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Medicare Payments to Puerto Rico May Increase

The Centers for Medicare and Medicaid Services (CMS) has released a proposed rule that will increase reimbursement rates for physicians in Puerto Rico under the Medicare program. The change will take place on January 1, 2017.

The difference in funding between Puerto Rico and the 50 states has been a problem for Puerto Rico for many years. With the rise of the Zika virus and the economic crisis in Puerto Rico, the effects have become even more dire. Reports from Puerto Rico say that lack of medical supplies and even of electricity and water are affecting healthcare facilities, government payments have dropped even further, and that doctors are leaving Puerto Rico at the rate of one a day.

The government of Puerto Rico is responsible for significant medical costs, with the majority of the population eligible for public health benefits. The government also has to pay a higher proportion of the costs than the governments of the 50 states do. Medicare payments in Puerto Rico are lower, and reimbursements to doctors are also lower. Increasingly, Puerto Rico’s medical professionals have been finding that they cannot survive on their earnings.

Three factors are included in decisions about Medicare payments:

  • “Physician Work” considers the cost, including time, of providing a service.
  • “Practice Expense” reflects the cost of maintaining a medical practice, including rental of office space, staffing costs, and the costs of equipment and supplies.
  • “Malpractice” is based on the price of malpractice insurance.

A geographic pricing cost index, called GPCI, is then applied, to account for the differences in the cost of running a medical practice in different parts of the country. The cost calculations for Puerto Rico are the lowest in the United States. “As a practical matter,” says a press release from Pedro Pierluisi, the Resident Commissioner of Puerto Rico, “this means that Puerto Rico physicians are reimbursed less under Medicare than doctors in any other U.S. state or territory, including the neighboring U.S. Virgin Islands.”

Pierlusi has claimed for years that the formula does not reflect the true cost of practicing medicine in Puerto Rico, and his 2015 health care bill,  Improving the Treatment of the U.S. Territories Under Federal Health Programs Act, argued for a change in the formula.

“After years of advocacy efforts undertaken by me, the Puerto Rico College of Physicians and Surgeons, the Puerto Rico Institute of Statistics, and other stakeholders, I am so gratified that CMS is now proposing to increase all three GPCIs for Puerto Rico physicians,” says Pierluisi. “Although it is not possible to precisely estimate the dollar value of this proposal, the positive impact is likely to be extraordinarily significant, because island doctors will receive higher federal payments for every single medical service they provide to Medicare patients.”

This might make it possible for doctors in Puerto Rico to keep their practices open, and for medical students from Puerto Rico to return to the Island after they complete their degrees. In 1995, Puerto Rico had a little more than half as many doctors per thousand residents as the United States. Current figures are not available.

However, the American College of Emergency Physicians reports that “Puerto Rico has no burn unit beds and only 70.1 intensive care unit (ICU) beds per 1 million people” as well as a severe shortage of emergency specialist physicians. They point out that Puerto Rico has no near neighbors, as most of the 50 states do, to help with beds and medical facilities in case of emergency. As more doctors leave and hospitals make do with fewer resources, Puerto Rico will be increasingly vulnerable to natural disasters.

“I want to express my profound gratitude to officials at both CMS and the U.S. Department of Health and Human Services, CMS’s parent agency,” Pierluisi said.  “I intend to do everything within my power, working with my allies, to ensure that this proposal is retained in the final rule.” That final rule will be released in September.

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