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Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
×

Index

[Page numbers followed by b, f, n, or t, refer to boxed text, figures, footnotes, or tables, respectively.]

A

Access to care

adjustments to address provider shortages, 29, 56–57, 117, 147

hospital wage index policy adjustment add-ons to improve, 62

Phase 2 study goals, 147

research needs, 113–114

Accountability

of data providers, 4

integration of care and, 58

Accountable Care Act, 58

Accuracy of data

for creation of payment areas, 45–46

current system, 4, 31, 70–72

definition, 4, 16n, 31

for hospital wage index calculation, 70

Occupational Employment Statistics, 74–77

proxy data for physician income, 117, 124–125

relative value units, 118

strategies for improving, 4

study goals, 2, 16–17, 18b, 29, 146

Accuracy of payments to facilities, 2, 15–16

Administrative burden of geographic adjustment

current hospital cost reporting and review, 73

labor market segmentation and, 55–56, 58

use of Bureau of Labor Statistics data and, 77, 82

Administrative staff of physician practice, 130

Advanced practice nurses, 148

Affordable Health Care for America Act, 17, 29, 30

Agency for Healthcare Research and Quality, 21

Ambulatory surgical centers, 9, 79–81, 83

American Community Survey

access to data, 128

commuting data, 94

employee compensation data, 132

for GPCI calculation, 125, 126–127t, 128–129

limitations, 128–129

physician work adjustment data, 11–12

scope of, 128

American Housing Survey, 13

American Medical Association, 23, 118

Average hourly wage

accuracy, 72, 81

health care practitioners, 54–55, 54t

health care sectors, 54–55, 54t

hospital wage index computations, 62–65, 81

inputs and weighting, 73, 78–79

Occupational Employment Statistics for calculation of, 74, 81

B

Balanced Budget Act, 22, 87

Basic Allowance for Housing, 13

Beneficiaries of Medicare

age distribution, 17

current coverage, 1, 17

Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
×

economic status, 17

geographic distribution, 17

health status, 17

impact of geographic adjustment determinations, 2

nonelderly, 1, 17

Benefits valuation

in Bureau of Labor Statistics data, 75, 82

in hospital wage index, 71–72, 75, 82

Blum, Jonathan, 19b

Braley, Bruce, 28b

Budget neutrality adjustments, 29, 89, 90b

GPCI, 115–117

Bureau of Labor Statistics, 12

health care sector data, recommendations for use of, 8, 12, 58–59, 81–82, 141

labor market smoothing with data from, 89

See also Occupational Employment Statistics

C

Capital as factor of production in health care system, 37–38, 81

Care transitions, 58

Center for Studying Health System Change, 122

Centers for Medicare and Medicaid Services

administrative costs, 55–56, 58, 73, 77, 82

perception of geographic adjustment policy recommendations and implementation, 19b

recommendations for, 8, 9, 10, 12, 13, 82, 83, 139–140, 141

use of statistical areas, 43–45, 44b

See also Medicare

Combined statistical areas, 44b

Commuting, 7

consideration of, in current adjustment and classification system, 93–94

data sources, 94

hospital wage index adjustments, 22, 86–87

labor market smoothing based on, 88, 93–102, 107–109

modeling techniques, 9

patterns, 95, 96t

recommendations for smoothing labor market borders and payment areas, 9–10, 109–110

