4

Programs and Policies to Improve Access
and Quality of Care for Beneficiaries

INTRODUCTION

This chapter examines available evidence on the extent to which various programs and policies have influenced the ability of U.S. communities to attain adequate access to services appropriate to meet their health care needs. Previous chapters have established that access to high-quality health care services, including primary care services delivered by physicians and other practitioners, is not uniform across the United States. The health care workforce varies in size relative to population, and it varies in composition both across and within metropolitan and nonmetropolitan areas. In spite of this variability, broadly speaking, access to health services and Medicare beneficiary satisfaction with access are generally adequate and comparable in rural and urban areas.

The differences in health workforce size, distribution, and composition have been recognized for many years, and programs have been developed, mostly within the Public Health Service, to address them. The evidence reviewed by the committee suggests that geographic access to health care services has been improving, most likely as a result of market forces as well as various workforce policies, but that the distribution of practitioners continues to be a concern (Ricketts and Randolph, 2007, 2008; Rosenthal et al., 2005).

At the same time, factors that affect practitioner compensation, including payment policies of the Medicare program, may also have had an effect on the health care workforce’s ability to provide acceptable access in different geographic areas. Among the newest Medicare payment policies are those that move practitioner compensation from traditional fee-for-service models to bundled payments and other incentives for care teams to coordinate care across organizations and settings. These policies are encouraging new delivery models that are intended to improve efficiency and provide a better quality of patient experience, but their likely influence on the workforce supply, distribution, and training programs is not yet clear.

In the statement of task for Phase II, the committee was asked to evaluate and consider the effect of the geographic adjustment factors on the level and distribution of the health care



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4 Programs and Policies to Improve Access and Quality of Care for Beneficiaries INTRODUCTION This chapter examines available evidence on the extent to which various programs and policies have influenced the ability of U.S. communities to attain adequate access to services appropriate to meet their health care needs. Previous chapters have established that access to high-quality health care services, including primary care services delivered by physicians and other practitioners, is not uniform across the United States. The health care workforce varies in size relative to population, and it varies in composition both across and within metropolitan and nonmetropolitan areas. In spite of this variability, broadly speaking, access to health services and Medicare beneficiary satisfaction with access are generally adequate and comparable in rural and urban areas. The differences in health workforce size, distribution, and composition have been recognized for many years, and programs have been developed, mostly within the Public Health Service, to address them. The evidence reviewed by the committee suggests that geographic access to health care services has been improving, most likely as a result of market forces as well as various workforce policies, but that the distribution of practitioners continues to be a concern (Ricketts and Randolph, 2007, 2008; Rosenthal et al., 2005). At the same time, factors that affect practitioner compensation, including payment policies of the Medicare program, may also have had an effect on the health care workforce's ability to provide acceptable access in different geographic areas. Among the newest Medicare payment policies are those that move practitioner compensation from traditional fee-for-service models to bundled payments and other incentives for care teams to coordinate care across organiza- tions and settings. These policies are encouraging new delivery models that are intended to improve efficiency and provide a better quality of patient experience, but their likely influence on the workforce supply, distribution, and training programs is not yet clear. In the statement of task for Phase II, the committee was asked to evaluate and consider the effect of the geographic adjustment factors on the level and distribution of the health care 91

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92 GEOGRAPHIC ADJUSTMENT IN MEDICARE PAYMENT workforce, including recruitment and retention, mobility between urban and rural areas, and the ability of hospitals and other facilities to maintain an adequate and skilled workforce in order to maintain access for beneficiaries. The committee was also asked to consider the effect of the adjustment factors on population health, quality of care, and the ability of providers to furnish efficient, high-value care. Historically, policies and programs supported by the Centers for Medicare & Medicaid Services (CMS) and the Health Resources and Services Administration (HRSA) have sought to improve access to care in many different ways. In general, however, the policies have influenced the workforce directly, through training programs and payment policies to increase supply, or they have been targeted to maintain access through influencing the geographic distribution of facilities and health professionals. Medicare payment policies have also been tied to quality improvement for several years, originally for hospitals and increasingly also for ambulatory care and primary care providers, primarily physicians. The committee did not find sufficient evidence about the effect of payment policies on population health and high-value care to be able to include in its review, but it did discuss value-based purchasing and the workforce implications of new models of care that focus on care coordination. Given the breadth of the committee's charge, the committee chose to do a targeted review that focused on Medicare payment policies to address access, quality of care, and workforce supply and distribution and that also have a geographic component, such as a comparison of metropolitan and nonmetropolitan areas. This chapter begins with a review of Medicare policies and programs intended to promote beneficiaries' access to hospital and primary care services provided by a variety of health professionals, and then it reviews policies intended to promote quality of care. The chapter then reviews workforce programs intended to improve the geographic distribution of practitioners through recruitment and retention efforts, focus- ing on program evaluations and other evidence that the programs are successful in improving access, especially in Health Professional Shortage Areas (HPSAs). The chapter then discusses the many gaps in the evidence it reviewed and the need for a coordinated approach to collecting workforce data, designing programs, and setting national workforce targets and goals. The chapter closes with the committee's findings related to access, quality of care, and workforce programs and policies. MEDICARE PAYMENT POLICIES INTENDED TO MAINTAIN ACCESS TO HOSPITAL CARE Given the committee's focus on the impact of geographically based payment adjustments on access in medically underserved areas, hospitals that are important or sole sources of hos- pital care for Medicare beneficiaries were of particular concern. Medicare's payment policies that are intended to preserve access to hospital care in geographically isolated areas focus on five types of hospitals: critical access hospitals, sole community hospitals, Medicare-dependent hospitals, low-volume hospitals, and rural referral centers (see Table 4-1). However, the policies that apply to these hospitals tend to be inconsistent, and there is no mechanism for ensuring that the policies serve their stated purpose. Nearly 1,300 hospitals have been designated as critical access hospitals, based on their size and the lack of another hospital within a specified distance.1 The critical access program is 1 Medicare Payment Advisory Commission. Payment Basics: Critical Access Hospitals Payment System, revised Oc- tober 2011. Available at http://www.medpac.gov/documents/MedPAC_Payment_Basics_11_CAH.pdf. Critical access hospitals are limited to 25 acute care beds and must be at least 35 miles by primary road or 15 miles by secondary road from the nearest hospital; until 2006, hospitals also could qualify as critical access hospitals if they were designed a "necessary provider" by their state.

