November 8, 2010

The final rule on the 2011 Medicare Physician Fee Schedule turns out not to be very different from the proposed rule that was published last July. The final version, which CMS released on November 2nd, makes official the huge SGR-driven payment cut that we all feared: the 23% cut that takes effect on December 1st, combined with reductions scheduled for next year, means that the Medicare conversion factors (CFs) will be 25% lower beginning on January 1, 2011 – unless Congress intervenes.

Anesthesia, we all know, has its own geographically-adjusted dollar CFs by which the sum of base and time and modifier units are multiplied.  All other services on the Fee Schedule are paid under a different, national CF using the formula:

(RVU_work × GPCI_work ] + [RVUM_pe × GPCI_pe] +[RVU_pli × GPCI_pli]) × CF

Where RVU = Relative Value Units
GPCI = Geographic Practice Cost Index
work = physician effort
pe = practice expenses
pli = professional liability expenses

The “other services” formula and CFs establish Medicare payment rates for pain medicine, invasive monitoring lines, visits, and critical care services. One major difference between the two formulae is that the calculation of the CF for “other services” makes adjustments for geographic differences to the RVUs, while for anesthesia those adjustments are captured in 90 different locality CFs.   Both the national average anesthesia CF and the single national CF for other services determine aggregate patient revenues. The table below shows how they are changing:

Medicare Conversion Factors, June 1, 2010-January 1, 2011

At a level of $15.8085, the national average anesthesia CF is lower than it has been since the mid-1990s.  A 25% cut in payments is manifestly intolerable.  Based as it is on the little-loved SGR formula, which seems to have no principled proponents at all, the cut demands some sort of Congressional intervention, and quickly. A correction is all the more urgent because of the dispatch with which some private payers are likely to implement their own 25% cuts to their Medicare-based allowed charges.

The problem is that maintaining Medicare physician payments through December 2011, as the AMA, ASA and more than 60 other associations have urged, would cost $17 billion. The Democrats lost as many Congressional seats as they did on November 2nd in large part because of fear and opposition to further government spending. The sense in Washington is that there will be at least a one-month fix once Congress returns for the lame duck session on November 15, but a $17 billion rescue will be a stretch. It remains very, very important that anesthesiologists and nurse anesthetists join with the rest of medicine and allied health in urging Congress to do away with the SGR and pay physicians more fairly than is now the case.

We are glad to note that there does not appear to be any bad news for anesthesiology practices in the rest of the final rule. We will review some of the other Fee Schedule changes that will be of interest to the specialty, such as greater ease of participation in the PQRI (albeit for a lower potential bonus amount) next week.

A New Publication from the OIG

Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse

The OIG conducted a survey of medical school deans and designated institutional officials at institutions that sponsor residencies and fellowships to learn what types of instruction medical students, residents, and fellows receive on Medicare and Medicaid fraud, waste, and abuse. Nearly all respondents (92% of deans and 90% of designated institutional officials) reported they would like OIG to provide educational materials they can use.

In response, the OIG has developed a 30-page booklet entitled “Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse.” The Roadmap summarizes the five main Federal fraud and abuse laws (the False Claims Act, the Anti-Kickback Statute, the Stark Law, the Exclusion Statute, and the Civil Monetary Penalties Law) and provides tips on how physicians should comply with these laws in their relationships with payers (principally the Medicare and Medicaid programs), their relationships with vendors (like drug, biologic, and medical device companies), and relationships with fellow providers (like hospitals, nursing homes, and physician colleagues).

As always, we hope that this information is useful to you.

With best wishes,

Tony Mira
President and CEO


If you have any questions or would like additional information please call 517-787-6440 x 4113, send an email to info@anesthesiallc.com, or visit our website at www.anesthesiallc.com.