ASA August 1999 Newsletter

Commercial payment levels for anesthesia services have changed very little in the last two years. That is the major conclusion to be drawn from a survey of ASA members and anesthesia practice administrators conducted by the Washington Office this spring.

Methods. A one-page questionnaire asking respondents to list the dollar conversion factors (CFs) paid by their three highest-volume commercial payers (indemnity or managed care), as well as capitation rates, was distributed to the audience at the February 1999 Conference on Practice Management. This questionnaire was virtually identical to the one used in 1997. It was also mailed to all the members of the Committees on Economics and on Practice Management and to the anesthesiologists on the Medicare Carrier Advisory Committees. A total of 83 usable responses were received. Not every respondent answered all questions.

To eliminate implausible outliers, we deleted responses that were either more than twice or less than half the mean value of the statistic. Applying this rule removed only five values from the set of CFs.

National rates. The average CFs paid by the carriers representing the greatest number of respondents' patients are $45.02, $43.10 and $42.35. The first two amounts are less than a dollar higher than the corresponding value for the survey conducted in 1997 (reported in the "Practice Management" column in the September 1997 NEWSLETTER). The minimum payment rate has increased by $1.12 and the maximum by $3. The $81 maximum CF comes from a state in which some payers allow a higher CF for the anesthesia care team than for anesthesiologists working alone.

The results of the two surveys are set out in Table 1. The total number of 1999 responses is 23 percent higher than we received in 1997, but the same cautions apply. The total numbers are small; the statistics are not weighted in any way, and a particularly high response rate from the South may have biased the numbers, although perhaps less so than two years ago. The spread of CFs between the geographic regions is somewhat smaller this year: average values for CF 1 in 1999 range from $38.88 to $48.30, with a corresponding 1997 range of $35.16 to $50.08.

State rates and antitrust considerations. Summary statistics for California, Georgia, Missouri, North Carolina, Texas and Virginia appear in Table 2. These are the only states for which we can publish fee data because of federal antitrust law. In general, the law says "competitors" such as members of the same medical specialty may not share fee information with each other. There is, however, a "safety zone" that shields certain health care fee surveys from enforcement of the anti-price fixing laws by the Federal Trade Commission and the Department of Justice. In order to come within that safety zone, published results of surveys must, among other things, be based on data that are more than three months old and that represent values from at least five different providers. For further details of the antitrust safety zones, please see the September 1997 "Practice Management" article. ("Practice Management" columns going back to May 1996 are available on this Web site

The states in Table 2 each produced at least five survey responses. Only Texas and Georgia generated enough data to be featured in both the 1997 and 1999 surveys. The change in Texas is particularly hard to interpret. All three average CFs increased slightly; the minimums increased from the low to mid-$30 range to $40 and above, while the maximums decreased. The very small count of responses must be borne in mind. Georgia likewise showed increases in all three average conversion factors. The highest average in 1997 was $58. It is now $67.68, markedly higher than in any other state, as is the highest median of $67.50.

California		CF 1	CF 2	CF 3
	Average	41.69	38.66	34.92
	Count	6	6	5
	Median	37.30	38.75	35.00
	Maximum	70.00	43.84	44.02
	Minimum	32.00	34.15	27.80

Georgia		CF 1	CF 2	CF 3
	Average	64.06	67.68	63.37
	Count	6	5	5
	Median	62.44	67.50	67.50
	Maximum	81.00	75.00	69.00
	Minimum	48.00	60.00	50.00

Missouri		CF 1	CF 2	CF 3
	Average	38.70	39.60	37.00
	Count	5	5	5
	Median	38.00	40.00	37.00
	Maximum	42.50	42.00	39.00
	Minimum	36.00	37.00	35.00

North Carolina		CF 1	CF 2	CF 3
	Average	47.78	46.51
	Count	5	5	4*
	Median	51.42	49.00
	Maximum	55.00	53.82
	Minimum	36.00	38.66

Texas		CF 1	CF 2	CF 3
	Average	45.75	43.47	42.42
	Count	6	6	6
	Median	45.00	42.90	42.25
	Maximum	51.00	49.50	45.00
	Minimum	42.00	40.50	40.00

Virginia		CF 1	CF 2	CF 3
	Average	45.40	49.58	49.30
	Count	5	5	5
	Median	40.00	55.45	57.00
	Maximum	64.50	72.00	67.50
	Minimum	35.00	32.00	31.00

Missouri comes in the lowest, with average CFs of $38.70, $39.60 and $37. California is not far behind and, in fact, yielded the absolute lowest average CF ($34.92). The maximum reported California CF of $70 may elicit a lot of interest (not to say jealousy or skepticism!).

