The Long Road to Fixing the Monterey Bay Area's Medicare Problem

Apr 10, 2014

This map shows the 14 counties which will have their status changed from rural to urban.
Credit Justine Herrera

With the stroke of a pen, President Obama signed into a law a bill that includes an increase of Medicare reimbursement rates for doctors in the Monterey Bay Area.  The speed at which this passed masks more than a decade of work it took to make this change.   

In a conference room at the Palo Alto Medical Foundation in Santa Cruz, Dr. Larry deGhetaldi lays down a color coded map of California.  The map was originally drawn about 40 years ago. “This is how physicians are paid today in California.  All the green are paid the same,” said deGhetaldi.

The green area covers most of California.  They’re areas Medicare considers rural so doctors get reimbursed for their services at a lower rate than their urban counterparts because presumably the cost of doing business is less. 

The rural counties include Santa Cruz and Monterey, as well as, San Diego and Sacramento, to name a few. 

This creates a problem not just for doctors, but for patients too.  Dr. deGhetaldi says the lower reimbursement rates means less doctors choose to practice in this area and sometimes there aren’t enough to go around. 

“There was a period between 2004 to 2010 where we were really not accepting new patients at all,” said Dr. deGhetaldi.

As President of Palo Alto Medical Foundation Santa Cruz, Dr. deGhetaldi’s job is to oversee the 200 physicians in this medical group, but he can talk about the Medicare reimbursement rate and the formula behind it better than any policy wonk. 

That’s because he’s been advocating for change for more than a decade.  Though initially that wasn’t  his plan.

"I had no idea that it would be a 12 year journey."

“My first thought was I was just doing my job as a citizen to bring to the attention of my representative a problem that was affecting health care in his district. I had no idea, I had no idea, that it would be a 12 year journey,” said Dr. deGhetaldi.

Hi problem helped explain a problem Congressman Sam Farr was encountering at his town hall meetings.  “Seniors telling me they had insurance, they were covered but they couldn’t get any doctor to see them,” said Congressman Farr. 

So he, along with Congresswoman Anna Eshoo began working on a fix.  The challenge was this wasn’t just about changing the color coding of map.  It was about the formula behind it.  “They (formulas) are very complex to establish in the first place. There are always winners and losers,” said  Congressman Farr.

There are losers because changing the formula means more money for one county less for another.  So the only way to keep any county from losing was to cut elsewhere.

Congressman Farr first tried in 2003.  His fix never made it out of the House.  Two other attempts passed the House, but both times failed in the Senate. 

“There’s people that go through these bills and scrub them and they want to find everything in there and knock it out because it costs,” said CongressmanFarr. 

But then just last week Congress had to vote on a bill to stop a pending cut in Medicare reimbursements for doctors.  This was a moment where the years of work met opportunity.

“So you have to find a bill that’s relevant.  In this case, the big Medicare fix was relevant and it was a must do and we had a deadline for it, and we saw the opportunity, and the question is could we stay in the bill or would someone knock us out.  We’re small but we are still pricey,” said Congressman Farr.

Pricey because it’s going to cost $50-millions more a year  to change the status of 14 California counties, including Monterey and Santa Cruz, from rural to urban.  But finally the bill passed.

“This time a deal was made, whatever the House passed, the Senate was going to pass without an amendment,” said Congressman Farr.

The Medicare fix doesn’t go into effect until 2017 because it will take time to figure out where the savings will come from. And even then it will be phased in over the six years.

“Finally we see the light at the end of the tunnel when we will be reimbursed based on the cost to provide care in our community,” said Dr. deGhetaldi.