News October 06, 2010

Lawmakers Urge CMS to Hike Anesthesiologists' Payment

Lawmakers Urge CMS To Hike Anesthesiologists’ Payment

Large bipartisan groups of lawmakers in the Senate and the House are urging CMS to increase Medicare payments for anesthesia services, but so far the agency appears to be resisting the pressure, according to stakeholders. Medicare payment for anesthesia services represents 33 percent of commercial insurance payment rates, the lawmakers said, compared with about 80 percent for other physician services, and anesthesiologists say changes that CMS is proposing to the Physician Fee Schedule will reduce payments even further.

A bipartisan group of 16 senators, including a few from the Senate Finance Committee, sent HHS Secretary Kathleen Sebelius a letter Aug. 23 on behalf of anesthesiologists. In May, 75 House Democrats and Republicans sent a similar letter. HHS responded to the House letter on July 15, but the letter merely cites a section of the health overhaul law that requires CMS to periodically review Part B billing codes for potential misvaluation. There is no indication of whether codes for anesthesiology services will be a priority, an anesthesiologist following the issue said.

CMS uses the Medicare Economic Index (MEI) and the Sustainable Growth Rate to calculate the annual update to the physician fee schedule. CMS is revising the MEI, a fixed-weight input price index that is used to estimate increases in costs for providing physicians services. MEI is comprised of physician time and physician practice expense.

“While we agree with the use of the updated data and the general concept of rebasing, we strongly disagree with the CMS proposal to revise the methodology used to calculate the weights in the index,” the American Society or Anesthesiologists stated in an Aug. 24 letter to CMS, which in July issued a proposed rule on the 2011 Physician Fee Schedule and other revisions to Part B.

If the MEI proposal is finalized, services with a relatively higher percentage of work Relative Value Units (RVUs), such as anesthesia services, will decrease, ASA states. Services with relatively high practice expenses and professional liability insurance expenses will increase. In the proposed rule, the changes to the MEI weights would reduce the relative proportion of physician work from 52.47 percent to 48.27 percent and increase the relative proportion of practice expense
from 43.67 percent to 47.44 percent. The professional liability insurance expense would rise from 3.87 percent to 4.3 percent. To ensure that Medicare spending in the aggregate is proportionate to the new MEI weights, CMS is proposing to keep the work Relative Value Units (RVUs) constant and to inflate practice expense RVUs by 16.8 percent and the
professional liability insurance RVUs by 41.3 percent). In addition, CMS plans to reduce the conversion factor by 7.9 percent to maintain budget neutrality.

These changes would be add to an already bad situation, ASA states. In July 2007, the Government Accountability Office found that Medicare payments for anesthesia services are about 33 percent of the commercial payment rate. In contrast, Medicare payments for other medical specialties are about 80 percent of their commercial payment rate. There
have bee modest increases in the Medicare anesthesia conversion factor over the last few years, but the ASA says the comparison to commercial rates is still similar.

ASA is urging CMS to delay finalizing changes to the MEI until the agency receives recommendations from a technical advisory panel that CMS proposed to convene later this year. If CMS chooses to go ahead with MEI revisions before receiving such recommendations, ASA says CMS should transition the changes over four years. ASA also takes issue with CMS’ suggestion to use relative values for increases and absolute values for decreases. “CMS appears to be inconsistent in that it recognizes the importance of relativity when it proposes to increase the RVUs for PE and PLI to affect revisions to the MEI, but will adjust the conversion factor rather than the RVUs for the corresponding
impact on the work portion of a medical service,” the group states.

CMS is working with the American Medical Association’s Specialty Society Relative Value Update Committee (RUC) to identify potentially misvalued codes. ASA and other specialties believe that CMS should apply a “zero-based building block” to the services in question, which assumes that the existing values, based on the recommendations the RUC made

after its review of these services in February and April 2008, are accurate. This concept starts with a value of zero and builds upwards. But CMS is using a “reverse building block” approach, ASA states, which begins with a starting value and pulls work out. ASA says this approach is “clearly flawed” because in the 2010 fee schedule it resulted in a negative work RVUs for several of the services to which it was applied.

“CMS apparently continues to believe that a building block methodology is the most appropriate mechanism for valuing the resources required to provide services,” ASA states. “If this is true, CMS should consider the potential vulnerabilities of such an approach. For instance, under the building block approach it is critical that all components be accurate and validated. As we saw in 2010, the starting values used in the reverse building block approach were problematic.” -- John Wilkerson