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September 1996
Volume 60 |
Number 9
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PRACTICE MANAGEMENT
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| Shift in Medicare
Localities Will Affect Conversion Factors |
Karin Bierstein,
Practice Management Coordinator
E-mail the author
Medicare payments for physician services are adjusted to reflect
different practice costs among 210 "payment localities,"
or distinct geographic areas. A proposal by the Health Care Financing
Administration (HCFA), as published in the July 2 Federal Register,
calls for a consolidation that would reduce the number of localities
to 89. Under the HCFA proposal, 78 of the current localities would
see an increase in reimbursement for anesthesia services. Sixty-four
would see a decrease, and there would be either no change or a
negligible (less than 1 cent) change in 63 localities. Five would
experience mixed results. The numbers are similar for medicine
in general.
How large will the changes be? The biggest cut, both for
anesthesia services and for the rest of medicine, will occur in
part of Pittsburgh, where ASA's consultant has estimated the potential
decrease in the anesthesia conversion factor at $1.33. Parts of
the St. Louis, Missouri, locality (Columbia, Springfield and Jefferson
City) would experience the next largest decrease, currently estimated
at $0.72. These cuts are attributable to the structure of the
current locality system, where high- and low-cost areas have fortuitously
been grouped together and are now being realigned. The affected
part of Pittsburgh, for example, is now paid on the same basis
as the much higher-cost Philadelphia. At the other end of the
spectrum, there will be significant increases in the anesthesia
conversion factor in Philadelphia ($0.93), in the Boston metropolitan
area ($0.66) and in certain rural parts of California ($0.66).
Table 1 lists all
of the localities in which the change, up or down, is projected
to exceed 5 cents.
Why is HCFA proposing this restructuring? In the Federal
Register notice, the agency is explicit about its "belief
that statewide localities generally are preferable to the present
Medicare localities because they simplify program administration
and encourage physicians to practice in rural areas by reducing
urban/rural payment differentials."
HCFA considered four restructuring options developed by its contractor,
Health Economics Research, Inc., of Waltham, Massachusetts. Three
of the options were based on metropolitan statistical areas and
would have involved either too few or too many new payment localities
or "fee schedule areas."
The option selected builds on the current localities. As it happens,
there are already statewide localities in 22 states as well as
in the District of Columbia, Puerto Rico and the Virgin Islands.
These areas will experience no change. In the other 28 states,
the localities are ranked from the highest to the lowest geographic
adjustment factor (GAF) currently in use. The GAF of the highest-cost
locality is compared to the weighted average GAF of all lower-cost
localities. If the difference is 5 percent or less, the state
becomes a single statewide locality. If the difference exceeds
5 percent, the highest-cost locality remains a distinct area.
The process is repeated for the second-highest-cost locality and
on down the list, until the difference between the highest-cost
locality and the weighted average GAF for all lower-cost localities
does not exceed 5 percent.
Are these changes written in stone? What is ASA doing about
them? It is important to note that the projected increases
and decreases for anesthesia services are estimates only. Several
factors will probably cause them to change, if only by a few cents:
1. The changes are intended to be budget-neutral within each state.
An adjustment would be made to them late in the year, incorporating
the most recent data, to yield the same total physician fee schedule
payments within each state as if the payment localities not been
changed. The budget neutrality adjustment will likely limit the
amount of decrease for most anesthesiologists, since there will
be disproportionately more services cut initially (the volume
of services is higher in cities, which are generally seeing reductions
in reimbursement).
2. HCFA is proposing a two-year phase-in for areas predicted to
lose more than 4 percent. For most of medicine and surgery, only
two states would experience cuts of this magnitude: Pennsylvania
(8.6 percent for Pittsburgh, 5.0 percent for other non-Philadelphia
cities) and Missouri (5.9 percent). The anesthesia conversion
factor in Pittsburgh and non-Philadelphia cities and in St. Louis
would be reduced by 8.4 percent, 4.4 percent and 4.7 percent,
respectively. Reimbursement reductions would be limited to 4 percent
in the first year (1997).
ASA will have filed its comments on the proposed rule by the time
this issue of the NEWSLETTER is in print. Preliminarily,
ASA is considering questioning HCFA's assumptions about administrative
simplification and is urging, at a minimum, a longer phase-in.
Component societies in states facing larger cuts are being alerted
to the issue and to the opportunity to comment. ASA leadership,
including the Committee on Economics, is reviewing the possibilities.
Aetna Is Pulling Out of Medicare
Aetna Health Plans has announced that as of October 1, 1997,
it will terminate its service as a Medicare carrier. Currently,
Aetna constitutes one-fifth of the Part B carriers and one-fourth
of the Part A (hospital) intermediaries. The locations in which
it is a carrier are Alaska, Arizona, Georgia, Nevada, Oklahoma,
Oregon, Hawaii, New Mexico, Washington, Guam, and the Northern
and Mariana Islands. HCFA will need to enter into multiple contracts
with successor carriers in time to prevent disruptions in payment
processing.
Aetna recently completed its $8.9 billion purchase of U.S. Healthcare
Inc., creating the third-largest health care maintenance organization
chain in the country.
