6

Recommendations

In its Phase I report, the committee set forth a number of recommendations designed to make Medicare’s geographic adjustments to payments to hospitals, other institutional providers, physicians, and other practitioners more accurately reflect the underlying differences in costs of providing care across different areas of the nation. The committee recognized the importance of inter-area differences among labor markets for health care services, and many of its recommendations would improve not only the definitions of, but also the data pertaining to, such markets in reformulation of the geographic adjustments. The committee concluded that, if its recommendations were adopted, the geographic adjustments would not only be more accurate but would render unnecessary the many exceptions that had been implemented to make the current adjustments more conducive to promoting beneficiary access to high-quality health services.

In its Phase II report, the committee was charged both with an assessment of the extent to which its recommendations, if followed, would affect payments to Medicare’s providers and, more generally, an assessment of to what extent geographic payment adjustments affect the quality of, and access to, the care provided. Analogous to its approach in Phase I of focusing on labor markets, the committee recognized the importance of the health care workforce in its analyses of geographic variations in quality and access to care. Consequently, while the impact analysis in Chapter 2 and Appendix A is extensive, the committee determined that redistribution of payments among Health Professional Shortage Areas (HPSAs) deserves special attention.

Inevitably, a change in the way Medicare’s geographic payment adjustments are calculated would cause some providers’ payments to increase and some to decrease, and Chapter 2 provides examples of how the adjustments in both directions could affect different groups and geographic areas. While it is natural to focus attention on the decreases, it is equally valid to be concerned about the inaccurately low past and current reimbursement to providers whose payments would increase under the committee’s recommended changes. Nevertheless, the committee chose to concentrate on areas of underservice whose payments would decrease, and where the potential impact on beneficiaries would be of particular concern.



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6 Recommendations I n its Phase I report, the committee set forth a number of recommendations designed to make Medicare's geographic adjustments to payments to hospitals, other institutional pro- viders, physicians, and other practitioners more accurately reflect the underlying differences in costs of providing care across different areas of the nation. The committee recognized the importance of inter-area differences among labor markets for health care services, and many of its recommendations would improve not only the definitions of, but also the data pertaining to, such markets in reformulation of the geographic adjustments. The committee concluded that, if its recommendations were adopted, the geographic adjustments would not only be more accurate but would render unnecessary the many exceptions that had been implemented to make the current adjustments more conducive to promoting beneficiary access to high-quality health services. In its Phase II report, the committee was charged both with an assessment of the extent to which its recommendations, if followed, would affect payments to Medicare's providers and, more generally, an assessment of to what extent geographic payment adjustments affect the quality of, and access to, the care provided. Analogous to its approach in Phase I of focusing on labor markets, the committee recognized the importance of the health care workforce in its analyses of geographic variations in quality and access to care. Consequently, while the impact analysis in Chapter 2 and Appendix A is extensive, the committee determined that redistribu- tion of payments among Health Professional Shortage Areas (HPSAs) deserves special attention. Inevitably, a change in the way Medicare's geographic payment adjustments are calculated would cause some providers' payments to increase and some to decrease, and Chapter 2 pro- vides examples of how the adjustments in both directions could affect different groups and geographic areas. While it is natural to focus attention on the decreases, it is equally valid to be concerned about the inaccurately low past and current reimbursement to providers whose payments would increase under the committee's recommended changes. Nevertheless, the committee chose to concentrate on areas of underservice whose payments would decrease, and where the potential impact on beneficiaries would be of particular concern. 135

