ASA Survey Results for Commercial Fees Paid for Anesthesia Services payment and practice management

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1 payment and practice management ASA Survey Results for Commercial Fees Paid for Anesthesia Services 2016 Stanley W. Stead, M.D., M.B.A Sharon K. Merrick, M.S., CCS-P ASA is pleased to present the annual commercial conversion factor survey for Each summer we anonymously survey anesthesiology practices across the country. We ask them to report up to five of their largest managed care (commercial) contract conversion factors (CF) and the percentage each contract represents of their commercial population, along with some demographic information. Our objectives for the survey are to report to our members the average contractual amounts for the top five contracts and to present a view of regional trends in commercial contracting. Summary Based on the 2016 ASA commercial conversion factor survey results, the national average commercial conversion factor was $71.02, ranging between $68.33 and $74.36 for the five contracts. The national median was $68.00, ranging between $64.00 and $71.00 for the five contracts (Figure 1, Table 1). In the 2015 survey, the mean conversion factor ranged between $69.64 and $74.29 and the median ranged between $65.00 and $ In contrast, the current national Medicare conversion factor for anesthesia services is $ , or about 30.9 percent of the 2016 overall mean commercial conversion factor. Figure 1 shows the frequency in percent and distribution of contract values. The estimated normal distribution is the solid blue line. Also, we are adding a box-and-whiskers plot of the same data immediately below the histogram. The upper and lower whiskers delineate the minimum and maximum values. The box represents the interquartile range, the bottom of the box is the 25th percentile, the horizontal line in the box is the median and the top of the box is the 75th percentile. The solid diamond in the box is the mean. Table 1 (page 60) provides the overall survey results by reported managed care contract. As with previous surveys, we requested that participants submit data on five commercial contracts. Most practices submitted three or more contracts. Stanley W. Stead, M.D., M.B.A., is Professor of Anesthesia and Perioperative Care, University of California, Irvine. He is ASA Vice President for Professional Affairs. Sharon K. Merrick, M.S., CCS-P, is ASA Director of Payment and Practice Management. Downloaded From: on 05/02/

2 The survey reflects valid responses from 204 practices in 41 states, an increase from last year s survey. The 2015 survey results included data from 183 practices in 38 states. Methodology The survey was disseminated in June To comply with the principles established by the Department of Justice (DOJ) and the Federal Trade Commission (FTC) in their 1996 Statements of Antitrust Enforcement Policy in Health Care, the survey requested data from respondents that were at least three months old. In addition, the following three conditions must be met: 1. There are at least five providers reporting data upon which each disseminated statistic is based, and 2. No individual provider s data represents more than 25 percent on a weighted basis of that statistic, and 3. Any information disseminated is sufficiently aggregated such that it would not allow recipients to identify the prices charged or compensation paid by any particular provider. To comply with the statements, we are only able to provide aggregated data. Since some states did not respond, and other states had insufficient response rates, we are unable to provide specific data for all states. We term Eligible States, those that submitted sufficient data to be compliant with DOJ and FTC principles, and provided state-specific data for only those states. This is the sixth year we offered the survey electronically through the website ASA urged participation through various electronic mail offerings, including ASA committee list serves, ASAP (all-member weekly digest), Vital Signs and via the ASA website. The responses to the survey represented 215 unique practices. However, due to respondents providing incomplete data, we excluded 11 responses for the overall analysis. Our results are based on the data from 204 practices. Results Table 2 presents respondent information for the 204 practices in the analytic sample per Major Geographic Region as identified by the Medical Group Management Association (MGMA). These regions are as follows: n Eastern: CT, DE, DC, ME, MD, MA, NH, NJ, NY, NC, PA, RI, VT, VA, WV n Midwestern: IL, IN, IA, MI, MN, NE, ND, OH, SD, WI Continued on page 60 Will the Medicare Physician Fee Schedule Still Matter Under MACRA? Sharon K. Merrick, M.S., CCS-P ASA Director of Payment and Practice Management Matt Popovich, Ph.D. ASA Director of Regulatory and Quality Affairs The Centers for Medicare & Medicaid Services (CMS) released its proposed rule for the CY2017 Medicare Physician Fee Schedule (MPFS) in late July. The proposed rule will have a 60-day comment period and CMS will issue a final rule in early November. The finalized proposals for payment policies, CPT code changes and values assigned to services provided will become effective on January 1, With the upcoming implementation of MACRA s Quality Payment Programs (QPP), you may wonder if the annual rulemaking process for the MPFS still matters. The short answer to that is, yes, it does. The QPP includes the Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APM). Payments made to Eligible Clinicians (EC) in the MIPS program start with the value assigned to the service under the MPFS. In 2019 when MACRA s payment adjustments begin, that fee schedule value as paid to the clinician will be adjusted based on how the EC s Composite Performance Score compares to a threshold score to be established by the Secretary of Health and Human Services. Determination of payment amounts per the MPFS is based on two major components. The first being the number of base units assigned to each anesthesia service or relative value units (RVU) assigned to other services such as pain procedures and line placements. The second is the conversion factor (CF), the dollar amount paid per unit. MACRA provides for a 0.5% CF update for 2016 through 2019 and a 0.0% CF update for 2020 through The CF for ECs in MIPS gets a 0.25% update for 2026 and on. However, policies and proposals in the fee schedule rule-making process also impact the CF. As we saw in 2016, the CF actually decreased from the 2015 figure even with the positive update from MACRA. We can anticipate a similar situation for 2017 based on the forecasted CF calculations presented in the proposed fee schedule rule. The conversion factor is also a consideration in APMs. MACRA provides for a 0.75% CF update for those who are qualifying participants in advanced APMs, but again, the CF is also subject to other required adjustments. Further, the MPFS will remain a consideration in APMs that include a spending target. Setting realistic and appropriate targets requires an understanding of what it costs to provide services as well as what you are already being paid for them. The MPFS, with its CPT codes, base unit values RVUs and conversion factor updates, will still have a role in determining payments from Medicare under MACRA. October 2016 n Volume 80 n Number 10 59

