CMA urges Congress to update geographic payment localities in SGR fix

November 07, 2013
Area(s) of Interest: Advocacy Payor Issues and Reimbursement 

The California Medical Association (CMA) has sent the leadership of the Senate Finance Committee and the House Ways and Means Committee a letter urging them to include a Medicare payment locality update as part of legislation to repeal the flawed Medicare Sustainable Growth Rate (SGR) formula.

Last week, the two committees released an unprecedented bipartisan and bicameral “discussion draft” proposal to repeal the SGR and reform the Medicare payment system. The draft legislation did not, however, include a physician payment locality update. In July, the House Energy and Commerce Committee unanimously approved another bipartisan bill (H.R. 2810) to overhaul the SGR — this bill does include a CMA-sponsored "GCPI fix" that would update the California county-based localities to the same Metropolitan Statistical Areas (MSAs) used to determine payment rates for hospitals. The bill would also hold the physicians in rural counties harmless from the corresponding cuts that would otherwise occur.

Updating the localities would ensure appropriate payments for many recently urbanized areas like San Diego, Monterey and Sacramento counties. These counties are currently designated as rural, causing some California physicians to be paid up to 10 percent below what they should be paid if the regional designation was correct. The Centers for Medicare and Medicaid Services (CMS) already continuously updates the MSAss, however, the physician payment localities have not been updated in 16 years.

San Diego, for example, is now the sixth largest city in the United States, yet it is still designated by Medicare as rural. San Diego physicians and patients forego $26 million in Medicare funding each year because of the inaccurate rural designation. Medicare's geographic payment formula has not kept pace with the nation's changing costs and demographics. The negatively impacted counties in California include, San Benito, Santa Cruz, Marin, Santa Barbara, San Diego, Monterey, Sonoma, Placer, El Dorado, Yolo, Sacramento, San Luis Obispo, Riverside and San Bernardino.

Although the payment discrepancies are most egregious in our state, with California accounting for half of all payment anomalies in the country, a number of other states are experiencing similar problems. According to CMA’s latest analysis, the four states with the highest average payment error rate are California, Maryland, Virginia and Illinois.

CMA's letter urges committee leaders to include the H.R. 2810 California GPCI fix and a new provision that would direct the Secretary of Health and Human Services to develop long-term models and approaches for transitioning the Medicare physician payment localities in other states.

The committee leaders told CMA that the initial draft would only include national Medicare payment issues. The CMA GPCI fix is a secondary issue because it is a state-only provision. However, it is on the list of priorities when the secondary issues are considered by the committee for future drafts. CMA is fighting hard to include this provision in the final Medicare SGR payment reform bill. Doing so would improve payment accuracy, which is the goal of the proposed legislation.

CMA is on Capitol Hill in Washington, D.C., this week to deliver this letter and to lobby the California Delegation and the committee leadership, asking them to work on behalf of California physicians and patients to not only repeal the SGR, but to include the GPCI fix in this legislation.

Contact: Elizabeth McNeil, (415) 882-3376 or emcneil@cmadocs.org.


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