By Rebecca Adams, CQ HealthBeat

January 10, 2011 -- One of the biggest—and until now, among the most overlooked—fights over the implementation of the health care law starts in earnest this week as policymakers begin to determine which benefits insurers will have to cover beginning in 2014.

The health care law (PL 111-148, PL 111-152) requires the Department of Health and Human Services (HHS) to decide which medical services and equipment are "essential health benefits" that every insurer will have to cover. Drug and device manufacturers, physicians and other providers, patients, and others are watching closely to see how HHS officials settle questions such as whether the government will spell out every treatment that insurers must cover or write the rules more broadly.

The discussion will kick off at the Institute of Medicine, an arm of the National Academy of Sciences, which will have one closed-door meeting followed by a two-day public briefing that already has a waiting list of people wanting to attend. The institute is charged with producing recommendations for HHS, which it is expected to issue in September. IOM officials will hold several additional meetings, with the next round expected in March. The institute's report will not spell out which specific services should be covered but will advise HHS officials on policy principles and criteria to consider.

As a practical matter, many policy makers believe HHS officials will issue a proposed rule on essential health benefits by the end of the year so that insurance plans will have time to change benefits as needed before the provisions take effect in 2014.

The Federal Role

The discussion goes to the core of disagreements over how much influence the federal government should have over coverage in the United States. The implications are huge for companies whose products could be excluded or patients whose care will depend on what insurers will reimburse.

Critics such as tea party followers have complained that the new law amounts to a federal takeover of health care. Their complaints are based in part on this provision and also on related ones that dictate such things as amounts of deductibles and copays.

"The definition of essential health benefits will have a huge impact on providers of medical products and services," said Ian D. Spatz, senior adviser to Manatt Health Solutions. "In many cases, it will determine whether their products or services are paid for or not. This is the sleeper issue of health reform."

One key question is whether HHS officials will be prescriptive in detailing which treatments should be covered, or will give insurers more flexibility. The law specifies general categories that insurers must cover—such as outpatient and inpatient care, emergency services, pediatric dental and vision care, wellness services, rehab therapy and mental health care.

Beyond those broad categories, the HHS secretary is required to ensure that the scope of essential health benefits "is equal to the scope of benefits provided under a typical employer plan, as determined by the Secretary." HHS officials will rely in part on a survey that the Labor Department will conduct of employer plans.

Under some federal programs, such as the Medicare part D prescription drug programs, insurers are free to design benefit plans differently as long as they provide a certain value of overall coverage. But when it comes to the minimum benefit package, the law does not give insurers as much leeway.

But it is unclear whether HHS officials will seek to provide a specific list of treatments or take a broader approach, such as asking insurers to mirror benefits in particular plans, such as the most popular insurance policies in a state or in the Federal Employee Health Benefits Program. If HHS leaders take the more general route of tying the new standards to existing insurance plans, then they will have to fine-tune that because the law does not allow some current practices, such as charging patients higher rates if they are older, are terminally ill or have disabilities.

The language that protects against the higher rates contains a clause that some attorneys find curious. The provision says that HHS officials shall "not make coverage decisions, determine reimbursement rates, establish incentive programs, or design benefits in ways that discriminate against individuals because of their age, disability or expected length of life." That wording raises questions about whether HHS officials will be engaged in decisions that have traditionally been made by insurers—including making coverage decisions, setting rates, creating incentive programs or designing benefits.

How Much Is Enough?

Another question centers on what level of coverage HHS officials will require insurers to provide.

"My concern is that they will set the minimum so generously that it will be difficult to make it affordable—and subsidies will have to be high and rich to enable people to get that coverage," said Nancy L. Johnson, a former GOP House member from Connecticut. In other words, if HHS officials decide that the typical employer-sponsored insurance plan covers a wide range of expensive services, then the cost of insurance could be high. The law provides subsidies for coverage for people earning up to four times the federal poverty level, so the federal government would be picking up some of the costs of that insurance for many Americans.

A third issue arising from that language is the definition of "discriminate" and how far federal officials will go in making sure policies are not discriminatory.

Sara Rosenbaum, chairwoman of the Department of Health Policy at the George Washington University School of Public Health and Health Services, sees the provision as "a major advance in the law," noting that the Americans with Disabilities Act does not apply to private insurance.

However, the discrimination language does not mean that insurance companies must stop placing limits on the amount of care patients get. For instance, insurers will probably be able to continue putting limits on services—say, restricting care to a certain number of days of treatment—as long as the limits apply to everyone.

