Lastly......here is the ASA newsletter that you keep referring to. The only thing that you have proven is that even good data can be misapplied and misused to make an invalid inference................
Medicare Is Still the Wrong Benchmark
Karin Bierstein, J.D.
Assistant Director of Governmental Affairs (Regulatory)
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Payers continue to seek anesthesia rates based on the Medicare conversion factor (CF), which, as we know all too well, is $16.60 at the national level. In 1999, ASA published a slide set with full narrative titled "Medicare and Anesthesia Reimbursement Methods: Why the Medicare Fee Schedule Is the Wrong Benchmark for Commercial Anesthesia Payments." This monograph, developed by Alexander A. Hannenberg, M.D., chair of the ASA Committee on Economics, contained a number of analyses based on 1998 payment data, which are now obsolete. An August trip to West Virginia to explain why Medicare is the wrong benchmark to several state governmental payers provided the opportunity to update some of the models developed three years ago.
1. Difference in Medicare Rates for Anesthesia Versus Other Services
According to our 2001 commercial reimbursement survey, the national average CF (unweighted) for anesthesia services was $45.75. The Medicare CF was $17.83. For all other services paid under the Resource-Based Relative Value Scale (RBRVS), the unweighted average of Blue Cross/Blue Shield, managed care and other non-Medicare, non-Medicaid plans reported by the American Medical Association (AMA) in 2001 was $45.98. The corresponding Medicare rate was $38.26.
Medicare/Commercial
Anesthesia 38.9%
Other services 83.2%
As a percentage of commercial payment levels, therefore, Medicare payment for anesthesia services is less than half of Medicare payment for other medical and surgical services.
2. In Absolute Dollars, the 2002 Anesthesia CF Is 14 Percent Lower Than It Was in 1991
In 1991, the last year before Medicare implemented the RBRVS-based Fee Schedule, the national average CF for anesthesia services was $19.27. In 2002, it is $16.60, a 14-percent decrease.
These are absolute dollar amounts, not adjusted for inflation. $19.27 in 1991 dollars has the same buying power as $25.48 in 2002. Adjusted for inflation, the 1991 anesthesia CF would have been 46 percent higher than it is today.
3. Hourly Rate for Anesthesia Versus Nonphysician Services
Payment for anesthesia is based in part on the time that it takes to provide the service. There are quite a few other codes in the Current Procedural Terminology (CPT) system with descriptors that depend on the amount of time involved in providing the service (e.g., "each 15 minutes" or "30 minutes or less"). Multiplying the Medicare payment for some of these codes by 4 or 2 or another appropriate factor yields a per-hour rate, which we can compare to one-third of the payment for a three-hour anesthetic for open reduction and internal fixation (ORIF) of an ankle fracture:
When the time that it takes to perform one of these services is normalized to one hour, the Medicare Fee Schedule (MFS) places a higher value on orthotics fittings and aquatic therapy than on a typical anesthesia service. An office visit for an established patient with minimal presenting problems "that may not require the presence of a physician" and where "typically, five minutes or less are spent performing or supervising these services" is worth 2.75 times five minutes of the anesthesiologist's time in the operating room.
Medicare payment for the office visit above is calculated using the higher relative values allowed for a private office's overhead. Even if the visit takes place in the hospital and the allowable, minus the office overhead and normalized to an hour, is just $104.28, it is still worth 18 percent more than the anesthetic.
4. Cross-Specialty Comparison of Medicare-Based Net Income
Health economist Peter McMenamin, Ph.D., calculated a 1995 annual net income for anesthesiology and other specialties using a model developed by the architect of the RBRVS, Harvard Professor William C. Hsiao, Ph.D. For each specialty studied, Dr. Hsiao chose a typical service, computed the Medicare payment for that service, determined annual hours worked, calculated an annual gross income based on providing only that one service to Medicare patients, subtracted practice expenses and came up with an annual net income figure.
Dr. McMenamin updated Dr. Hsiao's figures and added the specialty of anesthesiology using colectomy as a typical service. In 1995, net incomes based on Medicare payments for 46 weeks times 45 hours of providing the single service per specialty were as follows:
Updating the McMenamin analysis to 2002, we find that anesthesiologists would be earning just $304 more than they were in 1995. Multiplying the annual number of colectomies by the 2002 Medicare CF and subtracting practice expenses projected to 2002 through the inflation calculator on the Bureau of Labor Statistics' Web site, the 2002 net annual income for an anesthesiologist would be $54,073.
5. RBRVS-Based Payments for the Components of an Anesthesia Service
Any given anesthesia service as described in CPT or in the Relative Value Guide includes many components. The code covers preoperative, intraoperative and postoperative care; only a very few procedures, such as pulmonary artery catheterization or epidurals for postoperative pain management, are separately payable. Many of the procedures performed during the course of a normal anesthetic correspond (with varying degrees of precision) to separate CPT codes.
Looking at the individual components or building blocks of an anesthetic for ventral hernia repair (00832), we find that their RBRVS relative value units add up to a total of 13.59:
The total payment for the above components of an anesthesia service would be $491.96 (13.59 RVUs ¥ $36.30).
