Impact of revising the PE GPCI in accordance with proposed MEI revisions

The large number of changes in the GPCIs that are being proposed simultaneously make it difficult to sort out the impacts of specific elements of this proposed rule. The AMA is concerned, however, that the proposal to revise the PE GPCI in accordance with the proposed revisions to the MEI would lead to cuts in a number of localities in 2011, one year earlier than Congress had called for budget neutral changes to the PE GPCI in the ACA.

Many of the new categories that have been separated out in the MEI office expense category are being grouped with medical equipment, materials and supplies which are treated in the GPCI as having national prices rather than local prices. As a result, a major change that occurs in the translation of the MEI changes to the PE GPCI is that the portion of the PE GPCI that is the same everywhere in the country instead of varying by locality grows from 29% currently up to 42% in the proposed rule.

These changes in the MEI and GPCI components, their weights, and the proportion of national vs. local pricing in the GPCI heighten the 2011 impact of the ACA requirement that only one-half of the geographic differences in rent be recognized. Localities with a PE GPCI below 1.0 see payment increases in 2011 because only half the geographic differences in rent are recognized, and these localities see further increases because the weight assigned to rent is reduced. The ACA holds harmless localities with PE GPCIs above 1.0 because they would see payment cuts if only half the geographic differences in rent were recognized. Under CMS’ proposal, however, these localities, which are primarily large metropolitan areas, will face cuts in 2011 due to the reduced weight for physician office rent. These cuts appear to contradict Congress’ intent as shown in the hold-harmless provision that applies to the PE GPCI provisions of the ACA for 2010 and 2011.