    Health Care Shortage Areas: Designations Not a Useful Tool for Directing
    Resources to the Underserved (Chapter Report, 09/08/95, GAO/HEHS-95-200).

    GAO reviewed the Department of Health and Human Services' (HHS) systems
    for identifying geographical areas where access to medical care is
    limited, focusing on: (1) how well the systems identify areas with
    primary care shortages; (2) how well the systems target federal funding
    to the underserved; and (3) whether the HHS proposal to combine the
    systems would lead to improvements.

    GAO found that: (1) the two HHS systems do not reliably identify areas
    with primary care shortages or help target federal resources to the
    underserved; (2) the systems have widespread data and methodology
    problems which severely limit their ability to pinpoint needy areas; (3)
    both systems tend to overstate the need for additional primary care
    providers because they do not consider all of the categories of
    providers already in place; (4) the Health Professional Shortage Area
    System (HPSA) does not consider the extent to which available resources
    are being used; (5) the Medically Underserved Area System (MUA) is
    limited in its ability to identify underserved areas and populations;
    (6) neither system identifies the specific subpopulations that have
    difficulty obtaining medical care; (7) while the systems can sometimes
    accurately identify needy areas, they do not provide the necessary data
    to determine which programs are best suited to those areas; (8) the
    proposed consolidation and streamlining of the systems is not likely to
    solve system problems, since the underlying causes of the problems have
    not been addressed; (9) it may be more cost effective to modify
    individual programs and application processes to identify where needs
    exist and the appropriate program to meet those needs and to target
    resources better; and (10) HHS officials believe that they need to
    maintain a national shortage designation system to monitor primary care
    access, but HHS has another initiative underway that could serve those
    purposes.

    --------------------------- Indexing Terms -----------------------------

     REPORTNUM:  HEHS-95-200
         TITLE:  Health Care Shortage Areas: Designations Not a Useful Tool
                 for Directing Resources to the Underserved
          DATE:  09/08/95
       SUBJECT:  Health care services
                 Physicians
                 Disadvantaged persons
                 Health resources utilization
                 Data bases
                 Data integrity
                 Evaluation methods
                 Geographic information systems
                 Health care personnel
    IDENTIFIER:  HHS Health Professional Shortage Area System
                 HHS Medically Underserved Areas System
                 HHS Community Health Centers Program
                 Medicare Incentive Payment Program
                 National Health Service Corps Scholarship Program
                 HHS Community Scholarship Program
                 Rural Health Clinic Services Program
                 PHS Title VII Health Professions Education and Training
                 Grant Program
                 PHS Title VIII Health Professions Education and Training
                 Grant Program
                 Indian Health Scholarship Program
                 HHS Title III Mental Health Clinical Traineeship Program
                 HHS Title X Family Planning Services Training Program

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    Cover
    ================================================================ COVER

    Report to Congressional Committees

    September 1995

    HEALTH CARE SHORTAGE AREAS -
    DESIGNATIONS NOT A USEFUL TOOL FOR
    DIRECTING RESOURCES TO THE
    UNDERSERVED

    GAO/HEHS-95-200

    Health Care Shortage Areas

    (108218)

    Abbreviations
    =============================================================== ABBREV

      DSD - Division of Shortage Designation
      HHS - Department of Health and Human Services
      HPSA - Health Professional Shortage Area
      IMU - Index of Medical Underservice
      MUA - Medically Underserved Area
      MUP - medically underserved population
      NHSC - National Health Service Corps
      OTA - Office of Technology Assessment
      USIA - United States Information Agency

    Letter
    =============================================================== LETTER

    B-259394

    September 8, 1995

    Congressional Committees

    This report was prepared at our own initiative in response to the
    growing number of federal programs using health care shortage areas
    to determine who can apply for federal assistance.  Our report
    discusses how the Department of Health and Human Services' systems
    for identifying health care shortage areas are currently used to
    target resources to the underserved, and Department proposals to
    combine these systems.  We include recommendations to the Congress
    that could result in a better match of federal program resources to
    needy communities, and eliminate funding where there is not a
    demonstrated need for federal assistance.

    Mark V.  Nadel
    Associate Director,
     National and Public Health Issues

    List of Addressees

    The Honorable Bob Packwood
    Chairman
    The Honorable Daniel P.  Moynihan
    Ranking Minority Member
    Committee on Finance
    United States Senate

    The Honorable Nancy L.  Kassebaum
    Chairman
    The Honorable Edward M.  Kennedy
    Ranking Minority Member
    Committee on Labor and Human Resources
    United States Senate

    The Honorable Michael Bilirakis
    Chairman
    The Honorable Henry A.  Waxman
    Ranking Minority Member
    Subcommittee on Health and Environment
    Committee on Commerce
    House of Representatives

    The Honorable William M.  Thomas
    Chairman
    The Honorable Pete Stark
    Ranking Minority Member
    Subcommittee on Health
    Committee on Ways and Means
    House of Representatives

    EXECUTIVE SUMMARY
    ============================================================ Chapter 0

       PURPOSE
    ---------------------------------------------------------- Chapter 0:1

    Many Americans live in places where there are barriers to obtaining
    primary health care.  These locations range from isolated rural areas
    to inner-city neighborhoods.  In fiscal year 1994, the federal
    government spent about $1 billion on programs for alleviating access
    problems in such locations.  To work effectively, these programs need
    a sound method of identifying the type of access problems that exist
    and focusing services on the people who need them.

    The Department of Health and Human Services uses two main systems for
    identifying such locations.  One designates Health Professional
    Shortage Areas (HPSAs), the other Medically Underserved Areas (MUAs).
    Over half of all U.S.  counties are designated as HPSAs or MUAs, and
    over another fourth have HPSAs or MUAs somewhere within their
    borders.  As part of the broad federal effort to improve access to
    care, GAO reviewed the two systems to determine (1) how well they
    identify areas with primary care shortages, (2) how well they help
    target federal funding to benefit those who are underserved, and (3)
    whether they are likely to be improved under Department proposals to
    combine them.

    GAO's review included evaluating the systems' criteria for
    identifying health professional shortages and medical underservice,
    measuring the accuracy and timeliness of the data in the databases
    and in a statistical sample of HPSA applications, and discussing the
    systems with managers who use them to allocate program resources.

       BACKGROUND
    ---------------------------------------------------------- Chapter 0:2

    The primary care HPSA system focuses on whether an area has a
    critical shortage of physicians available to serve the people living
    there.  A HPSA can be a distinct geographic area (such as a county),
    a specific population group within the area (such as the poor), or a
    specific public or nonprofit facility (such as a prison).  The system
    was first used in 1978 to place National Health Service Corps
    employees and those providers receiving scholarships or repayment of
    student loans in exchange for service in shortage areas.  Its use has
    expanded to nearly 30 other programs, each having a different
    strategy to improve access to care.  In fiscal year 1994, combined
    funding for programs using the HPSA system was about $473 million.

    The MUA system identifies areas or populations with shortages of
    health care services using several factors in addition to the
    availability of health care providers.  These factors include infant
    mortality rate, poverty rate, and percentage of population aged 65 or
    over.  Developed at about the same time as the HPSA system, the MUA
    system has been used for a more limited range of programs--mainly to
    identify areas eligible for federally funded community health
    centers.  The Community Health Center program, with fiscal year 1994
    expenditures of about $663 million, is still the system's main user.

    Federal programs use the HPSA and MUA systems in varying degrees as a
    screen to determine eligibility for federal funding.

       RESULTS IN BRIEF
    ---------------------------------------------------------- Chapter 0:3

    The HPSA and MUA systems do not effectively identify areas with
    primary care shortages or help target federal resources to benefit
    those who are underserved.  For programs relying on the systems for
    these purposes, there is little assurance that federal funds are used
    where most needed.

    Data and methodology problems are widespread, severely limiting the
    systems' ability to pinpoint the extent of need in underserved areas.
    For example, the HPSA methodology may be overstating the need for
    additional physicians in HPSAs by 50 percent or more, and the
    designations in both systems are often based on inaccurate or
    outdated information.

    Even when the systems accurately identify needy areas, they often do
    not provide the information needed to decide which programs are best
    suited to the area's particular need.  As a result, a program without
    additional screening processes may be applied that does not directly
    benefit the specific subpopulation with insufficient access to care.
    An example is the Medicare Incentive Payment program, which provides
    bonus payments to all physicians treating Medicare patients in
    geographic HPSAs, even though a different group than Medicare
    patients--such as migrant farmworkers--may be those actually
    underserved.

