Private insurers pay 3.5 times more for anesthesia than Medicare, GAO report says

On average, private insurers paid more than 3.5 times what Medicare paid for anesthesia services in 2018, the U.S. Government Accountability Office concluded in a 23-page report published Oct. 26.

With Medicare payments of over $2 billion in 2018, anesthesia services made up about 2 percent of the total amount Medicare paid to providers that year.

By contrast, anesthesia services represented 6 percent of the total amount paid to providers for patients with certain employer-sponsored insurers in 2018, according to a Health Care Cost Institute estimate cited by the GAO.

The payment difference is wider than it once was. In 2007, the GAO reported that private insurance paid roughly three times more than Medicare for certain anesthesia services in 2004.

The GAO partially attributed the gap to anesthesia providers' ability to negotiate higher payments from private insurance, whereas Medicare rates for anesthesia services are set by CMS.

"Studies also indicated that specialists, including anesthesia providers, could negotiate higher in-network payment rates because they were able to leave an insurer's network with little risk of losing patients or revenue," the report said.

Market concentration, which results when smaller physician practices are consolidated into larger groups, was also responsible for driving up private insurance payments for anesthesia services, according to studies and experts consulted by the GAO.

GAO reviewed U.S. literature and data published no earlier than 2010 on payment differences for anesthesia services. GAO also reviewed CMS data on the number of anesthesia providers from 2010, 2018 and 2020, and interviewed experts from three research groups, two beneficiary advocacy groups and five stakeholder groups.

Click here to access the report.

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