The specialty of anesthesiology is experiencing an unprecedented level of merger activity and practice acquisitions. The idea of two or more practices joining forces to secure their market position or enhance their strategic options is hardly a new phenomenon. The past few decades has seen the emergence of some very large anesthesia organizations that have dramatically changed the landscape in their respective markets. Once a pioneer in large group practice management, the Anesthesia Service Management Group (ASMG) and its 150 plus physicians in San Diego has become a model to emulate and refine. By some accounts, we have already reached a point where fewer than 100 organizations employ more than 15 percent of all anesthesia providers, but this is only a rough calculation, made especially challenging by the recent infusion of venture capital money that is inspiring an impressive list of practice acquisitions across the country. This dramatic rethinking of...

Anesthesiologists increasingly point to their role in driving down the rate of surgical site and other hospital-acquired infections (HAIs).  Not only does anesthesiologists’ and nurse anesthetists’ compliance with the relevant quality measures help the hospitals’ quality scores and satisfy PQRS requirements, preventing HAIs is good for patients and saves on health care system costs. Compliance with quality standards and improvement upon current scores are often elements in negotiations with hospitals, ambulatory surgical centers and, more and more, third-party payers.  When it comes to including performance bonuses in contracts, the principle is sound, but the dollar value has been elusive.  A new study published in the online edition of JAMA Internal Medicine on September 2, 2013, Health Care-Associated Infections:  A Meta-analysis of Costs and Financial Impact on the US Health Care System by Zimlichman et al. at the Brigham & Women’s Hospital in Boston, analyzed the literature and available databases to determine...

The American Medical Association (AMA) and the Medical Group Management Association (MGMA) offer tools that allow physicians, policy makers and others to evaluate the performance of a number of third party payers including Medicare. The AMA and MGMA information may help anesthesia and pain medicine groups who contract with private payers to identify potential problem areas and to prepare to negotiate for specific performance standards and remedies for non-compliance. The AMA’s National Health Insurer Report Card contains metrics on the timeliness, transparency and accuracy of claims processing by the payers analyzed.  The information in the latest annual report is derived from a random sampling of 2.6 million electronic claims submitted by more than 450 physician practices across 41 states in February and March of this year to Aetna, Anthem Blue Cross Blue Shield, Cigna, Health Care Service Corporation, Humana, Regence, United Healthcare and Medicare.  Below are some of the key findings...

Anesthesiologists are frequently requested to participate in student training programs for emergency medical technicians (EMTs)1, student nurse anesthetists (SRNAs), medical residents and students and respiratory therapists to provide training and supervision for intubation proficiency and airway maintenance. While most professional liability carriers provide coverage for participating in these student training programs, the following case summary underscores the significant liability exposures that can arise. A 20 year old female, 5’4”, 38.5 kg, with a medical history significant for kidney removal, duodenal obstruction and persistent vomiting for 4 days presented for Roux-en-Y gastric bypass and appendectomy. A nasogastric (NG) tube had been placed on the day of the procedure, but the NG tube had been “sneezed out” approximately two hours prior to the procedure. The surgeon was aware the NG had come out; however, that information was never conveyed to anesthesia. The anesthesia group had a contract with the county emergency medical services...

The Centers for Medicare & Medicaid Services (CMS) implemented the Comprehensive Error Rate Testing (CERT) program to measure improper payments in the Medicare Fee-for-Service (FFS) program.  CERT is designed to comply with the Improper Payments Information Act (IPIA) of 2002, as amended by the Improper Payments Elimination and Recovery Improvement Act (IPERIA) of 2012.  IPIA and IPERIA require the heads of Federal agencies, including the Department of Health and Human Services (HHS), to annually review programs it administers to improve agency efforts to reduce and recover improper payments. The Medicare FFS improper payment rate was first measured in 1996. HHS Office of Inspector General (OIG) was responsible for estimating the national Medicare FFS improper payment rate from 1996 through 2002. Based on available resources, OIG reviewed about 6,000 claims.  Currently CERT selects a stratified random sample of approximately 50,000 claims submitted to Part A/B Medicare Administrative Contractors (MACs) and Durable Medical...