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PROGRAMS AND POLICIES TO IMPROVE ACCESS AND QUALITY OF CARE FOR BENEFICIARIES 93 TABLE 4-1 Access to Hospital Care in Geographically Isolated Areas Type of IPPS Hospital Eligibility Criteria Payment Adjustment Critical A Medicare participating hospital is eligible The CAH is paid for most inpatient and access if it meets the following criteria: outpatient services at 101 percent of its hospital 1. It is located in a rural area; Medicare-allowable costs. (CAH) 2. It is located either more than 35 miles from the nearest hospital or CAH or more than 15 miles in areas with mountainous terrain or only secondary roads; 3. It maintains no more than 25 inpatient beds; 4. It maintains an annual average length of stay of 96 hours or less per patient for acute inpatient care; or 5. It furnishes 24-hour emergency care services 7 days per week. Sole A hospital must meet one of the following The SCH is paid whichever amount results community criteria: in the greatest aggregate payment in a cost hospital 1. It is at least 35 miles from other acute care reporting period: (SCH) hospitals; 1. The applicable IPPS rate, or 2. It is located in a rural area 2535 miles 2. A hospital-specific rate based on the from another acute care hospital, and hospital's Medicare-allowable highest cost per it accounts for at least 75 percent of discharge in FY 1982, 1987, 1996, or 2006 Medicare discharges in its service area; (adjusted for input price inflation and case 3. It is located in a rural area between 15 and mix)--whichever is highest. 25 miles from other acute care hospitals that are inaccessible at least 30 days each year because of local topography; or 4. It is located in a rural area and the travel time between the hospital and the nearest acute care hospital is at least 45 minutes. Medicare- For discharges occurring before October An MDH is paid whichever of the following dependent 1, 2012, a hospital must meet all of the amounts results in the greatest aggregate hospital following criteria: payment in a cost reporting period: (MDH) 1.It is located in a rural area; 1.The applicable IPPS rate, or 2.It has 100 or fewer beds; and 2.The applicable IPPS rate plus 75 percent of 3.At least 60 percent of its inpatient days or the difference between the IPPS rate and discharges were attributable to Medicare the hospital's updated hospital-specific rate beneficiaries during its cost-reporting (as described above) based on its Medicare- period ending in FY 1987 or FY 1988 or for allowable costs per discharge in FY 1982, at least two of the last three most recent 1987, or 2002. cost-reporting periods. Low- To qualify as a low-volume hospital Low-volume hospitals with 200 or fewer total volume a hospital must meet both of the discharges receive a 25 percent increase in their hospital following criteria: Medicare payments. 1. It is at least 25 road miles from the nearest acute care hospital; and 2. It had fewer than 200 total discharges in the most recent year for which data are available. For FY 2011 and FY 2012, the volume and distance criteria were loosened considerably. continued

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94 GEOGRAPHIC ADJUSTMENT IN MEDICARE PAYMENT TABLE 4-1 Continued Type of IPPS Hospital Eligibility Criteria Payment Adjustment Rural To qualify as an RRC, a hospital must Relative to other rural hospitals: referral meet one of the following criteria: 1.There is a 12 percent cap on additional center 1.It has 275 or more beds; payments other hospitals can receive for (RRC) 2.It meets all three of the following criteria: serving a disproportionate share of low- a. At least 50 percent of the hospital's income patients; an RRC is not subject to that Medicare patients are referred from cap on those payments. other hospitals or from physicians who 2.An RRC has less stringent requirements for are not on the staff of the hospital; geographic reclassification. b. At least 60 percent of the hospital's Medicare patients live more than 25 miles from the hospital; and c. At least 60 percent of all services the hospital furnishes to Medicare patients are furnished to patients who live more than 25 miles from the hospital; or 3.It is located in a rural area and a. Its case-mix index in the year prior to seeking eligibility is at least equal to the lower of the median CMI value for all urban nonteaching hospitals nationally or in the hospital's region; b. It had at least 5,000 discharges or the median number of discharges for urban hospitals in the census region in which the hospital is located, if lower. For an osteopathic hospital, its number of discharges is at least 3,000; and c. Either (i) more than 50 percent of the hospital's active medical staff are in specialties, or (ii) at least 60 percent of its inpatients live more than 25 miles from the hospital, or (iii) at least 40 percent of inpatients are referred from other hospitals or from physicians not on the hospital's staff. NOTE: CMI = case-mix index; FY = fiscal year; IPPS = Inpatient Prospective Payment System. designed to maintain access to emergency care and limited hospital inpatient services in isolated rural communities that are unable to support a full-service hospital. Critical access hospitals are paid based on their current Medicare allowable costs; because the committee's recommenda- tions apply only to those hospitals that are paid under Medicare's inpatient prospective pay- ment system for hospital services, critical access hospitals are not affected by the committee's recommendations on the hospital wage index. The special protections afforded to about 400 sole community hospitals are intended to support their unique role in providing access to inpatient hospital care to the residents of a geographic area. Medicare's payment to sole community hospitals is based on the higher of the applicable standard Inpatient Prospective Payment System (IPPS) rate or a hospital-specific rate derived from the hospital's own historical costs updated for inflation (using the Medicare hospital market basket index) and adjusted for case-mix changes. Sole community hospitals

