AMCNO responds to Center for Medicare and Medicaid Services (CMS) special study to consider changes to geographic practice cost indices (GPCIs)

On behalf of our membership, the AMCNO has sent comments to CMS regarding a recent study conducted for CMS by Acumen LLC – “Review of Alternative GPCI Payment Locality Structures.” CMS contracted with Acumen, LLC to conduct a preliminary study of several options for revising the GPCI payment localities. The study was commissioned by CMS because of the myriad comments received from across the United States regarding the GPCI configuration. 

The Medicare physician fee schedule adjusts physician fees for area differences in physicians’ costs of operating a private medical practice. Three separate indices, known as geographic practice cost indices (GPCI) raise or lower Medicare fees in an area, depending on whether the area’s physician practice costs are above or below the national average. These GPCIs adjust physician fees for variations in physicians’ costs of providing care in different geographic areas. The three GPCIs correspond to the three components of a Medicare fee: physician work, practice expense, and malpractice expense. 

At this time, CMS uses 89 physician payment localities among which fees are adjusted. CMS recognizes that changing demographics and local economic conditions may lead to increased variations in practice costs in certain payment locality boundaries. Currently, the state of Ohio is designated as a statewide locality. Based upon the AMCNO review of studies on the GPCI calculations, a statewide locality in Ohio clearly does not accurately account for the variations in practice costs in certain payment localities – particularly in Northern Ohio. 

The Acumen study clearly demonstrates that there is a very real need to change the current GPCI locality configuration to reflect the area differences in the state of Ohio. In fact, the Acumen study showed that every alternative outlined for the state of Ohio in the study would benefit physicians practicing in Northern Ohio based upon the data presented.

Upon review of the study, the AMCNO board of directors opted for Option 1 – the CMS CBSA option. This option follows the approach CMS uses to develop geographic payment adjustments for other major Medicare providers. It is a preferable option because it utilizes Metropolitan Statistical Areas (MSAs) and Metropolitan Divisions (MDs) to form localities. Also, this option, as noted in the Acumen study, also “allows for more stability in updates over time and data availability because of the use of MSAs.” The AMCNO believes that this option assures uniformity and provides for a common base for updates across all types of providers in Ohio. The AMCNO has urged CMS to carefully evaluate the Acumen study and consider including one of the options (preferably Option 1) in the 2009 physician update. 

As the regional organization representing physicians in Northern Ohio the AMCNO continues to advocate for a change in the payment localities utilized in Ohio. The AMCNO will continue to follow-up with CMS in the future to assure that our comments have been noted. Any questions regarding this issue may be forward to E. Biddlestone at the AMCNO at 216-520-1000, ext. 100.