    The Department's proposals for combining and streamlining the systems
    are unlikely to solve the problems we identified.  But fixing the
    systems is not the only option--and probably not the best one.
    Instead, all but one of the individual programs already have criteria
    and application processes in place that may be more easily modified
    to identify where a need exists and whether the program is an
    appropriate remedy.

       PRINCIPAL FINDINGS
    ---------------------------------------------------------- Chapter 0:4

          SYSTEMS DO NOT EFFECTIVELY
          IDENTIFY SHORTAGE AREAS
    -------------------------------------------------------- Chapter 0:4.1

    The HPSA methodology for identifying the extent of primary care
    shortages is flawed.  It tends to overstate the need for additional
    primary care providers because it omits several important categories
    of providers already in place.  For example, it does not count
    National Health Service Corps providers, U.S.-trained foreign
    physicians (unless they are permanent residents), and nonphysicians
    such as physician assistants, nurse practitioners, and
    nurse-midwives.  These omissions have substantial effects.  For
    example, adding just physician assistants and nurse-midwives known to
    be practicing in countywide HPSAs would decrease the number of
    providers said to be needed in such HPSAs by at least 22 percent.

    Similarly, the MUA methodology does not accurately identify the
    geographic areas and populations that have the greatest health
    service shortages.  When the methodology was initially developed in
    the mid-1970s, independent testing showed that rural areas designated
    as MUAs did not differ greatly from non-MUAs in terms of access to
    care.  The methodology has remained virtually unchanged; but since
    1986, the law authorizes the Department of Health and Human Services
    to designate underserved populations that do not meet the
    requirements of the MUA methodology, if so recommended by a state
    governor on the basis of unusual local conditions.

          SYSTEM DATA ARE NEITHER
          ACCURATE NOR TIMELY
    -------------------------------------------------------- Chapter 0:4.2

    GAO estimates that about 20 percent of geographic HPSAs were
    designated in error or without sufficient supporting documentation in
    the application file.  For example, the number of available
    physicians listed in some applications was understated by up to 50
    percent when compared with information in other sources (such as
    physician directories) for the area.  HPSAs are also not being
    reviewed on a timely basis to determine if they still qualify or
    should be dropped from designation.  Department policy calls for
    HPSAs to receive a comprehensive review every 3 years, but 31 percent
    of current HPSAs have not been reviewed within this time period.

    The list of MUAs has gone substantially unchanged since it was
    established in 1976.  Although new MUAs have been added, the overall
    list has not been reviewed systematically to update scores or to
    propose areas for dedesignation since 1981.  GAO's review of current
    countywide MUAs showed that if the designations were to be reviewed
    using 1990 data, almost half would lose their designation.

          SYSTEMS DO NOT EFFECTIVELY
          TARGET FUNDING TO THE
          UNDERSERVED
    -------------------------------------------------------- Chapter 0:4.3

    In many shortage locations, access to care is a problem for only part
    of the population.  For example, most residents in a city may have
    adequate access to care, but the poor may not.  However, most HPSA
    and MUA designations do not identify the specific subpopulations
    having difficulty obtaining access to care.  Instead, they identify
    an area only by its geographic boundaries.

    This approach presents a problem because, unlike the Community Health
    Center program, other assistance programs do not go beyond the MUA or
    HPSA designation to identify who is underserved, and why.  As a
    result, a disconnect can occur between the reason for underservice
    and the remedy provided.  This disconnect is particularly apparent
    for the Medicare Incentive Payment program.  The program, which pays
    a 10-percent bonus on Medicare billings, was established in 1987 to
    address concerns that low reimbursement rates could discourage
    physicians from accepting Medicare beneficiaries as patients.
    Current evidence indicates that this is no longer a significant
    problem.  However, in 1994, this program provided almost $100 million
    in bonuses to physicians in all HPSAs, despite the lack of evidence
    that Medicare beneficiaries in these areas have difficulty obtaining
    access to care.  GAO believes the use of this program as a remedy for
    underservice merits close scrutiny.

          SYSTEMS DO NOT MERIT
          UPGRADING
    -------------------------------------------------------- Chapter 0:4.4

    The Department has efforts under way to address some of the problems
    with the two systems, but for several reasons, GAO questions whether
    these efforts will provide significant benefits to the federal
    programs using them.  First, while the proposed changes may
    streamline the systems' administrative processes, the more
    significant problems of identifying underserved populations and the
    type of federal assistance needed will remain.  Addressing these
    problems could be difficult and costly, in part because the data
    needed to verify primary care capacity in locally defined service
    areas are often unavailable at the national level.  Second, for all
    programs except the Medicare Incentive Payment program, the
    Department already has alternative criteria and application processes
    in place that would appear to be more easily modified for targeting
    federal resources.  Third, neither of these systems is a suitable
    match for the Medicare Incentive Payment program because neither
    specifically identifies or addresses Medicare-related demographics.

    Department officials said that maintaining a national shortage
    designation system for some other purposes (such as general planning
    and monitoring with regard to health care shortages) would be useful.
    However, the Department has another effort under way that may address
    these issues.  A cooperative agreement between the Department and the
    states has provisions for identifying underserved populations and
    improving their access to existing health care delivery systems by
    integrating federal assistance with state and local resources.

       RECOMMENDATIONS TO THE CONGRESS
    ---------------------------------------------------------- Chapter 0:5

    GAO recommends that the Congress remove legislative requirements for
    HPSA or MUA designations as a condition of participation in federal
    programs.  Instead, GAO recommends that the Secretary of Health and
    Human Services be directed to develop and use program-specific
    criteria that will best match the type of program strategy with the
    type of access barrier existing for specific underserved populations.
    GAO also recommends that the Congress direct the Secretary to suspend
    funding for the Medicare Incentive Payment program until the
    Department can ensure that funding is specifically targeted to
    situations in which Medicare beneficiaries have a demonstrated
    difficulty accessing a physician because of low Medicare
    reimbursement rates for primary care services.

       AGENCY COMMENTS
    ---------------------------------------------------------- Chapter 0:6

    GAO requested written comments on a draft of the report from the
    Department of Health and Human Services, but did not receive the
    comments in time for publication.  However, GAO discussed an earlier
    draft of the report with the Department's management officials
    responsible for the HPSA and MUA systems.  These officials offered
    observations about GAO's analysis and findings, and their comments
    were incorporated as appropriate.

    INTRODUCTION
    ============================================================ Chapter 1

    The Department of Health and Human Services (HHS) spends about $1
    billion a year on programs for improving access to health care for
    areas with shortages of primary care physicians and health care
    services.  Many of these programs depend heavily upon systems to
    identify and designate specific areas and populations that are
    underserved.  HHS has two such systems:  The Health Professional
    Shortage Area (HPSA) system identifies underservice caused by a
    shortage of health professionals, and the Medically Underserved Area
    (MUA) system more broadly identifies areas and populations not
    receiving adequate health services for any reason, including provider
    shortages.  About 88 percent of all U.S.  counties contain HPSAs,
    MUAs, or both (see fig.  1.1).

       Figure 1.1:  U.S.  Counties
       With HPSAs and MUAs

       (See figure in printed
       edition.)

       (See figure in printed
       edition.)

    Source:  GAO analysis of data from HHS' HPSA and MUA databases.

       DESCRIPTION OF THE HPSA AND MUA
       SYSTEMS
    ---------------------------------------------------------- Chapter 1:1

    A primary care HPSA is an area designated by HHS as having a critical
    shortage of primary health care providers.\1 These include areas with
    no providers or areas with an insufficient number of providers to
    serve the population living there.  Designation as a HPSA is
    generally based on the following:

      the specified geographic area must be rational for the delivery of
         health services;\2

      the area must have a population-to-provider ratio of at least 3,500
         to 1 (or 3,000 to 1 under certain circumstances); and

      adjoining areas must have provider resources that are overused,
         more than 30 minutes travel time away, or otherwise
         inaccessible.

    In 1994, there were 2,538 primary care HPSAs reporting a need for
    5,133.8 full-time-equivalent physicians.  About 45 million people
    reside in these HPSAs.