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PROGRAMS AND POLICIES TO IMPROVE ACCESS AND QUALITY OF CARE FOR BENEFICIARIES 95 currently paid at their hospital-specific rate generally are not affected by the committee's recom- mendations; for sole community hospitals that currently are paid their standard IPPS rate, the committee's recommendations could reduce or increase their payments, but in any case they could not be paid less than their hospital-specific rate. The approximately 160 Medicare-dependent hospitals are afforded similar but more limited protection, to recognize their presumed inability to cover any difference between their Medicare costs and the standard IPPS rates. If the IPPS rate is lower than the hospital-specific rate (derived as for sole community hospitals, as described above), a Medicare-dependent hospital is paid 75 percent of the difference between the IPPS rate and its higher hospital-specific rate. Unlike critical access hospitals and sole community hospitals, Medicare-dependent hospitals are not designated based on the lack of alternative sources of care available to Medicare beneficiaries, but only on their small size and high proportion of Medicare patients. As a result, this program is not as well targeted to preserving access to care in geographically isolated areas. The rural referral hospital designation was established when it was determined that large rural hospitals that served as tertiary referral centers were disadvantaged by IPPS rate-setting policies that did not adequately account for their more complex patient population and infra- structure costs. Rural hospitals received a lower standard payment rate than urban hospitals; the patient classification system used to determine payment did not adequately account for differences in severity; and the hospital wage index reflected relative wage levels with no occupational mix adjustment. The current prospective payment system, however, applies the same payment rate to hospitals located in rural areas and urban areas with less than 1 million population, has improved its ability to account for differences in patient severity, and provides for a limited occupational mix adjustment to the hospital wage index (which the committee's recommendations would further improve). The approximately 130 rural referral centers also benefit from less stringent geographic reclassification standards (which the committee's recom- mendations would eliminate, in any case) and they also may receive higher disproportionate share payments than small urban and most other rural hospitals. The changes in Medicare payment over time would seem to weaken the rationale for the establishment of this category of hospitals for purposes of payment. The Medicare Modernization Act of 2003 established a payment enhancement for low- volume hospitals located more than 25 road miles from another hospital and having fewer than 800 total discharges. On the grounds that they cannot achieve the economies of scale and scope of larger hospitals and therefore tend to have higher costs per discharge, they can receive up to a 25 percent increase in their IPPS payments based upon volume. While these payment policies may be intended to preserve access to needed hospital care, they could potentially be better targeted to efficiently and effectively meet this objective. For example: The standards used to identify geographically isolated hospitals vary from one provision to another. The definition of road miles has been standardized, but the number of road miles differs from 35 miles under the sole community hospital policy to 25 miles under the permanent low-volume adjustment (and 15 miles under the temporary policy). The criteria for sole community hospitals consider the reliance of Medicare beneficiaries on the hospital while the low-volume adjustment criteria do not. Some hospitals receiving the low-volume adjustment may not be needed to preserve Medicare beneficiary access to care.

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96 GEOGRAPHIC ADJUSTMENT IN MEDICARE PAYMENT There is no periodic review to confirm whether hospitals designated as sole community hospitals and rural referral centers continue to meet the qualifying criteria for the higher payments. Moreover, rural referral centers located in a county that is redesignated from rural to urban by the Office of Management and Budget are permitted to retain their rural referral designation regardless of whether there are other hospitals in close proximity. In general, several of these policies may not be fulfilling their intended purpose. The hospital-specific rate for a sole community hospital is based on the highest cost per discharge from 1982, 1987, 1996, or 2006 updated for inflation in input prices. Using a hospital's costs in a more recent year to establish the hospital-specific rate would result in a better match between the hospital's current cost structure and Medicare's payment amount. As described above, the rationale for rural referral centers is substantially weaker than it was when the IPPS was first implemented. With regard to the low-volume adjustment, the temporary discharge criterion based on Medicare (rather than total discharges) eliminates the empirical underpinning for the adjustment and disadvantages hospitals with high Medicare utilization relative to hospitals of comparable size with low Medicare utilization rates. There is some redundancy among the policies. Sole community hospitals (and Medicare- dependent hospitals) are eligible to receive a low-volume adjustment on their hospital- specific rates as well as their IPPS rate. Because the former should already reflect the cost effect of providing a low volume of services, a low-volume adjustment to the hospital- specific rate is unnecessary. The committee is concerned that these considerations diminish the effectiveness of Medi- care policies in ensuring access of Medicare beneficiaries in different areas to appropriate care. PROGRAMS THAT ENCOURAGE CLINICAL PRACTICE IN UNDERSERVED AREAS Community Health Centers Since 1965, the U.S. government has funded community health centers (CHCs) to provide primary care services to underserved populations in metropolitan and nonmetropolitan areas, including low-income and uninsured populations. More than 1,100 CHCs operate more than 8,100 delivery sites that care for a total of 19.5 million individuals in every state, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and the Pacific basin (HRSA, 2012d). As of 2006, primary care physicians accounted for 89 percent of all physicians working in CHCs (Rosenblatt et al., 2006). CHCs also rely on advanced practice nurses and physician assis- tants (PAs) for staffing. In 2010, CHCs employed more than 131,000 staff nationally, including 9,600 physicians; 6,400 nurse practitioners (NPs), physician assistants, and certified nurse mid- wives; 11,400 nurses; 9,500 dental staff; 4,200 behavioral health staff; and more than 12,000 case managers, health educators, outreach workers, and transportation staff (UDS, 2012; The White House, 2012). CHCs substantially rely on the incentives for health professionals to work in these settings provided by loan forgiveness programs and J-1 visa waivers, which will be discussed later in this chapter. In 2006, CHCs had large numbers of unfilled positions, notably for family physicians, obstetricians/gynecologists, and psychiatrists (Rosenblatt et al., 2006). A substantial amount of research has been conducted on quality of care in CHCs, but there

