Insurance Company Reimbursement Policies for Anesthesia Shifts Costs to Hospital Subsidies

It is no secret that almost every hospital in the United States pays an anesthesia subsidy and that these subsidies are now starting to show up in outpatient centers. This rapidly growing disruption in the anesthesia market encourages healthcare systems to explore more efficient and effective models to mitigate expenses. 

In a recent announcement, Cigna Healthcare informed anesthesia providers of their intent to reduce Certified Registered Nurse Anesthetists (CRNAs) reimbursement to 85 percent of the Physician Fee Schedule when providing services outside the restrictive Medical Direction billing model. Cigna reimbursement will only be at the 100% level if the most inefficient model of anesthesia staffing for hospital and health systems is utilized, which is the traditional 1:4 Medical Direction model.1

This reduction in reimbursement penalizes hospitals that choose to implement more efficient staffing models by shifting the anesthesia costs onto hospitals in the form of subsidies. The Medical Direction model also brings compliance risk as the physician anesthesiologist must comply with the Tax Equity and Fiscal Responsibility Act (TEFRA) requirements for billing which are almost statistically impossible to achieve.3 

In contrast, when evaluating anesthesia services using Efficiency-driven Anesthesia Modeling, administrators are encouraged to consider anesthesia staffing models that are not based simply on the billing model of Medical Direction, which limits physician and CRNA ratios up to 1:4, without any demonstrated increase in quality or patient access.2 A decision-making framework based on the science of public policy, the Efficiency-driven Anesthesia Modeling identifies the most appropriate anesthesia care delivery system for a location. This makes the most of a facility’s resources by positioning efficient anesthesia provider staffing as a central objective.

Hospitals across the country are beginning to realize there are other models that offer the same level of quality, improved staffing, improved patient access to anesthesia care, and decreased overall costs and subsidies, with less risk of Medicare fraud.4   One of these models is the Collaboration/Team model, where physician anesthesiologists and CRNAs work collaboratively in ratios supported by the local patient population and acuity.  The other model is a physician anesthesiologist or CRNA operating independently.

The announced payment cut to CRNAs working outside the narrow Medical Direction billing model directly shifts the payment reduction amount to any facility that will have to pay a subsidy and risks adding a subsidy to previously subsidy-free healthcare facilities.  Essentially, Cigna’s payment cut is penalizing facilities that seek a more efficient anesthesia model or facilities that simply cannot afford physician anesthesiologists in strict ratios of 1:4, or afford them at all, as we see in much of the rural United States and many outpatient facilities.5   Health systems, providers, and patients all lose with this proposed payment cut; the only one who benefits is Cigna, who reported more than $6.7 billion in profits for 2022, while many hospitals are being forced to make tough decisions around cutting services due to massive financial losses. 

If this move goes unchecked, hospital subsidies will continue to rise, impacting the consumer. Such policies will only serve to benefit the insurance companies through profits. I encourage all of you to pay attention to insurance carriers reducing their CRNA reimbursement policy and to stand up against arbitrary payment cuts like this one, that shift costs by increasing hospital subsidies for anesthesia services.

1. Cintina I, Hogan P, Schroeder C, Simonson B, Quraishi J. Cost Effectiveness of Anesthesia Providers and Implications of Scope of Practice in a Medicare Population. Nursing Economic$. 2018;36(2):67-73.

2.  Dulisse B, Cromwell J. No harm found when nurse anesthetists work without supervision by physicians. Health Aff (Millwood). 2010;29(8):1469-1475. doi:10.1377/hlthaff.2008.0966

3. Epstein RH, Dexter F. Influence of supervision ratios by anesthesiologists on first-case starts and critical portions of anesthetics. Anesthesiology. 2012 Mar;116(3):683-91. doi: 10.1097/ALN.0b013e318246ec24. PMID: 22297567.

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5. Martsolf GR, Baird M, Cohen CC, Koirala N. Relationship Between State Policy and Anesthesia Provider Supply in Rural Communities. Med Care. 2019;57(5):341-347. doi:10.1097/MLR.0000000000001106

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