January 3, 2011

Medicare pays for anesthesia services through geographically-adjusted dollar conversion factors. Through the latter half of 2010, the national average anesthesia CF was $21.57. Vigorous lobbying by ASA and all of organized medicine prevented a 25% reduction attributable to the Sustainable Growth Rate (SGR) formula from taking effect in 2011. On December 8, Congress passed the Medicare and Medicaid Extenders Act of 2010, blocking the SGR cut and freezing payment rates at 2010 levels through 2011 except for changes driven by the Medical Economic Index and the Affordable Care Act.

As explained on the ASA website, 

However, as a result of Medical Economic Index (MEI) and Patient Protection and Affordable Care Act (PPACA) provisions, a small decrease is anticipated in the conversion factor, though it will be nowhere near the magnitude of what was in the original CMS final payment rule.

ASA staff in Washington are working with Dr. Stead, Chair of Committee on Economics to validate the limited and cryptic information in the original CMS final payment rule and any additional updates issued by CMS. In three of the last five years, ASA has found mistakes in the CMS final payment rules.

The Centers for Medicare and Medicaid Services (CMS) has just released the Physician Fee Schedule rates for next year.  The anesthesia conversion factors for 2011 and 2010, as well as the dollar and percentage changes from last year to this, are listed by state and locality in the table below.

Two localities will not see a reduction: the CF for Miami will remain at $24.96, and the CF for Queens, NY will rise by $0.12 to $23.13.  In all other localities, the CF will decrease between $0.05 and $1.30.  The average change in absolute values is -$0.54; the average percentage change is -2.45 percent.  The corresponding medians are -$0.56 and -2.51 percent.

Again, the great majority of anesthesia CFs will decrease by about 1 to 4 percent in spite of the legislation establishing a "zero percent update" because of adjustments required by the Affordable Care Act and especially because of revisions to the Medicare Economic Index weights.  The negative impact of the MEI rescaling on the CF for other, non-anesthesia services including pain medicine and ciritical care is 8 percent: the general CF will drop from $36.88 in 2010 to $33.98 in 2011.  This calculation is explained in Transmittal 828 from CMS to the contractors dated December 29.

The anesthesia CFs for the years listed and all prior years are available for download from the “PFS Relative Value Files” page on the CMS website. You may download a copy of the combined 2010-2011 spreadsheet prepared by ABC staff here. We will not be surprised if some further changes appear in the 2011 rates, due to mathematical corrections, and we will certainly keep you informed.

The new year will bring many challenges to anesthesia practices, including lower Medicare rates. We know that it will also bring many opportunities, and we hope that you will take advantage of them. We will continue to do our best to provide you with the necessary information and tools.

With best wishes,

Tony Mira
President and CEO