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December 2000
Volume 64 |
Number 12
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| 2001
Medicare Payment Rates Will Decrease |
Karen Bierstein
The national average conversion factor (CF) for anesthesia services
will decrease from $17.77 to $17.26 on January 1, 2001. The new
number is 2 cents higher than the 1999 national average. The 2001
CF for your geographic area appears in this
table.
The cause of this unwelcome development is, in two words, practice
expenses. We have known for several years and have reported to
you that we were likely to see a drop in the CF resulting from
a change in allowed practice expenses; but until now, the Medicare
inflation update has more than offset the practice expense (PE)
cuts. Next year the third of the four years of transition to the
new PE values that will not be the case.
Beginning in 1995, the Health Care Financing Administration (HCFA)
conducted numerous studies to try to move the practice expense
component of the Medicare Fee Schedule from a charge basis to
a resource cost basis. A key element in the estimation of resource
costs for anesthesiology was the expense of clinical staff employed
by the physicians rather than the hospital. HCFA was always skeptical
of the high numbers assigned to this expense by a physician focus
group but turned its attention to some of the many other problems
afflicting the practice expense exercise until 1999. In July 1999,
HCFA announced its intention to disregard the focus group numbers
and projected an 8-percent decrease in anesthesia payments over
the next three years. Because of the inflation updates, which
were not factored into the HCFA projection, this will appear as
an average cut of 3 percent. If you would like a more detailed
explanation, please refer to the Washington Report in the October
and December 1999 issues of the NEWSLETTER.
One reason why the decrease is this large is that HCFA admits
to having miscalculated the practice expense adjustment for 2000.
The cut should have been larger; according to their explanation
and the national average, CF should have been $17.58 not $17.77.
If HCFA had used the lower amount in 2000, the 2001 CF would have
been $17.44. The Committee on Economics is examining all available
data and computations closely now that we know, and HCFA knows,
that mistakes can be made.
Many ASA members have participated in one or more of the major
PE surveys we have been conducting since 1996. The purpose of
these surveys was to determine what anesthesiologists' practice
costs really are and to persuade HCFA that the real costs should
be taken into account. The most recent survey, fielded early this
year, sought to determine the extent of use of physician-employed
clinical staff (excluding nurse anesthetists, whom HCFA considers
a revenue rather than cost center). Although that use is growing,
it is not yet typical, the standard set by HCFA.
| …until now, the Medicare inflation update
has more than offset the practice expense (PE) cuts. Next
year the third of the four years of transition to the new
PE values that will not be the case. |
You may also be aware of the litigation that ASA instituted in
federal court on December 30, 1999, which was supported by the
American Academy of Ophthalmology, the American Society of Cataract
and Refractive Surgery and the American Association of Neurological
Surgeons. (These specialties have been affected even more dramatically
than anesthesiology. The neurosurgery reductions have meant significant
changes in practice expense payments for the pain management services
performed by anesthesiologists as well.) In that lawsuit, we argued
that the Balanced Budget Act of 1997 (BBA) required HCFA to recognize
actual and not merely typical costs. See the Washington Report
in the February 2000 issue of the NEWSLETTER for further
details. The lawsuit was ultimately dismissed on jurisdictional
grounds.
The third prong of ASA's attack has been the quest for legislation
that would place a halt, or at least a moratorium, on the last
two years of the transition to the new, final PE values. We continue
to participate in a coalition of the specialty societies mentioned
above and several others, including cardiology, thoracic surgery
and gastroenterology. Together we have sought to convince key
members of Congress that it is impossible to determine with any
accuracy the actual resource costs of every procedure or service
performed by physicians and that it is time to abandon the effort.
The issue, of course, has been money. Although there is widespread
agreement on Capitol Hill that the BBA created unintended reductions
in Medicare provider payments and that a figure in the $20 billion
range represents the appropriate give back Congress has been unable
to agree on a budget bill as of the time of this writing. It is
not certain if we will ultimately obtain a reversal of any of
the practice expense cuts through the legislative option, but
we will certainly keep trying.
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Karin
Bierstein joined the ASA Washington Office in 1994. She holds
a J.D. degree from Cornell University and a master's degree
in public health from Harvard University. She is currently
Assistant Director of Governmental Affairs (Regulatory). |
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