It is not yet known whether federal officials will pore through treatment guidelines and coverage exclusions that are buried in insurance documents that most patients don't read in order to make sure there are no policies that treat people with certain conditions differently.

"Once you're in the weeds of coverage, plans wanting to limit their exposure have ways to do that," said Rosenbaum.

All of these issues have the potential to significantly change insurance practices and the practice of medicine.

"The question is, what do a lot of these terms mean? There's no legislative history on it. How much does the secretary exert her power over coverage?" said Rosenbaum. "It's going to be a huge fight. This is one of the foundational aspects of the law."

By Jane Norman, CQ HealthBeat Associate Editor

January 14, 2011 -- Military families will now receive a benefit similar to the popular provision in last year's health care law that extended insurance to young adults up to age 26 under their family policies.

As many as several hundred thousand young adults in military families are expected to be eligible for insurance coverage through the Tricare Young Adult Program, announced by the Department of Defense. The benefit was included in the 2011 defense authorization measure (PL 111-383) President Obama signed into law earlier this month.

The health care law (PL 111-148, PL 111-152) required that private insurance plans allow families to include their dependents up to age 26 in their family policies. However, the law didn't affect Tricare, the health insurance program for members of the military and their dependents, because Tricare was specifically excluded.

But members of the military objected, saying they wanted to be allowed to include their children up to age 26 under their health insurance policies just like civilians.

Tricare until now covered dependent children up to the age of 21, or age 23 if they were enrolled at an accredited educational institution and relied on a parent for more than 50 percent of their financial support. But beyond that, they weren't covered.

"We've been working really hard to make sure we could put Tricare Young Adult on a fast track," Rear Adm. Christine Hunter, the deputy director of Tricare, said in a statement. She said the defense authorization law will allow military families to elect to enroll their children in the young adult program once it's up and running retroactive to Jan. 1.

The program is expected to begin later this spring and—unlike some military health programs—will require payment of a premium, though the cost has not yet been disclosed. Officials said that the premium allows them to provide the benefit without raising health costs in the defense budget, a major area of concern.

Young adults will be able to purchase coverage if they are unmarried and not eligible for their own employer-sponsored coverage. The coverage will be bought on a month-to-month basis. Young adults will receive the standard Tricare benefit package.

"This program has the potential to expand Tricare coverage to several hundred thousand additional beneficiaries," said Hunter.

By Dena Bunis, CQ HealthBeat Managing Editor

January 13, 2011 -- Hospitals and primary doctors seem to be increasingly buying in to the notion of jettisoning paper files in favor of electronic record keeping, especially with the federal government dangling money in front of them in exchange for so doing.

Data from two surveys released by the Department of Health and Human Service's Office of the National Coordinator for Health Information Technology (ONC) shows that 81 percent of hospitals plan to meet the "meaningful use" requirement of the certified Electronic Health Records (EHR) standard and 41 percent of office-based doctors say they will as well. Among hospitals, two-thirds—65 percent—said they will enroll during Stage 1 of the incentive programs, in 2011 and 2012. Among office-based physicians, 32.4 percent said they would enroll during Stage 1.

"We were really pleasantly surprised at the proportion of hospitals and doctors that have the intent to do this," David Blumenthal, the national coordinator for health information technology, said in an interview with CQ HealthBeat.
Asked whether he is confident that providers will all follow through on their declared intent, Blumenthal said it's too soon to tell because the earliest they can qualify for meaningful use payments is April 1.

Provider registration for the Medicare EHR incentive program and some for Medicaid opened on Jan. 3. Most states will begin such registration for Medicaid this spring and summer.

"The best we can do is figure out what their intent is," Blumenthal said. "Intent is the beginning of action. Without the intent you're kind of lost. At least we're off to a good start."

The survey data, Blumenthal added, also revealed that the percentage of primary care doctors who have already signed up for the first phase of EHR went from 19.8 in 2008 to 29.6 in 2010. The primary physician category includes general internists, family practitioners, pediatricians and geriatricians, Blumenthal said.

"We want all physicians and all other clinicians to be users of electronic health records," he said. "We have prioritized primaries for technical assistance because they have lesser incomes and because they are in many ways the entry point to the health system and the coordinators of care for most Americans."

