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DEPARTMENT OF HEALTH & HUMAN SERVICES Office of Inspector General

Washington, D.C. 20201

SEP 2 6 2011

TO: William V. Corr, J.D.Deputy Secretary

FROM: Daniel R. Levinson ~ 13, ~Inspector General

SUBJECT: Management Implication Report 11-0006 - Health Professional Shortage Areasand Medically Underserved Areas

PURPOSE

The purpose of this Management Implication Report (MIR) is to notify your office of avulnerability in the process used to designate Health Professional Shortage Areas (HPSA) andMedically Underserved Areas (MUA) and to recommend action to address this vulnerability.

BACKGROUND

For many decades, the Federal Government has recognized that there are disparities in the healthcare available to various segments of the population.l In response to this problem, Congressenacted legislation aimed specifically at overcoming these disparities, including the EmergencyHealth Protection Act, a law creating the National Health Service Corps (NHSC) in 1971, andthe Health Maintenance Organization (HMO) Act of 1973. The legislation creating NHSCmandated that NHSC personnel be assigned only to areas designated as "health manpowershortage areas," which were later renamed as HPSAs. The HMO Act of 1973 instructed theDepartment of Health, Education, and Welfare (later, the Department of Health and HumanServices) to define criteria for MUAs.2 Currently, the Health Resources and ServicesAdministration (HRSA) develops health professional shortage designation criteria to determinewh~Qer a ge2graphi~ area, population group, or facility meets the threshold _a~i:i HlSA or anMUA.

A HPSA is an area designated as having a shortage of primary medical care, dental, or mentalhealth providers. To be designated a HPSA, an area must demonstrate that primary medical

i Joseph W. MountIn and Hazel O'Hara, "Differences in Opportunities for Health" Public Health Reports, Vol. 53,

No. 13 (1938): pp.485-496. Accessed at http://www.jstor.org/stable/4582494 on July 25, 201 1.

2 Richard C. Lee, "Designation of Health Manpower Shortage for Use by Public Health Service Programs" Public

Health Reports, Vol. 94, No. i (1979): pp. 49-50. Accessed at http://www.jstor.org/stable/459602 1 on July 25,2011. .

Page 2 - William V. Corr, J.D.

professionals in surrounding areas are overused or are inaccessible to the area underconsideration. HPSA scores are developed for use by NHSC to determine priorities forassigning clinicians who have received scholarships or loan repayments in return for acommitment to locate in an underserved community. Scores range from 1 to 25 for primarymedical care and mental health professionals and from 1 to 26 for dental professionals. A HPSAscore of 0 is also possible, usually indicating that the scoring data are not available or areincomplete. Areas with higher scores are considered priorities. HRSA is required to reviewHPSA designations annually. To meet this requirement, HRSA's Bureau of Primary Health

Care, Office of Shortage Designations (OSD) performs an annual review, limited to thosedesignations that have not been updated for 3 years. During the annual review, State PrimaryCare Offices (PCO) should submit to OSD new data relevant to the designations in their States insupport of those areas' continued HPSA status.

HPSA designation serves mostly as an incentive to providers to locate in a HPSA.

Scholarships and student loan repayments are available for health professionals who work in aHPSA. Foreign physicians possessing a J-1 visa who agree to serve in a HPSA may apply fora waiver from the requirement to return home after residency training. Practitioners receive a1 O-percent bonus for services provided to Medicare patients within the HPSA. EffectiveJanuary 1,2011, general surgeons receive an additiona110-percent payment for theirMedicare claims for major surgical procedures provided in a HPSA, as stated in theAffordable Care Act of2010. Some States provide additional incentives to attract physiciansto HPSAs.

An MUA is an area designated as being underserved on the basis of four variables: (1) ratio ofprimary care physicians per 1,000 population, (2) infant mortality rate, (3) percentage ofpopulation with incomes below the poverty level, and (4) percentage of the population age 65 orover. Each of these variables is converted to a weighted value by applying the Index of MedicalUnderservice (IMU) to data on a service area. The IMU is a tool developed by HRSA to meetthe requirements of the HMO Act of 1973. The IMU scale is from 0 to 100; 0 representscompletely underserved areas and 100 represents best served or least underserved areas. Eachservice area having a score of 62.0 or less qualifies for designation as an MUA. Further, theIMU can be used to designate a population group within an area that does not qualify as an MUAas a medically underserved population (MUP). To be designated an MUP, it must bedemonstrated that the group faces economic, cultural, or linguistic barriers to medical care.Unlike the requirement for HPSA designations, there is no requirement that-MUA designationsbe periodically reviewed and updated. Many of the original MUA designations made in 1978 arestill in place.

MUA designation provides benefits for primary health care systems in underserved areas.Recipients of Community Health Center (CHC) grant funds must be located in an MUA. Healthcenters that meet the requirements for CHC grant funding, but do not receive CHC grantfunding, can apply for certification as a Federally Qualified Health Center (FQHC) or RuralHealth Clinic (RHC). Both FQHCs and RHCs qualify for program grants and for special

Page 3 - William V. Corr, J.D.

payment provisions with Medicare and Medicaid, such as cost-based reimbursement. MUPdesignation provides the same benefits.