Section 505 adjustment for, 87

significance of, in setting labor market boundaries, 42

wage index smoothing, 53

Congress, U.S., 2, 16, 29–30

recommendations for, 8, 81–82

Contiguous-county smoothing

implementation, 91b

results of simulations, 91–93, 92t, 93t

shortcomings, 109

technical development, 89

Contract wages

in hospital wage index, 72, 75–76

as percent of hospital personnel expenses, 75–76

Conversion factor, 115

Core-based statistical areas, 44b, 85, 93–94

Cost-share weights, 10, 25, 118–119, 139

Cost Survey for Single Specialty Practices, 135

Critical access hospitals, 62

Current Procedural Terminology, 23, 25, 114

Customary, prevailing, and reasonable, 118

D

Dartmouth Atlas Project, 30, 52

Data sources

access to, 12, 117, 128

commuting patterns, 94

current concerns and criticisms, 4, 16, 31

for geographic variation in physician income, 121–122

for GPCI cost-share weights, 119

for input price determinations, 2, 4

on labor market conditions, 4–5, 32

for labor market smoothing, 89

physician office rent, 13, 132–135, 136t, 141–142

physician salary, 11–12

for physician work adjustment, 4, 124–129

for practice expenses GPCI adjustments, 130, 132

professional liability insurance premiums, 137–138

proxies for physician income calculation, 10–11

quality of current hospital wage index data, 70–74

recommendations for CMS access to BLS data, 12, 141

recommendations for GPCI construction, 8, 12–13, 58–59, 141–142

recommendations for hospital wage index construction, 8, 58–59, 81–82

research framework, 2–3, 33–34

strategies for improving hospital data, 73–74

study goals, 2, 4, 16–17, 18b, 31, 147

See also Accuracy of data

Department of Defense, 13

Department of Health and Human Services, 2, 8, 13, 16

E

Employee compensation

data sources, 130, 132

geographic adjustment rationale, 1–2

health sector-level wages, 130

occupational mix, 130

Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
×

End-stage renal disease, 1, 17

Energy costs, 81

Equity issues, 17

F

Factors of production

definition, 37

scope of, in health care system, 37–38

scope of geographic variation in costs, 38

See also Input prices, health care

Frontier states, 22, 22n, 24f, 50b, 88, 92, 110, 115

G

General Services Administration, 13, 132, 142

Geographic adjustment, generally

budget neutrality in, 29, 89, 90b, 115, 117

consistent criteria for, 5, 32

current concerns and criticisms, 2, 15–16

definitional issues, 2, 48

policy adjustment and, 6, 10, 33

price and cost distinctions in methodology for, 19–21, 38–39, 59

rationale, 1, 15, 17–18, 31, 37, 113

study goals, 2, 16–17, 18b, 29–30, 146

See also Geographic adjustment factors; Geographic practice cost indexes (GPCIs); Hospital wage index; Research on geographic adjustment

Geographic adjustment factors

component adjusters, 25, 113, 118

county-level versus payment area, 51, 55

criticisms of, 29

effects of, in health care system, 3b, 17

for hospitals, 39b

for practitioners, 39b, 43–45

purpose and application, 1–2, 15, 17–18, 39b, 45–46

study goals, 3b, 18b

variation within payment areas, 51

See also Geographic practice cost indexes (GPCIs); Hospital wage index

Geographical information systems, 105

Geographic practice cost indexes (GPCIs)

budget neutrality, 115–117

components, 7, 25, 39b, 113, 114, 118. See also specific components

cost share weight calculations, 118–119, 119t

current concerns and criticisms, 2, 51, 115–117, 124–125

current structure and operations, 1, 15, 25, 114–117

future of exceptions, 110

historical evolution, 116b

hospital wage index and, 5–6, 32–33

implementation of recommendations for, 13–14

nonclinical labor-related expenses, 13, 25

office rent component, 13

one-quarter adjustments, 11, 140

payment areas, 117–118

price and cost distinctions, 85, 115

quality of current data sources, 4, 5, 31, 32, 117, 138–139

recommendations for cost-share-weight calculations, 10, 139

recommendations for data sources for construction of, 8, 12, 58–59, 141–142

recommendations for labor market and payment area definition, 7–8, 57–58, 118

recommendations for occupational inputs, 12, 141–142

recommendations for setting percentage of work adjustment, 11–12, 140

recommendations for smoothing labor market borders and payment areas, 9, 109–110

recommendations for use of physician income proxies, 10–11, 139–140

relative value units, 25–26

strategies for improving geographic adjustment system, 5–6, 32–33

study goals, 2, 3b, 18b, 138–139

update schedule, 115, 132

See also Physician payment areas; Physician work adjustment

Geospatial smoothing, 88

with inverse distance weighting, 105–107

nearest neighbor model, 102–105

Grassley, Charles, 28b

H

Health Care and Education Reconciliation Act, 29

Health care practitioners

average wages, 54–55, 54t

consideration of all economic sectors in labor market definition, 4–5, 32, 39, 42, 48–50, 59