In contrast, Medicare payment for a one-hour ventral hernia repair would be as follows:
00752 (6 Base Units + 4 Time Units) ¥ $16.60 = $166
Breaking down an anesthesia service into its components and applying the RBRVS-based Medicare allowable to each of those CPT codes would thus yield a payment almost three times greater than billing for the service using the anesthesia code.
Conclusion
The above analyses show that Medicare greatly undervalues anesthesia services relative to the other medical and surgical services in the MFS.
The ratio of Medicare:commercial payments for anesthesia services is less than half the ratio for other services;
The minute-for-minute payment for a typical anesthesia service is lower than that for such nonphysician services as aquatics therapy;
Annual net income for an anesthesiologist, calculated on the model of a single Medicare case, is less in 2002 than it was for all nonprimary care specialties in 1995;
Breaking down an anesthesia service into its component services on the RBRVS and comparing the Medicare payment for the total of those component services produces a Medicare allowable three times greater than the payment for the all-inclusive anesthesia code. In other words, the MFS is internally inconsistent as well as inequitable across specialties.
The simplest demonstration of the inadequacy of the Medicare conversion factor for anesthesia services can be made without reference to other specialties. Had it kept pace with inflation since the implementation of the MFS, the CF today would have been nearly 1.5 times greater than it is.
ASA Argues the Case for an Increase One More Time
In our efforts to persuade the Centers for Medicare & Medicaid Services (CMS) to increase the Medicare CF, we have been limited to the one method that CMS recognizes in showing that anesthesia "work" is undervalued. After nearly three years of hard work at the AMA/Specialty Society Relative Value Update Committee (RUC), we are now trying to make sure that CMS at least implements the RUC's data and analyses showing that our services are undervalued by an average of about 10 percent. This is obviously far less than the increase needed to close the gap between anesthesia and other services. Because the physicians representing the various specialties on the RUC are acutely aware that any increase in the valuation of one specialty's "work" will come out of their own pockets, the RUC ultimately refused to make an affirmative recommendation that CMS apply its findings but instead sent its data and analyses to CMS.
In our formal "comments" on the proposed rule for the 2003 physician fee schedule, we recently urged CMS to take the final step and give some meaning to the entire RUC process by translating the analyses into a CF increase. A copy of Dr. Glazer's letter is available at <
www.asahq.org/washington/pract_mgmt.html >. We are now seeking the help of key members of Congress to inspire CMS to take the appropriate action.
No, Aetna's Payment Levels Are Not Perfect
Editor Mark J. Lema, M.D., Ph.D., and the Washington Office have received several complaints about the August "Practice Management" column describing ASA's ongoing dialogue with Aetna and the payment policy changes that we have persuaded Aetna to make. We recognize that many anesthesiologists are legitimately dissatisfied with Aetna's payment amounts.
ASA cannot compel any payer to raise its rates. What we have been able to accomplish is to convince Aetna to change some of the policies that affect payment amounts, e.g., to cover monitored anesthesia care anesthesia in more circumstances than originally planned and to reinstate separate payments for invasive monitoring lines and postoperative pain management.
Aetna has just granted our request for an explicit statement that it will not attempt to apply the medical direction payment reductions to cases involving residents. Readers will recall that other large payers, notably United Healthcare, have taken advantage of the Medicare rules regarding payment for teaching anesthesiologists and reduced reimbursement by 50 percent in concurrent cases. The following statement forwarded on September 16, 2002, by Aetna's Jeffrey Livovich, M.D., is an important confirmation and example for other payers:
The [medical direction] modifiers should be used to report the supervision of CRNAs. These modifiers should not be used to report the supervision of residents in an academic institution within an anesthesia-training program. Aetna will pay up to two rooms of resident supervision, providing the attending physician is present for all critical portions of the anesthesia service (induction, etc.).
All of this took considerable effort on the part of several physicians inside Aetna (as well on ASA's part). We certainly appreciate Aetna's willingness to work with us even though we may not gain every policy change or action that we discuss, and we would be delighted if other payers were equally forthcoming.
Negotiating higher CFs must be, under the terms of the federal antitrust laws, up to individual physicians and integrated groups. ASA encourages its members to negotiate as forcefully as they believe appropriate.
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Don't forget about the Ninth ASA Practice Management Conference in San Antonio, Texas, January 31-February 2, 2003! For more information, contact Jeff R. Schultz at (847) 825-5586, ext. 45.
Source Materials:
Hannenberg AA. Medicare and Anesthesia Reimbursement Methods: Why the Medicare Fee Schedule is the Wrong Benchmark for Commercial Anesthesia Payments. ASA, 1999.
Bierstein K. Fees paid for anesthesia services: 2001 Survey Results. ASA Newsl. 2001; 65(9):34-37.
Gallagher PE. Medicare RBRVS: The Physicians' Guide. AMA, 2002:120.
U.S. Department of Labor, Bureau of Labor Statistics, inflation calculator: <
www.bls.gov/cpi/ >.
McMenamin P. Reassessing Anesthesia Fees Under the Medicare Fee Schedule, 1995. Paper prepared for ASA, available at <
www.asahq.org/Washington/McMenamin.pdf > .
Hsiao WC, Dunn DL, Verrilli DK. Assessing the implementation of physician payment reform. N Engl J Med. 1993; 328:928-933.