[Congressional Record Volume 149, Number 77 (Thursday, May 22, 2003)]
[Senate]
[Pages S7037-S7041]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH (for himself, Mr. Jeffords, Mr. Grassley, Mrs. 
        Lincoln, and Mr. Bingaman):
  S. 1135. A bill to amend title XVIII of the Social Security Act to 
establish a uniform national medicare physician fee schedule; to the 
Committee on Finance.
  Mr. HATCH. Mr. President, today I am pleased to introduce the 
``Medicare Physician Payment Equity Act of 2003,'' a bill that corrects 
a long-standing inequity in Medicare reimbursement to rural physicians. 
I am delighted that my colleagues, Senators Jeffords, Grassley, 
Lincoln, and Bingaman have joined me in addressing this issue and 
introducing this bill.
  Although many Americans are not aware of it, Medicare currently 
reimburses physicians practicing in many

[[Page S7041]]

rural areas at a lower rate than those practicing in more densely 
populated areas. A complicated formula, the geographic physician cost 
index, reimburses physicians according to presumed regional differences 
in the costs of their work, practice expenses, and medical liability 
insurance premiums. But in almost every case, this formula penalizes 
physicians who practice in rural settings.
  As a result, the unfortunate effect of the current formula is that it 
may contribute to regional disparities in access to health care. Rural 
areas tend to have fewer physicians, fewer hospitals and patients often 
have less access to subspecialty care. Penalizing doctors who practice 
in rural settings by paying them substantially less than their urban 
colleagues may contribute to this inequity in access to care.
  According to the Rural Policy Research Institute, the Medicare 
payment for an intermediate office outpatient visit in 2003 is 30 
percent higher in New York City, $59.33, than it is in St. George, UT, 
$45.75, and the reimbursement for an emergency room visit is 22 percent 
higher in New York City, $161.82, than it is in St. George, UT, 
$131.96.
  Proponents of this system that pays doctors differently for the same 
work claim that the purchasing power of physician compensation should 
be similar regardless of where the work is performed. But others, and I 
am one of them, believe that doctors should be compensated equally and 
appropriately for their work regardless of where that work is 
performed. I believe that it is time that we provide physicians with 
equal pay for equal work. Physicians deserve it and their patients do 
also. After all, the citizen in Utah pays Federal taxes at the same 
rate as the citizen in New York. Why should the citizen in Utah receive 
cheaper service?
  The practice expense component of the geographic physician cost index 
also penalizes rural physicians and their patients. Proponents of the 
current system claim that it is more expensive for doctors to practice 
medicine in urban areas where the cost of living is higher and the cost 
of paying employees is thought to be higher. The practice expense 
geographic physician cost index rewards physicians in these ``high 
practice expense'' areas by reimbursing physician services at a higher 
rate.
  While it might be tempting to think that practice expenses in urban 
areas are higher than those in rural areas, this is not necessarily the 
case. Rural physicians sometimes must offer higher wages to attract 
nurses and technicians to work in their communities. Furthermore, the 
formula that is used to calculate the geographic practice expense does 
not take certain key elements into consideration. Volume discounts can 
result in lower costs for capital goods and supplies in densely 
populated areas. Furthermore, a physician in a rural area who purchases 
an expensive, but necessary piece of equipment, such as an ultrasound 
machine, may use that equipment less frequently than a physician from a 
densely populated area. As a result, the rural doctor may not be able 
to pay for the capital investment as quickly as the urban physician. 
The practice expense for the rural physician in such a case is higher.
  In fact, we have known for years that additional resources are 
sometimes necessary to attract doctors to practice in rural settings. 
Physicians, nurses and allied health professionals are less prevalent 
and hospitals are fewer and farther between in rural settings. In some 
cases, certain services and subspecialty care are not available at all. 
For this reason, Federal and State programs have offered tuition 
payment and loan forgiveness programs to student physicians who agree 
to practice in underserved areas, many of which are rural.
  Federal payment policy with respect to physician services delivered 
in rural and underserved areas has been described as contradictory--
paying bonuses to physicians for practicing in rural and underserved 
areas on the one hand while devaluing physician clinical decision-
making and patient services in rural areas less, on the other. The 
bottom line is this: For many years we have found it difficult in this 
country to increase access to health care and improve the quality of 
health care in rural communities. Penalizing physicians for practicing 
in rural settings just does not make sense.
  All Medicare beneficiaries, whether they live in an urban or rural 
area, deserve excellent health care and access to outstanding doctors. 
The bill I am introducing today, the Medicare Physician Payment Act, 
addresses current disparities by creating a system that reimburses 
physicians equitably regardless of where they practice. The bill 
addresses all three components of the geographic physician cost index, 
work, practice expense, and medical liability costs, by increasing 
reimbursement for physicians in disadvantaged areas over a three-year 
period and by eliminating disparities in reimbursement altogether in 
the year four. If we pass this bill, doctors will no longer be 
discouraged from practicing in the rural communities that desperately 
need their services. I look forward to working with my colleagues in 
the 108th Congress to pass this legislation.
  Mr. JEFFORDS. Mr. President, I am pleased to join with my colleagues 
Senators Hatch, Grassley, Lincoln, and Bingaman in introducing the 
Medicare Physician Payment Equity Act of 2003. This bill corrects a 
longstanding inequity in the Medicare Part B reimbursement methodology 
that pays rural physicians less than what is received by physicians for 
more densely populated areas who provide the same exact service. I am 
pleased that we are able to offer a legislative solution to this 
payment inequity.
  Establishing Medicare reimbursement for physician services is a 
complex process and many factors go into setting rates. Without going 
into all of the intricacies of how fees are set, let me note that, for 
any specific service, the physician fee schedule has three components--
physician work, practice expenses, and the cost of malpractice 
insurance. Each of these components is further subjected to a 
geographic adjustment, which is lower for rural areas than for urban 
areas.
  In my own State of Vermont, we face a chronic shortage of doctors in 
our rural areas. Yet, when we need to find a physician for a rural 
clinic, we compete in a national market to find providers. The 
inequities in payments these physicians receive, however, makes it all 
the more difficult to recruit and retain physicians. Rural physicians 
have the same training, spend the same time with patients, and manage 
the same office pressures as their urban counterparts. Their work 
should be valued equally, and that is what this bill accomplishes.
  I've heard from many people in Vermont about this issue. Tim 
Thompson, M.D., President of the Vermont Medical Society, expressed his 
concern that while Vermonters pay the same premiums as other Americans 
to support the Medicare program, our doctors are paid less. This occurs 
without regard to the quality or efficiency of health care services 
they provide. In fact, according to the Center for Medicare Services, 
Vermont physicians provide the second highest quality care in the 
country, but the State is ranked forty-fourth in payments per Medicare 
beneficiary. We should do more to reward quality health care regardless 
of whether it is provided in an urban or rural setting. The Vermont 
Medical Society has told me that they strongly support the Medicare 
Physician Payment Equity Act of 2003 as an important first step in 
reducing the existing inequities in payment levels.
  I look forward to working with my colleagues to pass the Medicare 
Physician Payment Equity Act of 2003.
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