Financial impact if payers use medicare rates: anesthesiology versus other specialties

In 1992, Medicare changed its method for calculating physician payments. The resulting fee schedules have contained low payments for anesthesiologists. Now, other third-party (insurance) payers are using these schedules. The financial impact on anesthesiologists if all payers pay Medicare rates is unknown.

Payments from Medicare were compared with payments from other third parties in each clinical procedural terminology (CPT) grouping used by the West Virginia University Department of Anesthesiology during 1998. Changes in total Department of Anesthesiology receipts were determined if non-Medicare third-party payers paid Medicare rates. Then, the effect of adding payments at Medicare rates from patients without insurance was determined. Finally, potential changes in receipts of the Departments of Anesthesiology, Radiology, Surgery, and Medicine were compared by considering only patients with insurance and recalculating total payments to the departments using Medicare rates.

Medicare paid less than other third-party payers in every clinical procedural terminology group. Total Department of Anesthesiology payments would decrease by 31% if all non-Medicare third-parties paid Medicare rates. Adding payments at Medicare rates from patients without insurance still leads to a 21% decrease in total Department of Anesthesiology receipts. Considering only patients with third-party coverage, Medicare-rate payments would decrease total Department of Anesthesiology payments by 37%, whereas radiology, surgery, and medicine payments would decrease by 26, 22, and 13% respectively.

Universal payments at Medicare rates would substantially reduce revenue to anesthesiologists, proportionally more than to radiologists, surgeons, or internists.