The 2009 economic stimulus law (PL 111-5) authorized the incentive payments through Medicare and Medicaid to doctors, hospitals and clinics that make "meaningful use" of technology. A federal regulation published in July spells out the specific criteria the government will use in determining who qualifies for such payments. HHS officials said high rates of adoption and meaningful use could mean $27 billion in incentive payments would be made over the next decade. Eventually, providers will face lower Medicare and Medicaid reimbursements if they don't get with the EHR program.

Doctors and hospital groups have complained that the meaningful use standards are too high. They've also voiced angst that the process is ramping up too quickly, emphasizing how difficult it will be for physicians and hospitals to adapt to the technology.

"The biggest concern we're hearing is that it's just a hard thing to do," said Blumenthal, who spent 30 years as a primary care physician before joining the Obama administration. A decade ago, Blumenthal said, the hospital he worked at converted to electronic records.

Doing this "requires technical facilities," he said. "It requires redesigning the work of an office, a nursing station or clinic. Change is hard." Blumenthal said he believes the change in work design will be more difficult for physicians than absorbing the cost of conversion.

"We're also hearing that there are a lot of choices to make among the different products, and that physicians are concerned they may not be making the right choice," Blumenthal said. To help them, ONC has created 62 Regional Extension Centers that will help providers choose products, install systems and attain the meaningful use standards.

"We knew and the Congress knew that these obstacles would be important and we tried to anticipate that,'' Blumenthal said.

Time could also take care of getting the conversion from paper to computer accomplished.

Electronic record keeping, Blumenthal said, "is definitely easier for younger physicians. They are going to be very reluctant to enter practices that today don't have electronic systems," and in most instances are learning to care for patients under such systems.

Blumenthal said his daughter is a third-year medical student at the University of Pennsylvania who had two recent hospital rotations. One had an EHR system. The other did not. When she worked at the hospital that still used paper, Blumenthal said, "she was lost in terms of how to find data and how to report data. That's going to be a pretty universal experience in the future."

The data released came from surveys commissioned by ONC and were done by the American Hospital Association and the National Center for Health Statistics, an agency of the Centers for Disease Control and Prevention.

By Rebecca Adams, CQ HealthBeat Associate Editor

January 11, 2011 -- With a little more help than usual from the federal government, states maintained or expanded eligibility and enrollment for Medicaid and their Children's Health Insurance Programs in 2010, despite the economic downturn, according to a new Kaiser Family Foundation survey. But the picture may not be so stable going forward.

Governors have complained that they cannot afford to hold their Medicaid coverage steady because state revenues have fallen as demand for Medicaid rose during the recession and its aftermath. However, the 2009 stimulus law (PL 111-5) gave states extra funding if they maintained eligibility standards and enrollment procedures. The health care law (PL 111-148, PL 111-152) later expanded those requirements to CHIP. As a result, state officials that might have considered tightening eligibility or making it harder for people to enroll have not done so, despite the financial pressures.

But governors say that when the stimulus funding runs out in June, when many state fiscal years end, they won't be able to avoid significant Medicaid cuts. Last week, 33 current or departing GOP governors asked the Obama administration and congressional leaders to enact new legislation to lift the maintenance of effort (MOE) requirements, which they called "unconscionable" because "the federal requirements force Governors to cut other critical state programs, such as education, in order to fund a 'one-size-fits-all' approach to Medicaid."

Director of the Center for Medicaid and State Operations Cindy Mann, who oversees Medicaid and CHIP, told reporters in a conference call that there is an "ongoing discussion and efforts [are] underway to address the very real pressures that states are feeling."

The Kaiser report indicates that Arizona and New Jersey did cut coverage last year, but they did so in ways that did not run afoul of the law. Arizona capped enrollment in its CHIP program and New Jersey stopped enrolling parents covered through a CHIP waiver. The changes took effect before the health care law expanded the rules to CHIP.

A total of 13 states expanded eligibility in 2010, mostly for children, the Kaiser report found. Another 14 states simplified and streamlined enrollment and renewal procedures, through such techniques as presumptive eligibility for pregnant women and children and 12-month renewals.

The MOE rules were expanded by the health care law. They now require states to maintain their eligibility standards for children that were in place on March 23, 2010 until Oct. 1, 2019. For adults the new standard will hold until state exchange markets launch, which is expected in 2014. The health care law will expand Medicaid significantly and allow some uninsured people who wouldn't be eligible for Medicaid because they earn too much to get insurance through the new exchanges.

