Boxes
4-1 Do Quality Incentive Payments Work?: Results from the Premier Hospital Quality Incentive Program
4-2 Expected Earnings and Physician Specialty Choices
Table
4-1 Access to Hospital Care in Geographically Isolated Areas
Box
Figure
5-1 Primary care billings reflect a higher proportion of total RVUs in nonmetropolitan areas
Exhibits
A-1 Recommended Changes in Index Construction Incorporated into Payment Simulations
A-2 Labor Markets in Source Data and Final Index Construction
A-4 Effects of Adjusting for Independent Area Variation in Benefits
A-5 County Assignments by Region, Type of Payment Locality, and CBSA Market
A-6 County Smoothing Adjustments, by Type of Index
A-7 Commuter-based smoothing adjustments by Rural—Urban Continuum Code
A-10 Distribution of estimated proportion of county population in primary care shortage areas
A-12 Budget Neutrality Factors Imposed on IOM Committee Indexes
A-13 Distribution of payment impact across all IPPS hospitals
A-14 Estimated Change in IPPS Payments, Isolated by Type of IOM Committee Recommendation
A-15 Impact of IOM Committee Recommendations on IPPS Payment, by USDA Rural—Urban Continuum Code
A-17 Impact of IOM Committee Recommendations on IPPS Payment, by Hospital Reclassification Status
A-18 Impact of IOM Committee Recommendations on IPPS Payment, by Special Rural Status
A-19 Impact of IOM Committee Recommendations on IPPS Payment, by Teaching and DSH Status
A-20 Impact of IOM Committee Recommendations on IPPS Payment, by Bed Size
A-21 Distribution of physician payment impact across all counties
A-22 Change in Aggregate Geographic Adjustment Factor, by Type of IOM Committee Recommendation
A-23 County Analysis of the Isolated Payment Effects from Redefining the GPCI Payment Areas
A-24 Physician Payment Impact of IOM Committee Recommendations, by USDA Rural—Urban Continuum Code
A-28 Physician Payment Impact of IOM Committee Recommendations, by Rural County Population Density
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| ACA | Patient Protection and Affordable Care Act |
| ACS | American Community Survey |
| AHEC | Area Health Education Center |
| AHRQ | Agency for Healthcare Research and Quality |
| AMA | American Medical Association |
| ASC | ambulatory surgical center |
BLS | Bureau of Labor Statistics |
| BPC | Bipartisan Policy Center |
CAH | critical access hospital |
| CAHPS | Consumer Assessments of Healthcare Providers and Systems |
| CBSA | core-based statistical area |
| CHC | community health center |
| CMI | case-mix index |
| CMS | Centers for Medicare & Medicaid Services |
| COGME | Council on Graduate Medical Education |
| CPT | Current Procedural Terminology |
| CRS | Congressional Research Service |
| CSA | combined statistical area |
| CTS | Community Tracking Survey |
| CY | calendar year |
DoD | Department of Defense |
| DRG | diagnosis-related group |
| DSH | disproportionate share hospital |
| EHR | electronic health record |
FCC | Federal Communications Commission |
| FQHC | Federally Qualified Health Center |
| FY | fiscal year |
GAF | geographic adjustment factor |
| GAO | Government Accountability Office |
| GIS | geographic information system |
| GME | graduate medical education |
| GPCI | geographic practice cost index |
| GSA | General Services Administration |
HCAHPS | Hospital Consumer Assessment of Healthcare Providers and Systems Survey |
| HCFA | Health Care Financing Administration |
| HCPCS | Healthcare Common Procedure Coding System |
| HHA | home health agency |
| HHS | Department of Health and Human Services |
| HIT | health information technology |
| HITECH | Health Information Technology for Economic and Clinical Health Act of 2009 |
| HPSA | Health Professional Shortage Area |
| HRR | hospital referral region |
| HRSA | Health Resources and Services Administration |
| HSA | hospital service area |
| HSIP | Healthcare Shortage Professional Area (HPSA) Surgical Incentive Payment |
| HUD | Department of Housing and Urban Development |
| HWI | hospital wage index |
IME | indirect medical education |
| IMG | international medical graduate |
| IOM | Institute of Medicine |
| IPPS | Inpatient Prospective Payment System |
| IRS | Internal Revenue Service |
KFF | Kaiser Family Foundation |
LPN | licensed practical nurse |
MDH | Medicare-dependent hospital |
| MedPAC | Medicare Payment Advisory Commission |
| MEPS | Medical Expenditure Panel Survey |
| MGCRB | Medicare Geographic Classification Review Board |
| MGMA | Medical Group Management Association |
| microSA | micropolitan statistical areas |
| MIPPA | Medicare Improvements for Patients and Providers Act |
| MMA | Medicare Modernization Act of 2003 |
| MP | malpractice |
| MS-DRG | Medicare severity diagnosis-related group |
| MSA | metropolitan statistical area |
NAICS | North American Industry Classification Systems |
| NCS | National Compensation Survey |
| NHDR | National Healthcare Disparities Report |
| NHQR | National Healthcare Quality Report |
| NHSC | National Health Service Corps |
| NP | nurse practitioner |
| NPI | National Provider Identifier |
OBRA | Omnibus Budget Reconciliation Act of 1989 |
| OES | Occupational Employment Statistics |
| OIG | Office of Inspector General |
| OMA | occupational mix adjustment |
PA | physician assistant |
| PCSA | primary care service area |
| PE | practice expense |
| PFS | Physician Fee Schedule |
| PHS | Public Health Service |
| PLI | professional liability insurance |
| PPIS | Physician Practice Information Survey |
| PPS | prospective payment system |
| PQRS | Physician Quality Reporting System |
| ProPAC | Prospective Payment Advisory Commission |
RBRVS | Resource-Based Relative Value Scale |
| RN | registered nurse |
| RSE | relative standard error |
| RRC | rural referral center |
| RUCC | Rural—Urban Continuum Code |
| RVU | relative value unit |
SCH | sole community hospital |
| SE | standard error |
| SNF | skilled nursing facility |
UDS | Uniform Data Systems |
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