JACKSON, Mich.--(BUSINESS WIRE)-- Unless Congress intervenes, Medicare payments to physicians are going to decrease by 29.5 percent on January 1, 2012, according to proposed regulations issued by the federal Centers for Medicare and Medicaid Services (CMS) just before the July 4th weekend.
A 29.5 percent cut would mean that the dollar conversion factor by which relative value units are multiplied would drop from $33.58 to $23.95. To place that number in context, in 2011 Medicare pays physicians $103.29 for an epidural injection in the hospital. Next year, if the 29.5 percent cut is not prevented by legislation, Medicare will pay $72.82 for the same procedure.
Anesthesia services have their own distinct conversion factor. The current Medicare conversion factor is $21.05. The 29.5 percent decrease would lower that number to $14.84. Twenty years ago, in 1991, the anesthesia conversion factor was approximately $19.50 – in absolute numbers, not adjusted for inflation. Anesthesia for a three-hour hip replacement is currently paid (on average) at a rate of $378.90. With the proposed Medicare reduction, the rate would be $267.12.
This nearly one-third reduction in payments would be shocking in other contexts, but it has become depressingly familiar to physicians. The annual Medicare update is determined in major part by the “Sustainable Growth Rate” or “SGR,” a formula that penalizes providers if Medicare spending exceeds the general rate of change in the GDP. This dependency on changes in the rest of the US economy makes no sense, unless the goal is to drag down payment levels.
The SGR formula has been effective even though part of its impact has been deferred. In 11 of the past 12 years, Medicare compensation for physicians’ services would have dropped if Congress had not passed last-minute legislation freezing the payment level or substituting a small increase for the SGR cut.
There are very few policymakers left who support the SGR after years of protests from the medical and patient communities. All involved are working hard to repeal the SGR or at least to kick this can further down the road – something that is necessary to keep physician offices open, but that entails government spending when the federal deficit is a cliff looming before us.
The proposed regulations address not just payment levels, but also Medicare initiatives to improve quality and efficiency. The official comment period, during which the public may send comments to CMS, extends through August 31, 2011. The final rule is due in November.
About Anesthesia Business Consultants
ABC, established in 1979, is one of the largest billing and practice management companies dedicated to the complex and intricate specialty of anesthesia and pain management. It is both an American Society of Anesthesiologists Practice Management Supporter, and an Anesthesia Quality Institute Preferred Vendor. ABC employs industry leaders, operates under proven efficient processes, and utilizes technology advances to easily adapt to the ever-changing regulatory environment.
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Email: [email protected]
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