Several draft legislative proposals have been circulating in Congress that would have resulted in substantial Medicare payment cuts to physicians in urban and suburban regions. The California Medical Association (CMA) was successful in stopping these proposals and they will not be considered in committee this week, as originally expected. CMA is urging Congress to study the true impact of such Medicare geographic payment proposals before implementing changes that could have unintended consequences for physicians and patients in both urban and rural communities.

While well-intended to help rural physicians, CMA is worried that the proposals would have significantly and inappropriately altered the geographic payment adjustments in the Medicare physician fee schedule, resulting in reduced payments to the vast majority of physicians in the nation, including rural physicians, exacerbating patient access to care problems. Our analysis showed that instead of helping rural physicians, these proposals would have at best had no impact in some rural regions, and in others they would have actually had the opposite of the intended effect, resulting in cuts.

“CMA fully understands the health care challenges in rural areas, and we agree that more needs to be done to help improve access to medical care in these areas.  However, it is a complex problem,” CMA said in a letter to the leaders of key congressional committees. “Our goal is to ensure the fee schedule is not distorted and that it accurately adjusts payments to account for a physician’s local costs to provide care. Otherwise, such shifts in payment will exacerbate access to care problems in other regions and further skew the relativity of the fee schedule.  We believe there are alternative ways to assist rural areas without distorting the geographic adjustments in the fee schedule further and imposing cuts on physicians in the current environment.”

About the Medicare Geographic Practice Cost Index (GPCI)

Medicare adjusts physician payments to account for physicians’ local geographic costs to provide care, including medical malpractice insurance, office rent, staff wages, supplies and physician wages. These adjustments account for the substantial geographic variation in costs and ensure that physicians receive adequate payment and Medicare seniors have equal access to care. 

While we appreciate the work being done to reform the Medicare physician payment system, CMA and the other state medical associations are specifically concerned about the proposal to base Medicare physician rent reimbursement on rents paid by Federally Qualified Health Centers because it could reduce rent payments to all physicians in all regions nationwide. We are also opposed to changes that further reduce the impact of the Physician Work GPCI (physician wages) because cost of living expenses for physicians are substantially rising nationwide. Our analysis shows that such changes will not help rural areas. The accuracy of current data sources for these two areas have been upheld by several independent studies, and we strongly encourage CMS to study the impact of these proposals before implementing changes that could have unintended negative consequences for access to care.