ASSESSING THE VALIDITY OF THE GEOGRAPHIC PRACTICE COST INDEXES

Data on physician practice inputs were used to test the degree to whic h the geographic practice cost indexes (GPCIs) of the Medicare physici an payment schedule reflect geographic variation in input prices. For purposes of this study, input quantity information was collected throu gh the American Medical Association's Socioeconomic Monitoring System survey in 1990 and 1991. These data, along with practice expense infor mation, were used to construct unit input prices. The GPCIs were corre lated with input prices; however, ''real'' or GPCI-adjusted prices var ied significantly across localities. We conclude that the GPCIs are us eful, but imperfect measures of geographic differences in physician pr actice input prices.