Health equity, according to the National Center for Chronic Disease Prevention and Health Promotion, is achieved when every person has the opportunity to “attain their full health potential” and no one is at a “disadvantage from achieving this potential because of social position or other socially determined circumstances.”1 The issue is complex and requires many potential fixes beyond alteration of the fee-for-service (FFS) payment policy used to reimburse physicians under the Medicare Physician Fee Schedule (MPFS). Regardless, differential FFS payments can exacerbate or ameliorate access-to-care issues — and therefore must be considered as part of an overall strategy to effect change when striving for health equity.
The concept of differential FFS payments is already part of everyday payment policy under the MPFS. Medicare uses a complex payment formula that multiplies three different types of relative value units (RVUs) — malpractice, physician work, and practice expense — by an MPFS Conversion Factor to arrive at a payment amount due to a clinician. Each RVU is also multiplied by a Geographic Practice Cost Index (GPCI), which is a fudge factor to balance cost-of-living and cost-of-business differences between different regions of our country. Different GPCIs exist for each of the three types of RVUs mentioned above. These adjustments account for regional business costs and other market factors so that Medicare does not overpay or underpay a certain geographic region. Currently, CMS has 112 different localities, defining regional GPCI values as established under the Protecting Access to Medicare Act of 2014.
The physician work GPCI has a statutory defined floor of 1.0, which extends through Jan. 1, 2024 — as mandated under the Consolidated Appropriations Act of 2021. This was primarily set high to offset the stresses on the health care system during the global pandemic. Areas of the country with higher costs (for example, San Jose, California) have physician work GPCI values as high as 1.096. The GPCI was designed not only to account for cost of business, but also to preserve regional access to care. In practice, Medicare has found these objectives conflicting outside of metropolitan areas and has instead encouraged use of other policy vehicles to maintain or improve access to care. In essence, Medicare uses GPCI almost purely as a tool to adjust payments based on costs of doing business and not on access to care. A potential reason to limit use of GPCI to cost-of-business and living variables may originate from the ever-present budget neutrality requirements. As throughout most of the MPFS, if Medicare increases one region’s GPCI (payments to this region), then payments to other regions must go down — potentially creating new access-to-care issues.
Complicating matters of using GPCI as a vehicle for supporting health equity inside the MPFS is the parallel Medicare payment system for hospitals. The calculations for hospital payment systems contains a GPCI-like factor called the Hospital Wage Index. Medicare carefully sets both the GPCI and Hospital Wage Index by studying similar market data so as not to upset local labor markets between the physician practice and hospital practice.
Congress can fund policy-driven changes to GPCI not subject to budget neutrality and has used this mechanism to address health equity in the past. For example, physician work GPCI for Alaska is 1.5 (the highest in the nation and significantly higher than San Jose at 1.096), as established under the Medicare Improvements for Patients and Providers Act of 2008. While multifactorial and no doubt politically motivated, the higher GPCI in Alaska would theoretically help attract physicians to the region. Another example is the practice expense GPCI floor of 1.0 for frontier states (Montana, Nevada, North Dakota, South Dakota, and Wyoming) as established by Congress in the Patient Protection and Affordable Care Act. An artificially high practice expense GPCI is used as a tool to attract owners of advanced imaging equipment to these regions by paying more than the calculated cost of business.
The complexity of payment policy to physicians and hospitals makes moving the needle on health equity nearly impossible by simple regulation alone. Congress will need to act, but at least there is a track record of past interventions paving a road map to effect change by legislating bolstered payments to areas of our country that need better support from the healthcare community.