    HHS designates primary care HPSAs in one of three ways:

      a general shortage of providers within a geographic area, such as
         an entire county or group of census tracts;

      a shortage of providers willing to treat a specific population
         group (such as poor people or migrant farmworkers) within a
         defined area; or

      a shortage of providers for a public or nonprofit facility such as
         a prison or hospital.\3

    As shown in figure 1.2, most primary care HPSAs are geographically
    designated.  Of the geographic HPSAs, 845 comprised an entire county
    and 1,107 comprised other types of self-defined geographic service
    areas.\4

       Figure 1.2:  Types of Primary
       Care HPSA Designations

       (See figure in printed
       edition.)

    Note:  Percentages do not add to 100 because of rounding.

    Source:  GAO analysis of data from HHS' HPSA database.

    An MUA is an area designated by HHS as having a shortage of health
    care services.  One major difference between an MUA and a HPSA is
    that underservice in a HPSA is measured primarily as a shortage of
    health care providers, while underservice in MUAs is measured using
    other factors as well.  Qualification as an MUA is based on four
    factors of health service need:  primary care physician-to-population
    ratio, infant mortality rate, percentage of the population with
    incomes below the poverty level, and percentage of the population
    aged 65 and older.

    As of June 1995, 1,455 U.S.  counties were designated in their
    entirety as MUAs, and an additional 1,037 counties had at least 1 MUA
    designated within them.  According to HHS officials operating the
    system, there were about 3,100 MUAs in all.  Like HPSAs, MUAs can be
    designated for all people within a geographic area or can be limited
    to a particular group of underserved people within the area.  Most
    MUAs have been designated for geographic areas rather than population
    groups (exact figures are not available).  Unlike the HPSA system,
    however, the MUA system does not allow individual facilities to be
    designated as underserved.

    --------------------
    \1 Separate HPSA systems are used to identify and track provider
    shortages for dental and mental health care.

    \2 For example, a rational service area may be defined as a county,
    or group of contiguous counties, whose population centers are within
    30 minutes travel time of each other.

    \3 Hospitals are only eligible for designation when they have
    insufficient resources to treat underserved populations from an
    existing area or population HPSA.

    \4 A geographic service area can be a portion of a county, portions
    of multiple counties, or an urban neighborhood.

       HOW THE HPSA AND MUA SYSTEMS
       ARE USED
    ---------------------------------------------------------- Chapter 1:2

    The current HPSA system was developed in 1978 as a means to designate
    areas for placement of National Health Service Corps (NHSC)
    providers.  NHSC awards students scholarships or loan repayment for
    medical education and training in exchange for service in areas with
    critical physician shortages.\5 The types of primary care health
    professionals that could participate in the program included
    physicians, nurse practitioners, physician assistants, and certified
    nurse-midwives.  In 1994, NHSC reported having 1,147 physicians and
    482 physician assistants, nurse practitioners, and nurse-midwives
    working in HPSAs.

    Besides NHSC, two other programs now require that a location be
    designated as a HPSA to be eligible for participation.  Like NHSC,
    the Community Scholarship Program addresses provider shortages by
    awarding grants to HPSAs for local scholarships in the health
    professions.  The Medicare Incentive Payment program attempts to
    ensure that physicians treat Medicare patients by paying a 10-percent
    bonus on all Medicare billings generated from a practice located in a
    geographic HPSA.

    The MUA system was developed about the same time as the HPSA system
    but independently of it.  Authorized by the Health Maintenance
    Organization Act of 1973, the MUA designation has been applied
    primarily in identifying areas eligible to participate in the
    Community Health Center program.  This program awards grants for the
    operation of community health centers and migrant health centers in
    qualifying areas.  In fiscal year 1994, HHS provided support for
    about 627 grantees providing services at more than 1,600 sites.
    Centers that serve a designated MUA area or population also are
    eligible for cost-based reimbursement under the Medicare and Medicaid
    programs.  Another 100 health centers (the so-called "look-alikes")
    meet all requirements of the Community Health Center program and
    receive Medicare and Medicaid cost-based reimbursement, but do not
    receive Community Health Center grant support.

    Nearly 30 other programs use the HPSA or MUA systems to some degree,
    though none rely on a HPSA or MUA designation alone to decide who can
    apply for federal assistance.  For example, nonphysician providers
    may qualify for cost-based reimbursement under the Rural Health
    Clinic program if they are located in a state-defined underserved
    area, HPSA, or MUA.  The remainder of programs in this category are
    health professions education and training programs.  Programs under
    titles VII and VIII of the Public Health Service Act give funding
    preference to schools that place graduates in medically underserved
    communities.  Other programs, using various designations of
    underservice, award scholarships or grants for obligated service or
    training.

    Together, the various programs that use the HPSA and MUA systems
    accounted for more than $1 billion in funding and expenditures in
    fiscal year 1994.  Table 1.1 summarizes the various programs and
    their funding levels.

                             Table 1.1

              Federal Programs Allocating Funds Using
                      the HPSA and MUA Systems

                                          Number
                                              of
                                        individu
                                              al   Fiscal year
    Basic program     Benefit provided  programs  1994 funding
    ----------------  ----------------  --------  ------------
    Programs requiring HPSA designation to apply for federal
    funds
    ----------------------------------------------------------
    National Health   Awards                   3  $126,720,000
     Service Corps     scholarships
                       and provides
                       loan repayment
                       for service in
                       a HPSA.
    Medicare          Provides 10-             1    98,332,938
     Incentive         percent bonus
     Payments          payment on all
     program           Medicare
                       billings in
                       geographic
                       HPSA.
    Community         Awards grants to         1       478,000
     Scholarship       HPSA
     Program           communities for
                       health
                       professions
                       scholarships.

    Programs requiring MUA designation to apply for federal
    funds
    ----------------------------------------------------------
    Community Health  Awards grants            1   663,000,000
     Center program    for operation
                       of community
                       health centers.
    Federally         Provides cost-           1            \a
     qualified         based
     health center     reimbursement
     "look-alike"      for Medicare
                       and Medicaid
                       services
                       provided by a
                       federally
                       qualified
                       health center.

    Programs requiring HPSA, MUA, or some other designation as
    a medically underserv
    ----------------------------------------------------------
    Title VII/VIII    Training                24   151,834,000
     Health            programs may
     Professions       provide
     Education and     preference or
     Training Grant    priority to
     Programs          schools placing
                       graduates in
                       underserved
                       communities.
    Rural Health      Provides direct          1    77,010,536
     Clinic program    cost-based
                       reimbursement
                       for Medicare
                       and Medicaid
                       services
                       provided by
                       nurse
                       practitioners,
                       certified
                       nurse-
                       midwives, and
                       physician
                       assistants.
    Indian Health     Scholarships for         1     7,702,000
     Professions       service in HPSA
     Scholarship       or other locale
     Grant Program     with large
                       Indian
                       population.
    Title III Mental  Trainees perform         1     5,943,000
     Health Clinical   obligated
     Traineeship       service in HPSA
                       or other site
                       with specific
                       need for
                       psychiatric
                       services.
    Title X Family    Gives priority           2     4,500,000
     Planning          for grants to
     Services          institutions
     Training          that place
     Program           providers in
                       HPSAs.
    ==========================================================
    Total                                     36  $1,135,520,4
                                                            74
    ----------------------------------------------------------
    \a Sources at the Health Care Financing Administration told us that
    funding for federally qualified health center "look-alikes" could not
    be broken out from funding for all federally qualified health
    centers.

    --------------------
    \5 Federal intervention was considered justified only if the number
    of health care providers was significantly less than adequate,
    indicating that the needs of these areas were not being met through
    free market mechanisms or reimbursement programs.

       DESIGNATING AND UPDATING HPSAS
       AND MUAS
    ---------------------------------------------------------- Chapter 1:3

    Any person, agency, or community group may request designation of an
    area, population group, or facility as a HPSA.  Copies of each new
    request are received and reviewed by the Bureau of Primary Health
    Care's Division of Shortage Designation (DSD).  State representatives
    from the health department, medical society, and the governor's
    office are also asked to review and comment within 30 days.  DSD
    staff then check the application data against national and state
    sources.  They also resolve conflicts among applicants, commenters,
    and data sources to the extent possible.

    HHS must by law review annually each designated HPSA to decide if it
    is still experiencing a shortage of health care providers.  DSD does
    this by giving a list of HPSAs to each state and asking the state to
    update the information.  In addition, Bureau policy requires HPSAs to
    provide data to DSD every 3 years to support their continued need for
    the designation.  HPSAs not providing these updates are to be
    proposed for dedesignation in the Federal Register.

