Need for Consistent National Payment Policy for Special Anesthesia Services

HRD-91-23: Published: Mar 13, 1991. Publicly Released: Mar 13, 1991.

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Pursuant to a legislative requirement, GAO reviewed Medicare's anesthesia payment system, focusing on the: (1) extent to which carriers used modifier units to allow extra payments for factors such as patient age, physical status, or unusual risk circumstances; and (2) appropriateness of such payments.

GAO found that: (1) before 1989, Medicare payments for anesthesia modifiers and special monitoring procedures differed among carriers, causing some anesthesiologists to be paid more than others for identical services; (2) in fiscal year 1988, 33 of 52 surveyed Medicare carriers paid an estimated $43 million to $72 million in anesthesia modifiers for which other carriers did not reimburse; (3) carriers' payment policies for special monitoring procedures were inconsistent and inequitable; (4) the Health Care Financing Administration (HCFA) discontinued separate modifier payments and required carriers to adjust payment conversion factors to compensate providers for the value of those modifiers; (5) HCFA required individual carriers to continue existing payment policies for special monitoring procedures despite its concern about nonuniform payment policies; (6) discontinuation of separate modifier payments failed to eliminate but rather perpetuated the payment inconsistencies and inequalities; and (7) HCFA allowed problems with special monitoring procedure payments to continue by requiring carriers to maintain prior practices.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: The Department of Health and Human Services (HHS) believes that the potential effect on payment rates under the fee schedule is too small to justify the effort needed to address the recommendation. Because the fee schedule will be effective January 1, 1991, further pursuit would be futile.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to establish a consistent national policy for Medicare payments for anesthesia procedures. As part of the effort to establish a fee schedule for anesthesia services based on the resource-based relative value scale, the appropriateness of any additional payments for modifiers and special monitoring procedures should be assessed. If such payments are not justified, HCFA should ensure that prior carrier payment policies for modifiers and special patient monitoring do not influence payment levels under the fee schedule.

    Agency Affected: Department of Health and Human Services


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