DEPARTMENT OF HEALTH & HUMAN SERVICES

Office of Inspector General

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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 Areas and Medically Underserved Areas

PURPOSE

The purpose of this Management Implication Report (MIR) is to notify your office of a vulnerability in the process used to designate Health Professional Shortage Areas (HPSA) and Medically 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 health

the population.l In response to this problem, Congress enacted legislation aimed specifically at overcoming these disparities, including the Emergency Health Protection Act, a law creating the National Health Service Corps (NHSC) in 1971, and the Health Maintenance Organization (HMO) Act of 1973. The legislation creating NHSC mandated that NHSC personnel be assigned only to areas designated as "health manpower shortage areas," which were later renamed as HPSAs. The HMO Act of 1973 instructed the Department of Health, Education, and Welfare (later, the Department of Health and Human Services) to define criteria for MUAs.2 Currently, the Health Resources and Services Administration (HRSA) develops health professional shortage designation criteria to determine wh~Qer a ge2graphi~ area, population group, or facility meets the threshold _a~i:i HlSA or an
care available to various segments of MUA.

A HPSA is an area designated as having a shortage of primary medical care, dental, or mental health 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,

2011. .

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,

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

professionals in surrounding areas are overused or are inaccessible to the area under
consideration. HPSA scores are developed for use by NHSC to determine priorities for

assigning clinicians who have received scholarships or loan repayments in return for a
commitment to locate in an underserved community. Scores range from 1 to 25 for primary

medical care and mental health professionals and from 1 to 26 for dental professionals. A HPSA score of 0 is also possible, usually indicating that the scoring data are not available or are incomplete. Areas with higher scores are considered priorities. HRSA is required to review
HPSA designations annually. To meet this requirement, HRSA's Bureau of

Primary Health

Care, Office of Shortage Designations (OSD) performs an annual review, limited to those designations that have not been updated for 3 years. During the annual review, State Primary Care Offices (PCO) should submit to OSD new data relevant to the designations in their States in support 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 a HPSA. Foreign physicians possessing a J-1 visa who agree to serve in a HPSA may apply for a waiver from the requirement to return home after residency training. Practitioners receive a 1 O-percent bonus for services provided to Medicare patients within the HPSA. Effective January 1,2011, general surgeons receive an additiona110-percent payment for their Medicare claims for major surgical procedures provided in a HPSA, as stated in the Affordable Care Act of2010. Some States provide additional incentives to attract physicians to HPSAs.
An MUA is an area designated as being underserved on the basis of four variables: (1) ratio of primary care physicians per 1,000 population, (2) infant mortality rate, (3) percentage of population with incomes below the poverty level, and (4) percentage of the population age 65 or

Medical Underservice (IMU) to data on a service area. The IMU is a tool developed by HRSA to meet
over. Each of these variables is converted to a weighted value by applying the Index of

the HMO Act of 1973. The IMU scale is from 0 to 100; 0 represents completely underserved areas and 100 represents best served or least underserved areas. Each service area having a score of 62.0 or less qualifies for designation as an MUA. Further, the IMU can be used to designate a population group within an area that does not qualify as an MUA as a medically underserved population (MUP). To be designated an MUP, it must be demonstrated that the group faces economic, cultural, or linguistic barriers to medical care. Unlike the requirement for HPSA designations, there is no requirement that-MUA designations be periodically reviewed and updated. Many of the original MUA designations made in 1978 are still in place.
the requirements of

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. Health centers that meet the requirements for CHC grant funding, but do not receive CHC grant funding, can apply for certification as a Federally Qualified Health Center (FQHC) or Rural Health 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. MUP designation provides the same benefits.
use 'the_ HPSA and/or MUA designation to determine eligibility the exceptions and safe harbors to the physician self-referral law (also referred to as the "Stark Law") and the Federal anti-kickback statute reference HPSAs and/or MUAs. Thus, depending on the circumstances, HPSA or MUA designation can increase the likelihood that financial relationships or arrangements among physicians qualify for protection under those exceptions or
Currently, 37 Federal programs: for financial or other incentives or for assignment of clinicians.3 Further, some elements of

safe harbors.

DISCUSSION
the proper criteria and methodology for defining HPSAs and MUAs has been a source of controversy. HRSA proposed rules to amend these designations in 1998 and in 2008 but withdrew both proposals when many stakeholders objected that the proposed rules would cause many areas to lose their designations.4 The Negotiated Rulemaking Committee on the Designation of Medically Underserved Populations and Health Professions Shortage Areas is working on regulations to revise the criteria and methodology for designating areas as MUAs and HPSAs. This revision was mandated in section 5602 of the Affordable Care
The issue of Act of2010.5 The committee's report is expected by October 31, 2011.6 Regardless of committee's final decisions, it is vital that HRSA exercise rigorous oversight of

the

these

designations.

Fieldwork by special agents with the Office of Investigations (01) has revealed HPSA/MUA designations for areas no longer meeting the criteria. While preparing to open a field office in McAllen, 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 HPSA
and an MUA.

"Withdrawal" of

On March 30, 2005, Hidalgo County scored a 0 for primary medical care and was proposed for the HPSA designation by the PCO within the Texas Department of State Health

Services. PCO is the State contact for HRSA/OSD in developing and reviewing designation

requests and updates. HRSAlOSD failed to act on this recommendation. HRS~~s "Find
3 This figure was furnished by the Texas Department of

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 at
http://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.

State Health Services.

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. The

Office of Inspector General (OIG) estimates that potential HPSA bonus payments to Hidalgo County 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 dynamic growth of the local health care community. In 2011,01, with assistance from OIG's Office of Audit Services, determined that according to current data, Hidalgo County scores a 68.4, above the 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/the

Rural Health Clinic Program. In this report, OIG recommended that HRSA should "review the underserved designations for the areas that have not been updated in the last 3 years. ,,9 More recently, the Government Accountability Office published its report, Health
Professional Shortage Areas: Problems Remain with Shortage Area Designation System,

which recommended that HRSA "Publish a list of designated HPSAs in the Federal Register or otherwise remove, through Federal Register notification, the HPSA designations for those HPSAs that no longer meet the criteria or have not provided updated data in support of their designations."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 and remove 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 MUA designations 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,

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 practice address in a Hidalgo County ZIP Code. OIG does not have access to systems containing actual HPSA bonus

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

rayments. OEI-05-03-00 I 70, August 2005, p. 14 10 GAO-07-84, October 2006, p.35.