    MUAs are designated on a much different basis.  The Department of
    Health, Education, and Welfare\6 designated the original lists in
    1975 and 1976 by applying the four criteria (population-to-physician
    ratio, infant mortality rate, poverty rate, and percentage of
    population that is elderly) to all U.S.  counties, minor civil
    divisions, and census tracts.  All areas that ranked below the county
    median combined score for the four criteria were designated as MUAs.
    MUA designations have been added since then on the basis of newer
    data and the same cutoff score.  Since 1986, HHS has also been able
    to designate new MUAs under an exception process if requested to do
    so by a state's governor on the basis of unusual local conditions.

    MUAs also differ from HPSAs in that there is no requirement to update
    the designations regularly.  HHS officials managing the MUA and HPSA
    systems told us that DSD no longer reviews the list of MUAs to decide
    whether any should be dedesignated.

    --------------------
    \6 The Department of Health, Education, and Welfare is the
    predecessor agency to HHS.

       HHS PLANS TO COMBINE AND REVISE
       THE TWO SYSTEMS
    ---------------------------------------------------------- Chapter 1:4

    HHS has an effort under way to combine and revise the HPSA and MUA
    systems.  According to HHS officials, this action is being taken to
    reduce redundancies and differences in the application and
    administrative processes of the two systems.  While HHS officials
    told us that no changes would be made before 1996, a draft working
    document says that HHS' goal is to replace the existing systems with
    one that

      is consistent for all primary care programs,

      has simpler data-gathering requirements,

      uses relevant indicators of need, and

      will not disrupt services in existing areas.

       OBJECTIVES, SCOPE, AND
       METHODOLOGY
    ---------------------------------------------------------- Chapter 1:5

    We reviewed the HPSA system as part of the broad federal effort to
    improve access to care, and as a follow-up to a congressionally
    mandated review of the role of federal health education and training
    programs in achieving this purpose.\7

    While separate HPSA systems identify and track provider shortages for
    primary care, dental care, and mental health care, our review of the
    HPSA system focused on primary care HPSAs.  We chose this focus
    because the HPSA primary care system is by far the most heavily used
    for identifying areas eligible for federal funds.  We included the
    MUA system in our review because of current HHS efforts to combine it
    with the HPSA system.

    To review the extent to which the HPSA and MUA systems identify areas
    with primary care shortages, we

      reviewed past evaluations of the criteria and methodology for
         designating primary care HPSAs and MUAs and discussed the
         results with responsible HHS officials,

      identified the number of primary care providers in HPSAs and
         compared it to the number reported by the HPSA system,

      selected a random sample of primary care HPSA applications and
         reviewed whether designations were appropriate and accurately
         reflected in the HPSA database, and

      compared how often the HPSA and MUA data were updated with
         requirements in the law and HHS policy.

    To determine the extent that the HPSA and MUA systems provide
    information needed to target federal funding appropriate to meet the
    needs of underserved populations, we analyzed the types of
    designations requested by communities for their underserved
    populations and determined the extent to which the designations
    identify who is underserved in each HPSA and the reasons for
    underservice.

    To determine whether proposed changes to the HPSA and MUA systems
    would improve them, we discussed the purpose of the proposed changes
    with HHS representatives operating the HPSA and MUA systems.  We also
    asked federal, state, and program participants how much the proposed
    changes would help them identify underserved populations and provide
    assistance appropriate to meet their needs.

    Further details of our scope and methodology are presented in
    appendix I.  We did our work from November 1994 through June 1995 in
    accordance with generally accepted government auditing standards.

    We requested written comments on a draft of this report from HHS, but
    we did not receive them in time for publication.  We did discuss an
    earlier draft of the report with HHS management officials responsible
    for the HPSA and MUA systems.  They made observations about our
    analysis and findings, and we incorporated their comments in the
    report where appropriate.

    --------------------
    \7 Health Professions Education:  Role of Title VII/VIII Programs in
    Improving Access to Care Is Unclear (GAO/HEHS-94-164, July 8, 1994).

    SYSTEMS DO NOT RELIABLY MEASURE
    THE EXTENT OF PRIMARY CARE
    SHORTAGES
    ============================================================ Chapter 2

    Neither the HPSA nor the MUA system reliably measures the extent of
    shortages in primary health care, providing little assistance to
    federal programs in directing the $1 billion spent each year for
    alleviating underservice.  We identified two main reasons for the
    lack of reliability.  First, both systems have methodological
    problems, such as omitting important categories of primary care
    providers from the calculations.  In the HPSA system, for example,
    these omissions may be overstating the need for additional physicians
    in shortage areas by 50 percent or more.  Second, both systems rely
    on data that are often inaccurate or outdated.  On the basis of these
    data problems alone, we estimate that about 20 percent of HPSA
    designations are in error or lack adequate supporting documentation.
    Although we did not develop such an estimate for MUAs, many MUA
    designations are very old and may be invalid.  For example, about
    half of the U.S.  counties designated as MUAs would no longer qualify
    for designation if updated using 1990 data.

       SYSTEMS DO NOT CONSIDER ALL
       PRIMARY CARE RESOURCES IN
       MAKING SHORTAGE DETERMINATIONS
    ---------------------------------------------------------- Chapter 2:1

    Both systems rely on a population-to-physician ratio in establishing
    the need for additional primary care providers.  The HPSA system
    bases its shortage determinations on a population-to-primary care
    physician ratio of 3,500 to 1,\8 which identified a need for 5,134
    physicians in shortage areas in 1994.  The MUA system, which uses a
    population-to-primary care physician ratio as one of four factors in
    its underservice score, is less dependent on the ratio.  However, in
    making their calculations, both systems exclude two categories of
    primary care physicians already providing services in the shortage
    areas:

      NHSC and federal physicians.  The systems exclude federally
         salaried NHSC providers and privately salaried providers who are
         fulfilling an NHSC service obligation in exchange for health
         professions scholarships or loan repayment.  There were 1,147
         such physicians in 1994--the equivalent of about 22 percent of
         the shortage identified in HPSAs.  Other providers employed by
         federal entities such as the Indian Health Service and the
         Bureau of Prisons are also excluded.  There is no centralized
         accounting for the total number of federally salaried
         physicians.

      U.S.-trained foreign physicians with J-1 visa waivers.  Such
         waivers allow noncitizens who complete their residency training
         in the United States to remain and practice if they are needed
         in underserved areas.\9 While the total number of such
         physicians practicing in underserved areas is unknown, their
         numbers are substantial.  For example, the Appalachian Regional
         Commission and the Department of Agriculture approved at least
         538 J-1 visa waivers for foreign physicians willing to practice
         in shortage areas in 1993 and 1994 alone.\10 This is equivalent
         to about 10 percent of the reported shortage of providers in
         HPSAs.

    Both systems also exclude several other categories of providers that
    deliver primary care services:

      Nonphysician providers.  These include nurse practitioners,
         physician assistants, and nurse-midwives.  Comprehensive data on
         the number of such providers in HPSAs and MUAs are not
         available.  However, NHSC reported having 485 physician
         assistants, nurse practitioners, and nurse-midwives of its own
         practicing in HPSAs in 1994.  Data provided by health
         professional associations in 1993 showed at least 369 nonfederal
         physician assistants and nurse-midwives practicing in HPSAs.\11
         In total, these two groups may be the equivalent of between 8
         and 17 percent of the shortage reported by the HPSA system.\12

      Specialist physicians who provide primary care.  Other research
         shows that specialists such as general surgeons may provide a
         substantial amount of primary care in areas where the population
         base is insufficient to support a full-time specialty practice.
         Further, a 1991 study illustrated that the availability of a
         full range of specialists to rural communities almost doubles
         the number of people needed to support a family physician
         practice from 2,000 to 3,990.\13 In urban areas, the oversupply
         of physicians in various specialties is reportedly causing them
         to provide an increasing amount of primary care services.\14
         Current data on the extent to which specialist physicians are
         providing primary care in HPSAs and MUAs are not available.
         However, our review of a sample of 23 single-county HPSAs showed
         that most had specialist physicians in addition to primary care
         physicians providing patient care, averaging 1 physician for
         every 1,968 people.\15

    HHS has various reasons for excluding these categories of health care
    providers.  These reasons were published in the Federal Register in
    1980 and 1983 to explain or clarify the HPSA criteria and were
    confirmed by more recent discussions with HHS officials.  HHS'
    rationale for excluding NHSC and federal providers is that they
    probably would not serve in the HPSA without the service obligation
    or federal employment, and counting them could cause a community to
    lose its HPSA status.  For similar reasons, HHS regulations exclude
    foreign physicians unless they are permanent residents.  Although HHS
    originally planned to count nonphysician providers as 0.5 of a
    physician full-time-equivalent in the HPSA population-to-provider
    ratio, it excluded them from the final methodology because their
    scope of practice varies by state, and communities using them for
    care may be penalized in trying to establish a rural health
    clinic.\16 HHS does not count specialist physicians because HHS
    believes the law allows it to count only primary care physicians.