Currently, 37 Federal programs: use 'the_ HPSA and/or MUA designation to determine eligibilityfor financial or other incentives or for assignment of clinicians.3 Further, some elements of theexceptions and safe harbors to the physician self-referral law (also referred to as the "StarkLaw") and the Federal anti-kickback statute reference HPSAs and/or MUAs. Thus, dependingon the circumstances, HPSA or MUA designation can increase the likelihood that financialrelationships or arrangements among physicians qualify for protection under those exceptions orsafe harbors.

DISCUSSION

The issue of the proper criteria and methodology for defining HPSAs and MUAs has been asource of controversy. HRSA proposed rules to amend these designations in 1998 and in2008 but withdrew both proposals when many stakeholders objected that the proposed ruleswould cause many areas to lose their designations.4 The Negotiated Rulemaking Committeeon the Designation of Medically Underserved Populations and Health Professions ShortageAreas is working on regulations to revise the criteria and methodology for designating areasas MUAs and HPSAs. This revision was mandated in section 5602 of the Affordable CareAct of2010.5 The committee's report is expected by October 31, 2011.6 Regardless of thecommittee's final decisions, it is vital that HRSA exercise rigorous oversight of thesedesignations.

Fieldwork by special agents with the Office of Investigations (01) has revealed HPSA/MUAdesignations for areas no longer meeting the criteria. While preparing to open a field office inMcAllen, Texas, our agents immediately noted a high concentration of health care facilities.They later determined that Hidalgo County, where McAllen is situated, is designated as a HPSAand an MUA.

On March 30, 2005, Hidalgo County scored a 0 for primary medical care and was proposed for"Withdrawal" of the HPSA designation by the PCO within the Texas Department of State HealthServices. PCO is the State contact for HRSA/OSD in developing and reviewing designationrequests and updates. HRSAlOSD failed to act on this recommendation. HRS~~s "Find

3 This figure was furnished by the Texas Department of State Health Services.

4 Thomas C. Ricketts, III, Ph.D., et aI., "Designating Places and Populations as Medically Underserved: A Proposal

for a New Approach," Journal of Health Care for the Poor and Underserved 18 (2007): 568-570. Acessed athttp://muse.jhu.edu.ezproxy.umuc.edu/journals/journal_ oC health_care _for_the _poor_and _ underserved/vO 18/18.3ri

cketts.pdf on July 27, 2011.

5 Notice ofIntent to Form Negotiated Rulemaking Committee, Federal Register, May 1 I, 2010 (Volume 75,

Number 90), page 26167. Accessed at http://edocket.access.gpo.gov/2010/201O-1 1214.htm on June 8, 2011.

6 Preliminary Report from the Negotiated Rulemaking Committee on the Designation of Medically Underserved

Populations and Health Professions Shortage Areas to the Secretary of Health and Human Services March 20 i i.Accessed at http://www.hrsa.gov/advisorycommittees/shOltage/nrmaction.pdf on June 8, 20 11.

Page 4 - William V. Corr, J.D.

Shortage Areas" Web site identifies the Primary Care HPSA status for Hidalgo County as"Proposed WithdrawaL." 7 There have been no updates or modifications to the designation. TheOffice of Inspector General (OIG) estimates that potential HPSA bonus payments to HidalgoCounty providers may have totaled as much as $64 million in Medicare payments since 2006.8

On April 18, 1994, HRSA designated Hidalgo County an MUA with an IMU score of 54.4.Since 1994, there have been no updates or modifications to this designation, despite the dynamicgrowth of the local health care community. In 2011,01, with assistance from OIG's Office ofAudit Services, determined that according to current data, Hidalgo County scores a 68.4, abovethe 62.0 IMU threshold established by HRSA for MUA status.

The oversight of shortage area designations has been the subj ect of previous reports.HPSA/MUA designation was an important element of the OIG inspection report, Status o/theRural Health Clinic Program. In this report, OIG recommended that HRSA should "reviewthe underserved designations for the areas that have not been updated in the last 3 years. ,,9More recently, the Government Accountability Office published its report, HealthProfessional Shortage Areas: Problems Remain with Shortage Area Designation System,which recommended that HRSA "Publish a list of designated HPSAs in the Federal Registeror otherwise remove, through Federal Register notification, the HPSA designations for thoseHPSAs that no longer meet the criteria or have not provided updated data in support of theirdesignations."lo

HRSA concurred with the recommendations in both reports.

RECOMMENDATIONS

1) HRSA should review all HPSA and MUA designations no less than every 3 years andremove the designation from all areas no longer meeting the minimum criteria.

2) HRSA should respond to all State PCO requests to remove HPSA and/or MUAdesignations within 6 months.

Thank you for your attention to this MIR. If you have any questions, please contact me, or your

staff ~al contact !!Jv~stigations Analyst Paul l-Ieineman at (202) 205-044l.

7 Accessed at http://datawarehouse.hrsa.gov/GeoAdvisor/ShortageDesignationAdvisor.aspx on August 5, 20 I I,

using the target address for the McAllen Convention and Visitors Bureau: 1200 Ash A venue, McAllen, TX 78501.

8 OIG's estimate was based on a Business Objects query to the Centers for Medicare & Medicaid Services' (eMS)

Integrated Data Repository, applying CMS instructions for HPSA bonus payments to providers with a practiceaddress in a Hidalgo County ZIP Code. OIG does not have access to systems containing actual HPSA bonus

rayments.OEI-05-03-00 I 70, August 2005, p. 1410 GAO-07-84, October 2006, p.35.