I 111th CONGRESS 1st Session H. R. 2820 IN THE HOUSE OF REPRESENTATIVES June 11, 2009 Mr. Farr (for himself, Mr. Bilbray, Mrs. Bono Mack, Mrs. Capps, Mrs. Davis of California, Ms. Eshoo, Mr. Filner, Mr. Honda, Mr. Hunter, Mr. Issa, Ms. Matsui, Ms. Woolsey, Mr. Baca, and Mr. Thompson of California) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend title XVIII of the Social Security Act to transition to the use of metropolitan statistical areas as fee schedule areas for the physician fee schedule in California under the Medicare Program.

1.

Short title

This Act may be cited as the GPCI Justice Act of 2009.

2.

Findings

Congress finds the following: (1)From 1966 through 1991, the Medicare program paid physicians based on what they charged for services. The Omnibus Reconciliation Act of 1989 required the establishment of a national Medicare physician fee schedule, which was implemented in 1992, replacing the charge-based system. (2)The Medicare physician fee schedule currently includes more than 7,000 services together with their corresponding payment rates. In addition, each service on the fee schedule has three relative value units (RVUs) that correspond to the three physician payment components of physician work, practice expense, and malpractice expense. (3)(A)Each geographically adjusted RVU measures the relative costliness of providing a particular service in a particular location referred to as a locality. Physician payment localities are primarily consolidations of the carrier-defined localities that were established in 1966. (B)When physician payment localities were redesignated in 1997, Administrator of the Centers for Medicare & Medicaid Services acknowledged that the new payment locality configuration had not been established on a consistent geographic basis. Some were based on zip codes or Metropolitan Statistical Areas (MSAs) while others were based on political boundaries, such as cities, counties, or States. (C)The Medicare program has not revised the geographic boundaries of the physician payment localities since the 1997 revision. (4)Medicare’s geographic adjustment for a particular physician payment locality is determined using three GPCIs (Geographic Practice Cost Indices) that also correspond to the three Medicare physician payment components of physician work, practice expense, and malpractice expense. (5)The major data source used in calculating the GPCIs is the decennial census which provides new data only once every 10 years. (6)This system of geographic payment designation has resulted in more than half of the current physician payment localities having counties within them with a large payment difference of 5 percent or more. A disproportionate number of these underpaid counties are located in California, Georgia, Minnesota, Ohio, and Virginia. (7)For purposes of payment under the Medicare program, hospitals are organized and reimbursed for geographic costs according to MSAs. (8)Studies by the Medicare Payment Advisory Commission (MedPAC) in 2007, the Government Accountability Office (GAO) in 2007, the Urban Institute in 2008, and Acumen LLC in 2008 have all documented this physician GPCI payment discrepancy—specifically that more than half of the current physician payment localities had counties within them with a large payment difference (that is, a payment difference of 5 percent or more) between GAO’s measure of physicians’ costs and Medicare’s geographic adjustment for an area. All these objective studies have recommended changes to the locality system to correct the payment discrepancies. (9)A common recommendation among the GPCI payment discrepancy studies referred to in paragraph (8) is to eliminate the county-based locality and replace it with one determined by Metropolitan Statistical Area.

3.

Redesignating the geographical practice cost index (GPCI) localities in California

(a)

In general

Section 1848(e) of the Social Security Act (42 U.S.C.1395w–4(e)) is amended by adding at the end the following new paragraph: (6)

Transition to use of MSAs as fee schedule areas in California

(A)

In general

(i)

Revision

Subject to clause (ii) and notwithstanding the previous provisions of this subsection, for services furnished on or after January 1, 2010, the Secretary shall revise the fee schedule areas used for payment under this section applicable to the State of California using the Metropolitan Statistical Area (MSA) iterative Geographic Adjustment Factor methodology as follows: (I)The Secretary shall configure the physician fee schedule areas using the Core-Based Statistical Areas—Metropolitan Statistical Areas (each in this paragraph referred to as an MSA), as defined by the Director of the Office of Management and Budget, as the basis for the fee schedule areas. The Secretary shall employ an iterative process to transition fee schedule areas. First, the Secretary shall list all MSAs within the State by Geographic Adjustment Factor described in paragraph (2) (in this paragraph referred to as a GAF) in descending order. In the first iteration, the Secretary shall compare the GAF of the highest cost MSA in the State to the weighted-average GAF of the group of remaining MSAs in the State. If the ratio of the GAF of the highest cost MSA to the weighted-average GAF of the rest of State is 1.05 or greater then the highest cost MSA becomes a separate fee schedule area. (II)In the next iteration, the Secretary shall compare the MSA of the second-highest GAF to the weighted-average GAF of the group of remaining MSAs. If the ratio of the second-highest MSA’s GAF to the weighted-average of the remaining lower cost MSAs is 1.05 or greater, the second-highest MSA becomes a separate fee schedule area. The iterative process continues until the ratio of the GAF of the highest-cost remaining MSA to the weighted-average of the remaining lower-cost MSAs is less than 1.05, and the remaining group of lower cost MSAs form a single fee schedule area, If two MSAs have identical GAFs, they shall be combined in the iterative comparison. (ii)

Transition

For services furnished on or after January 1, 2010, in the State of California, after calculating the work, practice expense, and malpractice geographic indices described in clauses (i), (ii), and (iii) of paragraph (1)(A) that would otherwise apply through application of this paragraph, the Secretary shall increase any such index to the county-based fee schedule area value on December 31, 2009, if such index would otherwise be less than the value on January 1, 2010. (B)

Subsequent revisions

(i)

Periodic review and adjustments in fee schedule areas

Subsequent to the process outlined in paragraph (1)(C), not less often than every three years, the Secretary shall review and update the California Rest-of-State fee schedule area using MSAs as defined by the Director of the Office of Management and Budget and the iterative methodology described in subparagraph (A)(i). (ii)

Link with geographic index data revision

The revision described in clause (i) shall be made effective concurrently with the application of the periodic review of the adjustment factors required under paragraph (1)(C) for California for 2012 and subsequent periods. Upon request, the Secretary shall make available to the public any county-level or MSA derived data used to calculate the geographic practice cost index. (C)

References to fee schedule areas

Effective for services furnished on or after January 1, 2010, for the State of California, any reference in this section to a fee schedule area shall be deemed a reference to an MSA in the State. . (b)

Conforming amendment to definition of fee schedule area

Section 1848(j)(2) of the Social Security Act (42 U.S.C. 1395w(j)(2)) is amended by striking The term and inserting Except as provided in subsection (e)(6)(C), the term.