    While we understand HHS' rationale for excluding these providers from
    the designation calculations, we do not agree with it for several
    reasons.  Omitting these providers has such a substantial cumulative
    effect that the true extent of primary care available in underserved
    areas cannot be determined if they are excluded.  If the 1,147 NHSC
    physicians, 538 J-1 visa waiver physicians, and 854 physician
    assistants and nurse-midwives mentioned earlier were included in the
    HPSA calculations, the reported need for additional providers would
    be reduced by up to 50 percent.\17 If more complete data were
    available for all provider categories, this percentage could be
    substantially higher.

    Excluding primary care providers from the system also makes it
    difficult for federal and state agencies to coordinate their efforts
    in addressing underservice.  For example, in 1994, NHSC had 19
    providers in West Virginia in response to the HPSA system's reported
    shortage of 54 primary care physicians there.  However, this need for
    54 physicians did not reflect the presence of the NHSC providers or
    that other federal agencies had also assisted in placing 97 foreign
    physicians in the state's HPSAs in 1993 and 1994 alone.

    Finally, understating the number of primary care providers severely
    limits the usefulness of the system as a screen to identify which
    communities should be eligible for additional program benefits.  For
    example, NHSC records show that 15 percent of the 576 providers
    placed in HPSAs in 1994 were in excess of the number needed for
    dedesignation, while other HPSA vacancies went unfilled.  The excess
    numbers of NHSC providers placed in these HPSAs ranged from one to
    six.\18

    --------------------
    \8 This ratio can be dropped to 3,000 to 1 in areas where high need
    is indicated, such as areas with high poverty or high infant
    mortality rates.

    \9 Under a J-1 visa, foreign medical graduates can enter the United
    States for residency training if they return to their own country to
    practice medicine for at least 2 years after their training is
    completed.  In effect, the waiver cancels the requirement to return
    to their own country, allowing them to practice in the United States
    for up to 6 years under a renewable visa until permanent resident
    status is achieved.

    \10 The Appalachian Regional Commission and the Department of
    Agriculture requested the largest number of J-1 visa waivers,
    according to officials of the United States Information Agency (USIA)
    administering the waiver process.  While the agencies' records showed
    that 538 waivers had been approved, data from USIA showed an
    additional 181 physicians that had not yet been entered by the
    Department of Agriculture in its database.  See appendix I for
    further discussion.

    \11 Data from the American Academy of Physician Assistants and the
    American College of Nurse Midwives showed that at least 4,203
    physician assistants and certified nurse-midwives were practicing in
    counties with HPSAs in 1993.  However, our analysis includes only
    those practicing in single-county HPSAs because the number providing
    care to underserved populations in other types of HPSAs is unknown.

    \12 Opinions differ on the physician full-time-equivalency that
    should be attributed to nonphysician providers.  Counting these
    providers as a 0.5 full-time-equivalent in comparison to a full-time
    physician would result in a range of 8 to 17 percent.

    \13 L.L.  Hicks and J.K.  Glenn, "Rural Populations and Rural
    Physicians:  Estimates of Critical Mass Ratios, by Specialty,"
    Journal of Rural Health, Vol.  7, No.  4, Supplemental (1991).

    \14 See conference proceedings for the Health Resources and Services
    Administration National Conference at the Washington-Dulles Airport
    Renaissance Hotel, Virginia, on March 27-28, 1995, Estimating Medical
    Speciality Supply and Requirements in a Changing Health Care
    Environment:  The Technical Challenge (Rockville, MD:  Health
    Resources and Services Administration).  See also B.  Starfield,
    Primary Care:  Concept, Evaluation, and Policy (Oxford University
    Press, 1992).

    \15 Fifteen of the 23 HPSAs in our sample had specialist physicians
    in addition to primary care physicians with total
    population-to-physician ratios ranging from 300 to 1 to 3,298 to 1.

    \16 Rural health clinics may only be established in HPSAs, MUAs, or
    state-designated underserved areas.  If counting nonphysician
    providers precludes designation, nonphysician providers would not be
    eligible to establish a rural health clinic and receive direct
    cost-based reimbursement from Medicare and Medicaid.  Dedesignation
    does not affect rural health clinics once they are established.

    \17 As discussed in appendix I, this estimate was derived by
    subtracting the total number of providers practicing in HPSAs from
    the total number reported as needed by the HPSA system.  The range is
    estimated at about 40 percent to 50 percent if physician assistants,
    nurse practitioners, and nurse-midwives are counted as 0.5 to 1.0
    full-time-physician-equivalent.

    \18 Many NHSC placements were in areas needing less than 1 full-time
    physician to dedesignate the HPSA.  In these instances, we rounded
    the needed full-time-equivalent to 1 before comparing the number of
    physicians needed in a community with the number NHSC placed there.

       SYSTEM METHODOLOGIES ARE ALSO
       FLAWED IN OTHER WAYS
    ---------------------------------------------------------- Chapter 2:2

    Both systems have other problems with their methodologies that make
    it difficult to identify and measure underservice.  For the HPSA
    system, an ongoing concern is that it does not assess the extent that
    existing primary care resources in the community are being used.  For
    the MUA system, although a number of methodological weaknesses were
    reported in the past, the methodology has not been revised.

          HPSA METHODOLOGY DOES NOT
          CONSIDER THE EXTENT THAT
          AVAILABLE RESOURCES ARE
          BEING USED
    -------------------------------------------------------- Chapter 2:2.1

    The HPSA methodology has no mechanism for measuring the extent that
    existing primary care resources are insufficient to meet the demand
    for care.  HHS officials said that data for this purpose are
    unavailable using current sources and would exclude the health needs
    of people who cannot afford to seek care from a provider.  However,
    past studies of the HPSA criteria and methodology have pointed out
    that such a mechanism is needed because many factors influence the
    extent that communities use primary care resources at a rate above or
    below the 3,500-to-1 ratio.\19 For example, one county in our sample
    was designated as needing 1 additional physician even though the HPSA
    application showed that 42 of the 80 physicians surveyed within that
    HPSA were willing to take new patients.\20 Of those willing to accept
    new patients, over half reported no patient waiting time for
    appointments--another indication of additional capacity.

    Assessing the extent that existing primary care services are
    insufficient to meet the demand for care would also provide a better
    indication of whether a provider shortage exists in these areas or
    whether there are other barriers in accessing existing primary care
    resources.  In the previous example, only 15 of the 42 physicians
    with additional capacity would accept all new patients; the remainder
    would only accept patients with certain types of health insurance.
    In HPSAs such as this that appear to have barriers to accessing
    underutilized capacity, it may be more appropriate to give incentives
    for expansion of services rather than adding more providers.  For
    example, states are increasingly placing Medicaid patients in managed
    care in an effort to make these underserved populations more
    attractive to the existing physician workforce.

    --------------------
    \19 Evaluation of Health Manpower Shortage Area Criteria, Mathematica
    Policy Research, Inc., HRA contract #232-78-0156 (1980), and M.L.
    Berk, A.B.  Bernstein, and A.K.  Taylor, "The Use and Availability of
    Medical Care in Health Manpower Shortage Areas," Inquiry, Vol.  20,
    Winter 1983, pp.  369-80.

    \20 The methodology counts the full-time-equivalent each physician
    currently spends in patient care.  This may understate physician
    resources in areas where physicians are willing to work full time,
    yet do not have enough patients to do so.

          MUA METHODOLOGY IS LIMITED
          IN ABILITY TO IDENTIFY
          UNDERSERVED AREAS
    -------------------------------------------------------- Chapter 2:2.2

    The MUA methodology has a number of flaws that limit its ability to
    accurately identify geographic areas and populations that have the
    greatest shortages of health care services.  The methodology--an
    index of medical underservice--was developed within a short time
    frame using a process that involved limited empirical testing.
    Because the developers could not agree on a definition of "medical
    underservice," a mathematical model was developed to predict experts'
    assessments of service shortages.  Subsequent evaluations of the
    model, however, found little significant difference in the
    availability of health services between areas that were designated as
    MUAs and areas that were not.  These evaluations, which pointed out
    other methodological limitations as well, are summarized in appendix
    II.

