Washington, DC – U.S. Senator Dianne Feinstein (D-Calif.) today introduced legislation to establish a more fair and equitable formula to determine Medicare physician payment rates in California.

The legislation is co-sponsored by Sen. Barbara Boxer (D-Calif.) Rep. Sam Farr (D-Calif.) today is introducing a companion bill in the House.

Medicare reimburses California physicians based on costs in the counties in which they practice medicine -- providing additional compensation in areas where office rents and nursing staff wages are higher, such as in urban areas.

The payment localities, however, have not been updated since 1997. Many counties in California that were once rural have become more urbanized and costly to practice in, including San Diego and Sacramento. Currently, the “rural” counties are paid at the same rate, so physicians in some counties receive much less than their actual practice costs – some as much as 13 percent less.

As a result, some medical groups are finding it hard to recruit physicians to join their practices. Others are refusing to accept new Medicare patients.
 
“This is a question of equity.  Medicare reimbursements should reflect the true costs that California doctors face,” Senator Feinstein said. “Without action, it will become more and more difficult for Medicare patients in these counties to find doctors who will see them.”

Senator Feinstein’s bill would change the current payment locality system to one based on Metropolitan Statistical Areas (MSAs), bringing physician payments in line with hospital payments. The bill would change designations from rural to urban for 14 California counties, including: El Dorado, Monterey, Placer, Riverside, Sacramento, San Benito, San Bernardino, San Diego, San Joaquin, San Luis Obispo, Santa Barbara, Santa Cruz, Sonoma and Yolo.

The Centers for Medicare and Medicaid Services (CMS) also would be required to update the regions every three years to more adequately affect growing costs of maintaining private medical practices. The legislation would cost about $50 million annually.

The bill is supported by the California Medical Association.

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