Back in the Day
For many years, the unique method of calculating anesthesia fees worked to the advantage of the specialty. It was too complicated and arcane for most payers to understand. Most just paid a percentage of charge, irrespective of plan type. These were the good old days before payer contracts when providers basically charged what they thought was fair.
Because Medicare was a federal insurance program, the rising cost of the Medicare program became a public policy issue. The U.S. Department of Health and Human Service started exploring payment options that would reduce the overall cost of the program. After a period of fee caps, Medicare implemented a major program revision known as the Resource-Based Relative Value Scale—or RBRVS in its shorthand version. Ever since that time, Medicare fees have been significantly discounted with only minor increases from year to year. This caused the era of cost shifting during which negotiations of commercial PPO rates were intended to offset the Medicare cuts. Since Medicaid rates in most states were at or below Medicare rates, providers became fixated on the combined impact of public payers on their average net yield per unit.
More Recent Developments
For years, the most effective management strategy focused on aggressive contracting with the major PPO plans. For most practices, this was an effective strategy that resulted in sufficient revenue to cover the cost of care—that is, until insurance plans started pushing back. The last three years have seen a dramatic shift, as most plans had refused to increase their payment rates. However, based on a recent survey of year-over-year commercial payment trends, 2025 payment rates did show some improvement over the previous year. It remains to be seen what 2026 will bring in this regard, but it will behoove anesthesia group leaders and planners to closely monitor current reimbursement trends in preparation for discussions with their facility administrators.
So, in summary, here’s what we can say: as a result of (a) payer mix evolution, (b) growth of public payer plans, and (c) a history of rate stagnation (though there are recent signs of improvement), most anesthesia practices now rely on their facility for a significant percentage of their revenue, and this is a reality that is likely to remain.