    The MUA designation methodology has remained virtually unchanged
    since its development, despite improvements in U.S.  health status
    and resources.  The methodology uses the same four criteria to
    determine the MUA index score, and the cutoff score for MUA status
    (set at or below the median score for all U.S.  counties in 1975)
    remains the same.  The only changes to the methodology were made in
    1981, when the weights for the infant mortality rate and the
    population-to-physician ratio were adjusted slightly.  In 1986, the
    law was amended to allow the Secretary of HHS to designate MUAs that
    score above the cutoff, if the state's governor recommends
    designation based on "unusual local conditions which are a barrier to
    access or availability of personal health services." Since 1986,
    about 100 new medically underserved areas and populations have been
    designated on the basis of this exception process.

       SYSTEM DATA ARE NEITHER
       ACCURATE NOR TIMELY
    ---------------------------------------------------------- Chapter 2:3

    Numerous problems exist with the accuracy and timeliness of the data
    used to obtain and maintain HPSA and MUA designations.  Many HPSA
    applications do not contain the data necessary to support the
    designation, and data in the HPSA application often differ from those
    in the HPSA database.  The reliability of the HPSA system is also
    compromised by data that have not been updated as required by law and
    HHS policy.  For the MUA system, because it has no requirements for
    periodic review and updating, little has been done to keep the
    system's information current.

          DATA FOR HPSA DESIGNATION
          OFTEN INCOMPLETE OR
          INACCURATE
    -------------------------------------------------------- Chapter 2:3.1

    We estimate that about 380 of the 1,952 geographic HPSA designations
    were made in error or without adequate supporting documentation.\21
    HPSAs qualify for designation on the basis of three main factors:  a
    population-to-primary care physician ratio that equals or exceeds
    3,500 to 1, an insufficient number of providers in adjacent areas to
    provide care, and evidence of being a rational service area.  Our
    review of a random sample of 46 geographic HPSA applications found 17
    instances in which data in the file did not support one or more of
    these three factors.  Examples follow:

      Substantial differences existed in the number of physicians
         reported by some communities and the number obtained by HHS's
         Division of Shortage Designation (DSD) from other sources.  DSD
         verifies the number of physicians reported by applicants against
         data available from the professional associations.  Any
         discrepancies and their subsequent resolution are required to be
         documented in the HPSA file.  However, unresolved physician
         counts in some HPSA applications varied by as much as 50
         percent.  These differences were enough to preclude HPSA
         designation in each case.  For example, one HPSA needing fewer
         than 8.7 physicians to qualify for designation reported having 7
         physicians, while the American Medical Association directory
         showed 14 physicians practicing in the area.

      Some HPSA applications did not include data supporting that the
         number of providers in nearby communities was insufficient to
         provide care.  DSD uses a population-to-physician ratio of 2,000
         to 1 in contiguous areas within 30 minutes of travel time from
         the HPSA population center for this purpose.  However, some HPSA
         files did not show that resources in all contiguous areas were
         considered.  For example, one applicant reported the number of
         physicians in a town over 30 minutes away, but did not report
         the number of physicians practicing in a town within 30 minutes
         travel time.

      In some HPSA applications, there was no documentation to support
         the presence of rational service areas for primary care
         delivery.  For example, one single-county HPSA was so large that
         distances between its population centers exceeded the 30-minute
         criteria for travel time to care.  In another example, two
         separate service areas asked to be combined and enlarged to
         maintain the designation for one service area that no longer met
         the HPSA criteria.

    DSD was able to provide additional information to support 8 of the 17
    designations GAO questioned.  DSD officials said it was unclear why
    five of the remaining nine HPSAs had been designated, and said that
    they would follow up to resolve the discrepancies and propose
    dedesignations as necessary.  In the other four cases, they provided
    additional information that we considered but still found to be
    insufficient to support the designation.  We attempted to project the
    financial impact of federal funding provided to these areas, but
    because of program data limitations were unable to do so with an
    acceptable degree of statistical confidence.

    Another problem is that once the HPSA application data are verified,
    there is still no assurance that they will be entered or accurately
    reflected in the HPSA database.  Of the 46 HPSA applications in our
    sample, 14 had discrepancies between the verified data and the data
    existing in the database for population, physicians, poverty rates,
    or differences in travel distances or times to the nearest source of
    care.  Although these differences did not seem great enough to cause
    any of the 14 to lose their designation as a HPSA, some may be great
    enough to affect eligibility for placement of NHSC scholars or loan
    repayors.\22 We were unable to determine the effect these data entry
    errors or omissions had on the NHSC program because, as explained in
    the next section, HHS sometimes uses data other than those in the
    HPSA database to prioritize HPSAs for placement of NHSC providers.

    --------------------
    \21 This is the median error using a 95-percent confidence interval.
    The range of error lies between 131 and 633 of the 1,952 geographic
    HPSAs.

    \22 Each HPSA is scored using four factors:  population-to-primary
    care physician ratio, poverty rate, rates for infant mortality or low
    birth weight, and distance to care outside the HPSA.  HHS establishes
    cutoff scores each year to determine which HPSAs are eligible for
    placement of NHSC scholars and loan repayors.

          HPSA SYSTEM DATA ARE NOT
          UPDATED ON A TIMELY BASIS
    -------------------------------------------------------- Chapter 2:3.2

    HPSAs are not being reviewed on a timely basis to determine if they
    still qualify for federal assistance or should instead be dropped
    from designation.  Federal law requires HPSA designations to be
    reviewed annually, a task that DSD has delegated to the states.
    However, DSD annually obtains data from the Bureau of the Census and
    the National Center for Health Statistics for many of the HPSA
    fields.  DSD uses these current data instead of the older system data
    to identify which HPSAs have the greatest need for NHSC providers,
    but it does not use the current data to update its database.  DSD
    officials said they did not use the data to update the database
    because doing so may cause some HPSAs to become dedesignated.  DSD
    considers it inappropriate to dedesignate a HPSA until it can conduct
    a complete review of all data submitted by each HPSA during the
    formal update cycle.

    DSD's policy calls for each HPSA to submit an update application to
    them every 3 years for DSD review and verification that the HPSA
    designation is still valid.  However, DSD is conducting these
    reviews, at best, every 5 years.  Currently, about one-third of the
    HPSAs have not been updated in more than 3 years and should be
    updated or deleted, according to DSD policy (see fig.  2.1).

       Figure 2.1:  Years Since Last
       Update of Individual HPSAs, as
       of August 1994

       (See figure in printed
       edition.)

    Note:  Percentages do not add to 100 because of rounding.

    Source:  GAO analysis of data from HHS' HPSA database.

    DSD officials said they have extended the update period from 3 to 5
    years because they have not been able to keep up with the backlog of
    HPSA applications.  However, even the 205 HPSAs that did not reapply
    for HPSA designation within the past 5 years have not been dropped
    from the system.\23

    Delaying the update process means that HPSA designation is continued
    for communities no longer requesting it.  Communities generally do
    not request dedesignation when federal assistance is no longer
    necessary; instead, they simply do not reapply for designation during
    the update cycle.  However, when the designation for these outdated
    HPSAs is still on the books, federal programs may continue to provide
    them with resources, perhaps to the detriment of those HPSAs with
    current designations.  The following examples illustrate this
    problem:

      NHSC policy is to place providers in HPSAs updated in the last 5
         years.  However, in 1994, 9 percent of the NHSC providers were
         placed in HPSAs that had not been updated for 5 years or more.
         Twenty-three percent were placed in HPSAs that had not been
         updated in the past 3 years.

      Under the Medicare Incentive Payment program, Medicare pays bonuses
         to physicians in all designated HPSAs regardless of when the
         HPSA was last updated.  Although we were not able to determine
         how much bonus money was paid in HPSAs that had not been updated
         in the past 3 years, more than $98 million was paid to
         physicians in HPSAs in 1994, and one-third of all HPSAs were
         more than 3 years old.

    --------------------
    \23 As we were concluding our review, DSD officials told us they were
    in the process of proposing withdrawal of these designations.

