Medicare, the world's single largest health insurance program, covers more than 47 million Americans. Although it is a national program, it adjusts payments to hospitals and health care practitioners according to the geographic location in which they provide service, acknowledging that the cost of doing business varies around the country. Under the adjustment systems, payments in high-cost areas are increased relative to the national average, and payments in low-cost areas are reduced. In July 2010, the Department of Health and Human Services, which oversees Medicare, commissioned the IOM to conduct a two-part study to recommend corrections of inaccuracies and inequities in geographic adjustments to Medicare payments. The first report examined the data sources and methods used to adjust payments, and recommended a number of changes. Geographic Adjustment in Medicare Payment - Phase II:Implications for Access, Quality, and Efficiency applies the first report's recommendations in order to determine their potential effect on Medicare payments to hospitals and clinical practitioners. This report also offers recommendations to improve access to efficient and appropriate levels of care. Geographic Adjustment in Medicare Payment - Phase II:Implications for Access, Quality, and Efficiency expresses the importance of ensuring the availability of a sufficient health care workforce to serve all beneficiaries, regardless of where they live.

Contents

• THE NATIONAL ACADEMIES
• COMMITTEE ON GEOGRAPHIC ADJUSTMENT FACTORS IN MEDICARE PAYMENT
• Reviewers
• Acknowledgments
• Boxes, Exhibits, Figures, and Tables
• ACRONYMS
• Summary: Implications of Geographic Adjustment for Access, Quality, and Efficiency of Care
  • IMPACT ANALYSIS: PHASE I RECOMMENDATIONS
  • EVIDENCE OF GEOGRAPHIC VARIATION IN ACCESS, QUALITY, AND WORKFORCE DISTRIBUTION
  • PROGRAMS AND POLICIES TO IMPROVE ACCESS AND QUALITY OF CARE FOR BENEFICIARIES
  • NEW OPPORTUNITIES TO IMPROVE ACCESS, QUALITY, AND EFFICIENCY
  • RECOMMENDATIONS
  • CONCLUSION
  • REFERENCES
• 1. Introduction and Overview
  • BACKGROUND
  • CONCEPTUAL APPROACH TO GEOGRAPHIC ADJUSTMENT
  • RESULTS OF IMPACT ANALYSES FROM PHASE I RECOMMENDATIONS
  • REFERENCES
• 2. Payment Simulations
  • INTRODUCTION
  • OVERVIEW OF FINDINGS
  • EFFECTS ON HOSPITAL PAYMENTS
  • EFFECTS ON PHYSICIAN PAYMENTS
  • EXAMPLES OF PROVIDER IMPACT
  • KEY FINDINGS AND CONCLUSIONS
  • REFERENCES
• 3. Evidence of Geographic Variation in Access, Quality, and Workforce Distribution
  • GEOGRAPHIC VARIATION IN ACCESS TO HEALTH CARE
  • GEOGRAPHIC VARIATION IN QUALITY OF CARE
  • WORKFORCE DISTRIBUTION AND SUPPLY
  • EXPANDING OPPORTUNITIES TO IMPROVE ACCESS
  • SUMMARY
  • FINDINGS
  • REFERENCES
• 4. Programs and Policies to Improve Access and Quality of Care for Beneficiaries
  • INTRODUCTION
  • MEDICARE PAYMENT POLICIES INTENDED TO MAINTAIN ACCESS TO HOSPITAL CARE
  • PROGRAMS THAT ENCOURAGE CLINICAL PRACTICE IN UNDERSERVED AREAS
  • CURRENT PROGRAMS TO IMPROVE QUALITY
  • CURRENT PROGRAMS TO IMPROVE WORKFORCE SUPPLY AND ACCESS
  • EMPIRICAL EVIDENCE ON EFFECTS OF PUBLIC POLICIES TO IMPROVE GEOGRAPHIC DISTRIBUTION OF HEALTH CARE PRACTITIONERS
  • DELIVERY SYSTEM REFORM INITIATIVES TO PROMOTE ACCESS AND QUALITY OF CARE
  • POLICY CONSIDERATIONS AFFECTING WORKFORCE DISTRIBUTION
  • FINDINGS
  • REFERENCES
• 5. Observations on the Larger Policy Context
  • UNINTENDED EFFECTS OF MEDICARE PAYMENT POLICIES
  • DISPARITIES IN ACCESS TO CARE
  • GEOGRAPHIC ADJUSTMENT AND PAYMENT REFORM
  • CONCLUSION
  • REFERENCES
• 6. Recommendations
  • CONCLUSION
• Appendix A-1 Technical Approach to Payment Simulations: IOM Committee Recommendations for Hospital Wage Index and Physician Geographic Adjustment Factors
• Appendix A-2 Payment Simulations: Data Tables
• Appendix B Methods for the Analysis of Associations of Quality Measures with Payments in Chapter 3
• Appendix C Quality Assurance for RTI Payment Simulations
• Appendix D Public Session: Workforce, Access, and Innovation Policy Levers for Geographic Adjustment In Medicare Payment
• Appendix E Exchange of Letters Between House of Representatives Quality Coalition and Committee Chair Frank Sloan
• Appendix F Committee and Staff Biographies

This study was supported by Contract No. HHS P23320042509XI, Task Order No. HHS P23337012T between the National Academy of Sciences and the Centers for Medicare & Medicaid Services. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the organizations or agencies that provided support for this project.

Suggested citation:

IOM (Institute of Medicine). 2012. Geographic adjustment in Medicare payment: Phase II: Implications for access, quality, and efficiency. Washington, DC: The National Academies Press.

NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.