Medicare physician geographic practice cost indexes are valid in their design as a way to account for local variances in the costs of running a medical practice, but could use some fine tuning, according to a report issued by the Government Accountability Office.
The three indexes adjust Medicare reimbursements for physicians' work, practice expenses and malpractice costs. The GAO was mandated to evaluate the use of GPCIs by the Medicare Modernization Act of 2003. It noted that advocates for rural physicians have criticized GPCIs for lowering fees in areas where costs are below the national average.
The GAO found, on the contrary, that "the three GPCIs as implemented appropriately reflect broad patterns of geographic differences in the costs of running a medical practice."
Pay for nurses, "which constitute a substantial share of physicians' practice expenses," according to the report, vary from $29.16 per hour in the Oakland/Berkeley area of California to $19.60 per hour in South Carolina, based on 2000 data.
The physician work GPCI, the GAO said, "reflects a goal of protecting physician fees in low-cost areas . . . by limiting downward cost adjustments."
That said, the government watchdog agency also criticized the CMS for using wage data that was not current and medical malpractice insurance information that is incomplete.
It recommended augmenting the data and refining the methods the HHS agency uses to construct the indexes. HHS disagreed with most of the recommendations, "citing concerns about when they could be implemented," the GAO report said.
A spokeswoman for the Medical Group Management Association, which is lobbying for improvements in the adjustment methodology, also said the data used by the CMS to develop several of the indexes is inadequate.
"We absolutely agree with the GAO's studies findings," said Jennifer Miller, external relationships liaison for the MGMA. "We're encouraging (the CMS) to find some other source."
By statute, the GPCIs are to be updated every three years, Miller said, but the effect of the update is blunted because the CMS uses, in part, census data in the work and practice cost indexes that is gathered only once every 10 years.
In contrast, the CMS itself collects data every year on malpractice costs. The MGMA recommends the CMS either gather its own data for the other indexes on a regular basis, or ask another government agency, such as the Bureau of Labor Statistics, to do it for them, Miller said.
Another problem, Miller said, is that the labor costs used in the practice expense index are based on the wages of the types of workers one might have found in a group practice decades ago. The current model includes clerical workers, registered nurses, licensed practical nurses and health technicians, but does not account for physician assistants, information technology experts, occupational therapists, certified practice managers and certified coders.
"They didn't use any of the more expensive professionals that are used in the modern office," she said, adding that the MGMA's objections center on this "stale nature of the data that they're using."