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136 GEOGRAPHIC ADJUSTMENT IN MEDICARE PAYMENT The changes in hospital payments based on the committee's recommendations would not result in significant redistribution except for those providers that have benefited from special exceptions. The change in practitioner payments, however, would tend to redistribute payments to metropolitan areas from nonmetropolitan areas, including some that historically have been underserved. The literature reviews and analyses reported in Chapter 3 concluded that there are wide discrepancies in access to and quality of care across geographic areas, but they do not appear to be strongly related to differences in, or potential changes to, fee-for-service payment adjust- ments. This finding was supported both by literature review and by original analysis of Medicare beneficiary survey data from the Consumer Assessments of Healthcare Providers and Systems (CAHPS) survey. Thus, geographic payment adjustments are an appropriate tool for addressing geographic differences in costs of doing business, such as inter-area variations in labor market wages, but they are a blunt instrument for addressing variation in health care quality and access. Reasons for such discrepancies are varied and sensitive to area type, such as inner-city neighborhoods or remote rural areas. Accordingly, typical geographic designations, such as metropolitan statistical areas and nonmetropolitan "rest-of-state" areas, are not well suited to applying adjustments to encourage practice in underserved areas. The committee advocates more targeted policies and programs both within and outside the Medicare program focusing on the size, composition, and distribution of the health care workforce. In particular, the committee determined that the geographic availability of a work- force constituted to provide its population with robust primary care services is a key factor in achieving geographic access and quality objectives. This finding is especially significant with respect to racial and ethnic minority populations. In Chapter 4, the committee reviewed numerous programs, many of them organized within the Public Health Service, designed to encourage practitioners to locate in underserved areas. Federal as well as state programs have been funded at modest levels and rarely subject to systematic rigorous evaluation. The committee concluded that there is some evidence of effectiveness of many programs but that the evidence falls short of providing a reliable guide for policy makers. The chapter also discussed the changing roles of different health profession- als as Medicare's payment incentives increasingly move toward care coordination and different care delivery models, such as accountable care organizations. Throughout its deliberations, the committee discussed policies within the Medicare program that may also have an impact on the geographic composition and distribution of services to Medicare beneficiaries. The committee observed that the sheer size of the program, accom- panied by the incentives that its payment policies exert on practitioner decisions, such as the method of subsidizing the costs of training physicians, may act as an impediment to the achieve- ment of some access objectives. For example, the National Health Service Corps and other programs appear to have improved access, but the magnitude of spending on such programs is very small relative to the size of our health care system and the financial incentives that tend to exacerbate imbalances in access to primary care services. On the other hand, Medicare may be inadvertently contributing to these imbalances through the unaccountable ways in which health professional education is financed and health services are reimbursed. Thus, the picture that emerges from the committee's review of the evidence is multidimen- sional. Yet, the committee was tasked with determining how its recommendations about the accuracy of geographic adjustment would affect access and quality of health care and the supply and distribution of the health care workforce. With regard to access to care, the committee

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RECOMMENDATIONS 137 learned from the payment simulations that payments to physicians and other practitioners in shortage areas, which are disproportionately populated by racial and ethnic minorities, would be adversely affected by the Phase I recommendations. Because the committee's recommended approach to geographic adjustment appeared to place some providers in shortage areas at an added disadvantage, the committee included an evaluation of the potential impact of its Phase I recommendations on high-risk and vulnerable populations as part of its charge. Although not explicitly mentioned in the statement of task, the committee sought to develop recommenda- tions to help strengthen access and improve efficiency, particularly for high-risk and vulnerable populations, in order to address the adverse impact of the proposed adjustment. With regard to quality of care and the workforce supply and distribution, the committee did not find evidence that its recommendations about accuracy of geographic adjustment would have a significant impact. In sum, geographic adjustment plays an important, specific, but very limited role in the larger, multipayer health care system. The committee offers six recommendations below. Each recommendation is followed by a rationale statement that links back to the findings in previous chapters. RECOMMENDATION 1: The Medicare program should develop and apply policies that promote access to primary care services in geographic areas where Medicare beneficiaries experience persistent access problems. A focus on primary care is an important part of any effort to build a system of care that will provide efficient, high-value care for all Medicare beneficiaries, including those who require care from multiple specialists because of multiple chronic conditions and those who live in medically underserved areas where there are shortages of health professionals. In determining the impact of its Phase I recommendations on vulnerable populations, the committee used HPSAs with shortages of primary care physicians and other practitioners as the generally accepted standard for representation of geographic areas in which beneficiaries may experience access problems due to the undersupply of clinical practitioners. Based on an analysis of data from the CAHPS survey, the committee did not find any evidence that the proposed revisions in the geographic adjustment factors were related to consumer-reported access and quality of care. The payment simulations for shortage areas, however, did find that physician payments to metropolitan shortage areas would increase by 0.7 percent and payments would be reduced by 3 to 4 percent in most of the nonmetropolitan primary care shortage areas that are currently eligible for Medicare primary care bonus payments. After considering these analyses and the review of evidence about access and quality of care, the committee concluded that geographic adjustment is not an appropriate tool for achieving policy goals such as expanding the pool of providers available to see Medicare beneficiaries. However, Medicare payment policy already provides bonus payments to primary care practi- tioners and general surgeons who practice in HPSAs. The committee supports these targeted bonus payments and encourages the Centers for Medicare & Medicaid Services (CMS) to support other policy adjustments to offset potential payment reductions in shortage areas and encourage the provision of care in those areas. RECOMMENDATION 2: The Medicare program should pay for services that improve access to primary and specialty care for beneficiaries in medically underserved urban and rural areas, particularly telehealth technologies.

