Medicare Geographic Payment Locality Update

CMA is urging Congress to adopt a BUDGET NEUTRAL update of the California Medicare physician payment regions to Metropolitan Statistical Areas (MSAs) as recently recommended by the Institute of Medicine (IOM).  Medicare organizes and pays hospitals according to MSA regions.  While the hospital regions are continuously updated so that reimbursement accurately reflects local costs to deliver care, the physician regions have not been updated in 15 years.  Therefore, some of California’s urban counties - San Diego and Sacramento - are still designated as rural.  This has caused some California physicians to be paid up to 14% per year below what Medicare says they should be paid if they were in the correct region. California has the largest discrepancies in terms of dollars in the nation. Because the plan redistributes payments, it would hold the California rural physicians harmless from cuts with administrative savings achieved through the formation of a Medicaid managed care program in Alameda County, California.  There is no impact on the federal budget or any other state.  This is a California-only budget neutral solution.