November 13, 2017

The Centers for Medicare and Medicaid Services (CMS) will publish the final rule for the 2018 Medicare Physician Fee Schedule (PFS) in the Federal Register on November 15, 2017.  The final rule includes several changes of significance to anesthesia providers and pain specialists.  This eAlert focuses on changes in the PFS regarding anesthesia services for upper and lower endoscopy procedures and screening colonoscopies.  We will explore changes in the conversion factor as well as the broader implications of other anesthesia-related changes in the 2018 PFS in next week’s eAlert.

Again this year, anesthesia practices waited with a certain amount of apprehension for CMS’s decision regarding reimbursement in 2018 for anesthesia for colonoscopy.  Predictions were that there would be a drop, and that it would be substantial.  In keeping with previous responses by CMS to large increases in the utilization of services, including fluoroscopic guidance in chronic pain management and ultrasonic guidance in nerve block and catheter placement for postoperative pain, those fears have partially come to fruition.

Currently, both upper and lower gastrointestinal (GI) procedures have a base unit value of 5.  For 2018, the American Medical Association’s Current Procedural Terminology (CPT) editorial panel will eliminate CPT codes 00740 (anesthesia for upper GI procedures) and 00810 (anesthesia for lower GI procedures) and replace them with five new codes that are felt to more accurately describe the procedures being performed.

While the base unit value for endoscopic retrograde cholangiopancreatography (ERCP) will increase from 5 to 6 base units and other upper GI endoscopy procedures will remain steady at 5 base units, the base unit value for screening colonoscopy will decrease from 5 to 3.  This is a 40 percent reduction in base units that will translate into an estimated 28 percent reduction in reimbursement, based on an average of 7.2 total units billed.  In addition, the base unit value for lower GI procedures will drop from 5 to 4.  The changes are likely to have a significant impact on revenue for many practices.

The new codes and the percentage of changes from 2017 to 2018 are as follows:

Economic Reality

Four years ago, following CMS’s elimination of deductible responsibility for screening colonoscopies in response to growing recognition of the procedure’s importance in the early detection of malignancy, average payments for endoscopy cases were based on 5 base units plus time.  Virtually all payers eventually fell into line with this payment structure as well.

The market response to that change was a dramatic increase in the number of screening colonoscopies, along with a parallel rise in anesthesia services for these procedures in response to increased demand.  As a result, today, endoscopy cases represent as much as 30 percent of total revenue for many anesthesia practices.  Many groups have experienced continued growth as they have been asked to provide this level of service to patients undergoing GI procedures.

As we approach 2018, we are in the midst of a “correction” by CMS—a response we have seen before following a dramatic increase in utilization of a service.  The actual driver of this rapid escalation in utilization was the widespread recognition of colonoscopy as a reliable and effective early detection tool.  However, as with other types of widely used services, CMS’s response has been to question whether the service was misvalued, a line of reasoning that both the American Society of Anesthesiologists (ASA) and the anesthesia community in general strongly oppose.  In 2016, CMS noted Medicare claims data indicating that a separate anesthesia service was typically reported more than 50 percent of the time that various colonoscopy procedures were reported.  These findings were used as the rationale for the creation of the new series of CPT codes for 2018 that distinguish different types of procedures—and reduce the valuation for the most common procedure, screening colonoscopy.

At this point, the reimbursement changes apply only to Medicare payers and others that follow CMS guidelines.  We have yet to see how the ASA will respond to this in its Relative Value Guide^® (RVG™). However, we predict that, as has happened in the past, the reduction in reimbursements for anesthesia for colonoscopy will not be solely a Medicare policy for very long, and that private payers soon will follow CMS’s lead as well.  By next year, we should start to see what the greater impact will be moving forward. 

In conclusion, we recommend that you review the impact of this change in the base unit values for GI procedures with your practice management team so that you can identify the financial implications and plan accordingly.  The change in reimbursement does not reflect the clinical benefits of having an anesthesiologist involved in the procedure or your ability to manage your endoscopic settings more efficiently.

With best wishes,

Tony Mira
President and CEO