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138 GEOGRAPHIC ADJUSTMENT IN MEDICARE PAYMENT One very promising and rapidly developing strategy to improve access to care for benefi- ciaries is to provide practicing clinicians with new resources and technology that enable them to reach more patients. Increasingly, the term telemedicine is being replaced by a newer term, telehealth, that refers to the use of technology-enabled delivery of services to facilitate the moni- toring, diagnosis, treatment, management, care, and education of patients who are at a distance from the providers. These services can not only reduce the travel burden for beneficiaries but also improve efficiency by increasing the availability of real-time information on clinical status. Nearly 50 recognized subspecialties now use telehealth services, ranging from teleradiology to teledermatology, teleophthalmology, telecardiology, and telemental health. More than half of all Medicare beneficiaries have chronic medical conditions such as diabetes, arthritis, and kidney disease for which regular monitoring is becoming part of the standard of care. Remote patient monitoring, in which electronic devices are used to remotely collect and send real-time clinical data to a clinician's office or a monitoring service, is increasingly being used to replace office or clinic visits or to supplement the use of visiting nurses. As of October 2011, 13 states support telehealth technology to improve parity between health care services delivered in person and via telehealth. While the lack of technology infrastructure was previously cited as a barrier to adopting telehealth services, recent public investments are helping to steadily expand the availability of broadband access in rural communities. A significant barrier to broader expansion and use of telehealth services is limitations in payment. Currently, Medicare pays for telehealth services when provided by qualified providers to beneficiaries in rural areas, but individuals and facili- ties in medically underserved urban areas are not eligible for Medicare payment for telehealth services. Therefore, the committee calls for changes in CMS payment policy to support services that improve access for all beneficiaries, and particularly for those in underserved urban and rural areas. RECOMMENDATION 3: To promote access to appropriate and efficient primary care services, the Medicare program should support policies that would allow all quali- fied practitioners to practice to the full extent of their educational preparation. The committee reviewed multiple sources of workforce data and found clear documentation of the need for primary care providers and clinicians in general, and specifically in rural areas. There is evidence that primary care nurse practitioners choose to practice in rural areas more frequently than their physician counterparts, and there is also a trend that nurse practitioners are more likely to locate in rural areas in states with more progressive, less restrictive regulations. The scope of practice of various health professions is not only an area of disagreement over professional autonomy between physicians and other health professionals, but it also has a major impact on regulatory and payment policies. As of March 2012, 16 states and the District of Columbia have passed laws that remove nurse practitioner practice barriers, enabling them to practice to the full extent of their education and within their scope of preparation, bearing responsibility for the care they deliver under their own license. Although some of these 16 states have large rural areas (e.g., Alaska, Hawaii, Iowa, North Dakota, Oregon, and Washington), other more restrictive states such as Georgia and Alabama also have significant rural areas as well as provider shortages that could be alleviated by full use of the available workforce. In the Institute of Medicine (IOM) report The Future of Nursing, the first recommendation was to "Remove scope of practice barriers," that is, "APRNs should be able to practice to the

