CMA-Sponsored Bill Introduced Into U.S. Congress Would Bring Equity to Geographic Payment Formula
[Posted 05/31/07]

Rep. Sam Farr (D-Carmel) last week introduced a CMA-sponsored bill to fix the inequitable and outdated Medicare geographic payment formula. The bill, which has bipartisan support from key members of the California congressional delegation, would allow currently underpaid counties to be reimbursed based on more accurate geographic practice costs.

"We are grateful to Congressman Sam Farr and the California authors of this important legislation for working so hard on behalf of physicians and patients to achieve Medicare geographic payment equity,” says CMA President Anmol S. Mahal, M.D.

CMA has for many years sought a fix to the geographic payment problem. The reimbursement formula includes a geographic adjustment factor (GAF) that adjusts the payment rate for local geographic market conditions. The goal is to base physician reimbursement on what it costs to provide care in a particular geographic region. The formula calculates a geographic adjustment factor for each county and assigns each county to a Medicare payment locality.

Unfortunately, the payment locality assignments have not been updated in 10 years, and the last update was made using 1966 demographic data. Practice costs in many recently urbanized counties have increased dramatically, yet the counties remain inappropriately grouped into payment localities with lower-cost counties. The result is that physicians in 174 counties in 32 states are paid up to 14 percent less than they should be according to their GAF. The ten most underpaid counties in California are Santa Cruz (-10.2 percent), Sonoma (-8.2 percent); Monterey (-6.7 percent), Marin (-6 percent), San Diego (-5.5 percent), Sacramento (-4.6 percent), Santa Barbara (-3.5 percent), El Dorado (-3.3 percent), Placer (-2 percent), and San Luis Obispo (-1.2 percent).

This bill would require the Centers for Medicare and Medicaid Services (CMS) to move any county whose county GAF exceeds its locality GAF by 5 percent to its own locality and be reimbursed at the geographically appropriate rate. The bill also requires CMS to update the payment localities every 3 years using the 5 percent threshold. The legislation would also protect the physicians in counties remaining in original payment localities by establishing a geographic payment floor at current levels.

If your members of Congress are authors or sponsors of the bill, please thank them for supporting this long-overdue fix. If your representatives have not yet signed on, please urge them to do so immediately!

Click here for a more details on this bill.

Contact: Elizabeth McNeil, 415/882-3376 or emcneil@cmanet.org.

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