II 111th CONGRESS 2d Session S. 3915 IN THE SENATE OF THE UNITED STATES September 29, 2010 Mrs. Lincoln introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend title XVIII of the Social Security Act to improve the recruitment and retention of physicians under the Medicare program.

1.

Short title

This Act may be cited as the Medicare Rural Physician Recruitment and Retention Act of 2010.

2.

Findings

Congress makes the following findings: (1)The United States is facing shortages in a wide range of health workforce professions, including as many as 91,500 physicians, consisting of 46,100 specialists and 45,400 primary care physicians, by 2020. Many rural and other underserved areas continue to experience chronic shortages. (2)These shortages will be exacerbated as millions of previously uninsured Americans gain access to health insurance and the Baby Boomer generation enters the Medicare program in greater numbers. (3)To address the physician shortage, United States medical schools have already started fulfilling their commitment to expanding class size by 30 percent by the year 2015. However, the Medicare program has not yet increased the number of approved medical residency training positions it helps support in order to accommodate a 30 percent increase in medical school graduates. (4)From 1966 through 1991, Medicare physician payments reflected physician charges for health care services. The Omnibus Budget Reconciliation Act of 1989 (Public Law 101–239) mandated the creation of a national Medicare physician fee schedule, which was implemented in 1992. (5)As mandated by the Balanced Budget Act of 1997 (Public Law 105–33), the statutory method for determining annual updates to the Medicare physician fee schedule, known as the sustainable growth rate system, has resulted in a reduction in physician reimbursement rates each year since 2002. With the exception of 2002, when a 4.8 percent decrease was applied, Congress has passed a series of bills to override the reductions. (6)Although a number of modifications to the Medicare sustainable growth rate system have been proposed, Congress has yet to pass legislation that would provide for a long-term alternative to the current system. (7)The Medicare physician fee schedule establishes payment rates for more than 7,000 services. Payments for each service on the fee schedule is based on 3 relative value units that correspond to the 3 physician payment components of physician work, practice expense, and malpractice expense. (8)Each relative value unit is geographically adjusted to reflect the cost of providing a particular service in a particular location (a locality). Physician payment localities are primarily consolidations of the carrier-defined localities established in 1966. (9)Medicare’s geographic adjustment for a particular physician payment locality is determined using 3 Geographic Practice Cost Indices that also correspond to the 3 Medicare physician payment components of physician work, practice expense, and malpractice expense. (10)In general, Medicare Geographic Practice Cost Indices (and thus, reimbursements) are less in rural areas than in urban areas largely because rural cost-of-living is estimated to be lower. (11)Medicare Geographic Practice Cost Indices are based on 1990 earnings of professionals with 5 or more years of post high school education, not current physician earnings, and the office rent portion of the practice expense Geographic Practice Cost Index is based on 2000 residential apartment rental data from the Department of Housing and Urban Development, proxy data used in place of actual national data for physician office rents. (12)Rural physician employers and rural communities recruiting physicians must pay salaries that are competitive in regional and national, not local, markets. (13)Though the percentage difference may seem small, the elderly represent a higher percent of the rural population. Consequently, Medicare patients will represent a greater percentage of a rural physician’s practice, and differences in payment due to variation in Medicare Geographic Practice Cost Indices represent many thousands of reimbursement dollars. (14)Furthermore, commercial insurers often reimburse physicians at rates directly related to Medicare’s fee schedule. As a result, the impact of any Medicare payment disparity is potentially extended to non-Medicare payors as well. (15)Recruitment and retention of rural physicians remains problematic.