Sun Health
Sun City, Arizona 85351
March 7, 2002

The Honorable Nancy Johnson
Chairwoman, Subcommittee on Health
Committee on Ways and Means
1102 Longworth House Office Building
Washington, D.C. 20515

Re: March 1, 2002 Ways and Means Health Subcommittee hearing

Dear Chairwoman Johnson:

I respectfully request that this letter be included in the official record for the Ways and Means Health Subcommittee hearing on March 1, 2002, regarding physician payment for Medicare services.

Sun Health is a nonprofit healthcare system with over 90% of its hospital admissions representing Medicare beneficiaries; for this reason, Sun Health is often the harbinger of various healthcare trends and Medicare reimbursement implications.  In the case of current Medicare reimbursement for anesthesia services, the quality of care offered to Medicare beneficiaries is suffering and will become substandard in Medicare-dependent locations nationwide.  The following appeal is in support of an increase in Medicare’s anesthesia conversion factor, and strives to depict the early albeit devastating implications of the current anesthesia conversion factor insufficiencies.

Sun Health prides itself on a tradition of offering superior patient care to over 135,000 seniors in our service area.  During 2001, Sun Health treated 28,228 inpatient cases and 124,033 outpatient cases, and is well on its way to surpassing those numbers in 2002.  However, the quality of care offered to our Medicare beneficiaries is threatened by Medicare’s minimal reimbursement for anesthesia services. 

Currently, Arizona anesthesiologists serving Medicare patients receive $16.61 per unit.  In contrast, commercial payers in Arizona reimburse up to $42 per unit.  This translates into an Arizona Medicare rate that is 50-60% lower than current market value.  Accordingly, Sun Health and other Arizona facilities that serve high proportions of Medicare patients are facing a crisis in recruiting and retaining qualified anesthesiologists because serving Medicare beneficiaries results in a financial detriment to the anesthesia professional.

There is an exodus of anesthesiologists from Medicare-dependent facilities.  For instance, Walter O. Boswell Memorial Hospital, our Sun City facility, lost an unheard of 65% of its anesthesia professionals in the past year, while Del E. Webb Memorial Hospital, our Sun City West facility, lost its entire anesthesia group because of the Medicare reimbursement insufficiencies.

An inadequate supply of anesthesiologists translates into longer days for the few anesthesiologists who do stay, often upwards of 12 hours for five consecutive days of direct patient care, and often in critical care situations.  When anesthesiologists who leave Sun Health or other Medicare-dependent facilities to seek at least the median income in their profession at other hospitals, a multitude of surgical procedures must be cancelled or postponed.  This compromise to Medicare beneficiaries is inexcusable. 

While Sun Health continues to search for methods to recruit and retain anesthesiologists, we are utilizing locum tenens, or temporary, anesthesiologists.  Between this unforeseen expense and the added expense of guaranteeing after-hours coverage of staff anesthesiologists, the substandard Medicare reimbursement cost Sun Health over $2,920,000 during 2001 for anesthesia services, and is projected to cost Sun Health $1,680,000 in 2002.  This expensive subsidization solution should not be borne by community hospitals, but will continue to be an extreme financial burden as this issue intensifies for Medicare-dependent facilities nationwide.

In order to solve the anesthesia payment crisis, anesthesiologists serving Medicare beneficiaries nationwide deserve at least a 25% adjustment to the conversion factor.  Additional increases may still be required in the future.  Sun Health urges the House Ways and Means Subcommittee on Health to reform the process for physician payment under Medicare in an effort to avoid the Medicare patient anesthesia catastrophe that otherwise awaits us.

This issue is so critical to the health of our patients and to the future of our hospital system that our system appeals to Congress to take steps necessary to ensure a fair rate adjustment.  If I or any of my colleagues at Sun Health may be of assistance to you in this endeavor, including providing additional correspondence, contact with our anesthesiologists, or personally testifying in Washington, D.C., we would be pleased to do so. 

Respectfully submitted,

Leland W. Peterson
President and Chief Executive Officer

LWP:kl

cc:  Arizona Congressional delegation
      Arizona Hospital and Healthcare Association