The law does provide a way for states to get out of the maintenance of effort rules. If a state certifies that it faces a budget deficit, it can shake off the requirements for childless adults who are not pregnant or disabled if they earn more than 133 percent of the federal poverty limit. The rules also do not apply to benefit changes or provider payments. States, therefore, could save money by scaling back the benefits they added to the core Medicaid program when times were better.

Tricia Brooks, senior fellow at the Georgetown University Center for Children and Families, said that while the tough economy makes budgeting difficult for governors, it is "even harder for families that are struggling with finding a new job or paying the bills." She said that what governors are really advocating is taking coverage away from children who need it.

Mann encouraged state officials to investigate opportunities to get additional funds from the federal government. She noted that the CMS distributed $200 million in performance bonuses in 2010, more than double the awards in 2009—which could be another reason why some states improved their programs in 2010. The federal government has two sets of performance goals that states must meet to qualify for a bonus. States must take steps to streamline their enrollment and renewal processes to make it easier for families with eligible kids to get coverage and must document a significant increase in the number of children enrolled in Medicaid.

Other ways for state officials to get more federal dollars include fees on providers, which can draw down additional federal revenues when states contribute more funding; new grant programs, including those funded by the Center for Medicare and Medicaid Innovation (CMI); and higher federal matching rates for care coordination. One CMI project that is currently taking applications will award up to $1 million each for up to 15 states who have innovative ideas about delivering care to people who are eligible both for Medicare and for Medicaid. Applications are due Feb. 1.

By Jane Norman, CQ HealthBeat Associate Editor

Members of the Medicare Payment Advisory Commission (MedPAC) recommended that Congress set a first-ever copay for home health care services, despite worries about the financial burden it might place on beneficiaries.

The commissioners also suggested changes to the home health payment system but said they should be postponed until 2013, a small reprieve for home health companies deeply concerned about earlier MedPAC discussions on trimming payment rates. But the companies would likely also suffer from any copay Congress would impose because fewer seniors might use home health care if they have to share in paying for it.

Now its up to Congress to decide whether to take on the usually powerful senior lobby and levy such a copay on Medicare recipients.

The concept of a copay was supported by nearly all the commissioners. And MedPAC Chairman Glenn Hackbarth said there's evidence that use of copays—common in other sectors of Medicare—reduces health care use. Medicare spent $19 billion on home health services in 2009.

Commissioners agreed on suggesting a $150 copayment for each 60-day home care treatment period, or episode, and that figure will be included in the text of a March report to Congress, separately from the formal recommendation. At a December meeting, members had balked at a $300 figure put forth by Hackbarth, and the $150 was described as less burdensome for seniors. It would come out to an estimated $8 a visit. Hackbarth said the $150 was "modest." It would equal 5 percent of the average episode payment.

A number of commission members also said they're concerned about a home health system that one characterized as "out of control" and about possible fraud. In certain areas—many in Texas—there are high percentages of Medicare enrollees using home health care and high rates of use. In Starr County, Texas, 35 percent of all Medicare fee-for-service beneficiaries use home health care services.

There's also a danger that home health care, intended to be temporary, can turn into long-term care, commissioners said.

Seniors with very low incomes who are also eligible for Medicaid would be exempt from the copay. Had the copay been in effect in 2008, it would have applied to a third of all home care episodes, which are a series of related visits.

Nonetheless, some commissioners said they are concerned about the overall financial burden that would be placed on seniors. Mitra Behroozi of the Service Employees International Union urged caution in particular about the $150-per-episode figure.

Among commissioners, 13 voted in favor of the copay recommendation, two abstained and one voted against it. The vote against it came from George N. Miller Jr. of First Diversity Healthcare Group in Springfield, Ohio.

The copay would apply to home health episodes that are not preceded by hospitalization or post-acute care. Episodes with very few visits would be excluded from the copay.

Karen R. Borman, a physician from Abington Memorial Hospital in Abington, Pa., said that commissioners have heard about some "fairly eye-popping" margins of profit in some sectors of Medicare, and home health care is one of them. MedPAC staff members said there was a 17.7 percent margin in 2009 for free-standing home health agencies. Access generally is adequate, and the number of agencies continues to grow, with more than 3,800 new agencies in business since 2000.

The volume of use has increased by 50 percent since 2001, and the percentage of enrollees using home health care services continues to rise, staff members said.

Borman said that she has "warm and fuzzy feelings" about the best home health care, but that sometimes MedPAC commissioners must "step back a little bit" and use a "more detached intellectual judgment" in their decision-making.