          MUA DESIGNATIONS HAVE NOT
          BEEN REVIEWED SINCE 1981
    -------------------------------------------------------- Chapter 2:3.3

    There is no required schedule for periodically reviewing and updating
    MUA data and designations, and even less has been done to keep this
    system current than for the HPSA system.  According to DSD officials,
    no systematic attempt to update the MUA designations has been made
    since 1981, when existing designations were reviewed against newer
    data.  They told us that at that time, areas that no longer qualified
    as MUAs with the newer data were not always dedesignated, however, to
    avoid disrupting existing community health center services.
    Community health centers are required to serve MUAs or medically
    underserved populations to receive federal grant support.
    Essentially, once an area or population has been designated, it
    remains designated until the state's governor requests dedesignation.
    Since 1990, this has happened only once, when three counties in North
    Dakota were proposed for dedesignation in 1994.

    To show what might happen if designations were updated, we compared
    an application of the MUA methodology to 1990 data for all U.S.
    counties with DSD's 1995 list of MUA-designated counties.  We found
    that about 740 counties would qualify as MUAs on the basis of 1990
    data, compared to about 1,380 counties that DSD now has
    designated.\24 Although according to an HHS official there may be
    other reasons--such as continued eligibility for community health
    center funding--not to delete some old designations, maintaining the
    system with such obviously outdated information provides further
    evidence of the system's unreliability in identifying medically
    underserved areas.

    --------------------
    \24 The total 1,380 DSD-designated MUA counties cited here differs
    from the 1,455 MUA counties mentioned earlier because of variations
    in how counties were defined in the two data sets we compared.  To
    make the comparison, we excluded variations in Alaska and Virginia.
    See appendix I for details.

       CONCLUSIONS
    ---------------------------------------------------------- Chapter 2:4

    The HPSA system does not accurately measure the existing capacity of
    communities to provide primary care services to its populations or
    the additional number of providers needed for this purpose.
    Shortages in many communities are overstated because the HPSA
    criteria do not recognize differences in the types of health care
    providers used to obtain care, or consider the extent that federal
    resources are already provided.  The system's reliability is also
    questionable because HHS has difficulty verifying and updating the
    HPSA data in a timely manner.  Continued reliance on the inaccurate
    and outdated MUA system likewise has resulted in designations that
    are not valid indicators of primary health service shortages, or
    where federal program funding is most needed.

    The next chapter discusses other aspects of the HPSA and MUA systems
    that hinder effective targeting of federal resources to the
    underserved.

    DESIGNATION SYSTEMS DO NOT PROVIDE
    INFORMATION NECESSARY TO TARGET
    FUNDING TO THE UNDERSERVED
    ============================================================ Chapter 3

    Even when the HPSA and MUA designations identify needy areas, they
    generally do not provide the type of information needed by federal
    programs to target assistance best suited to meet a location's
    particular needs.  Because most HPSAs are defined as general
    geographic areas, the designation does not identify the specific part
    of the population that has difficulty accessing a primary care
    provider or the underlying reason for this access problem.
    Similarly, although the MUA system can be used to designate specific
    underserved populations, most designations encompass everyone within
    a broad geographic area.  As a result, federal programs relying on
    the designations to identify the type and scope of assistance needed
    may not provide assistance to those actually underserved in these
    areas.  A case in point is the Medicare Incentive Payment program,
    which spent over $98 million in 1994 without any assurance that funds
    were used to improve access for Medicare beneficiaries in geographic
    HPSAs.

       DESIGNATIONS OFTEN DO NOT
       IDENTIFY DEMOGRAPHICS OF THE
       UNDERSERVED
    ---------------------------------------------------------- Chapter 3:1

    Most HPSA designations do not provide information about the HPSA
    community beyond defining that a shortage of providers exists
    somewhere within the geographic area.  Over three-fourths of all
    HPSAs in 1994 were geographically designated.  Such a designation
    assumes that everyone within the general geographic area is
    underserved because the population-to-primary physician ratio exceeds
    a standard of 3,500 to 1.

    Only one-fourth of HPSAs were designated for specific types of
    underserved populations or the facilities that treat them.  Unlike
    geographic designations, these designations provide some indication
    of the types of access problems that exist in the community.  For
    example, there are seven categories of population-based HPSAs,
    primarily designated for specific poverty populations such as the
    homeless or Medicaid-eligible, but which also include designations
    related to cultural or language barriers experienced by migrant
    farmworkers or immigrants.  Facility HPSAs are primarily used to
    designate shortages for prison populations but may also include
    public or nonprofit medical facilities.

    While designation as a geographic HPSA implies that federal
    assistance is needed to address access problems for all residents of
    the HPSA, HHS and state officials agree that specific subpopulations
    within the area may be those actually at risk.  While HHS and state
    officials believe that underservice may affect entire populations
    living in areas with no physicians or in remote rural areas, only 12
    percent of the underserved populations live in such areas.\25 The
    remaining underserved populations live in urban areas or rural areas
    nearby.  Access in these areas may more likely be a problem for
    specific subpopulations, such as the poor.

    The MUA system has similar problems.  By combining the weights for
    four factors into a single MUA score, the system produces scores that
    are difficult to interpret and tend to obscure an area's specific
    needs.  While communities may request designations for specific
    populations with shortages of health care services, DSD officials
    told us this medically underserved population (MUP) designation was
    not used much until the 1980s.  Following program amendments in 1986
    that permitted state governors to request designations, about half of
    those new designations have been for underserved populations.

    --------------------
    \25 This percentage includes HPSAs the system identifies as having no
    physician full-time-equivalents and rural HPSAs that are not
    identified as being located near an urbanized area as defined by the
    Department of Agriculture's urban-rural continuum codes.

          EXISTING DISINCENTIVES FOR
          IDENTIFYING UNDERSERVED
          POPULATIONS
    -------------------------------------------------------- Chapter 3:1.1

    While the HPSA system allows designation for various types of
    underserved populations, there are several disincentives to request
    them instead of the geographic designation.  First, communities with
    geographic designations can participate in all federal programs,
    while the programs available to population HPSAs are more limited.
    For example, the 10-percent bonus on Medicare billings is available
    to all physicians in a geographic HPSA, but not to those providing
    care in HPSAs designated on the basis of a poverty population.
    Second, the application process for population designations takes
    longer and is more difficult.  Population designations require the
    applicant to conduct a physician survey to determine the proportion
    of services available to the underserved population and to explain
    why access to care is a problem.  These requirements do not exist for
    geographic designations, which must only provide a
    population-to-physician ratio.\26 Finally, individual program
    requirements for geographic HPSAs are more flexible.  For example, in
    HPSAs designated for poverty populations, 80 percent of the patients
    treated by an NHSC provider must live below the poverty level, but in
    a geographic HPSA, NHSC providers can treat anyone living within the
    defined geographic area.

    To ensure access to the broadest range of federal assistance, HHS
    officials encourage communities to use the geographic designations if
    possible, even when a specific underserved population can be
    identified.  As a result, population HPSAs appear to be designated
    only as a last resort for communities not meeting the criteria for
    geographic designation.  Our review of HPSA withdrawals and
    designations made in 1993 also showed that population designations
    are often used to maintain HPSA designation for areas no longer
    qualifying on the basis of geography.  For example, of the 66 HPSAs
    that lost their geographic designation in 1993, about a third were
    redesignated on the same day as population HPSAs.

    --------------------
    \26 Communities applying for geographic designation are required to
    conduct a physician survey if the number of physicians exceeds the
    minimum standard.  In such cases, the community must demonstrate that
    it falls below the standard because some physicians are working only
    part time.

          DESIGNATIONS HAVE NOT
          CHANGED TO REFLECT THE NEEDS
          OF PROGRAMS USING THEM
    -------------------------------------------------------- Chapter 3:1.2

    The general nature of most designations does not reflect the need of
    many federal programs to target assistance to specific populations or
    circumstances.  Over the years, a variety of federal assistance
    programs have been created to address underservice identified by the
    HPSA and MUA systems.  Initially, these programs served a broad
    purpose, requiring only that the HPSA and MUA systems designate the
    geographic areas that required additional providers or services.  The
    NHSC program, for example, placed providers in all types of urban and
    rural shortage areas, regardless of who was underserved or whether
    underservice was caused by an undesirable geographic location, an
    inability to support a physician practice because of sparse or poor
    populations, or cultural or language differences of migrant
    farmworkers or immigrants.