3 Continued from page 59 n Southern: AL, AR, FL, GA, KS, KY, LA, MS, MO, OK, SC, TN, TX n Western: AK, AZ, CA, CO, HI, ID, MT, NV, NM, OR, UT, WA, WY These practices employ or contract with 5,886.6 full-time equivalent (FTE) physician anesthesiologists, 5,135.8 FTE nurse anesthetists and FTE anesthesiologist assistants (AAs). The practices also work with an additional FTE nurse anesthetists and 15 FTE anesthesiologist assistants for whom the practice does not directly pay compensation (i.e., facility hires or contracts the nurse anesthetist or AA). The 204 practices reported a total of 809 managed care contracts. This is 2.5 percent more than the 789 contracts reported last year. Table 3 provides the same respondent information by Minor Geographic Region as identified by the Medical Group Management Association (MGMA). n CAAKHI: CA, AK, HI n Eastern Midwest: IL, IN, KY, MI, OH n Lower Midwest: AR, KS, LA, MO, OK, TX n Mid Atlantic: DC, DE, MD, VA, WV n North Atlantic: NJ, NY, PA n Northeast: CT, MA, ME, NH, RI, VT n Northwest: ID, OR, WA n Rocky Mountain: AZ, CO, MT, NM, NV, UT, WY n Southeast: AL, FL, GA, MS, NC, SC, TN n Upper Midwest: IA, MN, ND, NE, SD, WI Seven hundred seventy-nine (779) of the contracts are based upon a 15-minute unit, 12 upon a 12-minute unit, 15 are based upon a 10-minute unit and three are based upon an eight-minute unit. We normalized all contract conversion factors with eight-, 10- and 12-minute time units to the typical 15-minute time unit using an adjustment factor of Table 1: National Managed Care Anesthesia Conversion Factors ($/unit), 2016 Conversion Factors Contract 1 Contract 2 Contract 3 Contract 4 Contract 5 ALL Mean $68.33 $70.75 $70.23 $73.37 $74.36 $71.02 Low $40.00 $31.00 $37.00 $45.00 $30.10 $ th Percentile $57.59 $57.75 $58.50 $60.00 $61.10 $59.00 Median $64.00 $67.00 $68.00 $71.00 $70.50 $ th Percentile $74.00 $80.13 $76.00 $80.00 $81.21 $78.34 High $ $ $ $ $ $ Number of Responses Percentage of Managed Care Business 20.40% 9.49% 6.77% 4.79% 5.21% 10.20% Table 2: Respondent Information by Major Geographic Region, 2016 Region Practices Cases Mean Units/ FTE MD Mean Units/ Case FTE MD FTE Nurse Anesthetist FTE AA Eastern 41 1,399,419 14, , ,037 [83] 38 [1] Midwest 37 1,289,400 14, [247] 79 [12] Southern 79 3,267,025 18, , ,023 [484] 355 [2] Western ,235 9, , [4] 24 ALL 204 6,831,079 14, , ,136 [818] 496 [15] ACT = Anesthesia Care Team Number in brackets indicate the number of non-employed FTEs. 60

