ASA Announced Opposition to Medicare Payment Rates in Public Option Proposal

Last week, ASA released a Congressional letter strongly opposing a Medicare payment rate-based public option. The formal comment letter from President Beverly Philip, MD, FACA, FASA to Congressman Frank Pallone, Jr. (D-NJ), Chairman of the House Energy and Commerce Committee, and Senator Patty Murray (D-WA), Chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, responded to an official Congressional Request for Information (RFI) from the two lawmakers on their plans to develop a proposal on a public option for health insurance coverage. A public option insurance plan would create a government-run health care coverage program offered alongside existing private insurance plans in the Affordable Care Act’s exchanges. 

ASA applauds Congressman Pallone and Senator Murray for working to ensure all Americans have access to affordable insurance and high-quality medical care. However, ASA vehemently opposes any proposal that incorporates flawed Medicare payment rates, which have long undervalued anesthesia services. 

ASA has long supported changes to Medicare payment rates for anesthesia services and has consistently opposed any use of Medicare rates for any new health care program.

A 2007 Government Accountability Office report found that Medicare paid anesthesiologists 33 percent of what commercial insurers were paying, compared to other medical specialties, which received 85 percent of commercial rates for their care. ASA’s annual payment survey shows even greater disparities for anesthesiologists in recent years: Medicare payment rates for anesthesia care were only 27 percent of commercial payment rates in 2020.

These payment inconsistencies date back decades to the establishment of the Medicare Physician Fee Schedule, but now a combination of budget neutrality mandates and a current freeze on Medicare fee updates through 2025 is likely to continue the systematic underpayment of anesthesia care into the foreseeable future. This also means payment structures are unable to keep up with inflation and rising costs of care.

Worsening matters, anesthesiologists and their practices lack the financial flexibility available to other medical specialties in offsetting any payment disparities. Anesthesia practices are often required to accept all patients, regardless of insurance type and cannot control patient volume, making them far more vulnerable to revenue reduction than other medical specialties.

Even if a public option provides a 200 percent increase to anesthesiologists over Medicare rates, ASA research suggests that anesthesia practice revenue would fall by 33 percent. This means any use of Medicare rates is likely to make a public option financially catastrophic for many anesthesia practices around the country. ASA believes the better and fairer solution for a public option is to create a system that is completely independent of Medicare payment models.

ASA will continue to monitor and provide input as policymakers consider plans to increase access to affordable healthcare, ensuring that anesthesiologists’ concerns are voiced at every opportunity.

See ASA’s communication to Congressman Pallone and Senator Murray.