HCFA Agrees to Amend Teaching Instructions
In the "Washington Report" of the May 1996 NEWSLETTER,
Michael Scott drew attention to the fact that HCFA had changed
the instructions to carriers under the new teaching regulations
to require that the teaching anesthesiologist working with a single
resident be present in the operating room for the entire period
in which time units were charged. The draft instructions had required
physical presence in the operating room only during the key portions
of the anesthesia procedure, e.g., induction and emergence.
Upon reviewing the revised instructions, ASA promptly filed vigorous
objection with HCFA, noting that the new instructions were impermissibly
at variance with the teaching regulations themselves, which required
presence only during key portions of the procedure. In due course,
HCFA advised ASA in writing that HCFA would again revise the instructions
to bring them into conformity with the regulations [Figure
1]. On June 24, ASA President Norig Ellison, M.D., advised
all program directors of the HCFA change.
Figure 1
I am responding to your fax regarding the anesthesia instructions
in the interim teaching physician instructions. We have decided
to change the manual instruction to more closely follow the
language of the regulation. Specifically, we will specify only
that the teaching anesthesiologist must be present in the operating
room for the critical or key portion(s) of the procedure (including
induction and emergence) and that he or she must be immediately
available to furnish services during the entire procedure. The
teaching anesthesiologist must document the medical records
as to the key portions of the service for which he or she is
present. While we believe that the teaching anesthesiologist
should be in the operating suite during the portions of the
procedure not considered to be critical or key, we will not
require documentation of such availability at this time. In
addition, we have decided to remove anesthesia from the list
of time-based codes since the anesthesia payment is computed
by a combination of time and base units.
We plan to pass this information on to the regional offices
for transmission to the carriers prior to the July 1, 1996,
implementation date.
Terrance L. Kay, Director
Division of Physician Services
Office of Physician and Ambulatory Care Policy
HCFA Bureau of Policy Development
Applying the new teaching rules: The new teaching rules,
together with the widely publicized Medicare audit of the University
of Pennsylvania, have raised questions as to the appropriate documentation
of the teaching physician's participation in the procedure. HCFA's
letter merely says that the teaching anesthesiologist must document
in the medical record the key portions of the procedure for which
he or she is present and that, at least for the present, no documentation
of availability during the nonkey portions of the procedure will
be required. Amplifying on these requirements, Dr. Ellison suggested
the conservative course outlined in Figure
2 in his June 24 advisory to program directors.
Figure 2
Applying the New Teaching Rules
... A conservative approach would suggest that during or immediately
following the procedure, the teaching physician manually note
on the anesthesia record, "present for induction, emergence
(and any other critical portion)," and manually sign the
note. HCFA officials have repeatedly stated they do not regard
a checkoff or initials as sufficient; they want evidence of
substantial personal attention to the documentation requirements.
As to the nonkey portions of the procedure, documentation requirements
are more ambiguous. The attached letter [Figure
1] can be read as requiring no documentation at the present
time, but I think a conservative approach would suggest a manually
signed note that says "immediately available throughout,"
"immediately available in the suite throughout" or
similar language....
Excerpted from a letter from ASA President Norig Ellison,
M.D., to members of the Society of Academic Anesthesiology Chairs
and the Association of Anesthesiology Program Directors, June
24, 1996.
Do the teaching rules have any impact on medical direction
rules? What is not clear is whether HCFA's teaching documentation
advice has any application in the medical direction context. At
present, there are absolutely no HCFA instructions as to how an
anesthesiologist appropriately documents the steps involved in
medical direction. Logic would suggest that, at the least, the
anesthesiologist must document those "most demanding portions"
of the procedure for which he or she was present in the medical
records, but there is no guidance as to what further documentation
is required.
ASA has written HCFA, seeking clarification of HCFA's requirements,
and when the matter is resolved, advice will appear in this column.
There appears to be some confusion in anesthesiology teaching
programs as to whether the anesthesiologist who is medically directing
residents must participate in the pre- and postoperative visits.
HCFA's proposal to require such participation for anesthesiologists
involved with a single resident was withdrawn, as readers of the
NEWSLETTER know. The teaching instructions do not supplant
the medical direction rules, however. Thus, if the anesthesiologist
is medically directing two, three or four residents (or a combination
of residents and nurse anesthetists), he or she must still "perform
a preanesthesia examination and evaluation" and "provide
indicated postanesthesia care."
One-on-one ("personally performed") anesthesia: Must
the anesthesiologist remain in the operating room? The debate
continues: The question as to whether an anesthesiologist
working with a single nurse anesthetist must remain in the operating
room, or whether immediate availability in the operating suite
suffices, continues to confound ASA members and also, apparently,
Medicare carriers. Radically different interpretations from various
carriers have been brought to the attention of the ASA Washington
Office.
In 15 months, new rules will take effect that will recognize medical
direction of a single case involving a nurse anesthetist. Until
then, anesthesiologists can best protect themselves against false-billing
claims by obtaining a written answer to the question "Must
the anesthesiologist remain in the operating room throughout the
case, without any breaks?" from their own carriers.
If you write to your carrier to request an interpretation, it
may be helpful to include examples of the types of activities
that would take you out of the operating room.
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