definition of, 1n, 15n, 113n

distribution, Medicare payment system and, 2, 3b, 147

distribution of employment shares by region and statistical areas, 79t

employee compensation in physician practices, 130, 132

Phase 2 study goals, 2, 147

quality of cost data, 4, 31

study goals, 2, 3b, 17, 18b

trends, 148

See also Geographic practice cost indexes (GPCIs)

Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
×

Health information technology, 148

Health technicians, 130

Healthcare Common Procedure Coding System, 23, 114

Home health agencies

hospital wage index calculations, 9, 79–81, 83

study goals, 2, 18b

Hospice facilities, 79–81

Hospital cost survey data, 7, 8

Hospital Outpatient Departments, 79–81

Hospital payment areas

alternative approaches to defining, 52–53

current structure, 42–43

metropolitan statistical areas and, 46–48

physician payment areas and, 7–8, 53–55, 57–58

reclassification appeals, 48

Hospital referral regions, 52

Hospital service areas, 52

Hospital wage index

administrative burden of reporting and review, 73, 77

alternative approaches to defining labor markets for, 52–53

benefits valuation in, 71–72, 75, 82

calculation from Occupational Employment Statistics, 74–79

case mix adjustment, 62

circularity problem in data, 50–51, 71

comparative effects of adjustments in different geographic areas, 62, 63t

contract wages in, 72, 75–76

current data sources and calculation methodology, 1, 2, 4, 5, 7, 8, 18–21, 31, 32, 39b, 42–43, 61–67, 81

current geographic distribution, 22, 23f

data needs for calculating, 70

exceptions and reclassifications, 22, 86–88, 109, 110

for facilities other than acute care hospitals, 9, 79–81, 83

future of exceptions, 110

GPCI and, 5–6, 32–33

historical evolution, 68–69b

hospital-specific, 52–53

implementation of recommendations for, 13–14

inputs and weighting, 9, 73, 78–79, 82–83

objectives for smoothing labor market borders, 88–89

occupational mix in calculation of, 9, 21, 39–40, 78–79

origins, 61

policy adjustment add-ons, 62

pre-classified, pre-floor, 79, 80n, 86

price and cost distinctions, 19–21, 61, 85

purpose, 15, 38, 61

quality of current data sources, 4, 5, 31, 32, 70–74, 81

recommendations for data sources for construction of, 7, 8–9, 58–59, 81–82, 83

recommendations for labor market and payment area definition, 7–8, 57–58, 118

recommendations for occupational inputs, 9, 82

recommendations for revision of controlling statute, 8, 81–82

recommendations for smoothing labor market borders and payment areas, 9–10, 109–110

rural floors, 87–88

strategies for improving data for, 73–74

strategies for improving geographic adjustment system, 5–6, 32–33

study goals, 2, 3b, 18b

transparency of cost report data, 72

types of labor market adjustments and exceptions, 86, 87t

use of all-industry or health sector data in calculation of, 4–5, 32, 39, 42, 48–50, 59, 70–71, 74–75, 75t, 76

volatility, 50, 76

wage data for defining, 48–51

See also Hospital payment areas

Housing costs, 41

I

Index floors, 10

Indexes, defined, 1n, 15, 16b

Inflation, 118–119

Inpatient Prospective Payment System (IPPS)

