At a news conference Monday, Gov. Tom Vilsack said he would send a letter to Health and Human Services Secretary Tommy Thompson demanding that the inequity be addressed.
"If the secretary won't take the steps necessary to fix this problem, we will pursue all available avenues to ensure basic fairness for all Iowans," Vilsack said.
The first step likely would be a regulatory challenge, said Attorney General Tom Miller.
At the heart of the dispute are regulations enacted in 1997, which set the reimbursement rate for Iowa based on data such as local wages and costs. The per-patient reimbursement rate in Iowa is $3,053 per year, compared to a national average of $5,490.
Iowa's Medicare reimbursement rate ranks 50th in the nation. At the same time, Iowa ranks fourth in the nation in the percentage of its population 65 and over.
Iowa's low Medicare reimbursement rate costs the state $1 billion a year and makes it tough to keep medical professionals in the state, Vilsack said.
While Miller conceded that any legal action could be months if not years away, the announcement came just months before an election in which Vilsack faces Republican challenger Doug Gross in a contest polls show is close.
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