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PROGRAMS AND POLICIES TO IMPROVE ACCESS AND QUALITY OF CARE FOR BENEFICIARIES 97 are no direct comparisons of CHC quality relative to comparison groups of private practices. The limited evidence that exists indicates that quality of chronic disease care is comparable to other settings (e.g., Hicks et al., 2006; Landon et al., 2006). However, similar to general practices, the quality of care in CHCs varies across settings, with some outcomes comparable to national benchmarks, while others do not always meet quality-of-care standards and guidelines (Chin et al., 2000). Studies of CHC interventions to improve clinical workflow and patient education for diabetes patients have resulted in some improvements in clinical outcomes (Chin et al., 2007). Area Health Education Centers Area Health Education Centers (AHECs) recruit, train, and retain health professionals to work with underserved populations by developing partnerships among medical, nursing, and allied health schools to help meet local health care needs (HRSA, 2012c). Fifty-nine AHEC programs and more than 245 rural and urban centers operate in 48 states, 2 territories, and the District of Columbia. The federal government has supported AHECs since 1971 and administers the program through HRSA. The AHEC program grantees are medical and nursing schools who contract with CHCs to provide clinical rotations and training opportunities for health professionals who seek experience providing clinical care, health education, and preventive services for underserved communities. They also provide infrastructure and a combination of support services, including medical library resources, continuing education courses, and telecommunications technology linking clinical practices in rural areas with personnel in an academic medical center or nursing school. The Office of Inspector General (OIG) (1995) of the Department of Health and Human Services (HHS) conducted a short-term management and program evaluation of four AHECs in Arkansas, Florida, and Texas. The key results, somewhat dated given that the evaluation was performed over 15 years ago, were that the AHECs were responding to clinical needs of practitioners in rural areas but that there was a need for greater emphasis on educating practitioners about innovations in health care delivery, such as clinical practice guidelines, and opportunities for use of telecommunications technology already available at the time were not being sufficiently used. To the committee's knowledge, there has been no systematic evaluation of AHECs, although there are qualitative reviews of specific aspects of particular programs (see e.g., Rooks et al., 2001) on a primary care preceptorship for first-year medical students coordinated by an AHEC based at the University of Florida. Incentive Payment Program for Primary Care Services in HPSAs A total of almost 60 million Americans, or about one in five, live in geographic areas that are designated as primary care shortage areas (HRSA, 2012a). Since 1987, Section 1833(m) of the Social Security Act has provided bonus payments for all services for physicians in locations designated as primary medical care HPSAs under Section 332 (a)(1)(A) of the Public Health Service Act. In 1991, the original 5 percent bonus was increased to 10 percent. This bonus is applied to cover Medicare Part B services provided in designated geographic HPSAs. For claims with dates of service on or after July 1, 2004, psychiatrists providing services in mental health HPSAs are also eligible to receive bonus payments.

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98 GEOGRAPHIC ADJUSTMENT IN MEDICARE PAYMENT From 2011 through 2015, participating Medicare Part B primary care practitioners will receive an additional bonus payment equal to 10 percent of the amount paid for primary care services.2 Eligible primary care practitioners include physicians (family medicine, internal medicine, geriatric medicine, or pediatric medicine), NPs, clinical nurse specialists, and PAs. In addition, the primary care services they provide must account for at least 60 percent of allowed charges under the Physician Fee Schedule in order to receive the 10 percent bonus payment (CMS, 2011b). The threshold for the bonus excludes some clinicians who see fewer Medicare patients and provide services to fewer beneficiaries than CMS requires. There has been very little empirical research on HPSA bonuses. One study by Chan et al. (2004) used Medicare Part B claims data for 1998 to assess amounts paid under the 1991 10 percent bonus program and reached two important conclusions. First, amounts paid were small, which could be expected to limit incentive effects of the program. Second, many claims that could have been subject to the bonus had no bonus payments, and many bonus payments that should not have been paid were paid. Shugarman and Farley's (2003) study contributed additional evidence on the small size of the 1991 bonus program, documenting that bonus payments constituted about 1 percent of total Part B payments for services in rural, under- served areas. Given its small size, important effects on HPSA practitioner workforce could not be expected, and the same may be true of the Affordable Care Act bonus program. Given that the more recent bonus payments have only been available for about a year, it is too early to evaluate their effects on the primary care workforce. However, any temporary bonus can be expected to have a much lower effect on a clinician's location choice than a permanent bonus, because of the length of time often involved in making location decisions. HPSA Surgical Incentive Payment (HSIP) The Affordable Care Act of 2010, Section 5501 (b)(4) provides bonus payments for general surgeons in HPSAs. Effective 2011 through 2015, physicians serving in designated HPSAs will receive an additional 10 percent bonus for major surgical procedures within a 10- or 90-day global period (CMS, 2011b). This additional payment, referred to as the HPSA Surgical Incen- tive Payment (HSIP) will be combined with the original HPSA payment and will be paid on a quarterly basis. HSIP is intended to provide incentives for general surgeons in medically underserved areas, as they make it possible for many of the nation's smallest and most remote hospitals to provide services (Hagopian et al., 2003). Many rural towns can lose non-hospital-employed physicians as well as those employed by hospitals after their hospitals close (Hart et al., 1994). Similar to the Affordable Care Act primary care bonus program, studies of the effects of the Affordable Care Act provision on the general surgery workforce are not yet available. Methodological Questions About Provider Distribution Current official measures of the distribution of physician personnel and by inference, geo- graphic access to physicians' services, such as HPSAs, are based on county boundaries. County 2 The bonus provisions were described in the Affordable Care Act of 2010. See http://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/HPSAPSAPhysicianBonuses/index.html?redirect=/hpsapsaphysicianbonuses.