Bill Dombi, vice president for law at the National Association for Home Care and Hospice, said that earlier recommendations for copays in home health care have found little traction in Congress among either Democrats or Republicans.

"We've got ages of experience in fighting copay battles," said Dombi. "We would anticipate there is going to be a very open-minded review." He said he had difficulty imagining who might sponsor legislation to launch what he called a "sick tax" on senior citizens.

"They will receive the recommendation. I have strong doubts they will do anything with it," he said.

Dombi said that the recommendations adopted by the commissioners were better than the $300 copay talked about at the December meeting but would still be harmful to home health care recipients, who, he said, are often women older than 80 living on their own. Often they have many other illnesses, he said.

And if the copay is only applied to seniors who are admitted from the community rather than from hospitals or nursing homes, he said he wouldn't be surprised to see doctors start admitting their Medicare patients to hospitals just so they can avoid the home health care copay later.

Dombi also said that if there are concerns about high use rates in certain geographic areas, then those areas should be targeted rather than introducing copays for everyone. And, he said, while some home health care agencies may have high profits, a third are already "below water" with their Medicare margins and would sink further if the recommendations are adopted by Congress.

Scott Armstrong of Group Health Cooperative in Seattle called the $150 per episode a "very reasonable" copayment, not unlike others in Medicare.

The copayment would reduce Medicare spending by an estimated $250 million to $750 million in 2012 and by $1 billion to $5 billion over five years.

MedPAC also said that Congress should instruct the secretary of health and human services to begin a two-year change in home health rates in 2013 and eliminate the market basket update for 2012. That would reduce spending by $750 million to $2 billion in 2012.

Also, commissioners recommended that the HHS secretary and inspector general should conduct a review of counties that have "aberrant" use of home health care, and payment should be suspended if significant fraud is found.

A fourth recommendation was that the secretary should revise the home health case-mix system to rely on patient characteristics to set payment for therapy and non-therapy services and no longer use the number of therapy visits as a payment factor.

In other recommendations, MedPac said Congress should:

• Update the Medicare outpatient dialysis payment rate by 1 percent for calendar year 2012.
• Eliminate the update to payment rates for skilled nursing facilities services for the 2012 fiscal year.
• Eliminate the update to payment rates for in-patient rehabilitation facility services for the 2012 fiscal year.

The American Health Care Association (AHCA) was not happy about the decision on skilled nursing facilities.

"We understand that MedPAC's limited scope forces the commission to recommend funding levels for skilled nursing care based solely on its recent assessment of the Medicare program," said former Kansas Governor Mark Parkinson, president and CEO of AHCA. "Fortunately, Congress does not suffer from such limitations. In fact, Congress can, and should, consider the entire economic picture—to include the relationship of Medicare and Medicaid in the long-term care setting – when determining federal funding levels for FY 2012, especially as their constituents' care, good-paying caregiver jobs and local economies depend on it."

By John Reichard, CQ HealthBeat Editor

The Medicare Payment Advisory Commission (MedPAC) voted to recommend to Congress that inpatient and outpatient Medicare hospital payments rise by 1 percent in fiscal 2012—too small an increase, according to the hospital industry.

The commission also decided to recommend that payment rates under the physician fee schedule should grow by one percent, and those for ambulatory surgery centers should increase by .5 percent. MedPAC will issue the recommendations to Congress in March.

An American Hospital Association (AHA) official said the hospital outpatient payment recommendation should have called for a "market basket" increase, currently estimated to be 2.6 percent in fiscal 2012, not the smaller 1 percent hike. The market basket refers to an index that measures annual changes in the cost of delivering medical care.

The official, AHA senior associate director for policy Joanna Kim, added that the inpatient payment was reduced too much to compensate for what MedPAC refers to as "documentation and coding improvements," or "DCI."

MedPAC had contemplated recommending an inpatient payment update of 2.5 percent, but lowered that figure by 1.5 percentage points because of "DCI." The result was the one percent increase recommendation.

MedPAC is also supposed to account for productivity gains in calculating recommended payment changes. But commissioners said that a productivity adjustment should not be made in 2012. They decided the adjustment, which would reduce payments, is not warranted because of the DCI adjustment.

MedPAC Chairman Glenn Hackbarth added, however, that this does not mean productivity adjustments shouldn't be made in future years.

