Federal Budget Proposals and Medicare Payments for Anesthesia Services

Federal Budget Proposals and Medicare Payments for Anesthesia Services

September 26, 2011

Further Clarification of eRx Penalty and Hardship Exemption

The Medicare eRx Incentive Program is turning out to be the Full Employment for Healthcare Writers program.  Last week we described how anesthesiologists, pain physicians and nurse anesthetists with prescribing privileges could apply for a hardship exemption using a new CMS web page, the Communication Support Page.   Our September 19th Alert also stated that “Most anesthesiologists … will not qualify for either the eRx bonus or the eRx penalty because they submit very few electronic prescriptions and report very few of the outpatient visits encompassed by the eRx measure.”

We would like to reemphasize this point.  Anesthesiologists are not subject to any eRx penalty this year if they did not:

  1. Submit claims to Medicare for at least 100 outpatient or office visits, for dates of service between January 1, 2011 and June 30, 2011.  Only those evaluation and management services identified by one of the CPT™ codes in the measure specification (including codes 99201, 99202, 99203, 99204, 99205, 99211, 99212, 99213, 99214 and 99215) are counted, and
  2. At least ten percent of the individual physician’s Medicare allowed payments come from evaluation and management codes that are in the measure specification.

Very few anesthesiologists will satisfy this two-part test, unless they also provide pain medicine services in the outpatient or office setting.  Once they have determined that they did not perform enough visit services to be liable for the penalty, providers do not need to do anything further.  In particular, they do not need to apply for an exemption from the penalty.

ABC is checking our clients’ data to see if any of you may meet the 100 visit/10% of allowables test.  Your account managers will be in touch if there is any question that you could be subject to the penalty and should therefore request an exemption.  Note that CMS published an answer to a Frequently Asked Question on September 19th that contradicts the appearance of the online form :  in answer to FAQ 10824, CMS stated:

Billing managers, office managers, receptionists, and other office staff cannot submit an eRx hardship exemption request on behalf of their eligible professionals for the 2012 eRx payment adjustment. The Tax Identification Number/National Provider Identifier (TIN/NPI) requesting the significant hardship exemption must be the one who enters the request by November 1, 2011.

When accessing the Quality Reporting Communication Support Page at to submit the hardship exemption request, the requestor relationship must be the "health care provider". Please note, however, that you or office staff can use the Quality Reporting Communication Support Page to submit a request for an NPI-level feedback report on behalf of the eligible professional.

We agree with the AMA that readers who provide outpatient pain medicine services and think that they may be close to the limit of 100 visit/10% of allowables should request each exemption for which they qualify.  There is no cost other than a little time to fill out the online application, and it’s easy enough to put worries about the eRx penalty to rest.

MedPAC Proposes an Alternative to the SGR

The Medicare Payment Advisory Commission (MedPAC) last week released new draft recommendations dealing with the Sustainable Growth Rate (SGR) problem, i.e., the GDP-based formula that has been driving payments to physicians down for more than a decade.  MedPAC proposes that Congress repeal the SGR, whose flaws it has pointed out many times.   Its members will vote on the proposal at their regular meeting on October 6-7, 1911.

If the SGR is repealed this year, as MedPAC recommends and as the White House assumes, we will avoid the automatic 29.5 percent reduction in the Medicare conversion factor that is slated to go into effect on January 1, 2012.

MedPAC has proposed an alternative method of paying back the SGR debt, however: a ten-year freeze on payments for primary care services, and 5.9 percent compounded cuts on specialty services each year through 2013, followed by a seven-year freeze.  Using the national average anesthesia CF and the overall CF applicable to visits and surgical procedures for 2011, and assuming no other changes, the results would look like this:

The projected anesthesia CF of $17.54 represents a cumulative reduction of 17 percent reduction compared to today’s national average anesthesia CF.   It would erase almost all of the upward adjustments achieved by ASA over the course of three “Five-Year Reviews.” In 2021, again assuming no other payment policy changes that would affect this specialty, the conversion factor would fall below the level of the CFs for the following years:

A $17.54 CF today would have the same purchasing power as $13.33 in 2000, according to the Department of Labor’s CPI Inflation Calculator.  The calculator does not project inflation forward, which is probably just as well when we are considering what is happening to anesthesiologists’ income.

