June 3, 2011
The Institute of Medicine experts said Medicare needs to make a “significant change” to the ways it evaluates salaries of health care workers and real estate costs.
After the U.S. House of Representatives called for a study by the IOM in Section 1157 of The Affordable Health Care for America Act, the Department of Health and Human Services and Congress sought advice from the IOM on how to improve the accuracy of the data sources and methods used for making the geographic adjustments in payments to providers. The IOM recommends an integrated approach that includes:
- moving to a single source of wage and benefits data;
- changing to one set of payment areas and labor markets; and
- expanding the range of occupations included in the index calculations.
The IOM also recommends developing a new source of data on the cost of office rent and applying the hospital wage index for facilities other than acute-care hospitals. Taken together, these recommendations would lead to improvements in payment accuracy, including a more streamlined and consistent payment process for a broader range of providers and a reduced burden of cost reporting.
This IOM report is one of two reports for Congress and the Secretary of the Department of Health and Human Services over the course of 24 months. This first report evaluated the accuracy of geographic adjustment factors and the methodology and data used to calculate them. The second report, expected in spring 2012, will evaluate the effects of the adjustment factors on the distribution of the health care workforce, quality of care, population health, and the ability to provide efficient, high-value care.
