ASA December 2002 Newsletter

On November 8, 2002, Alexander A. Hannenberg, M.D., and Michael Scott made presentations to the annual meeting of the Society of Academic Anesthesiology Chairs and the Association of Anesthesiology Program Directors. This article was drawn from their two presentations.

When Medicare introduced its physician Medicare Fee Schedule in 1992, the schedule contained a double-dose of bad news for academic anesthesiologists. Like the entire specialty, teaching anesthesiologists were subjected to a 29-percent cut in the Medicare anesthesia conversion factor. The fee schedule also included notice that the long-standing practice of paying full fees for two concurrent procedures involving residents would end. Medicare announced its intention to pay only for the faculty’s medical direction service (at 50 percent of the fee schedule amount) in this situation.

ASA was successful in persuading Medicare to postpone the implementation of this rule until 1994, but the one-two punch has been a serious problem for academic anesthesia practices ever since. This phenomenon, coupled with the current and ongoing provider shortage in the specialty, has created what the Society of Academic Anesthesiology Chairs has called a “perfect storm”¹ in which the capacity to recruit and retain teaching anesthesiologists has become a critical issue.

We estimate that the impact of the 1994 change in Medicare teaching payment rules results in more than $17,000 in lost annual revenue per anesthesiology resident. Extrapolated to the universe of U.S. anesthesiology trainees, the price tag exceeds $50 million annually. Medicare would argue that federal support for anesthesiology residents yields several-fold this amount. Nonetheless, the cost to the Medicare program of simply reverting to the pre-1994 rule is quite high.

This is not the only obstacle to improving academic finances by this route: the anesthesia teaching rule is part of a general approach to Part B reimbursement to teaching physicians that crosses all specialties. The basic concept of these rules, which became final in 1996, is that a teaching physician must be personally involved with the resident in all of the most difficult aspects of the procedure. Thus, although a surgeon need not be present for opening and closing, he or she must be present during all critical portions of the procedure and must be available to furnish services during the entire procedure. Any proposed change in the anesthesia teaching rules would potentially cause the Centers for Medicare & Medicaid Services (CMS) to consider the rules in other specialties, an obstacle to a ready solution of the anesthesia problem.

The cost of restoring full payment for two concurrent teaching cases could, however, be absorbed within the current pool of Medicare payments to anesthesiologists, currently about $1.45 billion annually. Doing so (a “budget- neutral” solution) would necessitate a reduction in the conversion factor paid to all anesthesiologists estimated at almost 4 percent, or about 60 cents per Medicare unit. The current crisis in funding the Medicare physician fee schedule, which produced a 6.9-percent cut in the Medicare anesthesia conversion factor this year and threatens future years, makes further reductions at this time unappealing. In addition, there is a possibility that such an adjustment would be applied only to the Medicare payments to physicians, not nurse anesthetists. The result would be separate conversion factors for physician and nurse anesthetist services, with the latter exceeding the former.

There is a special class of anesthesiology residents for whom the teaching payment rules are particularly irritating. Although the Balanced Budget Act of 1997 froze the number of resident positions, some anesthesiology residency enrollments are currently growing. These additional anesthesiology resident positions are funded through institutional or practice revenues and are not directly supported by Medicare graduate medical education (GME) payments. The number of such positions is unknown, but the Medicare argument that Part B payment for the services of such residents are duplicative of GME funding rings hollow in this situation. It would be logical for anesthesiology teaching departments — and those in other specialties, too — to seek restoration of full payment for services of unfunded residents. Such a change would weaken Medicare’s influence on the size of the postgraduate trainee pool and require regulatory change but would presumably have a price tag lower than the $50 million required for a universal change in payment policy in anesthesiology.

A new Medicare rule governing nurse anesthetists in a teaching role with student registered nurse anesthetists (SRNAs) raises interesting issues with respect to payment policy for teaching anesthesiologists. Under this rule, nurse anesthetists recently have become eligible for payment when supervising two concurrent SRNA procedures. The Medicare carrier’s manual now stipulates that full base units plus the time actually spent in attendance (“face-to-face” time) with each patient is payable using the full anesthesia conversion factor.² To qualify for these payments, however, the teaching nurse anesthetist must be present throughout the entire preanesthesia and postanesthesia service periods and must, presumably, carefully document the time spent face-to-face with each patient.

If this same formula were applied to a teaching anesthesiologist who documented 100 percent of his or her time with one or the other of two concurrent patients, it could yield payments approximately 35 percent higher than current Medicare physician teaching rules allow. It would create new obligations for faculty participation in preoperative and postoperative care and very substantial new documentation requirements. The face-to-face time approach would be a radical departure from the current method of reporting time during medical direction services. At least one Civilian Health and Medical Program of Veterans Administration intermediary has implemented such a requirement for physician medical direction services over the strident objections of the affected anesthesiologists. If the specialty sought the application of the new nurse anesthetist rule to teaching anesthesiologists, we would, however, have a precedent on which to base our request, but one wonders whether the cure is worse than the disease.

As ASA NEWSLETTER readers know, there has been growing interest among private payers in mimicking Medicare’s approach to services of teaching anesthesiologists.³ Private payers do so, however, without the benefit of a GME-funding mechanism to cite as their justification.

Academic medical centers are becoming increasingly aware of this phenomenon, and some have aggressively negotiated exclusions from such private payer policies. Doing so requires that the private payers abstain from use of Medicare anesthesia claims modifiers. It is clear that they are perfectly free to do so and despite their occasional assertions to the contrary, there is no obligation under the Health Insurance Portability and Accountability Act’s standardized transaction provisions to use these modifiers. Since many academic anesthesiology departments function under the umbrella of a faculty practice plan, it is critical that the contracting staff of the academic medical center be alert to the appearance of private payer reimbursement practices such as these.

Improvements in the economics of academic anesthesia practice involve many parties, including the academic anesthesia community itself, the specialty as a whole, government and the private insurance industry. Formulating a strategy that will satisfy all parties is a daunting task, which ASA’s leadership is making a high priority.

As this article is written, we are uncertain whether CMS will approve all or any portion of our request for increased valuation of anesthesia work under the fee schedule and whether Congress will roll back the negative update in the fee schedule applicable to all physicians beginning next year. Both actions would obviously provide Band-Aid help to academic departments but will not provide a serious vehicle for stemming the shortage of teaching anesthesiologists.

References:

1. Tremper K, et al. Surviving the Perfect Storm: The Financial Environment of Academic Anesthesia. October 2000. [presented at the ASA 2000 Annual Meeting]. <www.ASAhq.org/aapd-saac>.

2. Medicare Carriers Manual. Section 16003 J, effective July 1, 2002.

3. Hannenberg AA. Private payer perils. ASA Newsl. 2002; 66(5):24-25.

Alexander A. Hannenberg, M.D., is Associate Chair, Department of Anesthesiology, Newton Wellesley Hospital, Newton, Massachusetts, and Associate Clinical Professor, Tufts University School of Medicine, Boston, Massachusetts.

Michael Scott, J.D., oversees the federal, state, regulatory, lobbying and legal activities in the ASA Washington Office.

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