The byzantine mathematical formula Medicare uses to calculate doctors’ pay in Santa Barbara County could change in the coming months, and as far as area doctors are concerned, it’s not a moment too soon.
Medicare devised a payment system in 1996 for doctors all over America that relegated Santa Barbara to a 47-county category known as “Area 99” or “Rest of California.” The costs of running a private practice in these diverse counties are averaged to obtain a uniform pay scale. Because many Area 99 counties have lower costs than Santa Barbara, doctors here have ended up underpaid by as much as 10 percent. The fact that insurance companies peg their reimbursement rates to what Medicare pays has only compounded the problem. The system has kept talented providers from moving here and driven doctors already here either to retire or to move away; at least two Santa Barbara primary care doctors are now refusing to take Medicare patients.
Kurt Ransohoff, Sansum Clinic CEO, said a correction of Medicare’s reimbursement formula here would be “a very significant event.”
Other counties have suffered- and complained -similarly. Since 2001, lawmakers (including Rep. Lois Capps), physicians from affected areas, and lobbyists have been hammering away at the problem with little success, partly because giving some counties more money requires taking it from others. Medicare has always maintained any fix would have to be “budget neutral.”
Now, however, with legislation expected to be introduced in the House on June 11, a lawsuit, and high-level talks between members of the House, Senate, and Medicare, change could finally be coming.
The bill to be introduced-written by Rep. Sam Farr of Monterey and cosponsored by Capps-would change the way payment localities are calculated from a county-based system to one based on the Metropolitan Statistical Areas (MSA). According to Farr’s office, MSAs are more accurate because they’re updated annually. The new bill would only apply to California, would make Santa Barbara and San Luis Obispo each a stand-alone payment locality, and would designate them as urban, raising their reimbursement rate additionally. A companion bill will also be introduced on June 11 by Senator Dianne Feinstein.
Capps’s office said a similar bill was introduced in the last congressional session but failed.
Meanwhile, seven California Area 99 counties with underpayment problems (Santa Barbara, San Luis Obispo, Santa Cruz, Monterey, Marin, Sonoma, and San Diego) filed a joint lawsuit against the Secretary of Health and Human Services (HHS)-which oversees the Centers for Medicare and Medicaid-in June 2007. Filed in federal court, the suit claims a violation of the Equal Protection Act under the Fifth Amendment, as well as violations of administrative procedures. It was thrown out in 2008 after HHS claimed Medicare’s geographic formulas were beyond judicial review.
Dario de Ghetaldi, the Millbrae attorney representing the counties, said the lawsuit is now under appeal at the 9th Circuit. He also said during oral arguments in April, that two of the three judges seemed not to understand Medicare’s contention that its payment formula was beyond scrutiny. All seven localities are seeking eight years of back pay, which for private doctors here, amounts to $34 million, de Ghetaldi said. A ruling could come anytime between now and next February.
The third arm of the battle involves Santa Barbara gastroenterologist Ed Bentley who, for six years, has worked to fix the payment system. Last month, he was invited to attend a summit on the issue organized by Wendell Primus, a senior policy advisor to House majority leader Nancy Pelosi. Representatives from the California Medical Association, Medicare, and others attended. It was a two-hour meeting, Bentley said, and when it was over there was full agreement that there was a problem and that discussion of solutions would continue. Bentley is optimistic that a fix is finally coming. “Our government eventually does what is right,” he said.