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PROGRAMS AND POLICIES TO IMPROVE ACCESS AND QUALITY OF CARE FOR BENEFICIARIES 99 boundaries were established historically and are at best imprecisely related to medical market areas, because beneficiaries routinely cross county and other boundaries to obtain care. Using data from 23 states with relatively low physician-to-population ratios compared to the other 27 states, and assuming that people seek care from nearby primary care physicians, Rosenthal et al. (2005) found that few persons would have relied on primary care physicians with caseloads in excess of federal guidelines for HPSAs in 1999 (i.e., caseloads exceeding 3,500 patients per physician). In particular, only 11 percent of individuals residing in rural counties adjacent to metropolitan areas would have obtained care from primary care physicians with caseloads exceeding this threshold. For residents of rural counties not adjacent to metropolitan areas, Rosenthal et al. (2005) estimated that 7 percent saw primary care physicians with caseloads above the threshold rep- resented in the federal HPSA guidelines. The authors took the position that many individuals in counties adjacent to metropolitan areas obtain care from providers in the metropolitan areas and hence should not be attributed to providers in their counties of residence. For this reason, the caseload burden in such counties is actually lower than their calculations imply. Thus, using an alternative assumption about individuals' travel to care, meaning they travel further than was assumed in the baseline calculations, reduces variation in caseloads by area, which implies less of a geographic maldistribution of providers. In other words, because so many individuals are willing to travel to see practitioners in both urban and rural locations, it is very difficult to estimate whether or not there is a maldistribution of clinicians on the basis of provider location alone. Other results in the Rosenthal et al. (2005) study also raise issues about the strength of the relationship between provider location and availability of care. For one, residents of very rural counties had to travel 5 miles on average to the nearest general or family practitioner. The near- est specialist in internal medicine was slightly over three times further away, and physicians in specialties with fewer practitioners (e.g., ophthalmology and neurology) were even further away. Primary care physicians locate their practices in communities of all sizes, so a close link would be expected between primary care availability, especially general and family practitioners, and access to primary care services. By contrast, the geographic locations of physicians in smaller fields such as subspecialty care tend to be limited to communities with larger population sizes. Availability of care depends on many factors, including work hours--total and scheduled hours, staff size and variety of personnel, willingness to accept new patients, including Medicare beneficiaries, and many others. As Rosenthal et al. (2005) pointed out, there are some limitations to their study. First, as they acknowledge, the American Medical Association Masterfile, which the authors used for data on the location and specialty of physicians, is a headcount. Second, they made assumptions about travel patterns for care but did not observe actual patterns. Any measure of central tendency, such as mean distance between a place of residence to the nearest physician, obscures important variation. For example, although it is important to know that a mean travel distance is 5 miles, travel is going to be much longer for those who live in isolated rural communities. Finally, workforce policies of the U.S. government may reduce dif- ferences in ratios of health professional personnel relative to population. By excluding federal physicians and other federal clinicians from their analysis, Rosenthal et al. (2005) may actually have overstated geographic variation in these ratios. The Rosenthal et al. (2005) study makes an important contribution in raising questions about the degree of geographic maldistribution of physicians and in emphasizing the limitations of using counties as units for calculating shortages. As a matter of policy and practice, however,

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100 GEOGRAPHIC ADJUSTMENT IN MEDICARE PAYMENT additional studies will be needed to fully understand the range of influences on individual willingness to travel to see providers, and policy makers will need to conduct further studies and consider setting national distribution targets for the workforce in order to determine the extent of shortages. CURRENT PROGRAMS TO IMPROVE QUALITY As discussed in Chapter 3, HHS uses a core set of evidence-based quality measures to make standardized comparisons of the quality of care for different groups and regions (AHRQ, 2010). Quality measures include process measures, which are derived from administrative or claims and clinical data and measure the delivery of care; and outcome measures, which are often disease specific and include clinical outcomes as well as patient experience and satisfaction with the care team and the care setting. Hospital reporting on quality measures has been under way for several years, while primary care quality reporting is in earlier stages. However, several policies tie payment to performance on quality measures. Hospital Inpatient Quality Reporting Program For the past 6 years, CMS has been administering the Hospital Inpatient Quality Reporting Program,3 which is designed to incentivize IPPS hospitals, through Medicare Part A payments, to report their quality of care measures to CMS (CMS, 2009). In 2010, participating hospitals were required to report 42 quality measures, including 30-day mortality and 30-day risk- standardized readmissions on three specific medical conditions,4 patient safety indicators and hospital-acquired conditions, and patient satisfaction data (CMS, 2011c).5 Hospital patient satisfaction data are collected from each hospital by administering the Hos- pital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey. Developed by CMS and AHRQ, the HCAHPS is a national standardized survey that asks discharged patients 27 questions about their recent hospital stay (HCAHPS, 2012). Since 2008, each hospital has been responsible for administering the survey to a random sample of adult patients (18 years of age and older) between 48 hours and 6 weeks after discharge. Participating hospitals that fail to report the 47 quality measures and the HCAHPS patient satisfaction data receive a 2 percent reduction in their annual market-based update in Medicare payment. In FY 2011, only 47 IPPS hospitals (or less than 5 percent of all IPPS hospitals) chose not to participate in the quality reporting program and therefore received a 2 percent reduction in their annual market-based update in Medicare payment (CMS, 2011d). Hospital Readmissions Reduction Program New Medicare payment policies are targeting payments to help reduce overall Medicare spending while maintaining or improving the quality of care. Based on evidence from pilot programs, demonstration projects, and expert consensus, these policies reflect a combina- 3 As mandated by mandated by Section 501(b) of the Medicare Prescription Drug, Improvement, and Moderniza- tion Act of 2003. 4 The three conditions are heart attacks, heart failure, and pneumonia--the three most common medical conditions of hospital-admitted Medicare beneficiaries. 5 Starting in 2013, each quality measure specified by the Secretary of HHS must be endorsed by a contracted con- sensus entity (currently the National Quality Forum) (P.L. 111-148).

