CMS recently finalized a 2.83% physician pay cut in its 2025 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System.
This comes after years of declining reimbursements. CMS anesthesia reimbursements declined 8.2% from 2019 to 2024 — from $22.27 per unit to $20.44, VMG Health said in a May blog post.
Four anesthesiologists told Becker's how they think the new cuts will affect anesthesia:
Editor's note: Responses have been lightly edited for clarity and length.
Jason Habeck, MD. Assistant Professor of Anesthesiology at the University of Minnesota (Minneapolis): Continued decrease reimbursement certainly puts a strain on anesthesia practices at a time when overhead continues to increase. Especially when compared to the discrepancy between commercial payers being around $80 and CMS setting it down near 20 dollars. It makes a good payer mix that [much] more essential to maintain.
Cory Maxwell, MD. Anesthesiologist and Partner of Providence Anesthesiology Associated (Charlotte, N.C.): The reality is that this cut will have a nominal, if any, effect on the practice of anesthesia because Medicare and Medicaid rates are already unsustainably low. When the rates were established they were insufficient to support an anesthesia practice at the time and after 30 years there has been a decrease in these rates rather than any [cost of living adjustment] or other positive adjustment. This anchoring bias created a de facto system in which commercial payers subsidize government payers to [a] much greater magnitude than any other medical specialty and anesthesia practices are acutely sensitive to fluctuations in payer mix. The recent cut is a clear sign that any effort to rectify this unsustainable model will take a paradigm shift rather than a bandaid, but what event or events triggers this switch is unclear.
David Vierra, MD. Anesthesiologist of Providence Medical Group—Napa (Calif.): Not only are the continued CMS cuts detrimental to the practice of Anesthesiology but to medicine in general. In most areas of [California] government payers, [including] CMS and MediCal, account for at least 70% of the payer mix. Demand for anesthesiologists is growing, yet reimbursement keeps dropping, which puts pressure on hospitals and ASCs to make up the difference. Both entities are also facing issues with decreased reimbursements as well. I think that is why we are seeing hospital bankruptcies, reduced service lines and decreased access to care. I also think the Anthem decision to reimburse on CMS average minutes rather than actual minutes will further deteriorate anesthesia reimbursement, leading to further pressure on hospitals and ASCs to make up the difference, more anesthesiologists leaving medicine and further reductions in access to care.
Vijay Sudheendra, MD. President of Narragansett Bay Anesthesia (Narragansett, R.I.): To answer your question specifically from a Rhode Island physician in private practice anesthesia for the last 20years.
- The 2025 anesthesia conversion factor will be $20.31, representing a decrease of 2.20% from the 2024 anesthesia conversion factor of $20.79.
- The resource-based relative value scale conversion factor will be $32.34, down 2.83% from the 2024 conversion factor of $33.28.
- These cuts are part of an overall 2.83% reduction in the Medicare physician fee schedule conversion factor for 2025. Given looming Medicare cuts coupled with increased standard Medicaid and commercial Medicaid patients, especially in Rhode Island, and the ever-increasing cost of anesthesia providers, the viability and longevity of local private practice groups — the bedrock of community hospitals — are called into question.
- The provider shortage, resulting in increased demand, has resulted in unsustainable costs, provider burnout, dissatisfaction and, more importantly, inadequate anesthesia coverage. With more Medicare patients requiring orthopedic procedures being done in physician-owned ASCs, the subsidy for the anesthesia groups is even more crucial.
- The hospitals, as such, have razor-thin margins or no margins, and with further Medicare cuts for anesthesia in 2025, they are concerned about having to budget for additional anesthesia expenses.