After almost a decade, a Medicare payment inequity costing San Diego County's physicians roughly $100 million annually ($10,000 per physician per year) has been resolved.
President Barack Obama signed HR 4302 / S 2000, the Protecting Access to Medicare Act of 2014, on April 1. The bill does three things:
1. It postpones (for the 17th time) the 24 percent cut to physician Medicare reimbursement rates demanded by the sustainable growth rate (SGR) formula to April 2015 — this despite a bicameral, bipartisan solution already agreed to.
2. It postpones the implementation of ICD-10 (the International Statistical Classification of Diseases and Related Health Problems) to October 2015.
3. It permanently eliminates the Medicare Geographic Practice Cost Index (GPCI) inequity for select urban counties in California (including San Diego), while holding rural counties harmless.
The physicians of the San Diego County Medical Society (SDCMS) continue to be extremely concerned about Congress's delaying for the 17th time permanently fixing the SGR formula, but the permanent elimination of the GPCI inequity is a huge victory for San Diego County's physicians and the patients.
U.S. Representatives Darrell Issa and Sam Farr, with support from the rest of the California congressional delegation, worked together to insert language into HR 4302 / S 2000 that permanently eliminates GPCI.
What is GPCI?
* Several large urban counties in California (and the process is almost identical in other states) are grouped together in what is called region 99 (including Santa Cruz, Sacramento, and San Diego).
* In region 99, the annual actuarially sound cost-of-living increase in Medicare is calculated for the entire region collectively.
* This results in urban counties like San Diego being averaged down with rural counties with a lower cost of living.
* The result of GPCI is that urban counties like San Diego are being systematically underpaid year after year — in San Diego, for example, that average is approximately 5 percent.
In San Diego, roughly $30 million in direct Medicare underpayments per annum can be counted. In addition, any private insurance that is denominated in Medicare dollars (payment is a percentage of Medicare rates) is similarly underpaid, conservatively estimated to be at least twice the direct Medicare underpayment, resulting in a total annual underpayment estimated to be greater than $100 million per year for San Diego County's physicians, or $10,000 per year per physician for at least a decade.
The elimination of the Geographic Practice Cost Index starts in 2017 and will be phased in over a six-year period. While San Diego's physicians would have preferred an immediate solution, the political realities mandate a more gradual shift, and we are nevertheless pleased with the outcome.