Why your anesthesia subsidy keeps rising, and what to do about it

If your hospital pays its anesthesia group a subsidy, you have likely noticed the number tends to rise at each renewal. Some contracts call it a stipend or an income guarantee. The pattern is the same.

That is rarely a sign of bad faith. It reflects simple arithmetic: what the group can collect for its work has gone flat or down, while what it costs to staff your anesthetizing locations has gone up. The anesthesia group subsidy covers the gap.

Here are the four forces behind that gap, with the numbers, and what hospital leadership can do about them.

What an anesthesia subsidy pays for

An anesthesia group's revenue comes from billing for the cases it does. Its costs come from something else: how many locations you ask it to staff, for how many hours, and with what mix of anesthesiologists and certified registered nurse anesthetists (CRNAs). A staffed room with no case in it costs the group money and brings in nothing.

The subsidy pays for that difference, and it has grown fast. Enhance Healthcare Consulting, which tracks contracts at more than 120 hospitals, found the average subsidy had reached $185,000 per anesthetizing location for contracts signed in the prior three years. That was 30 percent more than the $132,000 average for the three years before.¹

Medicare pays less per unit than it did in 2019

Anesthesia is paid in units. Each case earns units for the procedure and for time, and the total is multiplied by a dollar amount called the conversion factor. Medicare sets its national anesthesia conversion factor each year in the Physician Fee Schedule.

That rate has been sliding. CMS set it at $22.2730 for 2019.² By 2023 it was $21.1249.³ For 2026 it is $20.4976 for most clinicians, and that figure includes a one-year 2.5 percent increase that Congress set for 2026 only.⁴ For 2027, CMS has proposed $20.2143. In the same proposal, CMS estimates a 2.5 percent rise in the Medicare Economic Index, its measure of what it costs to run a medical practice.⁵

Payer mix makes this matter more. Medicare pays far less than commercial plans for the same unit. In the American Society of Anesthesiologists (ASA) 2025 survey, Medicare's 2024 rate of $20.77 per unit was 25.2 percent of the average commercial rate.⁶ Medicare Advantage plans do little to close that gap. The same survey found they paid, on average, 108 percent of local Medicare rates.⁶ Medicare Advantage now covers 55 percent of eligible Medicare beneficiaries, up from 19 percent in 2007.⁷

So when a patient moves from a commercial plan to Medicare, each unit of the same anesthetic is paid about a quarter of the average commercial rate. The work does not change. The revenue does.

Commercial rates are harder to count on

Commercial contracts are where groups make up the difference, and those rates have been under pressure. The ASA survey found average commercial rates fell by more than 5 percent in 2024, then recovered 2.1 percent to $82.43 per unit in 2025.⁶ The survey's authors tied the 2024 drop to concern that insurers, enabled by the No Surprises Act, were pushing rates down or pushing groups out of network.⁶

The No Surprises Act took effect in 2022 and protects patients from certain surprise medical bills.⁸ When an out-of-network group and an insurer disagree on payment, either side can take the claim to federal arbitration. Groups have often done well there. Through mid-2024, providers and facilities won 80 percent of disputes, and the median award in anesthesia disputes was about twice the insurer's benchmark rate, known as the qualifying payment amount.⁸ The ASA authors credit those results with slowing, or possibly reversing, the slide in commercial rates.⁶

For a hospital, the lesson is not who is winning. It is that more of your group's income now rides on contract talks and dispute outcomes that neither of you fully controls. A group facing uncertain revenue will want more of its income guaranteed. That guarantee is your subsidy.

Anesthesia clinician pay keeps climbing

The other side of the ledger is people, and they cost more every year.

Average CRNA pay rose from $181,040 in 2019 to $231,700 in 2024, about 28 percent, according to Bureau of Labor Statistics data reported by Becker's ASC Review.⁹ The bureau's estimate for May 2025 is $248,320.¹⁰

Anesthesiologist pay has moved the same way. Doximity's annual survey put average anesthesiologist compensation at $523,277 for 2024 and $557,131 for 2025.¹¹¹² Physician pay across all specialties rose 2 percent in 2025.¹²

Keeping clinicians is its own challenge. In an American Medical Association survey of nearly 19,000 physicians in 2025, 42.2 percent of anesthesiologists reported at least a moderate likelihood of leaving their organization within two years. Only urological surgery scored higher. The figure for all physicians was 31.1 percent.¹³

Put the two trends side by side. Payment per unit is flat or falling. The cost of the people who produce those units is rising. Someone covers the difference, and the request lands on your desk.

More anesthetizing locations, not all of them busy

Anesthesia has spread well beyond the main OR, into GI suites, cath labs and interventional radiology. A national registry study found the share of anesthesia cases done outside the operating room rose from 28.3 percent in 2010 to 35.9 percent in 2014. Colonoscopy was the most common of those procedures. The cases were also shorter, with a median of 40 minutes against 86 minutes in the OR.¹⁴

Shorter cases mean fewer time units per case. And every location you add needs a clinician for its scheduled hours, whether the schedule is full or not. Unless a new location brings new cases, it raises staffing cost and spreads the same work across more rooms.¹⁵ A room staffed for a full day that runs for half a day costs the group a full day of staffing and produces about half a day of billing.

This is the driver you control most directly. Your OR schedule, your block release rules and your decisions about which sites truly need anesthesia coverage all show up in the subsidy.