  On October 1, 2014, the United States health care system will undergo a major transformation. We will transition from the decades-old Ninth Edition of the International Classification of Diseases (ICD-9) set of diagnosis and inpatient procedure codes to the Tenth Edition of those code sets—or ICD-10. The Tenth Edition is the version currently used by most developed countries throughout the world. ICD-10 allows for greater specificity and detail in describing a patient’s diagnosis and in classifying inpatient procedures, so reimbursement can better reflect the intensity of the patient’s condition and diagnostic needs. This transition will have a major impact on anyone who uses health care information that contains a diagnosis and/or inpatient procedure code, including hospitals, physicians, other providers, payers, clearinghouses, billing companies, etc. The change will affect all covered entities as defined by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Covered entities are required to adopt...

In May of this year, CMS released information on the average charges for the one hundred most common inpatient services at more than 3,000 hospitals nationwide.  The following month, the Agency published average charges for 30 outpatient procedures.  Are average charges—or payments—for physicians’ professional services next? CMS would like to make physician payment data available, being strongly committed to greater data transparency in general.  Accordingly, it has published a request for public comments, in which it noted that “Since 2010, CMS has released an unprecedented amount of aggregated data in machine-readable form. These data range from previously unpublished statistics on Medicare spending, utilization, and quality at the state, hospital referral region, and county level, to detailed information on the quality performance of hospitals, nursing homes, and other providers.”  The questions on which CMS seeks comments are the following: (1) whether physicians have a privacy interest in information concerning payments they receive...

  There has been substantial growth in the number of ambulatory surgery centers across the United States. With the advancement in technology for non-invasive procedures, and shorter-acting anesthetics, more patients are being seen in the freestanding surgery facility (FSF). However, the trend in patient co-morbidities, i.e., obesity, diabetes, cardiac, and respiratory diseases has also risen, increasing the anesthetic risk even though low risk procedures are performed. The most common malpractice claims have been associated with diagnostic procedures performed in ambulatory surgery centers under monitored anesthesia care (MAC) with patient co-morbidities as contributing factors. The morbidity and mortality of ambulatory surgery patients has led to an increased concern for patient safety in freestanding facilities. Of particular concern is sedation, specifically in gastroenterology (GI) centers. Yet, the Journal of the American Medical Association (JAMA) recently reported that two-thirds of the anesthesia procedures provided during colonoscopies and endoscopies (EGDs) were on “low-risk patients;” suggesting...

Legislation to repeal the Sustainable Growth Rate (SGR) formula is emerging in the House of Representatives. On July 31st, the Energy and Commerce Committee voted unanimously to pass H.R. 2810, the Medicare Patient Access and Quality Improvement Act of 2013.   This is the culmination of more than two years of work involving members of both the Energy and Commerce Committee and the House Ways and Means Committee, with feedback from healthcare providers.  The bill now advances to the full Ways and Means Committee;  the Senate Finance Committee is expected to produce its version in the fall.Summary of H.R. 2810In Phase I, “Stabilizing Fee Updates,” the bill would permanently repeal the SGR formula at the end of 2013 and replace it with fixed 0.5 percent updates to the Medicare Fee Schedule for each of the years 2014-2018.  The positive and negative adjustments or incentives available through the PQRS and EHR programs would...

As of August 1st, certain manufacturers of drugs, medical devices and biologicals are tracking their payments to physicians, as required by the Physician Payments Sunshine Act (Sunshine Act), which is part of the Affordable Care Act.  They will report payments and other items of value worth more than $10, as well as certain ownership interests held by physicians and immediate family members, to CMS annually.  Reporting may begin immediately, on a voluntary basis, and must begin by next January.  CMS will post the information, by physician, on a public, searchable website.  CMS published the final regulations implementing the Act on February 1, 2013, and we summarized the rule in an Alert dated February 18th.  We refer readers to that Alert for information on the “applicable manufacturers,” the definition of “covered products,” the form and nature of payments and other “transfers of value” that must be reported and reportable ownership and investment...

