Medicare Locality Conversion Factors for Anesthesia Services Through 2013
As happens every year, Congress stepped in at the last minute and blocked the Sustainable Growth Rate (SGR) cuts in Medicare payments to physicians. On the afternoon of January 1, 2013, the House of Representatives adopted legislation passed earlier that day by the Senate, the "American Taxpayer Relief Act of 2012.” The bill prevented a plunge over the “fiscal cliff” by postponing across-the-board spending reductions and also overrode the 26.5 percent Medicare fee schedule cut that technically had already gone into effect on the morning of passage.
Congress’ action replaced the SGR reduction with a zero percent update for services provided from January 1, 2013, through December 31, 2013. Because of adjustments in the practice expense component of the anesthesia conversion factor (CF), the 2013 national average CF is $0.50 higher than last year’s CF, i.e., $21.9243. This is 38 percent higher than the $15.93 CF announced in November 2012.
Actual locality CFs vary from $19.36 (Puerto Rico) to $29.76 (Alaska), reflecting Medicare’s valuation of geographic cost differences. The pre- and post-legislation CFs for the 90 Medicare localities appear in the table below.
Although the SGR has been neutralized for one more year—at a cost of $25.2 billion—there is still the threat of a two percent cut in Medicare payments for physician services mandated by the budget sequestration process, which was merely postponed by the American Taxpayer Realief Act. Congress has until March 1st to prevent the reduction that is now set to apply to all government spending.
The uncertainty and instability of Medicare payment rates have become a major problem in their own right—as if the failure of those rates to keep pace with inflation, and the widening gap between Medicare and commercial payments for anesthesia services, were not worrisome enough. Planning for cash flow and for investment in one’s practice is needlessly complicated. On the bright side, let us hope that the disruptions caused by the series of stopgap measures seen over the last ten years, and especially the last few months, have increased Washington’s resolve to find a solution to the SGR problem.