Second lawsuit targets Medicare, claims patient co-pays are too high; litigants allege overpayments of $500m since 2001.

On the heels of a lawsuit alleging Medicare has underpaid San Diego County doctors, a second suit has been filed alleging the system has also overcharged its patients in lower-cost counties.

Both class-action lawsuits, filed June 4 and 15, respectively, are against the U.S. Department of Health and Human Services.

Each seeks to change the way Medicare decides how much services provided under its 65 and older program should cost in a particular geographic area.

The suits seek more money for doctors in higher-cost counties who say the value of their services has been underestimated and for patients in lower-cost counties who say their co-payments are based on inflated estimates.

The patients' suit was filed in the Eastern District of California, while the earlier suit on behalf of doctors in seven counties was filed in the Northern District of California.

"Our case addresses the complementary problem to San Diego County's suit because it is important when you talk to those who are unpaid to remember those who are overpaying because of it as well," said attorney William Parish of the Stockton-based firm Parish & Small.

Parish represents two Medicare patients from San Joaquin County and "others similarly situated," who, according to court documents filed June 15, have overpaid $500 million since 2001.

Medicare patients pay a 20 percent copayment for services.

San Diego falls in an area that includes 46 other rural and urban counties and, therefore, after averaging the differences, the assumed cost of doing business locally is 5.5 percent less than the actual cost, according to the San Diego County Medical Society.

Cost factors of doing business would include such things as rent and staffing costs. Since 2001, the suit filed June 4 by San Diego and six other counties claims nearly $2.5 billion.

Just in San Diego, the Medical Society estimates a loss of $160 million since 2001, with an expected loss of more than $30 million in 2007 alone.

Although supported by local doctors, the second suit involving patients does pose some risk to the first, according to Dr. Ted Mazer, a San Diego ear, nose and throat specialist.

Mazer said it could further push administrators into adopting a budget neutrality stance that was tossed around in the past.

Legislative Hopes

On May 24, Rep. Sam Farr, D-Carmel, introduced HR 2484, legislation that would direct Medicare administrators to change the way the agency groups rural and urban counties. Congress could vote on it as early as this year, according to Farr's office.

Reps. Susan Davis, D-San Diego; Brian Bilbray, R-Solana Beach; and Darrell Issa, R-Vista, are co-sponsors.

"The proposal in HR 2484 avoids taking moneys from other area doctors, but also would hold the rates at current levels in those counties. This could potentially cost patients more in the counties not in the high cost group, as a result of this artificially elevated rate versus adjusted rates after removing San Diego and other high cost counties," Mazer said. "That could be an impetus for (Medicare) to recommend a budget neutral shift of funds, lowering the rates in the remaining Area 99 counties and hurting access if the doctors curtail Medicare appointments. Such is the Catch-22 that (Medicare) has created in delaying a fix to this problem."

In addition to being the immediate past president of the San Diego County Medical Society, Mazer is a trustee with the California Medical Association.

Dario de Ghetaldi, attorney for the seven counties named in the doctors' suit, takes a different view on what the double dose of class-action lawsuits might prompt Medicare administrators to do.

"I have no idea what Medicare is going to do with it," de Ghetaldi said. But I don't think Medicare is going to do anything unless the courts tell them to. They've known about this problem since 2000 and they haven't done anything thus far."

A spokesman for Medicare said it is the agency's policy to not comment on pending legislation.

The six other counties named in the doctors' lawsuit are Santa Cruz, Mann, Santa Barbara, San Luis Obispo and Monterey.

De Ghetaldi is a Bay Area attorney with the firm Corey, Luzaich, Pliska, de Ghetaldi & Nastari LLP in Millbrae.

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