The last day for anesthesiologists, pain physicians and other “eligible professionals” (EPs) to begin documenting Meaningful Use of their certified electronic health record (EHR) technology is just two months away.  EPs must start participating in the program by October 3, 2013 and continue for 90 days, through December 31st, to earn an incentive bonus of up to $15,000.  The timeline for 2013 participation is as follows:The incentive payment is 75% of Medicare allowed charges up to a maximum annual cap.  An EP whose first year of demonstrating Meaningful Use (MU) in 2013 can earn a maximum EHR incentive of $39,000 over four years.  (To earn the greatest possible total incentive of $44,000, the EP would have had to start participating in 2012).  If the first year of MU is 2014, the maximum payment is $24,000, as shown below:The EP must successfully demonstrate MU no later than 2014 or face a financial...

The first Alert this month looked at preventable hospital readmissions and ways to attempt to reduce the rate, which was 12.3 percent for Medicare patients in 2011.  There is much more to say on the topic, including an interesting study published in the June 2013 issue of Health Affairs, Limits of Readmission Rates in Measuring Hospital Quality Suggest the Need for Added Metrics by Matthew J. Press and colleagues. This study concluded that 30-day readmission rates fluctuated and that they were not well correlated with other measures of hospital performance.  At most, therefore readmission rates should complement other quality indicators and not be considered on their own.  Unplanned readmissions have taken on a sizeable role in quality measurement in the last few years, because they are such an accessible proxy for other measures.  CMS is not just reducing payments to hospitals with higher-than–expected readmission rates for certain diagnoses, but it is...

Anesthesiologists who satisfy the requirements for participation in the specialty Maintenance of Certification (MOCA) program are eligible for an additional 0.5% PQRS bonus for the years 2013 and 2014.Under the PQRS program, board-certified physicians are eligible for the additional MOC:PQRS incentive payment if they (1) satisfactorily report quality measures for the 12-month reporting period, qualifying for the basic PQRS bonus and (2) participate in the applicable MOC program “more frequently than is required to qualify for or maintain board certification status” and successfully complete a qualified MOC program practice assessment for the 12-month period.The American Board of Anesthesiology (ABA) has recently qualified as a MOC:PQRS entity.  As a qualified entity, the ABA defines what constitutes “more frequent participation” than is required for board certification. Last week, the ABA notified its diplomates by e-mail of the availability of the MOCA and provided them with step-by-step instructions.Step-By-Step InstructionsTime limited and non-time limited certificates. ...

In a little more than two months, individuals and small businesses will be able to enroll in health plans offered by the Health Insurance Exchanges (HIEs) created under the Affordable Care Act.  By the deadline of January 1, 2014, all states must have an operational individual and small-business exchange.  The Congressional Budget Office estimates that nine million people will obtain coverage through HIEs in 2014, a number predicted to rise to 22 million people by 2022. Will that mean more patients for anesthesiologists?  Or at least more insured patients?  On the face of things, it seems obvious that better population coverage will lead to a greater number of patients for whom insurance will pay providers.  The current state of development, or lack of development, of HIEs in many localities, however, together with the July 2nd announcement by the U.S. Treasury Department that it will postpone until 2015 the mandate requiring that employers with 50 or...

Just as happens every summer, CMS has released its proposed rule with updates and changes to the Medicare Physician Fee Schedule that will take effect on January 1, 2014.  Not unexpectedly, the Agency is projecting that the sustainable growth rate (SGR) impact would be a 24.4 percent cut in 2014.  Do not bank on this number though.  It is going to change before the end of the year. Of greater significance, CMS has proposed modifications to quality reporting under both the Physician Quality Reporting System (PQRS) and electronic health record (EHR) incentive programs.  The basic PQRS principle for 2014 remains the same: eligible professionals (EPs), including anesthesiologists, pain physicians and nurse anesthetists who satisfactorily report data on PQRS quality measures are eligible to receive an incentive bonus equal to 0.5 percent of the total estimated Medicare Part B allowed charges for all covered professional services furnished by the eligible professional or group practice...