4 for eight-minute units, for 10-minute units and for 12-minute units (Table 4). Similar to the 2015 survey, the adjustment factors are calculated as ratios based on the mean number of time (94.1 minutes) and mean base units per case (6.69 base units). To make these calculations, we used the national medians published in the MGMA Cost Survey for Anesthesia and Pain Management Practices 2016 Data Dive Based on 2015 Data. More groups are reporting that payers have approached them for flat fee contracts for certain procedures. Table 5 (page 62) shows respondents who identified that they had flat fee contracts. One hundred seventeen (117) of the 204 groups (57.4 percent) responding to this question negotiated at least one flat fee contract. Fifty one percent of the respondents have flat fee contracts for labor and delivery. Respondents in the Western Region are still likely not to have flat fee contracts. Table 6 reports the conversion factor by MGMA Major Region. Contract 1 reflected the highest percentage of the reported commercial business, Contract 2 reflected the second highest percentage, and so on. Thus, when looking at the data, you can see that Contract 1 not only reflects the greatest number of responses (204) but also the highest average percentage of managed care business (20.4 percent). We also reported the number of responses for each contract in Table 1. Figure 2 shows the contract data for each region as a box-and-whiskers plot. Continued on page 62 Table 3: Respondent Information by Minor Geographic Region, 2016 Region Practices Cases Mean Units/ FTE M.D. Mean Units/ Case FTE M.D. FTE Nurse Anesthetist FTE AA CAAKHI ,314 7, Eastern Midwest 28 1,020,532 15, [97] 79 [6] Lower Midwest 35 1,598,612 14, , ,545 [10] 132 [1] Mid Atlantic ,534 15, [5] [1] North Atlantic 17 1,074,293 14, [14] - Northeast 5 69,526 9, Northwest ,240 8, [4] - Rocky Mountain ,681 10, Southeast 47 1,689,312 20, ,424 [538] 223 [1] Upper Midwest ,035 11, [150] [6] All 204 6,831,079 14, , ,136 [818] 496 [15] ACT = Anesthesia Care Team Number in brackets indicate the number of non-employed FTEs. October 2016 n Volume 80 n Number 10 61

5 Continued from page 61 We had a sufficient data sample to provide detailed information per MGMA Minor Region (Figure 3). Table 7 (page 65) shows contract data for the minor regions. This is the second year we are presenting state-specific data for those eligible states (Figure 4, Table 8) whose reporting complied with the DOJ and FTC requirements, listed above. We are hoping that by providing this data, we can encourage more participation in the 2017 CF study. Continued on page 64 Table 4: Conversion Factor Adjustment Based on Time Units, 2016 Base Units 6.69 Sum of Base and Time Units CF Value Ratio based for 15-minute units Minutes/Case minute time units minute time units minute time units minute time units Mean Minutes per Case and Base Unit taken from MGMA DataDive 2015: Cost Survey and Revenue Module for Anesthesia and Pain Management Practices. Table 5: Respondents Having Flat Fee Components, 2016 Region Flat Fee (Any) Labor & Delivery Cataracts Endoscopy Pain Other Eastern Midwest Southern Western Total Others include cosmetic and plastic surgery, TEE, oocyte retrieval and open heart surgery 62

6 Table 6: Major Region Managed Care Anesthesia Conversion Factors ($/unit), 2016 Contract 1 Contract 2 Contract 3 Contract 4 Contract 5 ALL Eastern n=41 n=34 n=33 n=28 n=25 n=161 Mean $76.53 $75.64 $73.01 $78.33 $78.49 $76.24 Low $42.00 $46.00 $45.00 $52.50 $30.10 $ th Percentile $60.40 $59.00 $57.00 $63.25 $66.62 $60.21 Median $70.48 $73.00 $73.00 $75.50 $78.00 $ th Percentile $78.63 $86.50 $81.97 $86.47 $87.00 $85.00 High $ $ $ $ $ $ Midwest n=37 n=34 n=33 n=29 n=22 n=155 Mean $68.15 $68.73 $63.84 $70.49 $70.87 $68.18 Low $41.00 $43.00 $40.00 $45.00 $46.75 $ th Percentile $57.17 $59.45 $54.00 $59.41 $61.10 $58.00 Median $65.00 $67.00 $65.00 $71.00 $69.00 $ th Percentile $72.27 $74.00 $71.00 $76.00 $79.90 $76.00 High $ $ $97.00 $ $ $ Southern n=79 n=70 n=63 n=54 n=45 n=311 Mean $67.04 $72.18 $72.75 $75.28 $76.37 $72.14 Low $42.00 $40.00 $37.00 $45.00 $40.00 $ th Percentile $55.89 $55.00 $60.00 $60.00 $59.00 $58.00 Median $62.00 $69.00 $69.00 $72.20 $70.00 $ th Percentile $74.26 $86.00 $82.00 $88.00 $81.21 $82.00 High $ $ $ $ $ $ Western n=47 n=41 n=37 n=31 n=26 n=182 Mean $63.46 $65.93 $69.15 $68.25 $69.88 $66.91 Low $40.00 $31.00 $40.00 $46.00 $48.25 $ th Percentile $51.60 $58.81 $62.60 $62.00 $62.00 $58.81 Median $62.25 $64.50 $67.82 $65.75 $67.64 $ th Percentile $71.00 $69.00 $72.85 $75.00 $75.65 $72.85 High $ $ $ $ $ $ October 2016 n Volume 80 n Number 10 63