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PROGRAMS AND POLICIES TO IMPROVE ACCESS AND QUALITY OF CARE FOR BENEFICIARIES 101 tion of financial incentives for desired performance and penalties for poor performance or nonparticipation. The first efforts at quality reporting and monitoring began with hospital services, which represent a relatively large share of Medicare outlays. In 2008, spending on hospital inpatient care came to $129.1 billion, or 29 percent of total Medicare payments that year. Despite such high spending, the quality of care was deemed not adequate for beneficiaries who had multiple chronic conditions and see multiple practitioners. Readmission rates varied substantially across the country, even after controlling for the severity of illness (Jencks et al., 2009). For example, Illinois, Louisiana, and New Jersey readmission rates approach 22 percent, while Idaho, Oregon, and Utah were between 13 and 16 percent (CRS, 2010). Between 2003 and 2004, 19 percent of Medicare beneficiaries who were admitted to a hospital were readmitted within 30 days (Hansen et al., 2011; Jencks et al., 2009). The total cost of all rehospitalizations within 30 days has been estimated at $44 billion (Jencks, 2010), and MedPAC (2007) has estimated that 75 percent of these hospitalizations may be avoidable; preventing them could save Medicare $12 billion a year. Factors contributing to preventable hospital readmissions include poor coordination between different care settings (e.g., hospi- tals, skilled nursing facilities, outpatient clinics), such as a lack of follow-up appointments after discharge (Jencks et al., 2009), as well as lack of assistance and support for frail beneficiaries at home as they recover. As part of a major national policy initiative, CMS made 30-day readmission rates publicly available on its Hospital Compare website in 2010 to try to bring increased attention to this measure of quality of care, which reflects not only the quality of inpatient care but the ability of the care system to coordinate postacute care as patients transition across settings, such as from hospital to nursing home to home. Readmission rates have been found to vary by hospital and by geographic area, even for the same level of severity for the same disease. This variation suggests that some readmissions could be prevented if there were better care management, particularly at discharge as benefi- ciaries transition to other care settings, such as their homes, skilled nursing facilities, or other postacute care (CRS, 2010). Beginning in 2013, CMS will reduce Medicare Part A payments for hospitals with higher than expected risk-adjusted readmission rates for three conditions: heart attack, heart failure, and pneumonia (CMS, 2011h). Medicare payments will be reduced by an adjustment factor based on the ratio of aggregate payments for excess readmissions (determined as a function of spending) to aggregate payments for all discharges. Over time, Medicare plans to expand this program to include other common diagnoses, which will be good for beneficiaries and for Medicare. However, there are no economic incen- tives for hospitals to reduce Medicare readmissions, and the financial penalties may not be strong enough to make a business case for improving quality. It remains to be seen whether other models such as bundled payments and "single-episode prices" may be more effective in improving efficiency and patient experience while lowering costs (Berenson et al., 2012). Of further concern, African American and Hispanic beneficiaries are more likely to be rehos- pitalized for preventable conditions than are white beneficiaries. An analysis of hospital discharge data from 10 states found that African American and Hispanic patients were at greater risk of rehospitalization, even after adjusting for patient differences in health care needs, socioeconomic status, insurance coverage, and the availability of primary care (Gaskin and Hoffman, 2000). In a comparison of predictors for rehospitalization after coronary artery bypass surgery, African Americans had higher rates of readmission (Hannan et al., 2003).

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114 GEOGRAPHIC ADJUSTMENT IN MEDICARE PAYMENT forgiveness programs has been on physician retention following fulfillment of the service obliga- tion, using different numbers of years of continuing service to indicate success. However, the effect of physician turnover on patient care is unknown. In general, while a variety of programs attempt to enhance recruitment, retention, or both, we know very little about which types of policies are most successful in improving access in underserved areas. CMS and HRSA are both HHS agencies, but policies to enhance access to primary care services have not been jointly developed.13 Indeed, Medicare payment policies that promote specialization and a large income gap between primary care practitioners and specialists have likely worked at cross-purposes with the objectives of Public Health Service programs to improve access in underserved areas. As Medicare is the single largest insurance program in the world, the incentives produced by its payment policies may well dominate many decisions made by health care providers throughout the United States. DELIVERY SYSTEM REFORM INITIATIVES TO PROMOTE ACCESS AND QUALITY OF CARE The growing costs of health care, the demographics of the aging population, and the chal- lenges of managing the care of older adults with multiple chronic health conditions are driving system reform and innovations in health services delivery. Among these are changes intended to improve access to primary care services and to improve the coordination of care as mechanisms for improving access and health care outcomes. There are many emerging conceptual models of coordinated care, including accountable care organizations, transitional care, medical homes, and others (CMS, 2011g; CRS, 2010; Friedberg et al., 2010; Naylor and Kurtzman, 2010; Pohl et al., 2010). What these models have in common are (1) the essential role of primary care services in ensuring that the care is coordinated and provided in the appropriate setting and level of care, including the type of clinician who provides services, and (2) the need for payment reform to support the policy goal of improved care coordination. Over time, many types and models of care may be shown to improve clinical outcomes and population health. Because Medicare is the largest payer, many of the new models are intended to move Medicare payments away from fee-for-service payment by providing financial incentives for shared risk through bundled payment options. It is hoped that these models will not only improve efficiency but also provide better integration and more coordinated care for benefi- ciaries (Guterman et al., 2009). The committee expects that these models may have workforce implications, by increasing the demand for primary care services provided by NPs and PAs. Accountable Care Organizations (ACOs) ACOs are defined by CMS as "groups of physicians, hospitals, and other health care pro- viders who come together voluntarily to give high-quality coordinated care to the Medicare patients they serve" (CMS, 2012c). The goal of ACOs is to improve quality of care for Medicare beneficiaries by coordinating care among practice settings (e.g., hospitals, physician groups, and skilled nursing facilities), which helps ensure that patients get the appropriate level of care and that unnecessary duplication of services, medical errors, and hospital readmissions are 13 Jurisdiction over Public Health Service programs and Medicare is also exercised by different committees in the U.S. Congress.

