Anesthesia Policy Draws Ire and Confusion

I want to cover a story that was spectacularly overshadowed by the recent assassination of former CEO for UnitedHealthcare Brian Thompson.

The story is the announcement by Anthem that it would change anesthesia reimbursement in February 2025.

Shortly after the Thompson killing Anthem withdrew its policy due to what the Associated Press reported as “significant widespread misinformation” about the policy. Anthem went on to say, “it never was and never will be the policy of Anthem Blue Cross Blue Shield to not pay for medically necessary anesthesia service. The proposed update to the policy was only designed to clarify the appropriateness of anesthesia consistent with well-established clinical guidelines.”

Were this true then Anthem would have served itself better by sharing and explaining the guidelines rather than rescinding the policy in a hasty retreat. Anthen has left skeptics to believe the policy was a predatory money grab rather than a fiscally responsible approach to fostering medically sound resource utilization.

For those who haven’t heard the policy proposed to deny anesthesia reimbursement in some markets for claims with time exceeding a specified value. As a reminder, anesthesia claims are paid as base units plus time units. Each unit has a contractually controlled dollar value. The combined based plus time units, times the unit value should be the reimbursement. 

Anthem proposed denying claims that had time units exceeding a predetermined value. Naturally, as well it might be expected there was immediate backlash.

The inherent unfairness of the proposed policy is evident from two facts. First, anesthesia providers have little control over the duration of a surgical procedure.  Second, patients and surgeons uniformly find that stopping the anesthesia prior to the conclusion of the surgery is an unsatisfactory outcome.  So there’s no acceptable way to stop the surgery when the Anthem meter runs out.

Let’s look at some of the expected outcomes of Anthem’s policy.

• First, providers would recognize this as a significant contract change and exercise their cancellation options. This would in turn exacerbate the current shortage of anesthesia providers. The most severely impacted providers would be those who care for sicker patients or those who provide care for prolonged, complicated, or highly specialized procedures.

• Next, the loss of providers would be expected to disproportionately impact the sickest patients who need complex surgeries. Anthem’s actuaries certainly recognize that delaying the surgery may eliminate the need for the surgery and associated complex treatments.

• Next, out of network cases would require single case agreements for elective care.

• Low-risk surgeries might be expected to shift to ambulatory surgery centers where payers may have better margins.

• Finally, some providers may begin anticipating denials and attempt to pre-emptively shift the risk to patients. Providing timely good-faith estimates and, possibly, front-end deposits shift financial responsibility to the patient and mitigates the need for appeal of denied claims. Or more accurately shifts the appeal obligation to the patient. This also increases administrative burden for practices.

Shifting payment burden is a common practice in contracting. Medicare Advantage and marketplace payers routinely “shift” payment responsibility. Payers generously offer 110-115P of Medicare knowing it they will simply increase premium and shift more reimbursement to patient responsibility.

A colleague recently told me of a marketplace plan with a 75percent co-pay. That’s not insurance. Such techniques in conjunction with denials for services already completed reliably drives actual Medicare Advantage reimbursement down to 88-92percent of Medicare rates. Yet providers continue to return to Dante’s 3^rd circle of hell to systematically erode margin.

In one sense Anthem’s policy was genius.

The payment changes only affect an “invisible” group of providers who are rarely hand-picked by patients. Anesthesia providers suffer under frivolous internal disputes between physicians and non-physician providers. This fractured front provides a particularly easy target for reimbursement reductions. The diverse provider group and the fact that the average anesthesia physician income last year exceeded $400K assures that these providers will get little sympathy.

Anthem’s brilliance extends to patients. The policy was disclosed first to providers. Most patients don’t pay attention to reimbursement policy changes. Patients who know of reimbursement changes assume it won’t affect them.

Besides, patients are unlikely to care if their “overpaid” anesthesiologist gets “stiffed” on a single case?

Did Thompson’s murder drive Anthem to reconsider? We may never know. But, as I noted previously, Thompson has the potential to be the poster boy for meaningful financial change in healthcare financing.

As a start we should consider the following:

• Seek to eliminate vacuous promises from payers. Patients and providers should insist on robust contracts that limit the ability of payers to deny and delay coverage or payment.

• Demand clear, honest advertising. Stop luring patients to MA plans using washed-up, geriatric, previously famous celebrities to talk about frivolous “benefits” that will have no positive impact on health.

• Insist that MAs eliminate “cash back” and other programs not directly related to healthcare.
• Demand that MAs disclose denial rates in an understandable manner to every beneficiary and contracted provider.

A significant component of the frustration with health insurance is the apparent failed promises and the crushing heartless bureaucracy. The health insurance industry has an opportunity to re-invent itself into something positive and still make billions in profit.

Maybe Thompson’s death won’t be as senseless as school shootings if it catalyzes meaningful reform.