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RECOMMENDATIONS 139 full extent of their education and training." This committee concludes that--given the short- age of primary care providers in the United States and specifically in rural areas--it would be reasonable to remove barriers in Medicare language and address inconsistencies in state laws so all qualified practitioners are able to practice to the full extent of their educational preparation. RECOMMENDATION 4: The Medicare program should reexamine its policies that provide location-based adjustments for specific groups of hospitals, and modify or discontinue them based on their effectiveness in ensuring adequate access to appropriate care. Several groups of hospitals currently receive special treatment in determining Medicare payment, on the basis that extra payment is necessary to preserve beneficiaries' access to appropriate care in the areas they serve: critical access hospitals, sole community hospitals, Medicare-dependent hospitals, low-volume hospitals, and rural referral centers. The criteria for qualifying for special treatment are generally not consistently stated or applied, nor have access benefits for beneficiaries been consistently demonstrated. Just as the critical access hospital provision was created in the Balanced Budget Act of 1997 by merging two separate programs that had been established for the same purpose, so all the existing provisions that currently provide additional payment to specified groups of hospitals should be reexamined for their effectiveness in protecting adequate access to appropriate care for the Medicare beneficiaries in the areas they serve. Such policies should be subject to periodic reevaluation to ensure that Medicare payments are targeted most effectively. It may be advisable over time to combine existing programs--or establish new ones--to best protect access to appropriate high-quality care for Medicare beneficiaries in different areas across the country. The rural referral center provision, in particular, should be reexamined, given the changes in the Medicare Inpatient Prospective Payment System since its implementa- tion--some of which may obviate the need for such special treatment. That provision, and all special provisions established to accomplish specific policy objectives, should continuously be evaluated as to their effectiveness in light of an evolving Medicare program and the environ- ment in which it functions. RECOMMENDATION 5: Congress should fund an independent ongoing entity, such as the National Health Care Workforce Commission, to support data collection, research, evaluations, and strategy development, and make actionable recommen- dations about workforce distribution, supply, and scope of practice. The committee was tasked with assessing "the effect of the adjustment factors on the level and distribution of the health care workforce and resources including: recruitment and retention taking into account mobility between urban and rural areas." That task was made difficult by the lack of objective, longitudinal research on the workforce. While there is an overall acceptance of the existence of specialty and geographic imbalances in the health care workforce, there is little in the way of systematic tracking and ongoing assessment of the status and distribution of those professionals. This is due, in part, to the lack of clear and consistent data collected in a uniform manner over time. At the same time, most of the research and analysis being carried out is sponsored by and focused on the needs of a particular specialty group. Rarely are there to be found cross-

