CA: Location-Based Adjustments Set to Take Effect in 2019

In April, the California Division of Workers’ Compensation (DWC) held a hearing regarding the inclusion of the Medicare Geographic Practice Cost Indices (GPCI) in the Physician and Non-Physician Practitioner portion of the Official Medical Fee Schedule (OMFS).

Now, it appears the DWC will almost certainly move forward with the plan to adjust reimbursement based on provider location.

The DWC issued a notice of proposed modifications to the Physician fee schedule, effective on January 1, 2019, which include GPCI calculations. A 15-day public comment period ends on September 14.

What is GPCI?

A GPCI is a multiplier used by Medicare to adjust reimbursement amounts to account for the widely varying costs associated with running a medical practice in different areas. According to Medicare reasoning, a physician office in downtown San Francisco, for example, faces drastically higher overhead than offices in far-flung rural areas.

GPCI proponents argue that the adoption of GPCI means workers’ comp reimbursements will better reflect the cost of doing business.

In 2013, when the OMFS transitioned to the current Resource-Based Relative Value Scale (RBRVS), the DWC rejected the Medicare GPCI location-based pricing. But in 2017, Medicare adopted a new GPCI system. The more refined GPCI divides California into 32 pricing regions, in contrast to the simpler 2013 version, which included only 9 pricing regions.

The DWC now contends that GPCI have evolved sufficiently to accurately reflect differences in provider costs across the state. Effective January 1, 2019, the proposed changes would eliminate the current average statewide geographic adjustment factor in favor of GPCI.

GPCI Is Coming (Apparently)

On August 30, the DWC issued a Newsline announcing proposed changes to the Physician fee schedule. This followed a previous announcement and a hearing regarding GPCI in April. The August Newsline also opened the 15-day comment period, inviting members of the public to weigh in.

The text of the proposed changes, available on the DWC’s rulemaking web page, lay out the calculations that would be required. For example, the current formula for calculating the base maximum fee for non-facility physician services is as follows:

[(Work RVU * Statewide Work GAF) + (Non-Facility PE RVU * Statewide PE GAF) + (MP RVU * Statewide MP GAF)] * Conversion Factor (CF) = Base Maximum Fee

Under the proposed changes, the new reimbursement formula would look like this:

[(Work RVU * Work GPCI) + (Non-Facility PE RVU * PE GPCI) + (MP RVU * MP GPCI)] * Conversion Factor (CF) = Base Maximum Fee

The DWC also posted a sample of the GPCI adjustments by locality, based on data from the Centers for Medicare and Medicaid Studies (CMS) for 2018. Should the proposed fee schedule changes go forward, the DWC will update the table upon the release of CMS’s 2019 adjustments.  

Potential Downsides to GPCI

At the April hearing, workers’ comp stakeholders voiced their apprehensions about GPCI. Of particular concern was the potential effect on rural providers, who will likely face reduced reimbursements in areas where access to medical care is already limited.

Representatives from different organizations worried that even small reductions in reimbursement may push rural providers to the conclusion that workers’ comp isn’t worth the effort, especially considering how ludicrously difficult it can be to obtain reimbursement.

As Thomas Novelli, Vice President of Government Relations and Public Affairs for One Call Care Management put it:

...we would just urge the DWC to proceed cautiously and occasionally check in with providers, especially in rural areas that may be subject to steeper payment rate cuts...We’ve seen, over time, in Medicare that sometimes these shocks can be a little more, I think, significant than people give consideration to.

Conversely, California Society of Industrial Medicine and Surgery (CSIMS) Director of Governmental Relations Steve Cattolica noted that by adjusting only the Physician fee schedule, the DWC excludes other providers in expensive urban areas from the benefits of GPCI. Cattolica stated:

I realize I’m going to be out of bounds here, but I’m compelled to say that if the cost of doing business for a physician is greater in urban areas, as Medicare recognizes, it’s also greater for physical therapists. It’s also greater for interpreters. It’s also greater for a number of people who are integral to the system but are not affected directly by the adjustment that you’re about to make.

Along with concerns that GPCI creates the potential for fraud by both providers and claims administrators, these criticisms highlight significant kinks the DWC must consider between now and January 1. But ready or not, here it comes.


GPCI will make calculating reimbursement even more difficult than it already is. Fortunately, there’s an app for that. Our Work Comp Wizard features the OMFS Calculator, which instantly and correctly calculates reimbursement. Try it free today.

TRY THE OMFS CALCULATOR

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