Geographic adjustments to Medicare payments are intended to accurately and equitably address regional variations in wages, rents, and other costs incurred by hospitals and individual health care practitioners—but almost 40% of hospitals have been granted exceptions to how their adjustments are calculated, finds a new report from the Institute of Medicine (IOM). The rate of exceptions strongly suggests that the mechanisms underlying the adjustments are inadequate, noted the committee that wrote the report.
The committee's recommendations to Medicare include:
The report is the first of 3 to be issued by the committee. A supplemental report that discusses physician payment issues will be issued this summer. A final report, to be released in 2012, will present the committee's evaluation of the effects of the adjustment factors on health care quality, population health, and distribution of the health care work force.
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