Bills Would Help Resolve Medicare Payment Disparities in CA, But Not Other States

Cheryl Clark, for HealthLeaders Media , June 11, 2009

Doctors in 14 urbanized California counties applauded bills introduced Thursday by Rep. Sam Farr and Dianne Feinstein that would revise the rules that underpay physicians for treating Medicare patients by redefining their practices as more expensive and urban, instead of rural.

Instead of paying doctors based on an algorithm called the Geographic Practice Cost Index or GPCI, Medicare fees would be based on costs according to the Metropolitan Statistical Index, which is updated annually and is a more accurate recognition of expenses in urban environments.

That's the way hospitals are paid now, the California congressman says, so it only makes sense to pay doctors that way too. "It's fairer, it's smarter, and it's certainly more accurate," Farr says.

Farr expects the bill will be rolled into a health reform package, along with Feinstein's companion bill on the Senate side. Asked if the bill could disappear in the scramble of numerous reform efforts, Farr says he doesn't think so. "Everybody has agreed it's a problem that needs fixing.  And that's half the battle."

In the absence of any formula correction, physicians have been declining to take more Medicare patients, leaving those who remain committed to care for older patients more frustrated and more frantic.  In some parts of the state, the last doctor in certain specialties now declines to take Medicare patients, requiring people over 65 to travel long distances to cities in other counties.

Counties in Georgia, Minnesota, Ohio, and Virginia have disparities in physician payments because of the issue as well. But for now, Farr says, the remedy is just for California. "The complaint has arisen in California where the voices were the loudest," Farr says.

But he adds corrective change could eventually come there as well.

"This is a national pilot. But we want to hook this star on the train that's going to the end destination. In the past, we haven't had a major medical bill to hang on to," he says.

The problem has been documented for several years by the Medicare Payment Advisory Commission, the Urban Institute, and a private consulting firm, Acumen LLC.&

California Medical Association leaders say they are thrilled that corrective action is now possible.

"This is a welcome breakthrough on a problem that has reduced access to care for years," said CMA President Dev A. GnanaDev, MD. "As costs have risen in places like Santa Cruz, Monterey, and San Benito counties, Medicare reimbursements have not kept up, and that has resulted in fewer doctors being able to serve those patients. This legislation provides a fix without punishing other counties."

According to Farr's bill, more than half of the current physician payment localities include counties within them with a "large payment difference (that is, a payment difference of 5% or more) between the General Accounting Office's measure of physicians' costs and Medicare's geographic adjustment for the area."

"All these objective studies have recommended changes to the locality system to correct the payment discrepancies."

The new payment structure would take effect with Medicare physician services furnished after Jan. 1, 2010.

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