As indicated below, the Medicare population has grown significantly over the past five years and currently represents about 19.5 percent of all Americans. At least one million new subscribers or 1.5 percent are added each year. While it is true that the most common conditions affecting older adults are non-surgical chronic conditions like diabetes, obesity and hypertension, many Medicare patients do require surgery. The average Coronis client group typically experiences about a one-percent increase in its Medicare population per year, although this varies based on the location of the practice.
The most obvious challenge is Medicare rates, which are seriously discounted as compared to commercial PPO payment rates. Because the rates are set by the federal government, they are subject to significant budgetary constraints. Despite a growing population, the Medicare budget is supposed to remain stable. In other words, each new Medicare case results in a decline in the overall practice yield per ASA units.
For the purpose of this study, we selected five large practices from across the country. As the chart below indicates, most experienced a significant increase in the percentage of Medicare cases year over year. For some, the exception was 2020 because of the impact of the pandemic. The overall increase in Medicare cases from 2019 to 2023 was 2.2 percent.
Medicare best exemplifies the impact of national demographic changes that affect all anesthesia practices. All practices are seeing the impact of the same trends and need to be monitoring the impact on three levels critical to the ongoing viability of the practice. Obviously, the most dramatic impact is financial; as the Medicare revenue erodes, practices must explore alternative strategies to maintain their cashflow. The number one reason for a subsidy from the facility is the impact of declining Medicare collections.
As the Medicare population increases, so too does the mix of cases. There has been a dramatic increase in anesthesia for colonoscopy.
Because of patient acuity issues, a significant percentage of Medicare cases must be performed on an inpatient basis while cases with better commercial insurance tend to be done in outpatient facilities and surgery centers. In other words, it is the impact of Medicare that has led many practices to expand their practices to cover more outpatient facilities.
While the impact of an increasing Medicare population might seem obvious and inevitable, the real question is how to prepare for it and how to develop an appropriate strategy. This must be a primary focus of practice managers as this directly implicates another challenge for today’s anesthesia practices: generating enough revenue to recruit and retain an appropriate team of qualified provide