How to reduce your anesthesia subsidy

You cannot change the Medicare conversion factor. You can know your own number better than anyone else at the table.

Build your own model from your own data. Start with case volume by location, payer mix, and staffed hours against billed hours. Estimate what the group should collect and what coverage should cost. Then compare that with the request. The group's pro forma may be right. You should still be able to check it.

Benchmark per anesthetizing location. A single subsidy total hides too much. Look at cost and support per location, and separate the main OR from GI, cath lab, obstetrics and other sites. Some sites earn their coverage. Others may be candidates for consolidated scheduling or a different staffing model.

Tie the subsidy to performance. Write measurable expectations into the agreement: first-case on-time starts, turnover times, coverage of add-on cases, revenue cycle results such as collection rates and denials, and regular financial reporting. Our ten questions to ask before you renew cover these terms in more detail.

Budget for the trend, not just this year. The 2027 Medicare proposal is lower than the 2026 rate. Clinician pay is still rising. Put both into your forecast before the next renewal, so the request does not arrive as a surprise.

The clinicians who cover your ORs every day want a stable arrangement too, and the best agreements come from both sides working from the same numbers.

Sources

1. Enhance Healthcare Consulting, "Anesthesia Subsidies: Putting It All On the Table," Enhance Healthcare Consulting EHC Insights, September 2022 (updated July 2025). https://enhancehc.com/ehc-insights/anesthesia-subsidies-putting-it-all-on-the-table/ ↩

2. Centers for Medicare & Medicaid Services, "Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2019," Federal Register (final rule), November 2018. https://www.federalregister.gov/documents/2018/11/23/2018-24170/medicare-program-revisions-to-payment-policies-under-the-physician-fee-schedule-and-other-revisions ↩

3. Mallorie Holguin and Patrick McGinn, "Understanding & Solving the New Reality for Anesthesia Services," VMG Health, June 2023. https://vmghealth.com/insights/blog/understanding-solving-the-new-reality-for-anesthesia-services/ ↩

4. Centers for Medicare & Medicaid Services, "Medicare and Medicaid Programs; CY 2026 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies," Federal Register (final rule), November 2025. https://www.federalregister.gov/documents/2025/11/05/2025-19787/medicare-and-medicaid-programs-cy-2026-payment-policies-under-the-physician-fee-schedule-and-other ↩

5. Centers for Medicare & Medicaid Services, "Medicare and Medicaid Programs; CY 2027 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies," Federal Register (proposed rule), July 2026. https://www.federalregister.gov/documents/2026/07/16/2026-14327/medicare-and-medicaid-programs-cy-2027-payment-policies-under-the-physician-fee-schedule-and-other ↩

6. Gordon Morewood, Jonathan Gal, Steven Schulman, Randall M. Clark, Thomas Miller and Helen Olkaba, "ASA Commercial Conversion Factor Survey Results – 2025," ASA Monitor, November 2025. https://journals.lww.com/monitor/fulltext/2025/11000/asa_commercial_conversion_factor_survey_results__.19.aspx ↩ ↩² ↩³ ↩⁴ ↩⁵

7. Meredith Freed, Jeannie Fuglesten Biniek, Anthony Damico, Nancy Ochieng and Tricia Neuman, "Medicare Advantage in 2026: Enrollment Update and Key Trends," KFF, June 2026. https://www.kff.org/medicare/medicare-advantage-in-2026-enrollment-update-and-key-trends/ ↩

8. Matt McGough, Nisha Kurani and Michelle Long, "The performance of the federal independent dispute resolution process through mid-2024," Peterson-KFF Health System Tracker, May 2025 (updated June 2025). https://www.healthsystemtracker.org/brief/the-performance-of-the-federal-independent-dispute-resolution-process-through-mid-2024/ ↩ ↩²

9. Cameron Cortigiano, "CRNA pay has increased 28% since 2019," Becker's ASC Review, December 2025. https://www.beckersasc.com/anesthesia/crna-pay-has-increased-28-since-2019/ ↩

10. U.S. Bureau of Labor Statistics, "Occupational Employment and Wage Statistics Profiles: Nurse Anesthetists (29-1151), May 2025," BLS Data Tools, May 2026. https://data.bls.gov/oesprofile/?major_group=290000&occupation=291151&measure=01&areas=INDUSTRY,STATE,MSA ↩

11. Doximity, "Doximity 2025 Physician Compensation Report," Doximity, July 2025. https://www.doximity.com/reports/physician-compensation-report/2025 ↩

12. Doximity, "Doximity 2026 Physician Compensation Report," Doximity, August 2026. https://www.doximity.com/reports/physician-compensation-report/2026 ↩ ↩²

13. Sara Berg, "Physicians in these 10 specialties are less likely to quit," American Medical Association, May 2026. https://www.ama-assn.org/practice-management/physician-health/physicians-these-10-specialties-are-less-likely-quit ↩

14. Alexander Nagrebetsky, Rodney A. Gabriel, Richard P. Dutton and Richard D. Urman, "Growth of Nonoperating Room Anesthesia Care in the United States: A Contemporary Trends Analysis," Anesthesia & Analgesia, April 2017. https://pubmed.ncbi.nlm.nih.gov/27918331/ ↩

15. Howard Greenfield, "Anesthesia 101: Anesthesia Subsidy Drivers," Enhance Healthcare Consulting EHC Insights, August 2018. https://enhancehc.com/ehc-insights/anesthesia-101-anesthesia-subsidy-drivers/ ↩