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A GPCI Update-
Still Breathing life, Maybe,
But Probably Not for 2005
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Sue U. Malone The
October issue of the Bulletin included reports from Barry
Sheppard in his President’s Column and Rex Greene in a Board report,
detailing a controversial proposal of the CMA to mitigate the Geographic
Adjustment Factor (GAF) inequities in California, and the SMCMA Board
position on the proposal. For those of you who
don’t have the acronym “GPCI” on the tip of your tongue, under
Medicare each CPT Code is assigned three sets of relative value units (RVU)
to quantify the value of physician work, practice expense, and
malpractice expense associated with delivering service. Further, a GPCI
is applied to adjust the RVUs to reflect geographic practice cost
differences, known as the Geographic Adjustment Factor (GAF). That cost
is then multiplied by the Conversion Factor to obtain the Medicare Fee
Schedule amount for each CPT service. Every county in California is
assigned a GAF value that is designed to represent what it costs to
provide care in a particular county. Thus, the higher the costs, the
higher the GAF, and the higher the reimbursement rate. In California there
is a total of nine Medicare payment localities. Six payment localities
are single county localities, of which San Mateo is one. (The other
single payment localities are Santa Clara, San Francisco, Orange, Los
Angeles, and Ventura. Alameda and Contra Costa are in a combined payment
locality, as are Marin, Napa, and Solano. The balance of counties in the
state is grouped in Locality 99, which makes up the rest of California.
This group includes 47 counties.) All of the above sets
the stage for the frenetic activity that started in late summer 2004
when the CMA’s GPCI Task Force recommended, and soon after the CMA
Executive Committee approved, a plan to mitigate the Geographic
Adjustment Factor (GAF) inequities in California by implementing a
California-only plan. This plan proposed that any county where the
individual county GAFs were at least 5 percent higher than their
Locality GAFs would be allowed to move to a new payment locality. The
problem faced in proposing such a change to the Centers for Medicaid and
Medicare (CMS) was the fact that the CMS would not consider any change
unless the change was budget-neutral. Thus, to increase the GAF for the
10 counties that exceed the 5 percent trigger, the increase must come
from monies already allocated to California Medicare providers. The Task Force,
almost exclusively composed of representatives from the counties that
wished to be removed from Locality 99, first contemplated that the
Locality 99 GAF would be recalculated, which meant a rather significant
decrease once the higher cost counties were moved to their own Locality.
This idea, of course, did not set well with the counties remaining in
Locality 99. Then the Task Force came upon the idea that cost-shifting
be derived by “reducing” the reimbursement to the most highly
compensated counties! That ended up being the plan until the CMA staff
learned that such an approach would not meet constitutional muster.
Finally, it was concluded that all counties should take a reduction to
move the 10 counties out of their respective localities (one county was
in Locality 3 rather than Locality 99). There was
considerable pressure to obtain approval from CMS quickly as the GAFs
had been updated for 2005 and 2006, and Congress had authorized a 1.5
percent increase in the Sustainable Growth Rate (SGR) for 2005. Thus it
was felt that a slight GAF reduction would be obscured by the 2005 GAF
increases in most Localities, and with the SGR increase, physicians
would not notice or complain. The SMCMA Board of
Directors reviewed the CMA GPCI Task Force proposal and supported the
idea that localities with a higher cost should be removed from Locality
99 and receive their own independent GAF. However, the Board felt that
physicians should not be penalized when the proposal was clearly a
stopgap measure and that Congress needs to address and fund the
underlying problem. The SMCMA Board held firmly that asking counties to
give up part of the physicians’ hard-earned geographic adjustments to
cushion the impact on the physicians practicing in the 34 counties
remaining in Locality 99 and Locality 3 counties was not fair. Further,
since the commercial payers use Medicare’s reimbursement formula as
well, physicians would be asked to pay to an ever greater degree. SMCMA
was not alone in this view; Santa Clara held the same position. Throughout the waning
weeks of 2004, CMA expended considerable energy attempting to get CMS to
approve the proposal before the new 2005 CMS payment formula went into
effect. Each week there would be updates stating that the proposal had
been accepted by CMS as a demonstration project and that it would be
implemented....but nothing came out of CMS announcing the project. Soon
2005 rolled around with the new payment formula in effect. Still we kept
hearing that the demonstration project would be approved and be placed
in effect shortly though it was conceded that some Congressional
delegation tensions over the proposal had developed. Enthusiasm for the
project has been somewhat dampened now that California is operating
under the 2005 Medicare payment schedule. Commencing a program in March
or midyear would be more difficult because it would require a payment
rollback, which would be more visible once physicians were working under
the new 2005 rates. Recently a CMS-HHS Region IX representative
indicated that any adjustments made for the demonstration project would
likely become permanent, if the project went forward. At this time
Alameda-Contra Costa has joined with Santa Clara and San Mateo in
opposing the CMA’s approach to fund the project. CMA continues to seek
approval for a California demonstration project, but I think it is
unlikely to occur in 2005. What will happen in 2006 is unknown, but this
is an issue that Congress needs to address and California physicians
should not be asked to shoulder this burden.
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