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Fall 2007


ASA Fee Survey of Commercial Payment Rates 1997 - 2007

Joe Laden, Business Manager, Anesthesia Associates of Louisville, PSC

The American Society of Anesthesiologists published its sixth biennial survey of commercial payment rates in the July ASA Newsletter. The surveys have been conducted by the ASA Washington office and the results reported in the ASA Newsletter Practice Management column written by Karin Bierstein, J.D. M.P.H. The first two surveys (1997 and 1999) were distributed to members of various ASA committees and given to attendees at the annual ASA Practice Management Conference. Beginning in 2001, the Anesthesia Administration Assembly of the MGMA was asked to participate. Participation in the survey has risen significantly each year culminating this year with 284 respondent anesthesiology practices employing a total of 5,870 anesthesiologists.

In consultation with AAA leaders Shena Scott and Genie Blough, Ms. Bierstein has refined and improved the survey methodology each year and as the number of participants increases, the results become more reliable. All of the past survey articles and the survey instruments are available on the ASA web site. The URLs are at the end of this article. Ms. Bierstein’s columns explain how this survey can be conducted legally within the antitrust enforcement policy guidelines set forth by the Department of Justice and Federal Trade Administration.

WHY IS THE SURVEY IMPORTANT?

Most anesthesia fee-based revenue comes from government health programs and, in greater proportions, from contracted commercial payers. There is not much control an individual anesthesiology practice can exercise over government rates, but a practice can negotiate the terms on which it will contract with commercial payers. Typically 2-5 commercial payers represent the bulk of a practice’s non-government revenue. Negotiating favorable rates with these payers is one of the most important functions of anesthesiology practice managers. Having good data on the rates paid by commercial carriers nationally and regionally can help in the negotiation of fees.These data will be most helpful in the case of a commercial payer with a low unit conversion factor relative to others in your geographic area. If the payer is reasonable and wants to pay a fair price for anesthesiology services, the survey data may help your negotiations.

Of course, there are payers with near monopolistic market power that can pay low rates with impunity. In this situation, you may be able to use the survey to justify financial support from your hospital to the extent that your services are underpaid by this payer relative to the cost for you to provide anesthesiology services.

If the rates paid by your contracted commercial carriers are at or above the median, you can use the survey data to show your anesthesiologists that you have done a good job negotiating your conversion factors.

HOW HAVE COMMERCIAL PAYER RATES EVOLVED SINCE 1997?

The survey has asked for three conversion factors from each anesthesia group. The first four questionnaires simply requested the respondent’s three highest-volume payers’ rates. In 2005 and 2007 the questionnaires instead called for the conversion factors paid to the group by its low payer, median payer and highest payer. Using these three numbers, ASA published the survey mean (average), median (mid point), minimum, maximum, 25th percentile and 75th percentile for each on a national and regional basis. A simplified way to look at the results over the past 10 years is to plot a graph of the statistical mean of the high, median and low of the biennial national results. It may be helpful to plot the conversion factor received by your practice by its major commercial contracted payers for comparison purposes.Over the 10 years from 1997 to present, the mean (average) of the median conversion factors has increased 32.3% from $42.82 to $56.66 which is an annual compounded rate of 2.8%. This rate is below inflation over this time period and therefore no gain has been made in dollars adjusted for inflation. The mean of the low payer’s conversion rate has increased 27.5% from $42.26 to $52.16 which is an annual compounded rate of 3.1%. The mean of the high payer’s conversion rate has increased 46.5% from $44.41 to $65.08 which is an annual compounded rate of 3.9%. It is interesting that the better payers’ rates are increasing the most rapidly.

USING THE SURVEY DATA TO YOUR ADVANTAGE

It is well known that anesthesiologists are underpaid by the government programs, Medicare, Medicaid and CHAMPUS/Tricare. The ASA survey shows that payment increases from commercial payers over the past 10 years do not exceed the national inflation rate. If one plots practice expenses over the same time period (e.g. malpractice, health insurance, CRNA salaries) the results will undoubtedly show that these practice expenses have increased at a rate far greater than inflation. This explains why many anesthesiologists express concern that they are working harder for the same or less pay. Also, there has been an increase over this time period in the number of anesthesiology practices that have had to ask hospitals for financial support because revenue from fees is insufficient to pay anesthesia personnel for required operating room coverage.

In order to advance the payment rate for anesthesiology services, anesthesia practice managers will need to become better negotiators with their principal contracted commercial carriers. A good way to start is by reviewing the six ASA fee survey articles and comparing the historic rates paid by your top commercial payers with the survey data. If there are one or more payers that fall below the survey averages, you will need to develop a strategy to bring these rates to parity.

Download the data table in Microsoft Excel format: ASA Fee Survey Worksheet


SUPPORT LEGISLATION TO FIX THE MEDICARE ANESTHESIOLOGY TEACHING RULE

Last month Sen. J.D. Rockefeller (D-WV) introduced legislation that would eliminate the discriminatory Medicare payment policy toward teaching anesthesiologists. For information on how to support this legislation visit the “What’s New?” section of the ASA website at www.asahq.org