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PROGRAMS AND POLICIES TO IMPROVE ACCESS AND QUALITY OF CARE FOR BENEFICIARIES 115 reduced (CMS, 2012c). CMS has established two ACO payment programs to provide financial incentives for Medicare-enrolled providers who come together to form an ACO: the Medicare Shared Savings Program and the Advance Payment Model. Medicare Shared Savings Program Shared savings is an approach to improving the value of health care by promoting account- ability, requiring coordinated care, and encouraging infrastructure investments such as elec- tronic health records and broadband to enable the secure exchange of clinical information across settings in real time (CMS, 2012d). Other investments may include hiring new nurse care managers and other personnel to provide better continuity of care across clinical settings. Participants agree to lower the cost of health care while meeting identified performance stan- dards by sharing resources and care in a coordinated manner. CMS is implementing two shared savings models: one-sided and two-sided shared savings models. Under the one-sided model, providers only share the savings; in the two-sided model, providers share the savings and the losses if there is a growth in costs (CMS, 2012d). CMS will develop a target level of spending for each participating ACO. Depending on the quality of their performance, those under the one-sided model will receive up to 50 percent in savings and those under the two-sided model will receive up to 60 percent in savings (CMS, 2012d). According to the ACA, NPs are authorized to be ACO professionals but are excluded from assignment of patients for this program; that is, patients must be assigned to and cared for by primary care physicians. Therefore, patients cannot choose a NP for their primary care provider under the current ACA. While this does not prevent nurse practitioners from joining an ACO, it does prevent their patients from being assigned to them directly. At this early stage, it is not clear how third-party payers will respond to this. Pioneer ACO Model The pioneer ACO model is designed to support organizations that already have experience operating as ACOs or in similar arrangements providing coordinated care to Medicare benefi- ciaries at a lower cost to Medicare. It is designed to allow them to move more rapidly from a shared savings payment model to a population-based payment model and to work in coordina- tion with private payers to provide better care for beneficiaries (CMS, 2012e). The first 32 pioneer ACO organizations were announced in December 2011 after a lengthy and competitive process (CMS, 2012f) and collectively provide care for about 860,000 benefi- ciaries. They include primarily physician-led organizations and include health systems in urban and rural areas in 18 states and various geographic regions of the country. The pioneer initiative is operated by the CMS Innovation Center and tests a shared savings and shared losses payment arrangement with higher levels of reward and risk than the rest of the Shared Savings Program. Advance Payment Model The advance payment ACO model is open only to two types of organizations participating in the Shared Savings Program: (1) ACOs that do not include any inpatient facilities and have less than $50 million in total annual revenue; and (2) ACOs in which the only inpatient facilities are critical access hospitals and/or Medicare low-volume rural hospitals and have less than $80 million in total annual revenue (CMS, 2012g).

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116 GEOGRAPHIC ADJUSTMENT IN MEDICARE PAYMENT The advance payment model is designed to provide financial support to organizations by improving their access to capital, including rural and physician-owned organizations. The first five awardees were announced in April 2012, and additional organizations were announced in July 2012 (CMS, 2012g). Future Success of ACOs The first 27 ACOs were selected in April 2012, including the five that are participating in the advance payment model, and they will be coordinating care for nearly 375,000 beneficiaries (CMS, 2012h). Of the 27 organizations, 21 are physician-led, even in those ACOs that involve hospitals (Fiegl, 2012). While the goal of all ACOs is to improve quality at lower costs, it is not yet clear how many new employment opportunities for NPs and PAs will emerge. Regional differences in staffing may be observed based on the current number of NPs and PAs already practicing in local markets. ACOs will have many operational challenges, including the need to change beneficiaries' expectations about how they receive their care, beneficiaries' potential unwillingness to share their personal health information with other providers within the ACO network, and difficulties establishing secure health information exchanges to support the exchange of that information (Gold, 2012). As hospitals and physician groups are consolidating to form ACO networks, there is concern that mergers and provider consolidation could increase market share enough to provide more leverage in negotiations with private insurers, thus driving up health care costs--having the opposite effect from the one intended. There is also concern that providers may take on more financial risk than they can handle, that the quality standards are too rigorous, that the expense of quality reporting through chart reviews or surveys for those who do not have electronic reporting will be overly burdensome, and that the potential savings will be too low in relation to the upfront investments needed (Ginsburg, 2011). From a workforce perspective, one of the more controversial aspects of ACOs is that benefi- ciaries are attributed to ACOs on the basis of which primary care physician provided a plurality of their primary care services. It will not be clear for some time how nurses, NPs, and PAs will contribute to care coordination across organizations and settings, one of the main goals of the ACO program. Value-Based Purchasing CMS will begin the hospital value-based purchasing program in FY 2013, requiring that a certain percentage of Medicare hospital payments be based on hospital performance.14 The goal of the value-based purchasing program is not only to incentivize hospitals to improve the quality of care they provide, but also to reward hospitals based on the extent of their quality improvement. The hospital performance standards for the value-based purchasing program are based on 12 clinical process measures and 8 patient experience measures and were announced in 2011 14 CMS will use a linear exchange function to compute the percentage of value-based incentive payment earned by each hospital. CMS will notify each hospital of the exact amount of its value-based incentive payment by November 1, 2012 (CMS, 2011b).

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PROGRAMS AND POLICIES TO IMPROVE ACCESS AND QUALITY OF CARE FOR BENEFICIARIES 117 (CMS, 2011i). Each hospital will be scored based on achievement and improvement ranges for each of the 20 quality measures (CMS, 2011i). Achievement scores are to be based on how much a hospital's current score differs from all other hospitals' baseline period performance. Hospitals will be awarded achievement points if they fall within the range of the 50th percentile of hospital scores or higher (CMS, 2011a). Improvement scores will be based on how much a hospital's current performance changes from its own baseline period performance, and hospitals that meet or exceed the performance standards will receive a value-based incentive payment. Future measures for consideration are posted on the CMS Hospital Compare website (CMS, 2012i). Incentive Payments for Coordination of Care New bonus payments for primary care practitioners are funded under the Affordable Care Act to improve coordination of care. Beginning in the summer of 2012, a Medicare pilot project, referred to as the Comprehensive Primary Care Initiative, will pay primary care practitioners in five to seven markets a bonus of $20 per month per patient for helping patients to coordinate care with specialists, develop personalized care plans, and deliver preventive care and health education (HHS, 2011b). This initiative is based on evidence from previous pilot projects and other studies that show primary care services help to prevent and reduce the use of more com- plex and more expensive settings, often with better patient experiences and outcomes (e.g., Friedberg et al., 2010). Among the most vulnerable times for patients--especially those with chronic conditions-- are the times when they are transitioning from one clinical setting to another, such as returning home after a hospitalization or nursing home stay. The movement of patients from hospitals and nursing homes to their homes and back to clinical settings has been estimated to cost Medicare approximately $15 billion per year. Studies have shown that up to 34 percent of beneficiaries experience adverse events and/or are rehospitalized at those transition times, which are also known as "handoffs" (Naylor et al., 2011). New approaches to improve care integration across episodes and settings of care are referred to as transitional care. These practices are distinct from care coordination in that they focus on critical transition periods, are time limited, designed to avoid preventable hospitalizations, and supported by a robust body of evidence that confirms their benefits (Coleman et al., 2006; Naylor et al., 2011). POLICY CONSIDERATIONS AFFECTING WORKFORCE DISTRIBUTION In 2009, nearly 1 million health professionals were participating in fee-for-service Medicare (MedPAC, 2011), but there are no agreed-upon national targets for the supply of practitioners by type. A major source of concern among policy experts involves questions about whether the balance and coordination of primary care services and specialty care are meeting the needs of beneficiaries for chronic care management and other primary care services (Goodman and Grumbach, 2008; Naylor and Kurtzman, 2010). Variation in Payment Policies for Medicare Providers In addition to payment for physician services, Medicare also pays for NP or PA services. These payments are paid at the same rate paid to physicians only if the services are deemed to be "incident to" physician services. This means that the service cannot be billed to Medicare

