Geographic Adjustment Factors in Medicare

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1 Institute of Medicine Geographic Adjustment Factors in Medicare Roland Goertz, MD, MBA President January 20, 2011

2 Issues Addressed Family physician demographics Practice descriptions AAFP policy Potential impact of the Affordable Care Act on payment for primary care services

3 Demographics 116,000 family physicians in the U.S. 88,000 provide direct patient care 81% of FPs practice in urban areas 19% practice in rural areas About 20% of nation s population is rural About 10% of nation s drs serve rural AMA Masterfile 2011 USDA and NPI 2008

4 Demographics Demonstrated shortage of primary care physicians in non-urban areas In 2009, 68% of all HPSAs are rural Rural areas depend more on family physicians Sharp decline in other PC specialties choosing rural Decrease in acceptance of rural-born students to medical school will exacerbate rural access problems

5 Demographics Primary care needs are escalating 42% chronic illness increase, Rural residents have higher rates of chronic disease Heart disease Hypertension Cancer Diabetes Obesity Higher proportion of people with disabilities live in rural areas 65 million Americans live in areas without enough primary care physicians

6 Demographics Growing income gap between subspecialties and primary care diminishes interest: 50% decrease in likelihood a medical student would pursue primary care and Another 20% decrease in likelihood of practice in a rural area COGME: bring primary care incomes to > 60% of specialty income Payment for primary care services must reflect their relative value to the health care system and the population

7 Description of Practice Typical family physician practice evaluation and management of increasingly complex patients in an outpatient ambulatory setting hospital and nursing home visits supervision of patients in nursing homes, hospice and home care

8 Rural vs Urban Family Physicians Compared to urban, rural FPs provide 13% more office visits 100% more hospital and nursing home visits Supervision of 50% more patients under care in nursing homes, hospice, and residences; and 22% more free or discounted care

9 Rural vs Urban Family Physicians Rural Family Physicians provide a more comprehensive array of services Practicing in rural areas requires and attracts family physicians who desire a more comprehensive practice model

10 Rural vs Urban Family Physicians Important differences between rural and non-rural practices have not been considered in past efforts to capture geographic cost differences However, CMS recently acknowledged Elements used to calculate eligibility for Primary Care Incentive Payments CMS noted that it did not intend to exclude primary care physicians in rural areas who provide a broad set of primary care services

11 AAFP Policy Established AAFP policy calls for a realignment of Medicare payment to reflect more equitable payment for services provided by family physicians. Relevant to the committee s charge, the AAFP: Supports the elimination of all geographic adjustment factors from the MPFS except for those designed to achieve a specific public policy goal (e.g., to encourage physicians to practice in underserved areas). Has found that Congress and CMS have been inconsistent: Counterproductive to give a physician a financial incentive to choose to care for an underserved community, and then reduce or negate that bonus by geographically handicapping that payment

12 ACA Impact Concern about a future primary care physician shortage and potential constriction of access to primary care MedPAC found (2008) increase in the number of new Medicare beneficiaries experiencing difficulty finding a primary care physician reduced interest in primary care among trainees Media reports an increase in primary care physicians limiting or stopping Medicare participation Lack of interest in primary care associated with income disparity between primary care physicians and other specialists COGME: decreased interest is compounded by the expansion of subspecialist training by teaching hospitals over the last decade

13 Comparison of annual income (median compensation) by physician subspecialty

14 ACA Impact ACA included a 10% bonus for primary care practitioners (5 years) > 60% of allowed charges are primary care services Rural family physicians more comprehensive practices may not meet the 60% threshold and therefore would be ineligible for the bonus CMS made adjustments that improve eligibility CMS now estimates that 80% of FPs in Medicare eligible for bonus

15 ACA Impact Primary Care Bonus Limitations Only about 22% of the typical family physician s patients are Medicare Consequently, the primary care payment changes in ACA will have modest effect The 10% incentive will increase Medicare revenue for family physicians by 5% (incentive applied to the applicable codes only) or < $4000 per year Less than a 2% increase in overall revenue for the average family physician Robert Graham Center for Policy Studies in Family Medicine and Primary Care

16 Primary Care Bonus Comparison A primary care (Medicare) bonus of 50% (at ACA 60% threshold) would: increase the average family physician s revenue by $20,000 - $40,000 (6.7% -13.4%) cost Medicare $2.9 billion annually achieve more meaningful reduction in the income gap between primary care and subspecialists

17 Payment Enhancement How large is not definitively known. But: The 10% HPSA bonus has not significantly mitigated the rural physician shortage Physician Scarcity Area (PSA) incentive payment additional 5% in effect for only 3 years impact not conclusively determined some believe it to be associated with increased migration of physicians (primary care and other specialists) into those areas

18 AAFP Urges IOM to Recognize Medicare geographic adjustment factors have not significantly improved: the level and distribution of the health care workforce and resources primary care physician recruitment and retention problems with access to health care in rural areas, or the ability of physician offices, hospitals and other facilities to maintain an adequate and skilled workforce.

19 AAFP Recommendation That the geographic adjustment factors be eliminated in favor of a larger, permanent direct bonus payment for primary care physicians, especially in underserved areas.

20 Thank You Contact information Roland Goertz, MD, MBA, President American Academy of Family Physicians 2021 Massachusetts Ave NW Washington, DC