Physicians in California, Across U.S. Seek Change to Medicare Pay Rules

Physicians in seven California counties and across the U.S. are arguing that Medicare reimbursement rates are unfair, the San Diego Union-Tribune reports.

The California counties have joined a $3.9 billion class-action lawsuit against HHS Secretary Kathleen Sebelius that aims to change Medicare's physician payment system.

Background

In 1996, Medicare divided the nation's physicians into 89 geographic payment zones to account for variations in providing care in different regions.

Determining reimbursement rates takes into account several calculations, including the local costs of malpractice insurance, physician practice expenses and the value of a physician's work.

Several reports -- including analyses from CMS and the Government Accountability Office -- have showed inequities in the reimbursement system and recommended changes.

Advocates of changing the payment system argue that it is outdated and does not account for changes in metropolitan areas.

The federal lawsuit -- first filed in 2007 and refiled in February in U.S. district court -- seeks retroactive payments for all U.S. physicians who have received Medicare reimbursements in underpaid counties since 2002.

Details of Possible Underpayments

Dario de Ghetaldi, an attorney representing plaintiffs in the lawsuit, said that underpayments in San Diego County last year could have reached $226 million. Nationwide, underpayments in 2010 could have been about $3.9 billion for about 50,000 physicians, according to de Ghetaldi.

Stephen Zuckerman -- a senior fellow and health economist at the Urban Institute's Health Policy Center -- said the reimbursement system has not been updated since the mid-1990s.

He said a new analysis could reduce rates in some rural areas and increase them in areas such as San Diego (Lavelle, San Diego Union-Tribune, 10/4).