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140 GEOGRAPHIC ADJUSTMENT IN MEDICARE PAYMENT disciplinary studies or assessments of the interactive effects of workforce policies that consider more than one profession or discipline. This situation is largely caused by the lack of coordination and unified guidance for policy analysis and research as well as a lack of credible evaluations of the many programs that are intended to improve supply and geographic distribution of practitioners. This latter situation may be due in part to stakeholder influence on the programs that oversee these initiatives under Title VII and VIII. Recognizing these problems and constraints, the committee's recommendation will pro- mote the collection of more useful data as well as the coordination of evaluation and assessment projects, the consideration of cross-cutting policy options, and the funding of an independent body that can focus policy questions and serve to combine viewpoints and prioritize policy choices among different constituencies. The committee was further tasked with assessing "the ability of hospitals and other facilities to maintain an adequate and skilled workforce; and patient access to providers and needed medical technologies." The committee did not closely assess the effects of payment policy on workforce retention, other than to note certain trends that have not yet been fully researched. These included the growing number of physicians and physician groups that are being folded into hospital systems either under formal direct employment or some other arrangement that links them more closely to these institutions. Also noted were the relationships of rural hospitals to the local supply of physicians and other health care professionals, and the tendency for rural towns to lose physicians after hospitals close. RECOMMENDATION 6: Federal support should facilitate independent external evalu- ations of ongoing workforce programs intended to provide access to adequate health services for underserved populations and Medicare beneficiaries. These programs include the National Health Service Corps, Title VII and VIII programs under the Public Health Service Act, and related programs intended to achieve those goals. The committee conducted a comprehensive literature review of public programs designed to improve the geographic distribution of health care professionals. Important social objectives motivated the establishment of these programs with the goal of providing access to health care services for underserved populations, including Medicare beneficiaries, but they have been funded at very low levels for several years and funding for evaluations of the programs has been quite minimal. Thus, the empirical evidence about program impact is quite limited. Publications were located by using the Web of Science with keywords for specific public programs. This literature search was supplemented with research known to committee mem- bers. The literature on physician practice decisions published in the last three decades or so is quite limited, and there is even less information on nurse practitioners and physician assistants. Since growth in the number of nurse practitioners and physician assistants has been relatively recent, virtually all of the research reviewed by the committee dealt with physicians. Evaluations of public programs designed to improve the geographic distribution of health practitioners are also extremely limited. For example, as noted in Chapter 4, there is some literature evaluating the performance of the National Health Service Corps (NHSC) in terms of retention of health professionals. But much less is known about effects that lack of retention has had on populations in underserved areas, measured in terms of access and quality of care received, or whether or not the existence of the NHSC has increased the number of health

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RECOMMENDATIONS 141 professionals who would have located in these underserved areas if the NHSC programs did not exist. The research base, at least that part in the public domain, is insufficiently detailed to inform recommendations as to how NHSC effectiveness could be improved. The majority of studies have focused on the retention of physicians, and not on the numbers recruited to underserved areas or the mix of different types of clinicians. In addition, states have implemented training programs to improve the geographic dis- tribution of physicians. These programs generally have not been the subject of independent evaluations at all. Another problem is that the endpoints used in the studies are not comparable to allow comparisons of the effectiveness of the various public programs. Although the committee would have liked to have reviewed a more comprehensive research base available in the public domain, many of the research findings reach positive or neutral conclusions as to program effectiveness. Therefore, the committee anticipates continued support of the programs at current levels, but also asks for much more rigorous independent evaluation of these programs in the future. These evaluations should not only focus on decision making of physicians, but be broadened to include all participating health professionals. They also should also assess impacts on populations that live in underserved areas. It is important to do much more to learn how the programs work and which program components and strategies work best to improve retention, clinical effectiveness, and population health. CONCLUSION Through its recommendations presented in its Phase I and II reports, the committee has ful- filled its charge to recommend improvements in the way Medicare's fee-for-service geographic payment adjustments are calculated. It is important to recognize the limitations of reliance on fee-for-service payment in encouraging health care delivery system innovations that emphasize improved population health outcomes rather than increased volume of services. Nevertheless, even as our delivery system evolves toward such reforms, fee-for-service pay- ment levels represent a baseline against which future payments will be compared, including geographic differences in payments. Therefore, it is essential to make fee-for-service payments as accurate as possible even as we rely less on such payments over time. Changes in fee-for-service payments that encourage greater coordination of care may be helpful in promoting outcome-based delivery system changes. The committee's Phase I recommendations to harmonize hospital and practitioner labor market areas and data sources are examples of ways that payment changes may encourage delivery system improvements. Consistent with this harmonization is the recognition in Phase II of the vital importance of the health care workforce in achieving access and quality goals.

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