North Carolina and Virginia report the next highest numbers after Georgia, which supports our enduring perception that anesthesiologists' earnings tend to be greatest in the South. This perception is not affected by the fact that a number of respondents in the southern states indicated the use of time units shorter than 15 minutes. Their data were converted algebraically, but the correction would tend to inflate the payment for base units. The next ASA fee survey will be designed to allow more accurate reporting. The perception of higher fees in the South is also consistent with the income information from the American Medical Association (AMA) Physician Socioeconomic Statistics 1999-2000. According to the 1997 survey data summarized in the anesthesiology section, mean net income levels were as follows:

All Anesthesiologists $236,200
East North Central $223,000
South Atlantic $291,500
Pacific $211,400

The AMA data are based on 169 survey responses. Only those geographic census divisions with more than 25 responses are reported.
In order to give readers in states for which we cannot report local data something more specific than the national figures, we have grouped the states as shown in Table 3. The groupings were determined solely by the availability of reasonably cohesive state data and do not conform to the census divisions or the 1997 groupings. California and Texas did not fit with any other set of states, and thus, their responses were not included in any of the regional reports, but Georgia, Virginia and North Carolina were added to the South, and Missouri was included with the Midwest.

Northeast	CF 1	CF 2	CF 3
Average	44.76	41.72	43.17
Count	9	9	9
Median	45.00	39.00	42.50
Maximum	60.00	54.00	58.00
Minimum	32.00	33.00	32.00

South	CF 1	CF 2	CF 3
Average	47.78	48.01	45.74
Count	28	27	26
Median	44.00	45.00	43.50
Maximum	81.00	75.00	69.00
Minimum	28.00	30.00	23.80

Midwest	CF 1	CF 2	CF 3
Average	41.97	39.10	40.29
Count	15	15	15
Median	42.00	40.00	38.55
Maximum	60.40	58.00	67.00
Minimum	33.00	30.00	28.00

Northwest	CF 1	CF 2	CF 3
Average	44.33	41.76	41.50
Count	6	6	6
Median	41.50	40.00	39.50
Maximum	55.00	54.00	54.00
Minimum	36.00	36.00	36.00

West	CF1	CF 2	CF 3
Average	38.88	38.71	38.55
Count	6	6	6
Median	36.63	36.88	37.25
Maximum	48.00	45.00	46.80
Minimum	34.00	35.00	32.00

Even without California, where competition has had its effect on fees, the West reported averages in the $38 range, considerably lower than the other regions. The South, as expected, showed the highest averages and maximums but also the lowest minimums.

Per-member-per-month (PMPM) payments under capitated contracts have declined, if the data reported are representative. Their reliability is an open question because of the very small numbers of values listed both on the 1997 and this year's questionnaires. This small number made it unnecessary to apply the rule for excluding outliers used to trim the conversion factor data.

As shown in Table 4, a total of six practices indicated that they had capitated Medicare contracts, with an average PMPM of $5.16. Three encompassed pain management services. In 1997, five respondents gave data resulting in an average PMPM of $5.93.

Capitation Rates, Per Member Per Month(PMPM)

Average	5.16	2.40	2.47
Count	6	5	10
Median	5.07	2.50	2.46
Maximum	7.14	2.77	3.54
Minimum	2.50	1.70	1.67

The commercial PMPM statistics show only a 7-cent differential between contracts including pain services and contracts excluding pain, in favor of the latter, which is highly implausible. The minimums and medians were also within 20 cents of each other, but the $3.54 maximum for PMPMs without pain services was an unlikely 77 cents higher than the greatest PMPM encompassing pain.

Accordingly, the capitation figures should be viewed with a great deal of caution. The safest conclusion to which they lead, when combined with the 1997 numbers, is that the Medicare PMPM averages are in the $5 range and the commercial rate averages are in the $2.40-$2.80 range.

Capitated contracts for anesthesia services are in effect throughout the country. Two respondents each in California, Illinois, North Carolina and Florida indicated that they had capitation agreements. Other states reporting PMPM data were Tennessee, Maine, Texas, Indiana, Colorado, Oklahoma and Missouri. The average number of patients covered by Medicare capitated contracts was 9,759 and the corresponding commercial average was 31,184.

A sincere thanks is extended to the anesthesiologists and administrators who returned the questionnaires. Please help us increase our response rate the next time we survey anesthesia payments by reminding your colleagues of the value of these data. With five or more responses from each state, we will be able to publish more extensive statistics.