    As new programs were added, they became more specific about the types
    of populations they served and the scope of assistance they provided.
    An example is the Medicare Incentive Payment program, which was
    expected to assist Medicare patients having difficulty obtaining
    access to a physician because of the low reimbursement rates for
    primary care services.  Another example is the Rural Health Clinic
    program.  Recognizing that many isolated rural communities are unable
    to support a physician practice, this program provides cost-based
    Medicare and Medicaid reimbursement to nonphysician providers such as
    nurse practitioners and physician assistants providing care in these
    areas without direct physician supervision.  However, the HPSA
    designation system has not been changed to serve the narrowed scope
    of these programs.  This has raised concerns that programs using the
    geographic designations to determine the type and scope of assistance
    needed in communities, instead of identifying the specific needs of
    underserved population within them, may result in misdirecting
    hundreds of millions of dollars in program resources.

    This change over time is of less concern with regard to MUA
    designations, because fewer new programs use them.  Moreover, the
    Community Health Center program, which is the chief user of the MUA
    system, relies on MUA designations only as a screen for eligibility
    to apply for funding, according to the program's Director.  Grant
    funds to support existing and new community health centers are
    allocated on the basis of reported performance and detailed need
    criteria within the community.  Outdated MUA designations still may
    be used, however, to certify rural health clinics in areas that no
    longer have serious health service shortages.

       PROGRAM INTERVENTIONS MAY BE
       MISDIRECTED
    ---------------------------------------------------------- Chapter 3:2

    When the access problems of specific underserved populations are not
    identified, it is difficult to determine what kind of federal
    intervention would be effective--and conversely, to avoid funding
    "solutions" that do not address the real need.  In regard to the MUA
    system, for example, a study published shortly after its
    implementation expressed concerns that the methodology did not
    adequately capture variations in ability to obtain physician services
    between rural and urban areas, and among populations of different
    racial and cultural compositions.  Consequently, the study concluded
    that programs using the MUA system could misallocate resources away
    from those most in need of federal assistance.\27

    According to HHS officials operating the HPSA system, they are
    responsible only for determining whether primary care physician
    shortages exist.  The specific programs using the HPSA system should
    determine who is underserved in geographic HPSAs and whether their
    programs are appropriate to address the access problems that exist
    there.  However, to date the programs have relied on the HPSA
    designations for this purpose and have not developed mechanisms to
    determine whether their strategies are appropriate for the
    underserved population in each HPSA.  They have not targeted or
    tailored their programs for individual HPSA needs.  Some examples
    follow.

      The NHSC program requires that providers placed in HPSAs serve 80
         percent of the HPSA population.  While designations for the
         Medicaid or migrant populations require that these specific
         populations be treated, there is no mechanism to ensure that
         these same populations would be identified and treated by an
         NHSC provider in a geographic HPSA.\28

      The Medicare Incentive Payment program pays all physicians in
         geographic HPSAs a 10-percent bonus on Medicare billings even if
         Medicare patients are not those actually underserved in the
         HPSA, and even if low Medicare reimbursement rates are not the
         cause of underservice.

      The Rural Health Clinic program provides cost-based reimbursement
         for Medicare and Medicaid services provided in any rural HPSA or
         MUA, even if the rural health clinic will not accept the entire
         HPSA population as patients.  According to program managers at
         the Health Care Financing Administration, there is no
         requirement to distribute rural health clinic services
         throughout the underserved area or for rural health clinics to
         accept patients regardless of ability to pay for services.

    We did not directly audit these programs to determine the extent that
    program controls were adequate to prevent misdirection of resources
    for underserved populations in HPSAs and MUAs.  However, we did find
    evidence that such problems exist--especially in the case of the
    Medicare Incentive Payment program.

    --------------------
    \27 John E.  Kushman, "The Index of Medical Underservice as a
    Predictor of Ability to Obtain Physicians' Services," American
    Journal of Agricultural Economics (Feb.  1977), pp.  192-7).

    \28 While NHSC providers in a geographic HPSA must agree to see
    anyone requesting care, they are not required to seek them out as
    patients.  Therefore, their location or hours of practice may be a
    barrier to access for some underserved populations, such as migrant
    farmworkers.

          MISAPPLICATION OF THE
          MEDICARE INCENTIVE PAYMENT
          PROGRAM
    -------------------------------------------------------- Chapter 3:2.1

    At present, there is no evidence that the Medicare Incentive Payment
    program is targeted to improve access to care for Medicare
    beneficiaries, even though over $98 million was paid to physicians in
    1994 for this purpose.  Neither the HPSA system nor the program
    identifies the extent that Medicare beneficiaries are underserved in
    geographic HPSAs or that low reimbursement rates cause access
    problems for them.

    The Medicare Incentive Payment program was established in 1987
    subsequent to concerns expressed by the Physician Payment Review
    Commission\29 that low Medicare reimbursement rates for primary care
    services may cause access problems for Medicare beneficiaries in
    rural HPSAs.  Under the program, all physicians providing services to
    Medicare beneficiaries in a rural or urban geographic HPSA are
    eligible for a 10-percent bonus on Medicare billings.

    The premise on which this program was created may no longer be valid
    in that the basis for Medicare reimbursement has changed since
    1987.\30 In its 1995 report to the Congress, the Physician Payment
    Review Commission found no evidence that provider shortages or low
    Medicare reimbursement rates cause health care access problems for
    beneficiaries in rural areas.\31 Close to half of the $98 million
    spent under the program in 1994 was paid to about 82,000 rural
    physicians.  While the Commission found some evidence of a link
    between living in urban HPSAs and access-to-care problems,
    beneficiaries cited the cost of services not covered by Medicare and
    a lack of transportation as the primary causes of access
    difficulties.  These problems are unlikely to be solved by providing
    a bonus on Medicare billings.  The remaining half of the $98 million
    spent under the program in 1994 was provided to about 96,000
    physicians in urban areas.

    Further, the HHS Inspector General has questioned the appropriateness
    of applying the program in HPSAs because it provides bonuses to
    specialist physicians as well as primary care physicians, while the
    HPSA system only identifies areas with primary care physician
    shortages.  The Inspector General reported that 45 percent ($31
    million) of the Medicare incentive payments made in fiscal year 1992
    went to specialist physicians who provided little or no primary
    care.\32 Among primary care physicians, the Inspector General
    concluded that Medicare incentive payments rarely have a significant
    effect on their decisions to practice in underserved areas.

    Bureau of Primary Health Care officials agreed that the HPSA system
    is not structured to effectively identify areas where the Medicare
    Incentive Payment program should be implemented.  However, they do
    not believe they should modify the HPSA system for this purpose.
    Rather than add a designation for underserved Medicare populations,
    they suggested that the Health Care Financing Administration devise
    another system.  While recognizing that the HPSA system is
    inappropriate, officials at the Health Care Financing Administration
    said that use of the HPSA system is mandated by law and that they do
    not have an alternative system that would effectively allocate
    funding under this program.

    --------------------
    \29 The Physician Payment Review Commission was established in 1986
    to advise the Congress on reforms in physician payment under the
    Medicare program.

    \30 The Health Care Financing Administration has been implementing
    changes to the physician fee schedule since physician payment reform
    measures were passed in the Omnibus Reconciliation Act of 1989.
    These changes generally increased reimbursement rates for primary
    care services and for services in rural areas.

    \31 The Physician Payment Review Commission found that Medicare
    beneficiaries, as a group, do not appear to have particular problems
    securing access to care.  The Commission analyzed the results of the
    Health Care Financing Administration's 1993 Medicare Current
    Beneficiary Survey and reported that 97 percent of Medicare
    beneficiaries surveyed said they had no trouble with access to care
    during the previous year.  The Commission did not address the
    continued need for the Medicare Incentive Payment program.  However,
    it did support retaining and expanding the program in its 1994 report
    to the Congress.

    \32 Medicare Incentive Payments in Health Professional Shortage
    Areas:  Do They Promote Access to Care?  HHS Office of Inspector
    General, Report No.  OEI-01-93-00050 (June 1994).

       CONCLUSIONS
    ---------------------------------------------------------- Chapter 3:3

    While designating HPSAs on a strictly geographic basis may be
    appropriate for areas with no providers or rural areas remote from
    other sources of care, such a designation provides limited benefit in
    targeting assistance in areas where specific subpopulations are at
    risk.  In addition, although