2021 PFS Final Rule: Financial Impact on Anesthesia
Summary: The initial information coming out of the massive 2021 PFS Final Rule provides little to celebrate for anesthesia providers. From a financial standpoint, the Final Rule has dealt the anesthesia specialty a stinging blow.
The Centers for Medicare and Medicaid Services (CMS) has released its Medicare Physician Fee Schedule (PFS) Final Rule for 2021. The document includes over 2,100 pages of provisions that address a myriad of topics, and it will take some time to review and process the voluminous information. Thankfully, CMS has already provided a summary of many of the more important components of the Rule. Until we are able to undertake a more comprehensive review of the Rule, itself, we want to provide you with an analysis of what appears to be its most impactful component—at least as it concerns the anesthesia specialty.
A Disappointing Setback
The most anticipated issue arising from the Rule for our readers has centered on the anesthesia and non-anesthesia conversion factors (CFs). You'll recall that the 2021 PFS Proposed Rule indicated an approximate 10 percent reduction in the anesthesia CF. Due to the efforts of the American Society of Anesthesiologists (ASA), individual anesthesia providers and other anesthesia societies, we had held out hope that the proposed reduction in the CF for Medicare cases would be reversed by the Final Rule. That was not to be the case.
With the publication of the 2021 PFS Final Rule on December 1, the nation's anesthesiologists and anesthetists were left in dismay, if not disbelief, having been dealt a significant financial setback. The national anesthesia CF for 2021 has been set at 20.0547, down from the 2020 CF of 22.2016. This represents a 9.6 percent decrease in potential anesthesia revenue—from a conversion factor perspective. The exact anesthesia CF will vary based on your practice location. To determine the anesthesia CF in your area, you can visit the following link: https://www.cms.gov/Center/Provider-Type/Anesthesiologists-Center.
The news was equally bad for those performing surgical procedures. The non-anesthesia CF, otherwise referred to herein as the "general CF," was also reduced by approximately 10.2 percent. The general CF for 2021—based on a national average (not locality-specific)—will be 32.41, as compared with 2020's CF of 36.09. This represents another letdown for anesthesia providers. Not only are their anesthesia services being devalued, but whenever they place a post-op pain block or an invasive line, or perform any number of non-anesthesia procedures, those services will pay less, as well.
An Underlying Rationale
The financial hits being absorbed by many professional clinicians under the Final Rule are meant to be offset by higher payments approved for evaluation and management (E/M) services. Think of these as essentially "doctor visits," though they also apply to visits performed by non-physician practitioners (NPPs). Why would the government do this? While not directly addressed in the Final Rule summary provided by CMS, other sources are reporting that the agency's reasoning for favoring E/M services in terms of reimbursement over other services is its desire to encourage clinicians to do more on the front end to prevent or limit disease before it gets to the point of surgical intervention. In other words, the government is willing to pay significantly more for E/M and less for surgical-based treatments in order to create a paradigm shift in care, believing this will result in overall reduced healthcare costs long term.
This is all well and good from a macro health and cost-cutting perspective. The problem for our readers is that most of them perform very few E/M services. In fact, when asked, many anesthesia providers aren't familiar with the term "E/M" and are surprised to learn that we do, in fact, bill a small amount of E/M codes on their behalf. This typically occurs when an anesthesia provider performs a consult or a pain round (specifically one that does not involve an indwelling epidural catheter). Other than these, however, anesthesiologists and anesthetists will be billing very few E/M services. This means that, while certain specialties may end up with a break-even reimbursement outlook for 2021 (less pay for procedures but significantly more for E/M), the anesthesia specialty has been left in the lurch.
The Search for Consolation
Regardless of the government's rationale, this makes two years in a row now that we've seen a decrease in the anesthesia CF from the previous year. While the change from 2019 to 2020 was fractional, the change from 2020 to 2021 will be keenly felt. A negative 9.6 percent swing in the anesthesia CF will be hard for many practices to absorb in the coming year—especially for those with a high Medicare patient population. However, there may be a slight mitigating factor, according to CMS analytics.
On p. 1660 of the 2021 Final Rule, we find a table (#106) entitled, "CY 2021 PFS Estimated Impact on Total Allowed Charges by Specialty." In that table, we are provided a list of each of the major medical specialties along with a corresponding number that represents the government's estimate of financial impact of the 2021 CF changes, by percentage. Based on that table, the overall effect on anesthesia reimbursement is expected to be -8 percent. This indicates a 1.6 percent positive variance with the change in the 2021 anesthesia CF and may be due to the government's assumption that a certain number of E/M services will be submitted by anesthesia providers, such as the pain rounds and consults discussed above. Other factors may also come into play accounting for this variance.
Whether the true impact of the Final Rule means a 9.6 percent reduction or an 8 percent reduction in Medicare revenues for 2021, anesthesia providers can take some comfort that these reductions will not translate to all payers. It is true that many commercial plans are tied to Medicare via some mathematical formula, but others are not. We can only hope that CMS' action does not signal a negative shift in anesthesia reimbursement across the payer spectrum in the years to come. That's where advocacy matters. Your voice counts. It is not too late to urge Congress to pass legislation to counter these reductions.
In the coming weeks, we will be offering a series of articles that will continue to update you on other aspects of the Final Rule as those details emerge. The articles will address such issues as coding changes, supervision rules, the Quality Payment Program (QPP), telehealth, as well as other topics relevant to the anesthesia and chronic pain communities. In the meantime, if you have a question concerning the Final Rule, please reach out to us at info@anesthesiallc.com.