Federal Officials Vow to Raise Medicare Reimbursement Rates in Several of California’s High-Cost Counties
[Posted 04/20/09]

A summit called last week by House Speaker Nancy Pelosi and Rep. Sam Farr to address the long-standing Medicare geographic payment inequity for a number of California counties concluded with a commitment from federal officials to tackle the problem this year.

“This is a welcome breakthrough on a problem that has reduced access to care for years,” says CMA President Dev A. GnanaDev, MD. “As costs have risen in places like Santa Barbara and San Diego counties, Medicare reimbursements have not kept up, and that has resulted in fewer doctors being able to serve those patients.”

The Medicare payment 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 every California county, and assigns each county to one of nine of California’s Medicare regions, called payment localities. However, because of rapid growth and development in recent years, physicians in some California counties (Marin, Monterey, Riverside, Sacramento, San Bernardino, San Diego, San Luis Obispo, San Joaquin, Santa Barbara, Santa Cruz, Sonoma and Yolo counties) have practice costs that are up to 10 percent greater than the average costs of other counties in their Medicare localities.

Speaker Pelosi used the power of her office to bring together representatives of key House and Senate congressional committees, the Centers for Medicare and Medicaid Services, the Medicare Payment Commission, and CMA met to discuss the problem. The meeting represented a giant step forward, as participants acknowledged that something must be done but stopped short of agreeing on a solution.

CMA has spent the last 10 years exploring a variety of solutions to this problem. Because federal law requires that geographic payment changes be budget neutral, CMA physicians have been placed in an untenable situation of creating winners and losers within California. CMA will only back a resolution that holds California’s other rural counties harmless.

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