In a letter written to MedPAC in response to the proposed plan, ASA President Mark A. Warner, M.D., expresses strong opposition to the commission’s draft recommendation.  Dr. Warner writes, “While we support permanently fixing the SGR, we believe cutting payment for anesthesia by 5.9 percent each year over the next three years, followed by a freeze in payment would harm patient access to care and does not take into account that Medicare currently pays anesthesiologists only 33 percent of the average commercial insurance payment for the same service.”

The proposed 10 year plan would differentiate specialty physicians from primary care physicians in regards to Medicare payments.  For specialty physicians, the draft recommendation would reduce payments 5.9 percent annually in years 2012, 2013 and 2014, followed by payment freezes for the final seven years. Payments for primary care specialties would be exempt from the payment reductions and would instead be frozen at current 2011 levels for the entirety of the 10-year period. 

ASA will continue to update members on the latest MedPAC developments.

Click here to read the letter ASA sent to MedPAC. 

The survey of more than 800 administrators and physicians found that 58 percent said they were in the process of forming ACOs or are considering doing so, while 42 percent said their facilities would not be forming ACOs in the foreseeable future.

Of the administrators and physicians moving toward ACOs, 42 percent said physician alignment is the most serious obstacle to their efforts. Forty percent of the physicians and administrators who are not forming ACOs said physician alignment was the reason.

Other obstacles to forming ACOs included lack of capital, the absence of integrated IT systems, and no evidence-based treatment protocol data, according to the survey.

1. Insurance membership will take a hit from slow recovery. Few unemployed will take advantage of COBRA while employees, faced with paying more of their health plan premium, will select high-deductible, low-premium PPO plans, hurting HMOs.
2. No easing on payment pressure. Although health plan payments will keep pace with inflation and operating cost increases, they will not make up for declining or stagnant Medicaid and Medicare payments.
3. Patients will postpone care, hurting providers. With high unemployment and underemployment and increased out-of-pocket costs, people will continue to put off treatment, keeping volumes soft at hospitals, ambulatory centers and physician offices.
4. Cost is king. Soft volume, downward pressure on revenues and a deteriorating payer mix with increased bad debt will drive providers to seek more cost savings. However, unions, staffing ratios and regulations will make those cuts difficult. At the same time, health plans will begin to explore and increase the use of tiered networks and stratified payments to encourage use of lower-cost providers.
5. Capital remains elusive. As in 2010, most non-profit hospitals will find it difficult to access capital. Lenders are requiring an increase in days cash-on-hand, coverage ratio, stronger EBITDA and smaller borrowings. Credit rating agencies want to see: 1) physician alignment strategy, 2) clinical integration and cost reduction action, 3) an IT plan, and 4) plans to capture more market share.
6. Physicians will make or break new care models. To improve outcomes and lower costs, hospitals and medical groups will focus on accountable care, bundled payments, patient-centered medical homes and/or clinical integration. Reducing variation in care – primarily by physicians – will be central to any successful strategy. An effective bundled payment strategy, for example, requires specialists to address clinical resource consumption and supply cost and use while standardizing care protocols in conjunction with hospitalists and intensivists.
7. Construction focus is on fast returns. Construction projects will be scaled down, with a focus on regulatory compliance, enhancing throughput, improving care/outcomes and, if possible, capturing additional market share. Providers also will prioritize construction that generates superior returns, such as surgical services and imaging centers. It won’t be surprising to see the growth of freestanding emergency departments to reduce the need for hospitals, increase access and provide capacity for the newly insured.
8. IT becomes more pervasive – or else. Information technology underpins providers’ ability to shift to new care models, so IT moves to center stage with efforts to implement electronic medical records, computerized physician order entry and health information exchanges – provided, of course, medical facilities already have in place e-prescribing, PACS and online results reporting and scheduling.
9. Let’s make a deal. Mergers and acquisitions will be brisk as more hospitals and physician groups acknowledge they lack the resources to invest in information technology, facilities and equipment for new delivery models or the leverage to negotiate effectively with health plans. Given their central role in new models, the value of primary care medical groups will increase. It’s possible that health plans will enter the market to acquire these medical groups.
10. Market share, market share, market share. Hospitals and medical groups have underused assets and must get them busy. Providers also realize that more volume will generate incremental revenue and decrease per unit cost. Hospitals will hunt for new programs to fill empty or underperforming assets.

