CMA News Release: CMA Applauds Institute of Medicine Study
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Molly Weedn
CMA Applauds Institute of Medicine Study
Study Released Highlights Geographic Differences in Practice Costs
Sacramento — After hearings and deliberation, the Institute of Medicine (IOM), an independent, nonprofit organization tasked with studying geographic differences in Medicare costs, released a study highlighting the geographic differences in practice costs, concluding then that Medicare should adjust payments for those differences.
“The IOM recommendations are a validation of CMA’s position and we urge CMS and Congress to implement these data-driven policies to improve Medicare payment accuracy and access to care,” said Jim Hinsdale, MD, CMA President.
The costs of running a physician’s practice differs substantially across the country and failing to take that into account in Medicare payments is a big mistake that harms senior citizens’ access to care, California Medical Association said in testimony before the Institute of Medicine (IOM).
IOM’s study laid out a number of recommendations, including that Medicare should combine physician and hospital payment localities into Metropolitan Statistical Areas (MSAs) to pay physicians more accurately based on their local costs. “This recommendation represents an enormous victory for California physicians and their patients who have been advocating for CMS and Congress to update the payment regions for a decade,” Hinsdale said. “Under the current system, 14 urban California counties are still designated as rural and underpaid by up to 13% annually.”
Additionally, the study said that Medicare should use a single source of wage and benefits data from the Bureau of Labor Statistics gathered by MSA geographic region, Medicare should expand the range of occupations included in the wage index to account for new kinds of workers that physicians employ, such as HIT assistance and that Medicare should use a new data source for physician office rent rather than the HUD residential rent data.
“San Francisco and Los Angeles are two of the most costly cities in which to practice medicine,” Dr. Jim Hinsdale added. “Recognizing those cost differences and adjusting payments accordingly will allow adequate care for seniors in many parts of California. The California Medical Association applauds the time and effort that IOM put into this careful analysis. We agree with the IOM recommendations to ensure a payment system that is consistent and based on appropriate data.”
Importantly, the IOM also recommended that public policy goals, such as improving access to care in rural physician shortage areas, should be addressed but not through the Medicare geographic formula.
Health care reform legislation passed and signed into law directed IOM to study regional differences in Medicare costs.
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The Institute of Medicine: The Institute of Medicine (IOM) is an independent, nonprofit organization that works outside of government to provide unbiased and authoritative advice to decision makers and the public. Established in 1970, the IOM is the health arm of the National Academy of Sciences, which was chartered under President Abraham Lincoln in 1863. Nearly 150 years later, the National Academy of Sciences has expanded into what is collectively known as the National Academies, which comprises the National Academy of Sciences, the National Academy of Engineering, the National Research Council, and the IOM.
The California Medical Association: The California Medical Association represents 35,000 physicians in all modes of practice and specialties. CMA is dedicated to the health of all patients in California.