7 Continued from page 62 Observations Based on our review of the analysis, the most interesting findings include: n The national average conversion factor remained essentially unchanged from a range of $69.64-$74.29 in 2015 to a range of $68.33-$74.36 in n Conversion factors across the country are similar, with the Eastern Region still having the highest mean of $ n Every region and nearly every contract category had a reported conversion factor high of at least $ The highest conversion factor reported was $ In 2015, these figures were $82.00 and $195.00, respectively. Conclusions This year s survey represents a similar sample size to the 2015 ASA CF Survey. Respondents reported on a broad geographic basis, allowing us to provide detailed regional responses. Some states reported a sufficient number of practices and contracts to allow us to do state reporting. We will continue to monitor the trend in the commercial conversion factor survey results and will launch the survey again in June It is important that as many practices as possible participate in the 2017 survey to help us obtain an accurate representation of the anesthesia commercial conversion factor. We hope that a significant growth in reporting by state will allow us to publish additional state data. We look forward to your future participation and thank all of the practices that contributed to the 2016 results. Reference: 1. MGMA DataDive Cost and Revenue 2016: Based on 2015 Survey Data. 64

8 Table 7: Minor Region Managed Care Anesthesia Conversion Factors ($/unit), 2016 MGMA Minor Region Contracts Low 25th Percentile Median Mean 75th Percentile High CAAKHI 51 $31.00 $50.83 $58.65 $59.83 $66.25 $87.40 Eastern Midwest 120 $40.00 $57.75 $65.00 $66.19 $72.00 $ Lower Midwest 141 $37.00 $55.00 $65.00 $70.22 $80.00 $ Mid Atlantic 45 $42.00 $57.30 $66.00 $66.88 $72.00 $ North Atlantic 80 $45.00 $59.50 $74.88 $80.70 $93.00 $ Northeast 24 $30.10 $75.50 $79.00 $77.33 $85.75 $97.61 Northwest 74 $50.00 $62.00 $65.80 $65.38 $70.00 $82.00 Rocky Mountain 57 $42.00 $64.00 $71.00 $75.23 $83.50 $ Southeast 174 $38.00 $60.50 $72.00 $74.71 $86.00 $ Upper Midwest 43 $40.00 $61.10 $72.00 $72.36 $81.85 $ ALL 809 $30.10 $59.00 $68.00 $71.02 $78.34 $ Table 8: Eligible States Managed Care Anesthesia Conversion Factors ($/unit), 2016 State Contracts Low 25th Percentile Median Mean 75th Percentile High AL 16 $38.00 $45.00 $61.00 $56.81 $63.50 $75.00 CA 43 $40.00 $54.10 $58.81 $61.67 $67.60 $87.40 FL 46 $42.50 $68.00 $82.88 $79.59 $92.00 $ GA 37 $55.89 $66.00 $73.54 $73.93 $77.45 $ IL 27 $49.32 $59.41 $65.00 $66.63 $70.29 $ LA 24 $37.00 $48.50 $52.00 $51.38 $55.00 $58.00 NY 23 $74.91 $83.33 $ $ $ $ OH 56 $41.00 $65.00 $69.50 $71.09 $76.00 $ PA 42 $45.00 $55.00 $60.00 $63.82 $70.48 $95.00 SC 23 $48.00 $60.00 $75.50 $83.51 $ $ TN 29 $50.70 $63.00 $71.40 $76.91 $78.00 $ TX 63 $43.00 $64.00 $79.00 $82.70 $93.00 $ WA 59 $50.00 $60.60 $65.75 $64.67 $69.50 $82.00 October 2016 n Volume 80 n Number 10 65

ASA Survey Results for Commercial Fees Paid for Anesthesia Services payment and practice manaement

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