Anesthesiology: What’s reality regarding payment outlook for anesthesiology?
Written by David Blaszczak, Senior Advisor at SCALE Healthcare
Bottom Line: The total payment made to anesthesiology groups (insurers, hospital subsidies, etc.) is very dependent on the state, contracted hospitals, staffing, and insurers in each region. Overall, in-network insurer rates are going down but not by much (~2-4% over 2020 to 2021) with the highest rates being targeted the most (5x Medicare rates). There is a shift of moving out-of-network (OON) providers to in-network (IN) but this depends heavily on the state. Out-of-network rates are more at risk of being reduced with the highest rates being targeted the most. Some OON rates over the last few years have been over $600 a unit – over 28x Medicare. We expect the No Surprises Act to have minimal effect while more judges are likely to strike part of the law and the Centers for Medicare and Medicaid Services (CMS) to further revise regulations over the next 3 years.
Payment for anesthesiology services is very individualized per state, payer, facility (hospital/ASC), patient population, volume of procedures, etc. The total payment for services is largely driven by four components: payers, hospital subsidies, staffing and associated costs, out-of-network (OON) billing. However, all four components mainly rely on each other or are affected by one another. For example, staffing shortage and costs will largely drive hospital subsidy payment amounts.
According to various studies and surveys, 85% to 95% of all hospitals directly or indirectly subsidize their anesthesia services. However, we are seeing hospital subsidies to anesthesiologists increasing by substantial amounts in recent months.
According to various studies and surveys, 85% to 95% of all hospitals directly or indirectly subsidize their anesthesia services. However, we are seeing hospital subsidies to anesthesiologists increasing by substantial amounts in recent months. We see the biggest contributor to the subsidy increase being costs of services, shortage of CRNA’s, and horizontal expansion of service lines which require anesthesia, and costs for anesthesiologists. We expect the increase in hospital subsidies to mitigate any likely cuts from payers.
We expect staffing shortages for anesthesiology services and costs for providing these services to continue to increase in the near future. Temporary staffing is also on the rise and likely to continue over the next 3-4 years and overall salaries for CRNAs and anesthesiologists are increasing with substantial bonus payments. This continues to be the main reason why hospital subsidy payment amounts are increasing substantially.
The American Society of Anesthesiologists (ASA) annual survey of their member’s average contractual (in-network) amounts for the top five contracts presents a glimpse of regional trends in commercial payer contracting. The survey reflects valid responses from 219 practices in 47 states and D.C. Based on the 2021 ASA commercial conversion factor survey results, the national average commercial conversion factor was $85.23, ranging between $79.04 and $90.23 for the five contracts. The national median increased to $78.00, ranging between $74.00 and $81.50 for the five contracts. In the 2020 survey, the mean conversion factor ranged between $76.09 and $85.75, and the median ranged between $69.00 and $77.25. The Eastern Region has the highest mean since 2018. The Eastern Region mean in 2020 was $97.85, and this year it is $93.16. The highest conversion factor reported was $292.00. In 2020, the highest conversion factor reported was $323.22.
Most states (over 30) have already enacted surprise billing laws years before the federal No Surprises law. We expect other judges, in addition to decision in TX, to strike part of the law. Therefore, CMS is likely going to rewrite the regulations over the next 3 years in accordance with changes in the law per the appeals currently happening in the courts.
Data from the Health Care Cost Institute (HCCI) (2016 and 2017) commercial and MA claims data, comprising claims from 61 million commercial and 8.9 million MA covered lives in 3 of the 5 largest US insurers: UnitedHealthcare, Aetna, and Humana. The in-network rates have actually increased per the ASA survey versus the HCCI data. Mean in-network commercial allowed amounts ($70) and charges ($148) per anesthesia conversion factor are 314% and 659% of the traditional Medicare rate ($22) from 2016 and 2017.
Most states (over 30) have already enacted surprise billing laws years before the federal No Surprises law. We expect other judges, in addition to decision in TX, to strike part of the law. Therefore, CMS is likely going to rewrite the regulations over the next 3 years in accordance with changes in the law per the appeals currently happening in the courts.
Contact David Blaszczak for questions or comments about this article.