$3.2B Lawsuit Targets Medicare Underpayments

Cheryl Clark, for HealthLeaders Media , February 24, 2011

The GAO identified four modifications that would "substantially reduce or eliminate relative underpayments to physicians" and "would generally impose a minimal amount of administrative burden on CMS, Medicare carriers and physicians."

Another five federally funded or sponsored studies have identified other ways that the Medicare Part B structure might more accurately reflect local costs of providing care. The Medicare Payment Advisory Commission and the Urban Institute have also "identified a number of ways in which payment accuracy can be improved without significantly increasing administrative expenses."

"Despite these six studies, (the Department of Health and Human Services) has taken no action other than to commission further study."

In fact, not one, but two Institute of Medicine committees are now holding hearings in advance of two reports anticipated later this year on the same topic.

The lawsuit, a first amended complaint of a case that was first launched two and a half years ago, was filed again against HHS Secretary Kathleen Sebelius in the United States District Court, Northern District of California.

DeGhetaldi says that the lawsuit seeks to represent all 200 underpaid counties and hopes to receive certification for a class action.

Plaintiff Theodore Mazer, MD, a San Diego ear nose and throat specialist, says he "decided to stick my neck out because we have been trying for 10 years, through regulatory and legislative channels, to get this fixed but it has been stagnating. We need to move this to where there is no question of who has the standing to sue to get it corrected."

He adds that it isn't just Medicare payments that are affected by these unfair geographic assignments. In many other regions of the country such as San Diego, "Every other payer follows Medicare, compounding the problem. And what that means is that doctors simply can't afford to continue to pay the overhead for their offices" in those regions of the country.

The looming sustainable growth rate formula, which threatens to cut physician's Medicare reimbursement by 27% if it is not repealed or postponed by January, 2012, makes the GPCI issue that much more urgent, he says.


Cheryl Clark is senior quality editor and California correspondent for HealthLeaders Media. She is a member of the Association of Health Care Journalists.
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