January 11, 2011 | Molly Merrill, Contributing Editor for The Camden Group

These modifications resulted in a decreased general conversion factor, increased practice expense RVU, increased malpractice RVUs, and lower work values for chronic pain services and critical care services that will result in decreases to fees for many of these services.  The negative impact of these decreases for pain practices and critical care services is about 8%.  

Effects on the Anesthesia Conversion The anesthesia conversion factors for all localities (except Miami, Florida – which will remain the same and Queens, NY locality – which actually increased by 12 cents) have decreased slightly from 2010 to 2011. The average decrease in anesthesia conversion factors for those localities with decreases is approximately $0.54.

What does this mean for your anesthesia practice? Although, the big 25% Medicare fee schedule reduction was averted, calendar year 2011 will bring lower Medicare payments for anesthesia services as well as chronic pain care services.  Due to the Patient Protection and Affordable Care Act and the Medical Economic Index, you will experience a minor decrease in the anesthesia conversion factor that will result in small reductions in reimbursement, but nowhere near the magnitude of what was expected earlier last year. 

 For more information click the link below: http://www.cms.gov/PhysicianFeeSched/PFSRVF/itemdetail.asp?filterType=none&filterByDID=0&sortByDID=2&sortOrder=descending&itemID=CMS1242727&intNumPerPage=10

The section of the survey that examines financial operations found that medical groups were still faced with significant financial challenges. Most regions were doing better than in 2008, but margins are thin. In 2009, organizations in the Eastern and Western regions were operating at break even. Organizations in the Southern region continue to operate at a loss (-$1,034 per physician in 2009, -$120 per physician in 2008). Groups in the Northern region continued to experience significant losses (-$9,943 per physician in 2009, -$3,254 per physician in 2008).

Work arrangements

• 40% of CRNAs and ANs are employed by a single group
• 40% of CRNAS and ANs are employed by a single facility or hospital
• ANs spend more time performing general anesthesia
• CRNAs spend more of their time performing monitored anesthesia care (MAC)
• CRNAs are more likely to be employed by rural facilities

Reimbursement

• ANs work more hours and make twice as much as CRNAs
• Both ANs and CRNAs make more money in a rural setting

Regional Differences

• Western CRNAs are least likely to be employed by a group
• Western ANs are most likely to be employed by a group
• Northeastern ANs and CRNAs tend to work in larger facilities

Shortage/Surplus

• Greatest evidence for a shortage is in the Northeast and in urban areas
• Nationally, the anesthesia market is thought to be equilibrium, while states see mixed statuses
• 25 states show a shortage of ANs currently
• 19 states show a shortage of CRNAs currently
• In absolute numbers, Florida, Alabama and North Carolina exhibit the most shortage of ANs
• In absolute numbers, Pennsylvania, Michigan and Florida exhibit the greatest shortage, while Minnesota, North Carolina and California exhibit the most surplus of CRNAs.
• 2020 national projections exhibit a shortage of ANs and a surplus of CRNAs.  

Rand Health performed this study in 2010 for Ethicon. For copy right reasons I am providing my impression of  the most pertinent findings of the report and not a copy of the reoprt. If you would like a reprint fo the actual report you can request one at http://www.rand.org/pubs/technical_reports/TR688/

Primary care physicians also generate substantial revenue for hospitals, the survey found. A general internist generates $1.7 million a year on average, a family physician $1.6 million a year, and a pediatrician $856,154 a year, according to the survey. Survey findings are based on data submitted by 114 facilities.   Courtesy of HFMA News March 19th.

I am curious about the revenues generated by Anesthesiologist and Nurse Anesthetists. I will report my calculations in a later post.

The principal focus of the report is MedPAC’s recommendations for annual rate adjustments in fee-for-service (FFS) Medicare. These updates are based on an assessment of payment adequacy taking into account beneficiaries’ access to care, supply of providers, the quality of the care they receive, and Medicare margins.

MedPAC recommends that the Congress update payments for physician services by 1 percent in 2011. The commission calls for a budget-neutral payment adjustment for primary care services billed under the physician fee schedule and furnished by primary-care-focused practitioners. MedPAC recommends no update to payment rates for skilled nursing facilities in FY11. The report also recommends a 0.6 percent increase in payments for ambulatory surgical center services in CY11 concurrent with requiring ASCs to submit cost and quality data.

The Baucus bill appears to be a compromise between senators who wanted to implement a one-year payment fix and others who were seeking another “short bridge” to give Congress more time to possibly repeal the formula that calls for annual physician payment cuts.