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