California Counties File Case Targeting Medicare Formulas
Seven California counties and other plaintiffs have filed a first amended complaint in a $3.2 billion lawsuit alleging that Medicare uses outdated reimbursement formulas that underpay physicians in 200 counties across the U.S., HealthLeaders Media reports.
The amended complaint, filed against HHS Secretary Kathleen Sebelius, follows up on a case initially filed two-and-a-half years ago. The suit is seeking class-action status.
The California counties involved in the lawsuit are:
- San Diego;
- San Luis Obispo;
- Santa Barbara;
- Santa Cruz; and
The plaintiffs claim that the Medicare fee schedule underpays physicians in certain counties classified as rural, even though some of those regions have become urbanized and are high-cost areas to provide care.
Dario De Ghetaldi, attorney for the physicians, said that some health care providers are receiving Medicare reimbursements between 12% and 24% lower than those received by their colleagues in demographically similar counties.
According to the complaint, California has faced theÂ largest MedicareÂ reimbursement burden among U.S. states, with more than $508 million in underpayments to physicians in 10 counties over 10 years.
De Ghetaldi said the lower payment rates have hindered access to care because they have led some physicians to stop accepting Medicare beneficiaries.
Identifying Potential Changes
According to the lawsuit, federal agencies and other organizations have identified strategies for revising the Medicare fee schedule.Â The suitÂ notes that the Government Accountability Office has determined four changes that would significantly reduce Medicare underpayments to physicians while imposing minimal administrative burdens.
In addition, the complaint states that the Medicare Payment Advisory Commission and the Urban Institute have "identified a number of ways in which payment accuracy can be improved without significantly increasing administrative expenses" (Clark, HealthLeaders Media, 2/24).
For additional coverage of the amended complaint, see today's Capitol Desk post.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.