The American Medical Association has sued HHS Secretary Donna Shalala for allegedly refusing to correct errors in the Medicare payment system for doctors.
The AMA contends that HCFA has underpaid physicians by $3 billion in the past two years by erroneously calculating the rate used to adjust the annual update of payments for physician services.
HCFA said it had not yet formulated a response to the 23-page suit, which was filed late last week in U.S. District Court in Chicago. The AMA has asked the court to declare HCFA's methodology illegal and order it to calculate a new rate that would compensate for undercalculation in 1998 and 1999.
"HCFA's ongoing refusal to use actual values in calculating the (rate) is the equivalent of asking physicians to care for approximately 1 million Medicare patients annually without compensation," said AMA President Thomas Reardon, M.D.
Officials intended to announce the suit at the winter meeting of the AMA House of Delegates this week in San Diego.
The controversy centers on the sustainable growth rate, which was enacted as part of the Balanced Budget Act of 1997. The rate adjusts physicians' fees based on projected changes in total Medicare payments for physicians' services, Medicare enrollment, the per-capita gross domestic product and any payment changes resulting from new regulations.
The AMA contends that the agency has refused to adjust the rate to reflect actual data for previous years, contrary to the intent of Congress.
The AMA said HCFA promised to correct its methodology in October 1997, but later reneged.
According to the AMA's lawsuit, HHS General Counsel Harriet Rabb told the association in March that HCFA had concluded the law precluded it from performing updates based on actual data and suggested doctors seek legislative relief.
The AMA said the Balanced Budget Refinement Act enacted in November contains "some improvements" to the sustainable growth rate system but further relief is needed.