[January 16, 2013]

Medicare Locality Conversion Factors for Anesthesia Services Through 2013

The Centers for Medicare and Medicaid Service (CMS) has updated the conversion factors for anesthesia services for 2013. The national anesthesia conversion factor is $21.92, $0.50 higher than the 2012 number. Across the ninety Medicare localities, the conversion factors range from a low of $19.36 (Puerto Rico) to a high of $29.76 (Alaska), reflecting CMS' valuation of geographic cost differences.

Medicare and other payers pay for individual anesthesia services by multiplying the sum of the relative-value "base" and "time" units for the case by the applicable dollar conversion factor. This system is unique to anesthesia. It was in use before the Medicare Fee Schedule was implemented in 1992, and because of flaws in the methodology by which anesthesia was incorporated into the Fee Schedule, Medicare payments for anesthesia services have remained relatively low compared to payments for other services for the past twenty years. Specifically, as noted in a report published by the General Accountability Office (GAO) in 2007, the Medicare conversio factor for anesthesia services is about one-third of the commercial payment rate.

Things could have been worse, however. Medicare payments across the board were scheduled to drop by 26.5 percent this year because of the operation of the "Sustainable Growth Rate" (SGR) formula, an arcane construct designed to hold down the rate of increase in spending on Medicare that would have had such drastic consequences that Congress has blocked its operation for all but one of the last ten years. On January 1, 2013, Congress again came to the rescue of patients and physicians by passing legislation that prevented the SGR cut from going into effect for one more year.

One of the very few issues on which there is consensus in Washington is the need to fix the SGR problem. The obstacle is of course the cost, which increases every year that another stopgap measure is enacted. ABC joins the American Medical Association, the American Society of Anesthesiologists and the entire house of medicine in urging Congress to adopt a permanent solution to the SGR problem before we go through yet another budget cycle.

About Anesthesia Business Consultants

ABC, established in 1979, is the nation's largest billing and practice management company dedicated to the complex and intricate specialty of anesthesia and pain management. It is an Anesthesia Quality Institute Preferred Vendor. It has also successfully completed a Service Organization Controls (SOC) 1 Report, which is an independent third-party verification of a company's internal operational controls and processes. ABC employs industry leaders, operates under proven efficient processes, and utilizes technological advances to easily adapt to the ever-changing regulatory environment. Visit ABC at: www.anesthesiallc.com.

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