GAO report finds physician payment localities out of sync with actual costs.

A report released by the U.S. Government Accountability Office (GAO) examines the state of the 89 physician payment localities currently used by the Centers for Medicare and Medicaid Services (CMS) to adjust physician reimbursement based on practice costs. The study finds that more than half of the localities had counties within them with a payment difference of 5 percent or more between GAO’s measure of physicians’ costs and Medicare’s geographic adjustment for an area. To address this disparity, GAO offers the following recommendations: CMS should examine and revise the payment localities using an approach that is uniformly applied to all states and based on the most current data, and should update the payment localities on a periodic basis. CMS has responded that it will consider the first recommendation, but the agency plans to continue its current approach of updating localities when interested parties raise concerns. A PDF file of the highlights of the report can be viewed at:

http://www.gao.gov/highlights/d07466high.pdf

A PDF file of the complete report can be downloaded from:

http://www.gao.gov/new.items/d07466.pdf