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Keep an Eye on This Potential 3.91% Anesthesia CF Cut for 2023

Published on Wed Aug 10, 2022

Proposed rule threatens big cut for MPFS conversion factor.

The Centers for Medicare & Medicaid Services (CMS) issued its calendar year (CY) 2023 Medicare Physician Fee Schedule (MPFS) proposed rule. There’s a lot of information in the 900-plus pages, but one hot topic is Medicare’s proposed reductions for both the MPFS and anesthesia conversion factors (CFs) in the coming year.

“CMS has proposed an anesthesia conversion factor (CF) of 20.7191, representing a decrease of 3.91% from the 2022 anesthesia CF of $21.5623. The 2023 proposed Resource-Based Relative Value Scale (RBRVS) CF is 33.0775. This represents a decrease of 4.42% from the 2022 CF of 34.6062,” states the American Society of Anesthesiologists (ASA) in a news release (www. asahq.org/about-asa/newsroom/news-releases/2022/07/new-medicare-fee-schedule-rule-further-illustrates-a-broken-payment-system). Read on to get the details.

Follow the Timeline of the Proposed 2023 CF Cut

To fully understand what’s going on with the CY 2023 CF changes, you have to look at last year’s changes, which were a byproduct of COVID-19 and congressional input.

First: As part of the CY 2022 final rule, CMS reduced the CF roughly from $34.89 to $33.59. This combination of the mandated annual budget neutrality requirements, which included a $1.30 decrease to the CF, and the expiration of the Consolidated Appropriations Act, 2021, 3.75 percent increase was a blow to many Medicare providers.

Next: Last December, the Protecting Medicare and American Farmers From Sequester Cuts Act offered Medicare providers a break with a 3 percent increase to the 2022 CF, a helpful change as providers continued to handle the realities of the COVID-19 pandemic.

Now: CMS proposes to cut the MPFS CF by 1.5287 for CY 2023, reducing the rate from 34.6062 to 33.0775, the proposed rule suggests. “This conversion factor accounts for the statutorily required update to the conversion factor for CY 2023 of 0 percent, the expiration of the 3 percent increase in PFS payments for CY 2022 as required by the Protecting Medicare and American Farmers From Sequester Cuts Act, and the statutorily required budget neutrality adjustment to account for changes in Relative Value Units,” CMS explains in a press release (www.cms.gov/newsroom/press-releases/cms-proposes-physician-payment-rule-expand-access-high-quality-care).

Medicare estimates the “anesthesia CF to be 20.7191 which reflects the same overall PFS adjustments with the addition of anesthesia-specific PE [practice expense] and MP [malpractice] adjustments,” the proposed rule states. Table 137 of the proposed rule shows a positive adjustment of 0.53 percent because of those anesthesia-specific adjustments, which slightly offsets the negative 1.55 percent CY 2023 RVU budget neutrality adjustment.

See How the CFs Affect Medicare Pay

The calculations Medicare uses to determine payment under the MPFS and for anesthesia services use the relevant CF. So, the CF has a direct impact on reimbursement to providers.

The basic Medicare formula to calculate the allowed amount for anesthesia uses the anesthesia CF like this:

(Base units + time [in units]) x anesthesia CF = anesthesia fee amount

For services paid under the MPFS, the basic payment rate formula is shown below:

(Work RVUs + practice expense RVUs + malpractice RVUs) x MPFS CF = payment amount

For both anesthesia and MPFS services, the actual calculation will vary based on other factors, such as a value called a geographic practice cost index (GPCI) that adjusts the payment rate based on the provider’s geographic location. Note that other payers also may include factors, such as physical status when calculating anesthesia reimbursement.

Here’s What the ASA and AMA Have to Say

“For anesthesia and pain medicine services, Medicare payment rates are inadequate due to flaws in the government formula used to calculate anesthesia and pain medicine rates, which is unlike the formula used for other physician payments. There is significant evidence that these inadequate payment rates, rising practice costs, and pandemic-related financial pressures seriously threaten physicians’ practice survival and patient access to care,” said ASA President Randall M. Clark, MD, FASA, in the ASA news release.

The ASA news release states that “Medicare payment rates for anesthesia services persistently hover around 33% of average commercial insurance company rates, far lower than Medicare payment rates for other specialties, which average 80% of commercial insurance rates. Anesthesiologists receive payment from Medicare at a tiny fraction of the cost of providing that care.”

The American Medical Association (AMA) is also making its position clear. “It is immediately apparent that the rule not only fails to account for inflation in practice costs and COVID-related challenges to practice sustainability, but also includes a significant and damaging across-the-board reduction in payment rates,” cautions AMA President Jack Resnek Jr., MD, in a release on the proposed rule. “Such a move would create long-term financial instability in the Medicare physician payment system and threaten patient access to Medicare-participating physicians. We will be working with Congress to prevent this harmful outcome” (www.ama-assn.org/ press-center/press-releases/ama-medicare-payment-schedule-rule-threatens-patient-access).

Resource: Peruse the proposed rule at www.govinfo.gov/content/pkg/FR-2022-07-29/pdf/2022-14562.pdf.