Statements on Introduced Bills and Joint Resolutions

Floor Speech

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - July 23, 2008)

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By Mr. GRASSLEY:

S. 3318. A bill to amend title XVIII of the Social Security Act to provide for recognition of equality of physician work in all geographic areas and revisions to the practice expense geographic adjustment under the Medicare physician fee schedule; to the Committee on Finance.

Mr. GRASSLEY. Mr. President, I am pleased today to introduce the Medicare Physician Payment Equity Act of 2008.

I stood before this body last December as we agreed to a short-term Medicare extension bill so that we would have the opportunity to address other pressing priorities in a bipartisan Medicare package this year. One of the most significant issues I had hoped to address was the need to provide more equitable payment for physicians in Iowa and other rural states.

While the Medicare bill that Congress just enacted improves the situation for physicians in the near-term by averting the SGR payment cuts scheduled to occur during the next 18 months, it does little to remedy the unjustifiable geographic disparities in physician payment that exist. It is unfortunate that reforms to the geographic physician payment adjusters were not included in H.R. 6331. I have long supported more equitable treatment of physicians in rural areas, and I have pressed for reforms to the work and practice expense geographic adjustments in the Medicare physician fee schedule. However, much-needed reforms such as the establishment of a practice expense floor are not in the Medicare bill that Congress enacted last week.

The legislation I am introducing today is designed to remedy this problem by providing more equitable treatment for physicians in rural areas. The bill reduces inequitable disparities in physician payment resulting from the Geographic Practice Cost Indices or adjusters, known as GPCls, by establishing a 1.0 floor for physician practice expense adjustments as of 2009 and by providing a national 1.0 geographic index for physician work expense after the expiration of the existing 1.0 floor in 2010.

Although geographic adjustments are intended to reflect actual cost differences in a given area compared to a national average of 1.0, the existing, inaccurate formulas create significant disparities in physician reimbursement that penalize, rather than equalize, physician payment in Iowa and other rural states. These geographic disparities lead to rural states experiencing significant difficulties in recruiting and retaining physicians and other health care professionals because of their significantly lower reimbursement rates. This in turn leads to reduced beneficiary access to rural health care providers.

Here is a simple example that demonstrates the inequity of the current GPCI formulas. Iowa is widely recognized as providing some of the highest quality health care in the country, yet Iowa physicians receive some of the lowest Medicare reimbursement of any physicians in the country because of inequitable geographic adjustments. Medicare physician payment is equal in all 89 Medicare payment localities until the geographic adjusters, or GPCls, are applied. After the GPCI adjustments, however, Medicare reimbursement for some physician services in Iowa is at least 30 percent lower than payment for the same service in other parts of the country, and it is fundamentally unfair. Congress needs to reduce these unwarranted payment variations and realign Medicare incentives to reward physicians' quality instead of their geography.

Sadly, the inequitable geographic formulas which make these adjustments have merely exacerbated the problems of rural access to health care. Rural America today has far fewer physicians per capita than urban areas do. According to the National Rural Health Association, only about 10 percent of physicians practice in rural areas although nearly a quarter of the U.S. population lives there. Another grave concern is the lack of specialists in rural areas: only about 40 specialists exist per 100,000 in rural areas compared to more than three times as many--134 per 100,000--in urban areas. The evidence is clear that the existing geographic adjusters have been a dismal failure in promoting an adequate number of physicians in Iowa and other rural states. More severe physician shortages will occur in the future if we do not make essential changes to these formulas now.

The Medicare Physician Payment Equity Act revises the formulas used to determine geographic work and practice expense adjustments. The physician work formula currently used by the Centers for Medicare and Medicaid Services to estimate physician wages measures geographic differences in the earnings of six categories of professionals (lawyers, engineers, and others), rather than differences in physicians' earnings. In addition, the data that are used are based on outdated proxy data from the 2000 census. This bill recognizes that physician work for a service requires the same skill and training regardless of the geographic area, and should be similarly valued, and it establishes a national index of 1.0 for physician work beginning in 2010.

The practice expense formula used by CMS is inaccurate, outdated, and does not represent the actual office rent or employee wage costs for physicians in many areas. The office rent component uses Department of Housing and Urban Development residential apartment rental data from 2000 which does not accurately reflect physician office rent. The employee wage component comes from 2000 census data on clerical workers, nurses, and medical technicians which does not take into account any of the more highly compensated workers such as physician assistants, office administrators, and other specialists employed in physician practices today. The Medicare Physician Payment Equity Act provides for a more appropriate recognition of the geographic differences in employee wages and office rents by reducing the impact of this index to reflect more accurately the differences in physician practice costs, as of 2010. We must act now to help recruit and retain rural physicians to ensure that beneficiaries in Iowa and other rural areas will continue to have access to health care.

I urge my colleagues to support this legislation to address the growing problem of health care shortages in rural America by providing more equitable payment for physicians.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

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