Medicare Physician Payment:

Geographic Adjusters Appropriate But Could Be Improved With New Data

HRD-93-93: Published: Jul 20, 1993. Publicly Released: Jul 20, 1993.

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William J. Scanlon
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Pursuant to a congressional request, GAO assessed whether the Health Care Financing Administration (HCFA) used the best available data when setting the geographic adjusters for the Medicare program.

GAO found that: (1) time constraints limited HCFA ability to develop data sources for use in establishing geographic adjusters; (2) HCFA contracted with several research organizations to develop recommendations about data and methodologies for the geographic adjusters; (3) Internal Revenue Service (IRS) data could be useful for future updates of the practice-expense and physician-work adjusters; (4) an adequate number of cases can be obtained for most Medicare localities due to the universal nature of IRS data; and (5) data on the relative differences in health care costs across geographic areas were not available.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: The Department of Health and Human Services obtained IRS data and evaluated them for their suitability for establishing geographic adjusters. The evaluation did not find the IRS data to be superior to other available data.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to complete work with IRS to test whether IRS data provide a superior basis for setting or updating the geographic adjusters. If IRS data prove superior to the data currently in use, the Secretary should direct the Administrator to obtain and use these data.

    Agency Affected: Department of Health and Human Services


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