CMS Considers Changes to Payment Locality Structures

The Academy stood up for rural family physicians recently when it voiced strong objection to four potential alternatives to the current payment locality structure that CMS uses in the Medicare physician fee schedule.

The alternatives were part of a report, "Review of Alternative GPCI Payment Locality Structures," (101-page PDF; About PDFs) prepared for CMS by Acumen, LLC.

In a letter to CMS, AAFP Board Chair Jim King, M.D., of Selmer, Tenn., said that family physicians "are the only specialty geographically distributed like the American people and the specialty on which Medicare beneficiaries in rural and physician shortage areas most rely."

King told CMS Acting Administrator Kerry Weems that the AAFP supports the elimination of all geographic adjustment factors from the Medicare physician fee schedule "except for those designed to achieve a specific public policy goal. "

Encouraging physicians to practice in underserved areas would be one such goal, King said.

The alternatives suggested in the report would impact the Medicare payment locality structure and result in adjustments to the geographic practice cost indexes, or GPCIs. The geographic tweaking is meant to adjust payments to reflect perceived geographic variations in the costs of providing health care services to patients.

In this case, however, the adjustments favor urban areas at the expense of rural areas, said King.

Although the suggested changes "would make urban viability more likely, they are reckless in lumping together" all nonmetropolitan areas and treating all rural areas as equal. None of the options looks at the true costs of providing health care in rural areas, said King.

He told Weems in the letter that the alternatives basically enhance the GPCIs for metropolitan statistical areas, or MSAs, and "leave rural areas at the mercy of MSAs."

The potential changes could have the unanticipated effect of reinforcing the current maldistribution of physicians, said King. "These alternatives represent another potentially large cut in Medicare payment for rural physicians, many of whom are family physicians serving as the primary safety net in their communities," said King.

He urged CMS to maintain its current payment locality structure in light of the anticipated negative effect that each of the four alternatives would have on rural physicians "who are already at a disadvantage in the current Medicare physician fee schedule."

After a review of all comments received on the report, CMS may offer a proposed rule on the issue sometime in 2009.