[Congressional Record Volume 155, Number 87 (Thursday, June 11, 2009)]
[Senate]
[Pages S6545-S6546]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. FEINSTEIN (for herself and Mrs. Boxer):
  S. 1236. 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; to the Committee on Finance.
  Mrs. FEINSTEIN. Mr. President, I rise to introduce legislation to 
correct a longstanding flaw in the Medicare Geographic Practice Cost 
Index, GPCI, system that negatively impacts physicians in California 
and several other states.
  This legislation will base California physician payments on 
Metropolitan Statistical Areas, MSAs. Hospital payments are developed 
this way, and it makes sense to pay our doctors in the same manner.
  It holds harmless the counties, predominately rural ones, whose 
locality average would otherwise drop as other counties are 
reclassified.
  Congressman Sam Farr, along with several California colleagues, is 
introducing companion legislation.
  The Medicare Geographic Practice Cost Index measures the cost of 
providing a Medicare covered service in a geographic area. Medicare 
payments are supposed to reflect the varying costs of rent, malpractice 
insurance, and other expenses necessary to operate a medical process. 
Counties are assigned to ``payment localities'' that are supposed to 
accurately capture these costs.
  Here is the problem. Some of these payment localities have not 
changed since 1997. Others have been in place since 1966. Many areas 
that were rural even 10 years ago have experienced significant 
population growth, as metropolitan areas and suburbs have spread. Many 
counties now find themselves in payment localities that do not 
accurately reflect their true practice costs.
  These payment discrepancies have a real and serious impact on 
physicians and the Medicare beneficiaries they are unable to serve. My 
home State of California has been hit particularly hard.
  San Diego County physicians are underpaid by 4 percent. A number of 
physicians have left the county and 60 percent of remaining San Diego 
physicians report that they cannot recruit new doctors to their 
practices.
  Santa Cruz County receives an 8.6 percent underpayment, and as a 
result, no physicians are accepting new Medicare patients. Instead, 
they are moving to neighboring Santa Clara, which has similar practice 
cost expense, but is reimbursed at a much higher rate. This means that 
seniors often need to travel at least 20 miles to see a physician.
  Sacramento County, a major metropolitan area, is underpaid by 2.7 
percent. The county's population has grown by 9.6 percent, while the 
number of physicians has declined by 11 percent.
  Sonoma County physicians are paid at least 6.2 percent less than 
their geographic practice costs. They have experienced at 10 percent 
decline in specialists and a 9 percent decline in primary care 
physicians.
  Health care coverage is not the same as access to health care. 
Seniors' Medicare cards are of no value if physicians in their 
community cannot afford to provide them with health care.
  Physicians deserve to be fairly compensated for the work they 
perform. California doctors simply want to be compensated at the 
correct rate for the practice expenses they face.
  This is not too much to ask.
  The underpayment problem grows more severe every year, and the longer 
we wait to address it, the more drastic the solution will need to be. 
This legislation provides a common sense solution, increasing payment 
for those facing the most drastic underpayments, while protecting other 
counties from cuts in the process.
  This is an issue of equity. It costs more to provide health care in 
expensive areas, and physicians serving our seniors must be fairly 
compensated.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1236

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

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

     SEC. 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 7000 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, the 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.

[[Page S6546]]

     SEC. 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''.
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