II 

111TH CONGRESS 

1ST SESSION S. 1236 

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. 

IN THE SENATE OF THE UNITED STATES 

JUNE 11, 2009 

Mrs. FEINSTEIN (for herself and Mrs. BOXER) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

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 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘GPCI Justice Act of 

5 2009’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 


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1 (1) From 1966 through 1991, the Medicare 

2 program paid physicians based on what they charged 

3 for services. The Omnibus Reconciliation Act of 

4 1989 required the establishment of a national Medi5 care physician fee schedule, which was implemented 

6 in 1992, replacing the charge-based system. 

7 (2) The Medicare physician fee schedule cur8 rently includes more than 7,000 services together 

9 with their corresponding payment rates. In addition, 

10 each service on the fee schedule has three relative 

11 value units (RVUs) that correspond to the three 

12 physician payment components of physician work, 

13 practice expense, and malpractice expense. 

14 (3)(A) Each geographically adjusted RVU 

15 measures the relative costliness of providing a par16 ticular service in a particular location referred to as 

17 a locality. Physician payment localities are primarily 

18 consolidations of the carrier-defined localities that 

19 were established in 1966. 

20 (B) When physician payment localities were re21 designated in 1997, the Administrator of the Cen22 ters for Medicare & Medicaid Services acknowledged 

23 that the new payment locality configuration had not 

24 been established on a consistent geographic basis. 

25 Some were based on zip codes or Metropolitan StaVerDate Nov 24 2008 03:12 Jun 13, 2009 Jkt 079200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1236.IS S1236

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1 tistical Areas (MSAs) while others were based on po2 litical boundaries, such as cities, counties, or States. 

3 (C) The Medicare program has not revised the 

4 geographic boundaries of the physician payment lo5 calities since the 1997 revision. 

6 (4) Medicare’s geographic adjustment for a par7 ticular physician payment locality is determined 

8 using three GPCIs (Geographic Practice Cost Indi9 ces) that also correspond to the three Medicare phy10 sician payment components of physician work, prac11 tice expense, and malpractice expense. 

12 (5) The major data source used in calculating 

13 the GPCIs is the decennial census which provides 

14 new data only once every 10 years. 

15 (6) This system of geographic payment designa16 tion has resulted in more than half of the current 

17 physician payment localities having counties within 

18 them with a large payment difference of 5 percent 

19 or more. A disproportionate number of these under20 paid counties are located in California, Georgia, 

21 Minnesota, Ohio, and Virginia. 

22 (7) For purposes of payment under the Medi23 care program, hospitals are organized and reim24 bursed for geographic costs according to MSAs. 


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1 (8) Studies by the Medicare Payment Advisory 

2 Commission (MedPAC) in 2007, the Government 

3 Accountability Office (GAO) in 2007, the Urban In4 stitute in 2008, and Acumen LLC in 2008 have all 

5 documented this physician GPCI payment discrep6 ancy—specifically that more than half of the current 

7 physician payment localities had counties within 

8 them with a large payment difference (that is, a pay9 ment difference of 5 percent or more) between 

10 GAO’s measure of physicians’ costs and Medicare’s 

11 geographic adjustment for an area. All these objec12 tive studies have recommended changes to the local13 ity system to correct the payment discrepancies. 

14 (9) A common recommendation among the 

15 GPCI payment discrepancy studies referred to in 

16 paragraph (8) is to eliminate the county-based local17 ity and replace it with one determined by Metropoli18 tan Statistical Area. 

19 SEC. 3. REDESIGNATING THE GEOGRAPHICAL PRACTICE 

20 COST INDEX (GPCI) LOCALITIES IN CALI21 FORNIA. 

22 (a) IN GENERAL.—Section 1848(e) of the Social Se23 curity Act (42 U.S.C.1395w–4(e)) is amended by adding 

24 at the end the following new paragraph: 


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1 ‘‘(6) TRANSITION TO USE OF MSAS AS FEE

2 SCHEDULE AREAS IN CALIFORNIA.— 

3 ‘‘(A) IN GENERAL.— 

4 ‘‘(i) REVISION.—Subject to clause (ii) 

5 and notwithstanding the previous provi6 sions of this subsection, for services fur7 nished on or after January 1, 2010, the 

8 Secretary shall revise the fee schedule 

9 areas used for payment under this section 

10 applicable to the State of California using 

11 the Metropolitan Statistical Area (MSA) 

