BOX 5-1Geographic Practice Cost Index Timeline of Events
1989: The U.S. Congress requires that the U.S. Department of Health and Human Services (HHS) account for physician work, practice expenses, and malpractice expenses when calculating the geographic practice cost indexes (GPCIs) (Omnibus Budget Reconciliation Act of 1989. P.L. 101-239, December 19, 1989).
1992: Section 1848 of the Social Security Act establishes a fee schedule for physicians' services.
1996: The Health Care Financing Administration reduces the number of payment areas from 210 to 89 (CMS, 1996).
1997: The U.S. Congress requires the Centers for Medicare and Medicaid Services (CMS) to implement resource-based malpractice relative value units (RVUs) for all services provided, effective in the year 2000 (The Balanced Budget Act of 1997. P.L. 105-33, August 5, 1997).
2003: The U.S. Congress mandates review of the practice expense GPCI (Medicare Prescription Drug, Improvement, and Modernization Act of 2003. P.L. 108-173, December 8, 2003).
2005: The Government Accountability Office (GAO) reports that the GPCIs are sound conceptually but that data and data collection methods could be improved, such as by collecting more data on physician assistant wages and using commercial rent data rather than residential rent rates (GAO, 2005).
2007: GAO recommends that CMS design a uniform approach to defining payment areas, so that there is consistency from state to state, and that CMS base its locality structure on the most recent data (GAO, 2007).
2007: The Medicare Payment Advisory Commission recommends that CMS exclude expenses that do not vary geographically (including supplies and medical equipment) from the GPCI formulas to improve their accuracy (MedPAC, 2007).
2008: Acumen report for CMS evaluates four smoothing techniques, and concludes that each method would significantly reduce large disparities between payment areas (O'Brien-Strain et al., 2008).
2010: On behalf of HHS Secretary Kathleen Sebelius, CMS commissions the Institute of Medicine to evaluate the accuracy of the geographic adjustment factors in a 2-year study.
2010: The U.S. Congress passes the Patient Protection and Affordable Care Act of 2010, which establishes a wage index floor of 1.0 for frontier states, sets a practice expense GPCI floor for frontier states, and extends the work GPCI floor through December 31, 2010 (P.L. 111-148).
2010: In November 2010, CMS posts the final Physician Fee Schedule rule with comment period for the 2011 GPCI. The Final Rule describes updates to GPCI weights and includes new regulations in response to provisions in the Patient Protection and Affordable Care Act of 2010 (CMS, 2010b).
2011: On July 8, 2011, CMS issues the CY 2012 Physician Fee Schedule Proposed Rule, which proposes to change the GPCI cost share weights by decreasing the weight for work and increasing the practice expense (PE) weight; to add a new category for contract labor as a component of the PE; and to use American College of Surgeons (ACS) residential rent data for the office rent component of the GPCI.
