More on Reimbursement

Lowering anesthesiology costs is a tangible benefit of value-based care frameworks

It's a complicated specialty that provides a potential road map to broader savings across the healthcare ecosystem.

Jeff Lagasse, Associate Editor

In an effort to shift the foundation of healthcare reimbursement, the Centers for Medicare and Medicaid Services is making a push for a larger percentage of reimbursements to be tied to value-based care contracts. Anesthesiology will be at or near the top of the list of priorities, given that it's one of healthcare's biggest cost line items.

What makes anesthesiology an interesting case is that its hospital/practice ties are convoluted and its reimbursement process is complex. These represent a unique example of the challenges – and potential – of value-based care in healthcare.

Anesthesiologists are often not employed by the hospital, which makes this specialty one of the top areas for surprise billing. Bringing anesthesiologists into the hospital as staff would be one way to lower costs.

The complicated nature of anesthesiology dates back to the 1960s, when the federal government was first establishing protocols for different specialties. According to Stephen Lorenz, president of Advisory Solutions at healthcare billing outfit abeo, the field of anesthesiology as a whole did not make an aggressive case for what its members should be paid, essentially allowing the feds to set a low reimbursement baseline for the specialty.

The field continues to be a laggard in terms of reimbursement from both Medicare and Medicaid, and there's an undue burden on the part of insurance companies to make up the shortfall. This wasn't a problem for many years, but in more recent times support costs for anesthesiology have increased dramatically, and the costs of clinicians' wages continue to skyrocket. That isn't going over well with hospital executives, who are trying to stem the bleeding from the COVID-19 pandemic.

The task for anesthesiology – and ultimately for all specialties – is to make practices more efficient while still providing quality care. The best ways to do so vary by situation. Some organizations are trying to get as large as they can to leverage economies of scale and better negotiate reimbursement.

"Other practices are trying to maximize their use of nurse anesthetists (CRNAs)," said Lorenz. "It worked to an extent, but their wages have gone up disproportionate to MD wages and those of most advanced practice nurses. We've pretty much wrung all the savings out of that turnip, if you will.

"Some practices have thrown in the towel and said, 'We'll become employees, join with a health system and let them negotiate with the payers to try to get the best reimbursement.'"


When deciding how best to achieve savings, the first step for anesthesiology practices is to determine the difference between their current collections and what the appropriate collections should be.

Step two is to get a handle on what constitutes market-rate compensation, and the third step is to determine how many people are needed to effectively and adequately provide services to people – which is as much an art as a science.

"After those three points, you can come up with costs and what you should collect," said Lorenz. "Now the question is, 'How do I write the professional service agreement between the specialists and the hospitals so it's an equitable deal? And how do I motivate people?'

"Once you've got those bases covered in your review, you can determine the best path forward."

There are case studies that demonstrate this approach in action. One anesthesiology practice with which Lorenz is familiar kept fewer operating rooms open at a time, which allowed it to maximize the available staffing and eliminate millions in operational costs to the health system. Another focused on how the physician practice contracted with payers.

"Surprisingly, there are a large number of payers who don't establish clinical metrics that will influence what you get paid, yet there's a number of practices where there's a great deal of effort to provide the quality of care and improve patient outcomes, and that needs to be tied directly to reimbursement," Lorenz said.

"Anesthesiologists are high-priced personnel, and when they're not being used and they're sitting around drinking coffee, it costs everybody money," he said. "The biggest opportunity is looking at the utilization of ORs and making scheduling a high priority."

A number of software tools from various staffing solutions providers can aid in this task. Nashville, Tennessee-based Polaris, for example, has built an app where people can dump staffing data from the practice into their system to identify gaps in scheduling and reduce wait times and dissatisfaction.

Austin, Texas-based Healthcare Control Systems offers giant visual boards in the OR that allow staff to see gaps in the schedule and move appointments aground in real time. If a vendor partnership is in the offing, there are options based on an organization's specific needs.

Another option for potentially lowering anesthesiology costs: bundled payments.

"Bundled payment arrangements heavily migrated to certain diagnoses -- orthopedics, joint replacement, testing, etc.," said Lorenz. "There are four or five bundles that are a test market for the concept of bundled payments.

"It allows anesthesiology and hospital medicine to work jointly, and once they've had surgery, get them out of the hospital in a timely fashion, and out of the long-term care facility, and get them home. Most patients do better at home than they would in these skilled nursing systems.

"It's important to get patients at home to their preferred environment. We've got to tighten this continuum down and monitor people closely so they don't come back.

"We're going to see some outstanding demonstrations for how we improve performance with each of these bundles," he said. "There's a value proposition here."

What anesthesiology has learned, and what hospital medicine is now learning, is that the concept of a care team model is instrumental in delivering value and lowering costs. In anesthesiology, three of four CNAs on average manage patients at the same time. This is now taking hold in emergency medicine, with hospitals seeing between a 26-62% decrease in emergency room visits over the past few years.

"Most practices think it's going to take five years before they see volume return to where it was pre-COVID," said Lorenz. "But we're going through times where they have to keep these ORs operating, and they're going to need help from the hospital. I think there's a lot for specialties to learn from watching the tortured world of anesthesiology."

Twitter: @JELagasse
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