Language to fix underpayment of local doctors by Medicare clears major committee hurdle today

The House Committee on Energy and Commerce unanimously passed legislation today that included Congressman Sam Farr’s (D-Carmel) Geographic Practice Cost Index (GPCI) Fix. The language authored by Congressman Farr was included as part of H.R. 2810, the Medicare Patient Access and Quality Improvement Act.  The fix would solve a four-decade-old problem that mislabels 14 California counties as “rural,” meaning doctors are undercompensated for Medicare procedures. Monterey, San Benito and Santa Cruz are among those affected by this problem.

“Central Coast families have faced a shortage of doctors in part because primary care physicians were not being fairly compensated by Medicare for the high cost to practice here,” said Congressman Farr. “Thanks to the Committee’s action today, we are huge step closer to modernizing the outdated reimbursement formula and providing California patients with the choice in doctors they deserve.”

In 1966, when the formula was initiated, counties were designated as either "rural" or "urban," with the expectation that those designations would be updated every few years. That never happened, and as a result, doctors in counties that have seen economic growth are being compensated at levels significantly lower than those in nearby counties. For instance, counties such as San Diego and Sacramento are improperly designated as “rural’ despite large populations. The 14 California counties (San Benito, Santa Cruz, Marin, Santa Barbara, San Diego, Monterey, Sonoma, Placer, El Dorado, Yolo, Sacramento, San Luis Obispo, Riverside and San Bernardino) are underpaid by as much as 10% each year, forcing doctors practicing in those counties to forgo up to $54 million in Medicare funding each year.

"The CMA wants to extend a huge thanks to Congressman Sam Farr for his leadership and tenacity in convincing the Energy and Commerce Committee today to adopt the California Medicare locality reform,” said Paul Phinney, MD, President of the California Medical Association. “It will significantly update Medicare physician payments and improve access to care for seniors and military families in San Benito, Monterey and Santa Cruz counties. “

If the legislation is signed into law, starting in 2017 the reimbursement formula would be calculated based on Metropolitan Statistical Areas (MSAs) which better reflect the cost of practicing medicine. MSAs are already used by Medicare for hospital payments. The higher payments would be phased in over a six year period.

The legislation now moves to the House Ways and Means Committee for approval. The Senate Finance Committee is expected to take up a similar bill this year.

# # #