current methodology, 18–19

current reclassifications and exceptions, 24f

geographic adjustment in, 1–2, 15, 38–39

hospital wage index calculation, 61–62, 86

number of hospitals by labor market, 71t

Inpatient psychiatric facilities, 79–81

Inpatient rehabilitation facilities, 79–81

Input prices, health care

concerns about current geographic adjustment system determinations, 2

geographic adjustment rationale, 1, 37

for GPCI calculations, 10

GPCI cost-share weights, 118–119

inflationary changes over time, 118–119

major factors of production, 37–38

price and cost distinctions in methodology for geographic adjustment, 19–21, 38–39, 51, 59

quality of data, 4, 31

recommendations for GPCI calculation, 12, 13, 141–142

Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
×

recommendations for hospital wage index calculation, 9, 82–83

source data for determination of, 2, 117

study goals, 2, 17, 18b

variation within payment areas, 117–118

Inverse distance weighting function, 105–107

IPPS. See Inpatient Prospective Payment System

L

Labor market areas, 53

Labor markets

alternative approaches to defining, 52–57

average wages, 54–55, 54t

as basis for geographic adjustment, 37, 40

boundary setting, 41–42, 85

conceptual framework, 6, 33

consideration of all economic sectors in definition of, 4–5, 32, 39, 42, 48–50, 59

defined by geopolitical units, 52–53

definition of, in geographic adjustment methodology, 2, 21, 38, 85

determinants of wage differentials, 40–41

as factor of production in health care system, 37–38

geographic variation in costs, 38, 40–41

hospital wage index exceptions and reclassifications, 22, 23f

number of, 5, 32

occupational mix in, 9, 12, 21, 27–28, 39–40

quality of data, 4–5, 32

recommendations for defining, 7–8, 57–58, 85, 118

recommendations for smoothing borders of payment areas and, 109–110

types of adjustments and exceptions, 86, 87t

updates, 58

wage data for defining, 48–51

See also Hospital payment areas; Payment areas; Physician payment areas; Smoothing labor market borders and payment areas

Land

as factor of production in health care system, 37–38

See also Rent

Licensed practical nurses, 39–40, 130

Long-term care hospitals, 79–81

Low-income communities

cost of providing health care services in, 121

hospital wage index adjustments, 62

Lugar County reclassifications, 24f, 50b, 86, 94

M

Malpractice. See Professional liability insurance

Medicaid and Medicare Extension Act, 123

Medical equipment, 38

Medical Group Management Association, 11–12, 13, 120, 125, 129, 135, 140, 142, 148

Medicare

coverage, 1, 17

current payment system, 18–28, 20f, 26f, 114–118

policy adjustments, 6

scope of geographic adjustment in, 1–2, 15

spending, 1, 17

See also Beneficiaries of Medicare; Geographic adjustment, generally

Medicare dependent hospitals, 23f

Medicare Economic Index, 10, 118–119, 129

Medicare Geographic Classification Review Board, 22n, 24f, 48, 50b, 86–87

Medicare Modernization Act, 22, 50b, 87, 123

Medicare Part B, 2, 12, 26f, 30, 115n, 141, 147

Medicare Payment Advisory Commission, 78, 80f, 89

Medicare Severity-Diagnosis Related Group, 19, 62, 67

Metropolitan statistical areas (MSAs)

in construction of hospital payment areas, 42

geographic distribution, 43f

number of, 5, 7, 21, 32, 42–43, 43n, 46, 55, 56

wage variation within, 53, 55

See also MSA/statewide non-MSA system

Micropolitan statistical areas, 42

definition and characteristics, 44b

geographic distribution, 43f

MSAs. See Metropolitan statistical areas

MSA/statewide non-MSA system

advantages, 58

commuting behavior considerations in, 93

distribution of employment shares by health care occupation, 79t

hospital payment areas, 42, 46–49, 53

hospital wage index reclassifications, 86–87

to influence provider distribution, 29, 56–57, 117

iterated approach, 56–57

as labor market proxy, 46, 53, 85

origins of, 44b

physician income variation within, 121–122

physician payment areas, 55–56

recommendations for labor market definition based on, 7–8, 57–58, 118

rural floor adjustments, 87–88

separation of high-cost MSAs, 56

See also Metropolitan statistical areas (MSAs); Micropolitan statistical areas; Statewide non-MSA statistical areas