Tug of War Over DCI

DCI is an ongoing bone of contention between the Centers for Medicare and Medicaid Services (CMS) and the hospital industry. The term refers to changes in the way hospitals have billed for payments since the 2007-09 adoption by Medicare of an "MS-DRG" system designed to more accurately account for the costs of care. The MS-DRG system entails more precise assessments of the severity of illness of patients admitted to the hospital.

The new payment system "created financial incentives to better document and code secondary diagnoses," said MedPAC staffer Jeff Stensland. DCI "increased payments, without any real change in average patient complexity or the cost of care," he added.

By law, the changes from adopting the MS-DRG system were not supposed to increase or decrease Medicare payments, which means the higher payments must be recouped, MedPAC officials say.

But hospitals and MedPAC are at odds over how much payments should be reduced to account for DCI and over what period of time.

The inpatient payment recommendation adopted last week also said that Congress should "require the secretary of Health and Human Services to make adjustments to inpatient payment rates in future years to fully recover all overpayments due to documentation and coding improvements."

But MedPAC says the financial shock for hospitals would be too great if DCI were recouped in one fell swoop. To prevent future DCI overpayments, a 3.9 percentage point reduction in Medicare hospital inpatient payments would be required. However, the recommendation would only require 1.5 percentage points of that to be recouped in fiscal 2012, leaving the remaining 2.4 percentage points to be recovered in future years.

But AHA's Kim said that the estimates of DCI-related overpayments MedPAC is relying on are too large. So, she said, the 1.5 percentage point adjustment for DCI in 2012 should be "quite a bit smaller."

MedPAC calculates that overall hospital profit margins on Medicare patients were minus 5.2 percent in 2009. But the commission said hospitals are profitable overall because of higher private sector insurance payments. Thus, overall hospital profit margins in 2009 were a positive 3 percent.

MedPAC says these higher private insurance payments tend to make a number of facilities less careful than they should be about controlling costs. Efficient hospitals in 2009 had a positive Medicare margin of 3 percent, according to MedPAC data.

Commissioners in December had expressed the need, however, for some type of financial warning system to signal that hospitals are going to go under because of the overall negative Medicare margins.

At last week's meeting, MedPAC staffer Stensland said such an early warning measure that looks at hospital cash flow (called "EBITDAR") shows that a relatively small proportion of hospitals in 2006—five percent—had negative cash flow. That percentage was unchanged in 2009, Stensland noted. The figures suggested a continuation of the recent trend toward only a relatively small percentage of annual hospital closures, the analyst said.

MedPAC calculates that the hospital payment recommendation would increase Medicare spending by between $250 million and $750 million in fiscal 2012 and would save between $1 billion and $5 billion over a five-year period as past DCI-related overpayments are recovered.

Doctor payments

As signaled by the December meeting, the commission urged a 1 percent increase in the physician fee schedule.

MedPAC's latest estimate is that payments to doctors next year under Medicare's controversial payment formula will fall 25 percent unless Congress intervenes. The American Medical Association warns that more and more Medicare beneficiaries face problems getting access to care because of physician disgust with payment levels.

Hackbarth devoted considerable time to explaining the apparent disconnect between MedPAC surveys to detect problems of Medicare patients getting access to doctors and reports received by some members of Congress about access problems.

Hackbarth said that survey data shows that only a relative handful of Medicare patients have to look for a primary care doctor each year and that of this small group, only a small fraction have access problems. The net result is that only a couple of percent of Medicare patients have trouble finding a doctor, he said. Access by Medicare patients to physicians is as good as or better than in the under-65 population, he added.

Hackbarth acknowledged that there are some congressional districts in which lawmakers field lots of complaints about access. But he said that doesn't mean MedPAC survey data is inaccurate. It's national data, he noted, and access may be more difficult in some local areas than in others. Also, the reason for access problems may not be that Medicare payment rates are too low but that there aren't enough primary care doctors in a particular area, affecting both Medicare and privately insured patients, he added.

Nevertheless, two percent of Medicare patients with access problems "is a lot of people"—about 900,000. And breaking that down further per congressional district, "that's still a lot of people. People are experiencing significant access problems we need to worry about," he said.

Commissioners expressed some frustration with simply looking at Medicare payment levels in considering the adequacy of Medicare payments. For example, doctors can order more tests and procedures to boost income even if payment rates are relatively low.

The volume of physician services per beneficiary continues to grow, according to MedPAC data. By one measure, physicians average $273,000 in annual income, according to MedPAC information recently released.