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Hospitals to Anesthesiologists:
Our Way or the Highway
By Patricia A. Dailey, M.D.
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The
following is a “how-to guide” for presenting anesthesia billing and
reimbursement issues to hospital administrations and board members as well
as to other physicians. The aim is to encourage reasonable, fact-based
deliberations. As demonstrated by the
recent events at a hospital in the San Francisco Bay Area, hospital-based
anesthesiologists are being pressured by hospitals to contract with all
the insurers with whom the hospital contracts. Unfortunately, there
are insurance payers that are unwilling to contract at reasonable rates.
When anesthesiologists refuse to accept below-market reimbursement by
these payers, patients who have selected a contracted hospital and a
contracted surgeon may find themselves anesthetized by a noncontracted
anesthesiologist. Irate letters have been written to hospitals, payers,
physicians, and legislators with retribution threatened against the
billing practices of noncontracted anesthesiologists. This now has
escalated to one group of anesthesiologists being escorted from their
hospital and replaced by other anesthesiologists who agree to accept all
contracts. How can
anesthesiologists educate their hospital administrators, board members,
hospital district leaders, surgeons, and legislators to understand our
often-daunting contracting issues? Let’s consider a hypothetical
situation using data from the 2003 CSA Reimbursement Survey. CSA members
may go to the Members Only section of the CSA Web site at www.csahq. Suppose your hospital
administration is demanding that all hospital-based physicians contract
with at least 75 percent of the hospital’s contracted PPOs. Your
hospital administration comes to your group with a pie chart (Chart 1)
showing the hospital’s top 10 PPOs (by patient volume) and has shaded
the pie chart showing the PPOs with whom your group contracts. Presented
this way your group doesn’t look like a team player. Instead of being
labeled as such, you need to educate your administration about the
realities of your payer mix. Change the focus from
PPOs; let the administrators know that you actually are a team player.
Document the payers with whom you are contracted or have regulatory set
rates (i.e., Medicare, Medi-Cal, Workers’ Compensation, etc.). For groups who practice
only at full-service hospitals, PPO patients may be a small proportion of
patient volume. Medicare may constitute the largest percentage. Indeed, in
some hospital practices, Medicare may, in fact, comprise almost 50 percent
or more of the patient volume. Compare the proportion of PPO patients to
the total patient volume. Chart 2 shows median payer profile data from the
CSA 2003 Reimbursement Survey. Presented this way, anesthesiologists
appear very much like team players. If the anesthesiologists have
contracted with the community HMO/IPA as well as some of the PPOs, they
are team players for more than 75 per cent of the patients. Next, educate your
administration about the inequity in payment by Medicare and Medi-Cal for
anesthesia services. All physicians receive poor reimbursement for Medi-Cal
services; as a result, few physicians open their practices to Medi-Cal
patients. Anesthesiologists have little choice but to accept Medicare and
Medi-Cal payment. Few administrators and board members know that Medicare
pays anesthesiologists as poorly as Medi-Cal. Bar Graph 1 compares Medi-Cal
and Medicare payment to the standard charge per unit in the absence of a
contract (the traditional usual and customary rate—UCR). The data in Bar
Graph 1 for anesthesiologists is based on the CSA Survey and for
internists and surgeons is based on my family’s bills, compared with
Medicare’s and Medi-Cal’s published rates. Medi-Cal pays 25 percent or
less of UCR for surgeons, internists, and anesthesiologists. However,
contrast this with Medicare, where anesthesiologists receive only 23
percent of the median UCR vs. the significantly higher reimbursement for
almost all other specialties. For example, Medicare pays my husband’s
internist 72 percent of his UCR. The Physician Payment Review Commission
(now MedPAC ), a congressional advisory group, has determined that
Medicare payments represent approximately 71 percent of commercial
payments across all specialties. (No wonder internists are happy to
receive PPO payments of 125 percent of Medicare—they end up with 90
percent of their UCR, but for anesthesiologists, 125 percent of Medicare
payment would result in their receiving only 29 percent of UCR.) Finally, point out that
your group has successfully negotiated with PPO payers for reasonable
reimbursement. Bar Graph 2, using fictitious data, demonstrates how this
may be presented. When presenting this data, be sure to point out to board
members and others that Medicare and Medi-Cal are government programs for
the elderly, indigent, and disabled. Furthermore, workers’ compensation
is a hybrid between government and private insurer, funded by premiums
paid by employers but with reimbursement rates set by state governments.
In this example, PPO #6 is paying much less than other PPOs. This economic
disparity among PPOs must be highlighted to avoid your being labeled as
noncooperative. If your hospital insisted that your group contract with
all PPOs, including PPO #6, this would not be reasonable. Furthermore,
consider the disadvantage in negotiating when the word gets out that you
“must” take all contracts. There are PPO carriers
who refuse to negotiate in good faith. Some PPOs have cost-shifted their
responsibility to pay physicians to the patients. By not contracting with
providers, these PPOs often wind up paying less than they would if they
were contracted to those providers, thus leaving the patient with the
responsibility to pay a much larger balance. Anesthesiologists need the
support of the medical community. If possible, determine the payer
contract status of pathologists, radiologists, emergency medicine
physicians, hospitalists, and even perinatalogists and interventional
cardiologists at your hospital. All too often, anesthesiologists are
miscast as the poster child for noncontracting, when other specialists
accept even fewer contracts. Anesthesiologists should not fight this
battle alone. You should warn other specialties that they also may be
forced to accept unreasonably low-paying contracts or be subject to
economic “decredentialing.” In fact, in the now well-known Ventura
conflict in 2003, a group of radiologists left Community Memorial
Hospital, citing onerous contract demands from the hospital. In my 2003 Presidential
Address to the California Society of Anesthesiologists House of Delegates,
I emphasized the importance of being “reasonable” in billing and
reimbursement: If
we want to keep anesthesiologists in California, we must be paid
reasonably for our services. Public and private entities must pay
reasonable fees for our services, just as we have a duty to bill
reasonable fees. Anesthesiologists should not be priced out of California
by unreasonably low fees paid by insurance plans. Equally important,
anesthesiologists should not price themselves out of the market by billing
seemingly unreasonably high fees. We need to listen and respond to
complaints. We need to police ourselves; we need to explain ourselves.
Patients and hospitals need to know that Medicare and Medi-Cal are not
paying their fair share. As a result, anesthesiologists and hospitals are
finding themselves forced to increase their fees to non-Medicare and non-Medi-Cal
patients. We have no choice if we want to keep anesthesiologists in
California. The key is to be reasonable in our billing practices. This will keep us from
the highway! Reprinted with permission of the author and the California Society of Anesthesiologists. This article first appeared in the CSA Bulletin, Vol. 53, No. 4, Oct-Dec 2004, and is available online at www.csahq.org in the CSA Bulletin Archives.
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