N

National Compensation Survey, 75, 82

Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
×

O

Occupational Employment Statistics

access to data, 77, 82

accuracy, 74–77

administrative burden of using, 77

employee compensation data, 130

for GPCI calculation, 124–125, 126–127t, 128

inputs and weighting, 78–79

labor market smoothing with data from, 89

limitations, 128

purpose, 74

recommendations for use of, 8, 10, 82

scope of survey, 74, 128

timeliness of data, 77

Occupational mix

in Bureau of Labor Statistics data, 78–79

in calculation of occupational mix adjustment, 65–67

in employee compensation data sources, 130

employment shares by geographic region and statistical areas, 79t

in hospitals, 21, 39–40

physician payment area variations, 27–28, 39

in physician practice, 131t

recommendations for calculation of hospital wage index, 9, 82–83

recommendations for GPCI calculation, 12, 141–142

required staffing levels, 78

similarities between needs of physician offices and hospitals, 53–54, 54t

Occupational mix adjustment

average hourly wage computations, 73

hospital wage index calculations, 64–67, 81

Occupational mix survey, 67, 70

Office of Management and Budget, 42

Office visits, 118

Omnibus Budget Reconciliation Act, 23, 115, 137

Omnibus Reconciliation Act, 86

Outmigration adjustment

commuting pattern-based smoothing, 93–102

purpose, 22, 87

recommendations for smoothing, 9, 110

See also Commuting; Section 505 reclassifications

P

Patient Protection and Affordable Care Act, 19b, 22, 88, 115

Payment areas

conceptual framework, 6, 33, 38

creation of new, 45–46

current concerns and criticisms, 2, 16

in current geographic adjustment system, 2, 7, 38

GPCI, 117–118

hospital wage index exceptions and reclassifications, 22

for hospitals, construction of, 42–43

need for consistent criteria in geographic adjustment, 5, 32

practice cost variation within, 27, 51, 117–118

recommendations for definition of, 7–8, 57–58, 118

recommendations for smoothing borders of labor markets and, 109–110

statewide consolidation, 45

study goals, 2, 18b

wage data for defining, 48–51

See also Hospital payment areas; Physician payment areas; Smoothing labor market borders and payment areas

Physician Assistants, 148

Physician Compensation and Production Survey, 125, 126–127t, 129

Physician Cost Survey, 13

Physician Fee Schedules, 23–25

basis for, 114

components, 113

in geographic adjustment system, 1–2, 15, 23–25

recommendations for future update methodology, 10, 139

Physician payment areas

administrative costs to Centers for Medicare and Medicaid Services, 55–56, 58

alternative strategies for defining, 53–57

construction of, 43–45

current concerns and criticisms, 27–28, 51, 57–58

current structure, 27, 27f, 43–45

in GPCI, 39b

hospital payment areas and, 7–8, 53–55, 57–58

metropolitan statistical areas and, 55, 56–57, 56t

number of, 55–56, 56t, 118

recommendations for, 7–8, 57–58

role in distribution of providers, 56–57

Physician Practice Information Survey, 119, 125, 126–127t, 129

Physician work adjustment, 39b

choices in level and scope of, 120–124

cost-share weight calculations, 118–119, 119t

current concerns and criticisms, 28

data sources for, 124–129, 140

definition, 25, 114

non-geographic factors, 11

office rent component, 13, 132–135, 136t, 141–142

proxy professions, 10–11, 123–125, 139–140

purpose, 120

recommendations for, 10–12, 139–140

statistical modeling, 11–12, 140

unique challenges in calculation of, 120

See also Geographic practice cost indexes (GPCIs)

Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
×

Policy adjustments

geographic adjustments to address provider shortages, 29, 56–57, 117, 147

hospital wage index adjustments, 62, 86

Phase 2 study goals, 10, 17, 18, 33, 110, 147

purpose, 6, 18, 110

study goals and, 113–114

Population health, 2, 3b, 17

Poverty among Medicare beneficiaries, 17

Practice expenses

adjustment goals, 129

cost-share weight calculations, 10, 118–119, 119t, 139

data sources, 4, 16, 31

definition, 25, 114

employee compensation component, 13, 130–132, 142

occupational mix, 2, 12, 130, 132, 141

office rent component, 13, 132–135, 142

recommendations for GPCI calculations, 10, 12, 13, 139, 141, 142

as share of GPCI, 129

variation within payment areas, 27, 51

See also Physician work adjustment; Professional liability insurance

Primary Care Service Area, 52

Professional liability insurance, 7, 39b

as component of Physician Fee Schedule, 113, 114

cost-share weight calculations, 10, 118–119, 119t, 139

coverage, 137

definition, 25

GPCI data collection and calculation, 137–138

perceived need, 137

premiums, 137

source of geographic variation, 137

Prospective payment systems

geographic adjustment in, 1–2, 15

Medicare evolution, 38, 39

recommendations for hospital wage index calculation, 9, 83

Provider shortages, 29, 56–57, 117, 147

Proxy data, 4, 31, 141

MSA as labor market proxy, 46

for practice inputs, 117, 122, 123–124, 125

recommendations for, 10–11, 12, 139–140

in smoothing, 92, 107

Q

Quality of care

future research, 2, 17

study goals, 2, 3b, 18b

R

Reclassification

current IPPS hospitals, 24f

hospital labor market adjustments, 48, 86–87

smoothing of labor market borders and payment areas to replace, 7, 10, 22, 110

strategies to minimize wage cliffs, 50b

Recommendations

for Centers for Medicare and Medicaid Services, 8, 9, 10, 82, 83, 139–140, 141

for Congress, 8, 81–82

for determining nonclinical labor-related expenses, 13, 142

for determining office rent costs, 13, 141–142

for geographic practice index calculation, 7–8, 12, 57–59, 141

for hospital wage index calculation, 7–9, 57–59, 81–83

implementation, 13–14, 19b, 145, 147–148

for labor market definition, 7–8, 57–58

research framework for, 2–3, 33–34

for smoothing labor market borders and payment areas, 9–10, 109–110

for use of proxies for physician income calculations, 10–11, 139–140

Registered nurses

average wages, 54, 54t

geographic variation in pay, 38

occupational mix calculation, 39–40, 130

required staffing levels, 78

REIS, Inc., 13

Relative value units, 11

accuracy, 118

definition and function, 114–115

in GPCI calculations, 23, 25, 118

importance of, in current payment system, 118

types of, 114

Rent

data sources, 132–135, 136t

as factor of production in health care system, 37–38

geographic variation in costs, 38

recommendations for determining prices, 13, 141–142

Research on geographic adjustment

challenges, 146–147

data needs on physician compensation, 122

data sources, 2, 4, 31

Phase 2 report, 2, 114, 118, 139, 145, 146, 147

scope of study, 2, 146

study framework, 2–3, 33–34

study goals, 2, 3b, 18b, 29–30, 113–114

underlying principles and assumptions for, 4–6, 31–33

Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
×

Resource-Based Relative Value Set, 115, 118

Retrospective cost reimbursement, 38

Rural areas, 110

cost of providing health care services in, 121

occupational mix, 76

physician earnings in, 122–123

Rural floor adjustments, 23f, 50b, 87–88, 92

Rural referral center hospitals, 23f, 62, 110

S

Schwartz, Allyson, 30b

Section 401 reclassifications, 24f

Section 505 reclassifications, 19, 50b, 87, 94. See also Outmigration adjustment

Section 508 reclassifications, 50b

Self-employed physicians, 120

Services sector, 13, 81

Short-term and acute care hospitals, 2, 18b

Skilled nursing facilities

hospital wage index calculations, 9, 79–81, 83

study goals, 2, 18b

Smoothing labor market borders and payment areas, 7

budget neutrality adjustments in, 89, 90b

commuting pattern-based, 88, 93–102, 107–109

comparison of current and alternative approaches to, 107–109, 108t

contiguous-county approach, 88, 89–93

design objectives, 88–89

geospatial methods, 88, 102–109

implementation, 9

need for, 85

outmigration adjustment for, 9, 22

policy adjustments and, 110

positive and negative adjustments, 89, 91b, 97–99, 110

