[Congressional Record Volume 154, Number 121 (Wednesday, July 23, 2008)]
[Senate]
[Pages S7156-S7158]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      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

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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.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3318

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicare Physician Payment 
     Equity Act of 2008''.

     SEC. 2. RECOGNITION OF EQUALITY OF PHYSICIAN WORK IN ALL 
                   GEOGRAPHIC AREAS UNDER THE MEDICARE PHYSICIAN 
                   FEE SCHEDULE.

       Section 1848(e)(1) of the Social Security Act (42 U.S.C. 
     1395w-4(e)(1)) is amended--
       (1) in subparagraph (A), in the matter preceding clause 
     (i), by striking ``subparagraphs (B)'' through ``the 
     Secretary'' and inserting ``the succeeding provisions of this 
     paragraph, the Secretary''; and
       (2) by inserting after subparagraph (E) the following new 
     subparagraph:
       ``(F) Recognition of equality of physician work in all 
     geographic areas.--In recognition of the fact that the 
     physician work for a service is the same in all geographic 
     areas, and should be similarly valued under this title, for 
     services furnished on or after January 1, 2010, the 
     geographic index for physician work under subparagraph 
     (A)(iii) shall be 1.0 in all fee schedule areas.''.

     SEC. 3. REVISIONS TO THE PRACTICE EXPENSE GEOGRAPHIC 
                   ADJUSTMENT UNDER THE MEDICARE PHYSICIAN FEE 
                   SCHEDULE.

       (a) Establishment of Floor.--Section 1848(e)(1) of the 
     Social Security Act (42 U.S.C. 1395w-4(e)(1)) is amended by 
     adding at the end the following new subparagraph:
       ``(H) Floor at 1.0 on practice expense geographic index.--
     After calculating the practice expense geographic index in 
     subparagraph (A)(i), for purposes of payment for services 
     furnished in 2009, the Secretary shall increase the practice 
     expense geographic index to 1.0 for any locality for which 
     such practice expense geographic index is less than 1.0.''.
       (b) More Appropriate Recognition of Practice Expense 
     Differences in Employee Wages and Office Rents Among 
     Geographic Areas.--Section 1848(e)(1) of the Social Security 
     Act (42 U.S.C. 1395w-4(e)(1)), as amended by subsection (a), 
     is amended by adding at the end the following new 
     subparagraph:
       ``(I) More appropriate recognition of differences in 
     employee wages and office rents among areas.--
       ``(i) In general.--In recognition of the limitations on 
     available data (as described in clause (ii)) for use as the 
     employee wage and office rent proxies in the practice expense 
     geographic index described in subparagraph (A)(i), and in 
     order to more appropriately reflect differences among 
     different fee schedule areas, for services furnished on or 
     after January 1, 2010, such practice expense geographic index 
     shall be an index which reflects \1/2\ of the difference 
     between the relative costs of employee wages and rents in 
     each of the different fee schedule areas and the national 
     average of such employee wages and rents.
       ``(ii) Limitations on available data.--The limitations on 
     available data described in this clause are the following:

       ``(I) The need to use proxy data to reflect differences in 
     employee wages and rents among areas.

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       ``(II) Wages for some categories of employees being 
     determined in national markets.
       ``(III) Physicians having to compete for some employees in 
     market areas that cross fee schedule areas.
       ``(IV) Physicians in rural areas frequently having to 
     locate their offices close to urban areas and competing with 
     urban rent markets.''.

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