12 iterative Geographic Adjustment Factor 

13 methodology as follows: 

14 ‘‘(I) The Secretary shall con15 figure the physician fee schedule areas 

16 using the Core-Based Statistical 

17 Areas—Metropolitan Statistical Areas 

18 (each in this paragraph referred to as 

19 an ‘MSA’), as defined by the Director 

20 of the Office of Management and 

21 Budget, as the basis for the fee sched22 ule areas. The Secretary shall employ 

23 an iterative process to transition fee 

24 schedule areas. First, the Secretary 

25 shall list all MSAs within the State by 


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1 Geographic Adjustment Factor de2 scribed in paragraph (2) (in this para3 graph referred to as a ‘GAF’) in de4 scending order. In the first iteration, 

5 the Secretary shall compare the GAF 

6 of the highest cost MSA in the State 

7 to the weighted-average GAF of the 

8 group of remaining MSAs in the 

9 State. If the ratio of the GAF of the 

10 highest cost MSA to the weighted-av11 erage GAF of the rest of State is 1.05 

12 or greater then the highest cost MSA 

13 becomes a separate fee schedule area. 

14 ‘‘(II) In the next iteration, the 

15 Secretary shall compare the MSA of 

16 the second-highest GAF to the weight17 ed-average GAF of the group of re18 maining MSAs. If the ratio of the sec19 ond-highest MSA’s GAF to the 

20 weighted-average of the remaining 

21 lower cost MSAs is 1.05 or greater, 

22 the second-highest MSA becomes a 

23 separate fee schedule area. The 

24 iterative process continues until the 

25 ratio of the GAF of the highest-cost 


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1 remaining MSA to the weighted-aver2 age of the remaining lower-cost MSAs 

3 is less than 1.05, and the remaining 

4 group of lower cost MSAs form a sin5 gle fee schedule area, If two MSAs 

6 have identical GAFs, they shall be 

7 combined in the iterative comparison. 

8 ‘‘(ii) TRANSITION.—For services fur9 nished on or after January 1, 2010, in the 

10 State of California, after calculating the 

11 work, practice expense, and malpractice ge12 ographic indices described in clauses (i), 

13 (ii), and (iii) of paragraph (1)(A) that 

14 would otherwise apply through application 

15 of this paragraph, the Secretary shall in16 crease any such index to the county-based 

17 fee schedule area value on December 31, 

18 2009, if such index would otherwise be less 

19 than the value on January 1, 2010. 

20 ‘‘(B) SUBSEQUENT REVISIONS.— 

21 ‘‘(i) PERIODIC REVIEW AND ADJUST22 MENTS IN FEE SCHEDULE AREAS.—Subse23 quent to the process outlined in paragraph 

24 (1)(C), not less often than every three 

25 years, the Secretary shall review and upVerDate Nov 24 2008 02:56 Jun 12, 2009 Jkt 079200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1236.IS S1236

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1 date the California Rest-of-State fee sched2 ule area using MSAs as defined by the Di3 rector of the Office of Management and 

4 Budget and the iterative methodology de5 scribed in subparagraph (A)(i). 

6 ‘‘(ii) LINK WITH GEOGRAPHIC INDEX

7 DATA REVISION.—The revision described in 

8 clause (i) shall be made effective concur9 rently with the application of the periodic 

10 review of the adjustment factors required 

11 under paragraph (1)(C) for California for 

12 2012 and subsequent periods. Upon re13 quest, the Secretary shall make available 

14 to the public any county-level or MSA de15 rived data used to calculate the geographic 

16 practice cost index. 

17 ‘‘(C) REFERENCES TO FEE SCHEDULE

18 AREAS.—Effective for services furnished on or 

19 after January 1, 2010, for the State of Cali20 fornia, any reference in this section to a fee 

21 schedule area shall be deemed a reference to an 

22 MSA in the State.’’. 

23 (b) CONFORMING AMENDMENT TO DEFINITION OF

24 FEE SCHEDULE AREA.—Section 1848(j)(2) of the Social 

25 Security Act (42 U.S.C. 1395w(j)(2)) is amended by strikVerDate Nov 24 2008 02:56 Jun 12, 2009 Jkt 079200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1236.IS S1236

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1 ing ‘‘The term’’ and inserting ‘‘Except as provided in sub2 section (e)(6)(C), the term’’. 

Æ 


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