Although we use the term “33% rule” all the time, it occurred to me that not everyone may know the intricacies of why anesthesia specifically could not sustain rates based on Medicare. So, for your reading pleasure, here it is:
- Medicare payment for anesthesiology is about 33% of commercial payer rates. In most other specialties, it hovers around 80% of commercial fee schedules. Considering the fact that Medicare has not increased for anyone at the same rate as commercial programs, that number is likely lower today.
- Why is this?
- In 1992, Medicare changed its payment rate from “usual, customary and reasonable” (UCR) to a system known to this day as RBRVS (Resource-Based Relative Value Scale).
- RBRVS was created by William C. Hsiao, Ph.D., who was contracted by Medicare to develop a new system.
- Originally, there was some consideration to move anesthesiology to a procedure-based system, but instead a decision was made to stay with the “base units plus time” system that we know today.
- When the conversion away from UCR to RBRVS was implemented, it was accompanied by a 29% reduction in the Medicare conversion factor.
- This drastic reduction is believed to have happened because of a severe calculating error comparing anesthesia work values to other physician specialties.
- Medicare used a limited and inaccurate comparison of anesthesia services to procedures performed by other specialties that resulted in the reduction to the anesthesia conversion factor, which was the start of the severe Medicare undervaluation of anesthesia care we have today.
- Why hasn’t it been fixed then, you ask?
- It is a constant on the high-priority “to do” list.
- Remember, Medicare payment is a zero-sum game because for our rate to be increased, even after showing a problem, it has to come from someone else. No new dollars are added into the system.
- We have sought correction through the former “Five Year Review” process, which resulted in some improvements.
- Corrections have occurred over the years. There was a modest correction in 1997, and we won a 23% increase in 2008. But over time, in real dollars, when there were increases in the conversion factors, because of our inaccurately low rates, these updates in real dollars were very small, and compounding over the years has magnified the problem.
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