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118 GEOGRAPHIC ADJUSTMENT IN MEDICARE PAYMENT by the NP unless a physician has seen the patient previously for the particular diagnosis being addressed at the visit (i.e., so the NP service is considered to be "incident to" the physician's management). In practice, this means an NP may not see a new patient or an existing patient with a new diagnosis if billing "incident to" a physician. In settings where these practitioners are salaried employees paid by the supervising physicians, the payment benefits accrue to the physicians as employers, and in settings where NPs are paid by hospitals, any payment benefits accrue to hospitals. To help expand access to primary care services, an incentive payment of 10 percent of the amount is paid quarterly under the Physician Fee Schedule for primary care services provided by primary care physicians (defined as those trained and practicing in family medicine, internal medicine, pediatrics, and geriatrics), NPs, clinical nurse specialists, and PAs (CMS, 2011b,f). Along with differences related to the degree of practitioner autonomy and the legal right to practice independently, payment differentials between primary care and nonprimary care physicians and between physicians and other health professionals are controversial. While physi- cian organizations often maintain that their longer and more extensive medical training makes them more qualified than NPs or PAs to diagnose and treat patients and that their payment should be commensurate with their experience, others focus on the need to expand primary care services through (1) the use of the "full primary care workforce" (Fairman et al., 2011; IOM, 2010; Pohl et al., 2010) and (2) consideration of the outcomes of care from all health care professionals (Newhouse et al., 2011). National Workforce Policy and Data Gaps As discussed previously in Chapter 3 and in this chapter, the committee's review has been made more difficult by serious data gaps, including a lack of consistent methodologies for workforce studies, conflicting findings, and lack of research attention to many members of the health care workforce who provide care for Medicare beneficiaries. For example, as mentioned in Chapter 3, there is no single source of accurate, up-to-date information on the current numbers of practicing health professionals for all of the major professions, and many of the sources of data have biases or other flaws in their data collection methods or reporting. Another problem the committee encountered is the lack of current evaluation research on training programs, due to several years of underfunding for evaluations specifically and workforce programs generally. As a result of the lack of clear, consistent data for many areas in its charge, the committee sought to draw conclusions from the limited evidence using a consensus process. Here too lay challenges, in that there were differences of opinion about how to distinguish between a shortage (supply) and a distribution problem, or how to describe the workforce implications for care coordination--a significant problem for beneficiaries in terms of access and quality of care, but not an area in which clear guidelines or practice patterns can be identified. The committee concluded that many of the complexities and contentiousness of workforce poli- cies and programs are influenced by market-based factors such as competition for patients in local areas, as well as by professional levels and types of training and differing views about scope of practice. Early in their deliberations, the committee members recognized the complexity of these issues and discussed the importance of creating and funding a new, independent body with representatives of different viewpoints that would help to prioritize workforce policy choices at a national level. They reviewed the authorizing language for a Health Care Workforce Com-

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PROGRAMS AND POLICIES TO IMPROVE ACCESS AND QUALITY OF CARE FOR BENEFICIARIES 119 mission in the Affordable Care Act and agreed that that commission or an entity similar to it is called for. No single agency within HHS currently has the authority or the resources needed to provide a comprehensive, objective view of the nation's workforce needs, and an independent body would be best suited to advise on ways to improve coordination across federal agencies. FINDINGS The committee members sought to identify the best available evidence to help them deter- mine what policies and programs have been most effective in improving access to hospital and clinical services, improving quality of care, and helping to increase the supply of practitioners as well as influence their distribution across the country. The evidence review was hampered by the lack of evaluation, mixed results, and methodological challenges in finding studies that included geographic comparisons. In developing their findings and recommendations, committee members developed a consensus on what the evidence base suggests. They also identified some promising new areas of policy and program development where changes in payment policies have the potential to expand beneficiaries' access to care. 1.Medicare policies intended to preserve beneficiary access to hospital care may not be efficiently targeted. 2.The effectiveness of bonus payments to improve Health Professional Shortage Areas (HPSAs) has not been adequately evaluated, and it will take time before there is enough information and experience to evaluate other recently introduced bonus payments. 3.Medicare's payment policies related to quality of care are important, but there is no evidence that geographic adjustment is related to quality of care. 4.Current information on public programs related to workforce is inadequate to assess whether current needs are being met. Consistent national data on workforce distribution and independent evaluations of public programs pertaining to distribution are lacking, and there are no nationally accepted distribution targets. 5.Evidence suggests some success of federal loan repayments in placing practitioners in underserved areas. Retention rates appear to be comparable to retention of other practitioners in similar areas without special programs, but more studies with consistent definitions of retention are needed for comparison. 6.New payment models are being introduced to encourage providers to improve care coordination through team-based approaches, but the extent to which an increased emphasis on care coordination will provide new opportunities for nurse practitioners and physician assistants to practice to the full extent of their educational preparation is unclear. REFERENCES AHRQ (Agency for Healthcare Research and Quality). 2010. National healthcare quality report. Rockville, MD: AHRQ. AMA (American Medical Association). 2006. Physician characteristics and distribution in the U.S., 2006 ed. Chicago, IL: AMA. Bazzoli, G. J. 1985. Does educational indebtedness affect physician specialty choice? Journal of Health Economics 4:1-19.

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