purpose, 9, 10, 22, 53, 85, 88

recommendations for, 9–10, 109–110

to replace system of exceptions and reclassifications, 7, 10, 22, 109, 110

techniques, 9, 88

thresholds for county eligibility, 109–110

use of Bureau of Labor Statistics data for, 89

Smoothing of wage index values, 53

Social Security Act, 23, 115

recommendations for revision of hospital wage index provisions, 8, 81–82

Sole community hospital, 23f, 62

Statewide non-MSA statistical areas

consolidation within, 45

definition, 44b

distribution, 43f

hospital payment areas and, 42

input price variation within, 47–48, 117–118

number of, 5, 7, 21, 27, 32, 42–43, 45

See also MSA/statewide non-MSA system

T

Tax Relief and Healthcare Act, 67

Teaching hospitals, 62

Timeliness of hospital cost report data, 72, 73–74, 77

Transitions, care. See Care transitions

Transparency

Bureau of Labor Statistics data, 77

concerns about current geographic adjustment system, 2, 16

of hospital cost report data, 72, 77, 82

to improve data quality, 4, 31

of process for reviewing geographic adjustment system, 6, 33

study goals, 2, 18b

use of confidential data sources, 12, 82

U

U.S. Postal Service, 13

V

Value of care

future research, 2, 17, 148

study goals, 2, 3b, 18b

W

Wage cliffs

commuting pattern-based smoothing adjustments, 97

definition, 42

extent of problem, 47–48

hospital wage index adjustments to reduce, 86, 88

inverse distance weighting to smooth, 106, 106t

strategies for reducing, 50b

Wage comparability criteria, 86–87

Worksheet S-3, 62, 72, 73, 77, 82, 89

Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
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Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
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Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
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Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
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Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
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Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
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Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
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Suggested Citation:"Index." Institute of Medicine. 2012. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/13138.
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Page 206
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Medicare is the largest health insurer in the United States, providing coverage for 39 million people aged 65 and older and 8 million people with disabilities, and reaching more than an estimated $500 billion in payments in 2010. Although Medicare is a national program, it adjusts fee-for-service payments according to the geographic location of a practice. While there is widespread agreement about the importance of providing accurate payments to providers, there is disagreement about how best to adjust payment based on geographic location.

At the request of Congress and the Department of Health and Human Services (HHS), the Institute of Medicine (IOM) examined ways to improve the accuracy of data sources and methods used for making the geographic adjustments to payments. The IOM recommends an integrated approach that includes moving to a single source of wage and benefits data; changing to one set of payment areas; and expanding the range of occupations included in the index calculations. The first of two reports, Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy, assesses existing practices in regards to accuracy, criteria consistency, evidence for adjustment, sound rationale, transparency, and separate policy adjustments to reform the current payment system. Adopting the recommendations outlined in this report will mean a change in the way that the indexes are calculated, and will require a combination of legislative, rule-making, and administrative actions, as well as a period of public comment.

Geographic Adjustment in Medicare Payment will inform the work of government agencies such as HHS, the Centers for Medicare and Medicaid Services, congressional members and staff, the health care industry, national professional organizations and state medical and nursing societies, and Medicare advocacy groups.

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