GPCI Update

CMS proposes a number of changes to the GPCIs, including those that are pursuant to the “Patient Protection and Affordable Care Act”(ACA), as well as other changes due to the use of more recent data, while still others would result from proposed revisions to the MEI:

•    The work GPCI floor of 1.0 would be extended only through 2010, as required by the ACA, and thus is not reflected in the proposed 2011 work GPCI.

•    The PE GPCI would reflect only one-half of the geographic differences in employee wages and office rents for each of 2010 and 2011, as required by the ACA, increasing payments in localities with a PE GPCI below 1.0. The ACA requires that each locality be held harmless so that the PE GPCI in localities with a PE GPCI above 1.0 are not reduced as a result of the change in the methodology for the PE GPCI.

•    A permanent, non-budget neutral floor of 1.0 for the PE GPCI will be implemented for five “frontier” states (MT, WY, ND, SD, and NV), as required by the ACA.

•    The ACA requires CMS to evaluate certain aspects of the PE GPCI and implement indicated revisions in a budget neutral manner no later than January 1, 2012. Specifically, CMS is required to analyze the office expense component of the GPCI, including the extent to which types of office expenses are determined in local markets instead of national markets, the weights assigned to each of the components of the PE GPCI, and the feasibility of using actual data, for example, physician office rent data, in place of proxies like apartment rental data. Instead of waiting until the proposed payment rule for 2012, CMS has completed this ACA-required review of the PE GPCI and proposes to implement the indicated changes in 2011.

•    As required under longstanding existing law, CMS proposes its every three-year GPCI update, including use of 2006 through 2008 Bureau of Labor Statistics (BLS) Occupational Employment Statistics data in place of the professional earnings data from the 2000 Census. Also as required by existing law, this will be phased in over two years, in 2011 and 2012.

•    As discussed above, CMS has also proposed a number of changes to the MEI which, if adopted, would significantly affect the GPCIs. CMS proposes to rebase the MEI to 2006 using data from the PPI survey, which decreases the weight for the work component of the physician payment schedule and increases the weights for the PE and liability insurance cost components. When these MEI changes are applied to the GPCIs, they apply less weight to the work GPCI and more weight to the PE and professional liability insurance (PLI) GPCIs in each locality.

•    CMS proposes to use BEA data to disaggregate the office expense component of the MEI by creating separate categories for utilities, chemical, paper, rubber and plastics, telephone, postage, “all other labor-related” expenses, fixed capital, and moveable capital. When these MEI changes are applied to the PE GPCI, it leads to different weights being assigned to different components of the PE GPCI.