Reforming anesthesia payment under Medicare

Is Physician Anesthesia Cost-Effective?

One of the most controversial issues in anesthesia is whether nonmedically directed nurse anesthetists are relatively more cost-effective than anesthesiologists in the provision of anesthesia care. We electronically surveyed anesthesia practices throughout the United States to estimate the range in anesthesia professional costs from the payer perspective. Using this survey data on anesthesia reimbursement and published outcomes studies, we developed an ad hoc model to estimate the cost-effectiveness of physician-directed anesthesia relative to a nonmedically directed nurse anesthetist model of care from the payer perspective. Cost-effectiveness ratios were defined as the ratio of incremental costs associated with physician anesthesia relative to the estimated incremental life expectancy gains with this model of care (i.e., dollars per year of life saved [US dollars /YLS]). Reference case results suggest that physician anesthesia is cost saving with an estimated incremental cost-effectiveness ratio of -US dollars 2601/YLS for a younger privately insured patient and an estimated cost-effectiveness ratio of -US dollars 4410/YLS for an elderly Medicare insured patient. Cost-effectiveness ratios ranged from -US dollars 4410 to US dollars 38778/YLS in univariate and multivariate sensitivity analyses across payer types. Results were most sensitive to assumed differences in reimbursement (commercial conversion factors) and to mortality rate assumptions by provider type. This analysis offers economic evidence in support of the physician anesthesia model of care.

IMPLICATIONS

Recent outcome studies suggest improved patient outcomes when physicians medically direct nurse anesthetists versus anesthesia care delivered with nonmedically directed nurses. The relative cost-effectiveness of this practice model is, however, unknown. This economic analysis suggests that outcome gains with physician anesthesia may be obtained at cost savings or, under conservative assumptions, at a cost deemed reasonable by society.

Barriers to achieving a cost-effective workforce mix: lessons from anesthesiology

As pressures to control health care costs increase, competition among physicians, advanced practice nurses, and other allied health providers has also intensified. Anesthesia care is one of the most highly contested terrains, where the growth in anesthesiologist supply has far outstripped total demand. This article explains why the supply has grown so fast despite evidence that nurse anesthetists provide equally good care at a fraction of the cost. Emphasis is given to payment incentives in the private sector and Medicare. Laudable attempts by the government to make Medicare payments more efficient and equitable by lowering the economic return to physicians specializing in anesthesia have created a hostile work environment. Nurse anesthetists are being dismissed from hospitals in favor of anesthesiologists who do not appear "on the payroll" but cost society more, nonetheless. Claims of antitrust violations by nurse anesthetists against anesthesiologists have not found much support in the courts for several reasons outlined in this essay. HMO penetration and other market forces have begun signaling new domestic physician graduates to eschew anesthesia, but, again, Medicare payment incentives encourage teaching hospitals to recruit international medical graduates to maintain graduate medical education payments. After suggesting desirable but likely ineffective reforms involving licensure laws and hospital organizational restructuring, the article discusses several alternative payment methods that would encourage hospitals and medical staffs to adopt a more cost-effective anesthesia workforce mix. Lessons for other nonphysician personnel conclude the article.