This paper provides policy analysis of the geographic adjusters used in the Medicare physician payment system. In 2003, Medicare set a floor on the adjuster for the work component of each fee so that every area is paid at least at the average, regardless of its relative costs. We review the conceptual foundation for the geographic practice cost adjusters, emphasizing why researchers and policymakers included an adjustment for geographic differences in the costs of physicians' work. Finally, we discuss the floor provision in the context of the broader aims of its proponentsto increase access to physician services in those areas affected by the floor.
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