or more than 40 years, the ASA Relative Value Guide™ (RVG) has stood the test of time as a reasonable and consistent billing methodology for anesthesiologists. The system evolved based on changes in the method of payment for anesthesia services, from direct payments for anesthesiologists’ services by hospitals to fee-for-service payments using a flat-fee methodology as a percentage of the surgeon’s fee to the current relative value system using base and time units. The ASA RVG is currently accepted by all insurers and by the Centers for Medicare & Medicaid Services (CMS).

When the Medicare Physician Fee Schedule was implemented in 1992, payment methodology for anesthesia was not incorporated into the resource-based relative value scale (RBRVS); for all other specialties, it was. At that time, however, the Medicare anesthesia conversion factor (CF) was reduced by 29 percent from a national average CF of $19.27 to $13.68. This low CF has persisted, and in 2007 the national unadjusted Medicare CF is $16.19. Fortunately, due to the tremendous work of the ASA Committee on Economics and the Current Procedural Terminology (CPT^®)/Specialty Society Relative Value Scale Update Committee (RUC) team, CMS (the agency that administers the Medicare program) has finally recognized the undervaluation of our services and has proposed to increase the anesthesia CF to about $20 per unit. Note that adjusting the CF of $13.68 in 1992 by the average consumer price index over the last 15 years would produce a conversion factor of about $20 per unit. We are now keeping up with inflation — a marked improvement!

Still, a huge discrepancy between the Medicare CF and private payer CF remains. The General Accounting Office (GAO), in a recent study called “Medicare and Private Payment Differences for Anesthesia Services” (GAO 07-463 www.gao.gov/new.items/d07463.pdf), found that the average Medicare CF in 2004 was 33 percent of the CF for private payers; this does not come as a surprise to anesthesiologists. For other specialties, however, Medicare payment is approximately 80 percent of private payers. Something is seriously wrong here.

To complicate matters further, health care expenditures continue to increase at an unsustainable rate. The Medicare and uninsured populations continue to grow, the State Children’s Health Insurance Program is expanding, and calls for universal health care are increasing. Health care availability and affordability are now major political concerns. At the same time, many anesthesiologists have entered into service contracts with hospitals and ambulatory surgery centers to provide payment for services that are not covered by health insurance, including call (availability) coverage and administrative responsibilities. Without these contracts and this additional payment, anesthesiologists’ incomes would most certainly fall. With the pending Medicare meltdown (see: Savings T. Medicare meltdown. Wall Street Journal. 2007; May 9), how long will these contracts be maintained? These issues are of critical importance to the future of the specialty.

What can we do about the payment discrepancies? Some have suggested that the unique method for payment of anesthesia services — time-based methodology — is accounting for the lack of equity in anesthesia payments. Is time the problem? Under RBRVS, the surgeon receives a single payment for an individual procedure, no matter how long it takes, while the anesthesiologist’s payment is based on time. Anesthesiologists have always argued that this time-based system is appropriate, since we do not control time, the surgeon does. In reality, it is both the surgeon and the patient who control time. No matter how fast that surgeon is, a difficult and complicated patient will require more time under the care of the anesthesiologist. Despite the desire to maintain time-based payment for anesthesia services, anesthesia time does not have a lot of support with the rest of organized medicine. While there are some codes (e.g., critical care, evaluation and management [E/M] and moderate sedation) that include a time component, time is not a separate component of the 6,000+ other CPT codes. So the common position is that since they do not have it, why should we? As a result, the question that is continually raised is whether we will be able to retain anesthesia time in the future as payment methodologies change.

At the same moment that anesthesia time is being debated, some in organized medicine have advocated a change in payment to a single payment to providers for a particular episode of care (episode case rate payments), a blended payment based on both fee-for-service and episode case rate payments or an expansion of pay for performance (Davis K, Guterman S. Rewarding excellence and efficiency in Medicare payments. The Milbank Quarterly. 2007; 85(3):449-468. Blackwell Publishing). Other payment methodologies also are being considered. What they will mean for anesthesia payment in the future remains unknown.

In response to these challenges, your ASA has been proactive. We do not know if anesthesia time as a separate payment element will last into the future, but we have been preparing for the possibility that it will not. In 2003 the ASA House of Delegates authorized the president to appoint a task force (TF) to study the relationship of anesthesiology’s payment methodology to the RBRVS and to answer the question, “Would a change to RBRVS methodology offer a chance for improved payment?” The TF produced a focused study of the RVG versus the RBRVS methodology for anesthesia and studied the ramifications of integration into the RBRVS under Medicare. The TF looked at four RBRVS models: flat fee based on an expanded anesthesia code set; time-based using existing core expanded anesthesia code sets; flat fee based on surgical CPT codes and average time; and a building block method using E/M plus intraservice value. All of these models could work, but they all had some problems. In the flat fee and average time models, academic practices would suffer (since their cases are longer and more complex) as would anesthesiologists working with slower surgeons. In the other models that were considered, numerous new codes would be required to determine values based on the complexity of the case and type of anesthesia. In all of the models, adjustments would have to be made for multiple surgical procedures. The TF concluded: Time may last forever, but anesthesia time units probably will not; all the models for integrating anesthesia into the RBRVS either do not show much improvement or are unduly complex and unfair to some; we should keep time as long as possible; and ASA must be prepared with viable alternatives when and if we lose anesthesia time units. The findings of the TF were presented at the 2004 ASA Annual Meeting.

The ASA Committee on Economics (COE) continues to study health care literature regarding payment methodologies, to explore new methods of paying for our services, and continues the work of the original TF through the COE Workgroup on Payment. Recently COE involved the Certificate in Business Administration (CBA) Program in the Alternative Payment Methodology Project. We hope the additional input and brainstorming of the CBA candidates will bring the additional insight and creativity necessary to develop an alternative payment methodology that will protect all anesthesiologists’ incomes in a fair and equitable manner.
.

Karl E. Becker, M.D., M.B.A., is Adjunct Professor of Anesthesiology, University of Kansas School of Medicine, Kansas University Medical Center and Principal, Carruthers Group, Leawood, Kansas. He is now retired from clinical practice.

Neal H. Cohen, M.D., M.P.H., M.S., is Vice-Dean, Professor of Anesthesia and Medicine, University of California-San Francisco School of Medicine, San Francisco, California.