Bundled payments are coming.  Are there any readers who have not heard?  But do we know what “bundled payments” might mean for anesthesiologists and pain physicians? Although there are certainly anesthesiologists participating in bundled payment systems—common examples include global surgical packages or OB packages—no one has written a field guide for the specialty.  The chapter on bundled payment for post-acute care strategies in MedPAC’s June 2013 Report to Congress provides a thorough and up-to-date review of general bundled-payment design issues.  More important, Congress will consider MedPAC’s recommendations in any new legislation on the topic, much as it did when it wrote and adopted the Patient Protection and Affordable Care Act of 2010, including a provision requiring Medicare to test a bundled payment approach. In a bundled payment methodology, a single, bundled payment covers all of the services delivered by two or more providers during a single episode of care or over...

In 2011, 12.3 percent of Medicare hospital admissions were followed by a potentially preventable readmission, according to the Medicare Payment Advisory Commission (MedPAC), which has just released its latest Report to Congress on Medicare and the Health Care Delivery System. To be clear from the outset, not all potentially preventable admissions can be avoided. A classification system developed by 3M Health Information Systems and discussed in the MedPAC report defines a potentially preventable readmission “as a readmission that is clinically related to the initial hospitalization in that the underlying reason for the readmission may be plausibly related to the care during and immediately after a prior hospital stay.  A clinically related readmission may have resulted from a process of care or treatment during the prior admission or from a lack of postdischarge follow-up rather than from unrelated events that occurred after the prior admission.” Preventing readmissions typically depends more on primary...

Some payers are sowing confusion regarding whether nerve blocks placed for the management of postoperative pain are separately payable. ABC’s Alert dated April 8, 2013 noted that Noridian LLC, the Medicare Part B (physician services) contractor for ten states in the Western U.S. had published a proposed policy that would prevent payment for peripheral nerve blocks placed preoperatively to reduce postoperative pain. Specifically, the draft policy (Local Coverage Determination, or LCD) entitled Nerve Blockade: Somatic, Selective Nerve Root, and Epidural stated that: “Providers should not expect separate payment for the establishment of epidural or other pain blocks unless the block is placed following discharge from PACU due to documented inadequate pain control.” The proposed new rule received considerable attention, as it would have reversed the longstanding principle that the purpose of a nerve block placed to manage surgical pain, and not its timing, determines whether the block is separately payable from...

A "bundled" payment covers a defined package of services delivered by two or more providers during a single episode of care or over a specific period of time. Nine out of nineteen provider-payer pairs studied by Bailit Health Purchasing, LLC have fully operationalized at least one bundled payment.  Two more pairs are conducting observational pilots and three others have embarked on developing a bundled payment program.  The Healthcare Incentives Improvement Institute (HCI3) asked Bailit to examine the status of bundled payments in 2011, and then to update the results this year.  Overall, as reported in HCI3’s Issue Brief “Bundled Payments One Year Later: An Update on the Status of Implementations and Operational Findings—May 30, 2013,”  payer and provider pairs have successfully brought bundled payments online and are working toward making them a permanent health care financing change, although challenges remain.  The Issue Brief illustrates both the achievements and the challenges through...

Recently I had the pleasure of speaking with anesthesia residents and faculty at a well-known progressive academic anesthesiology department. Opportunities like this are among the high points of my professional life because I invariably know more when I leave these presentations than when I arrive. This time was no different. My recent professional focus has been on working with hospitals and health systems to identify workflow enhancements and quality improvement initiatives to streamline care delivery and deliver greater total value. On a more theoretical level, I have been identifying and developing novel ways to produce comparable or better perioperative medical care in terms of price, quality, and service by using nontraditional processes or clinicians in nontraditional ways. With few exceptions, however, these latter efforts fall mainly into what one would call product development—showing promise but not yet ready for prime time. The topic, then, for this visit was the role of...