Threats to Our Prosperity

Alexander A. Hannenberg, M.D.Alexander A. Hannenberg, M.D.

First Vice PresidentFirst Vice PresidentAmerican Society of AnesthesiologistsAmerican Society of Anesthesiologists

Tufts University School of MedicineTufts University School of MedicineNewton-Wellesley HospitalNewton-Wellesley Hospital

Newton, MANewton, MA

Woo B. N Engl J Med 2006;355:864-866

Median Compensation for Selected Medical Specialties

Areas of Concern

DemographicsDemographics Recalibrated Hospital DRG PaymentsRecalibrated Hospital DRG Payments Rapid Growth Anesthesia ServicesRapid Growth Anesthesia Services Shift to Quality-Based PaymentShift to Quality-Based Payment

Unprecedented Lift in Anesthesia Work Value

$16.19$16.19$55.00 = 29.4%$55.00 = 29.4%

$20.19$20.19$55.00 = 36.7%$55.00 = 36.7%

2008 Best Case Scenario2008 Best Case Scenario

Medicare Eligible Population Growth

                              

               

Sources: Projections of the Population by Age are taken from the January 2004 Census Internet Release. Historical data are taken from "65+ in the United States," Current Population Reports, Special Studies, P23-190 Data for 2000 are from the 2000 Census and 2002 data are taken from the Census estimates for 2002.)

mill

ions

Dependency on Hospital SupportAcademic Anesthesia Departments

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

2000 2002 2003 2004

Average Support / FTE

Tremper KK et al Anesth Analg 2006;102:517–23

Rebasing Medicare DRGS (Healthcare Advisory Board)

Shifting Profit from Surgery to Medicine?

MarginMargin

UtilizationUtilization

CostCost

DRG Adjustments2007 IPPS

The Cash Cow of the Hospital

Specialty Supply & DemandResidency Enrollment 1999-2007

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

JAMA 9/6/2000; 9/5/2007

CRNA Workforce1989-2005

Grogono 2004

On-Call Stipend Support to Many

Medicare One Year Spending Growth2005-2006

01905 Anes, Spine Inject, X-Ray/Re01926 Anes, Tx Interv Rad Hrt/Cran01930 Anes, Ther Interven Rad, Vei

64445 N block inj, sciatic, sng64447 N block inj fem, single64448 N block inj fem, cont inf64470 Inj paravertebral c/t64475 Inj paravertebral l/s64555 Implant neuroelectrodes64561 Implant neuroelectrodes64581 Implant neuroelectrodes

101%22%27%

20%17%49%40%21%

148%46%34%

Responses to Rapid Growth

Medical Necessity RequirementsMedical Necessity Requirements Payment ReductionPayment Reduction

Less Complex Typical Patient / ServiceLess Complex Typical Patient / Service Advanced Technology / PharmacologyAdvanced Technology / Pharmacology

Non-Coverage DeterminationNon-Coverage Determination Service-Specific SGR CalculationService-Specific SGR Calculation

Volume Volume Annual Update Annual Update

Growth in Endoscopy AnesthesiaMedicare 2003-2006

22%

27%

31%

33%

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2003 2004 2005 20060%

5%

10%

15%

20%

25%

30%

35%

Anesth For EndoEndoscopy% Anesth

Anesthesia for All Endoscopy

-2002 Endoscopy volume per CDC-Anesthesia Fee = 5 Base + 3.74 Time Units

Medicare CF $17.76Non Medicare CF $50

Procedures Fee CostNon-Medicare 9,200,000 437.00$ $4,020,400,000Medicare 5,000,000 155.22$ $776,112,000Total 14,200,000 $4,796,512,000

Procedures Fee CostNon-Medicare 9,200,000 437.00$ $4,020,400,000Medicare 5,000,000 155.22$ $776,112,000Total 14,200,000 $4,796,512,000

Aetna: May 2006

ASA 1-2: No payment in office settingASA 1-2: Payment at Sedation Service fee in facilityASA 3-4: Base+Time MethodologyAll: Manual Submission & Review

Shift to Quality-Based Payment

Medicare PQRI 2008: $1.35 BillionMedicare PQRI 2008: $1.35 Billion California IHA: $55 Million --> 200 groupsCalifornia IHA: $55 Million --> 200 groups Massachusetts BCBS: $190 MillionMassachusetts BCBS: $190 Million Medicaid: 43/50 ProgramsMedicaid: 43/50 Programs

1 of 74 PQRI Measures 1 of 74 PQRI Measures available to available to anesthesiologistsanesthesiologists

2008: 140 Measures2008: 140 Measures 2 Measures for OR Practice2 Measures for OR Practice 2 Measures for ICU Practice2 Measures for ICU Practice

Opportunities for P4P Revenue

ahannenberg@partners.org

Anesthesiology Medicare:Commercial Ratio2007 Update

$16.19$16.19$55.00 = 29.4%$55.00 = 29.4%

Bierstein K ASA Newsletter Jul07

Medicare Payment Increase

RUC Recommended 32% Work Value IncreaseRUC Recommended 32% Work Value Increase Work = 77.2% of Anesthesia CFWork = 77.2% of Anesthesia CF Maximum Impact --> $4.00 Increase (2008)Maximum Impact --> $4.00 Increase (2008)

32% x 0.772 x $16.1932% x 0.772 x $16.19 $16.19 --> $20.19$16.19 --> $20.19

Other FactorsOther Factors Budget Neutrality ($0.33)Budget Neutrality ($0.33) Practice Expense ($0.19)Practice Expense ($0.19) SGR Reduction ($1.95)SGR Reduction ($1.95)

Expected Range: $20.19 - $17.72Expected Range: $20.19 - $17.72

American Society for Gastrointestinal Endoscopy

Guidelines for the use of deep sedation and anesthesia for GI endoscopy

“The routine assistance of an anesthesiologist for average risk patients undergoing standard upper and lower endoscopic procedures is not warranted and is cost prohibitive.”

Gastrointest Endoscopy 56:613, 2002

Anesthesia for Interventional RadiologyMedicare 2005-2006

$0 $1 $2 $3 $4 $5 $6 $7 $8

Millions

Anes, Spine Inject, X-Ray/Re

Anes, Tx Interv RadHrt/Cran

Anes, Ther IntervenRad, Vei

Peripheral Nerve Block Procedures

$0 $1 $2 $3 $4 $5 $6

Millions

N block inj fem, single

N block inj, sciatic, sng

N block inj fem, cont inf

Growth in Interventional Pain Procedures

$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100

Millions

Destr paravertebral n add-on

Inj paravertebral c/t add-on

Destr paravertebrl nerve l/s

N block, other peripheral

Inj paravertebral c/t

Inj foramen epidural add-on

Inj paravertebral l/s add-on

Inj paravertebral l/s

Inj foramen epidural l/s

Medicare 2005-2006

Whither 1.6 Million Cataract Anesthetics?

April 2007

California Integrated Healthcare Assn.

Boston Globe 5/10/06

Incentive ExplosionBlue Cross Blue Shield of Massachusetts

Fee Increases for Quality Incentives

Blue Cross Blue Shield Massachusetts 5/29/06

Medicaid P4P Activity

Variation: Anesthesia for GI Endoscopy

2%

40%

Anthem-Wellpoint 2004