Just as bad, the CF under the MedPAC proposal would maintain the anesthesiology disadvantage – a Medicare CF equivalent to about 33 percent of commercial payments, as opposed to the 80 percent figure applicable to other specialties – for at least another ten years.  It is somewhat ironic that a MedPAC staffer was quoted as saying that one major reason to scrap the SGR was that it failed to distinguish between types of services and caused across-the-board cuts.  The MedPAC proposal is not much more discriminating, reinvigorating the primary care vs. specialty care schism as it does.  Readers will recall that primary care received a 10 percent increase in the Physician Fee Schedule rule for 2011.

Of course, the devastation of the Fee Schedule update currently scheduled to take effect in January if Congress does not act would be significantly worse: the deferred 29.5 percent SGR cut would drop the anesthesia CF to $14.84.

Neither a 17 percent nor a 29.5 percent reduction is palatable to physicians.  Indeed, even a hold-harmless ten-year freeze is not acceptable to many primary care practitioners.  Organized medicine immediately denounced the MedPAC proposal. 

  • ASA: MedPAC’s draft approach to addressing Medicare payments to physicians is ill-advised. Including anesthesiology with its existing 33 percent payment problem among those targeted for additional payment reductions is not an approach we will support. Indeed, three years of payment reductions combined with seven years of payment freezes falls far short of our expectations of real Medicare payment reform. We urge MedPAC to rework its recommendations to reflect anesthesiology’s unique payment problem and the increasing costs to physicians of providing care to Medicare beneficiaries.

  • American College of Surgeons: The recommendations do not value the role all physicians have in the continuum of care and would have a devastating impact on access to surgical care. Therefore, the American College of Surgeons (ACS) is strongly opposed to this proposal, which specifically includes a 5.9 percent cut for most physicians each year for three years. … We do not believe that cuts are the answer. We believe that a replacement of the SGR needs to be created that leverages quality, bends the cost curve, pays down the SGR debt and incentivizes value in the future. Over the next several years, the cost of caring for the frail and elderly will place an enormous strain on the country's health care resources. As a result, the ACS supports redesigning the delivery system to meet this critical demand by applying a shared savings model centered around quality and value incentivizing all physicians to adopt better practices.

  • Alliance for Specialty Care:  The proposal simply devalues the expertise and critical care that specialists provide to Medicare patients and will further restrict access to care for them.  The failure of the SGR is not the fault of physicians, and doctors should not be required to pay for its repeal essentially through cuts to ourselves."

  • AMA:  The misguided scheme discussed by MedPAC to replace the nearly 30 percent cut to physicians scheduled for January 1 with a new series of very significant cuts will harm patients and physicians in the Medicare program.. Since 2001, Medicare reimbursement has failed to keep pace with the cost of running a medical practice. Further drastic cuts pose a very real risk to physicians' ability to retain staff, care for Medicare patients and make the investments needed to modernize their practices and participate in care delivery models intended to improve quality while reducing costs in the Medicare system.

The MedPAC story broke on Friday, September 16.  On Monday, September 19, President Barack Obama released a “Plan for Economic Growth and Deficit Reduction” designed to decrease the federal deficit by an additional $3 trillion over the next ten years through a combination of spending cuts and tax increases.  Proposed changes to the Medicare program alone would reduce the deficit by $248 billion.  The plan assumes that the SGR formula will be repealed by legislation, and it therefore appeals to some physician representatives, notably the AMA, which plans to lobby the deficit-reduction SuperCommittee to kill the SGR.  For more information on the healthcare spending changes provided for in the President’s plan, see the white paper issued by the White House.

We stress that we are talking about proposals here.  No one can make a bankable guess at next year’s actual Medicare payment rates.  Since 2000, the anesthesia CF has had year-to-year changes ranging from 19.77% (2008) to -9.92% (2007).  We will continue to update you on proposals for dealing with the SGR problem, but we cannot tell you what your CF will be in 2012 until the legislative and regulatory cycles are over. 

There is more activity in Washington to repeal and replace the SGR than we have seen in years.  You have an important opportunity now to work with ASA and other medical organizations to restore fairness to the Medicare payment system.  We urge you to take that opportunity, and as always, we wish you success.

With best wishes,

Tony Mira
President and CEO