October 5, 2020

Driving to the office—even in this age of working remotely—is not an unusual activity for millions of Americans.  However, it is still considered an exception to the rule for one group of healthcare workers.  Anesthesiologists and anesthetists tend to be found primarily in large facilities, such as hospitals and surgery centers, rather than an office.  Occasionally, however, some of these providers will indeed find themselves driving to a doctor’s office to perform an anesthetic service at the request of a surgeon or pain physician.  While these services are usually billable, there are a few things that our readers should understand before agreeing to provide office-based anesthesia (OBA).

Surveying the Space

Many of our clients stay on the lookout for opportunities to increase their presence and expand their business.  For this reason, extending anesthesia to the office setting is sometimes seen as a good option for adding another revenue stream.  By this, we do not mean that an anesthesia group will attempt to own or lease an office themselves; rather, they will go into an office that has been secured by others. 

When anesthesia practitioners provide services in the office setting, those services will be listed as place of service (POS) 11, “office,” on the claim form.  Some have wondered if this is correct, since POS 11 generally allows greater payment based on Medicare’s RBRVS payment calculation.  This higher payment is meant to cover the cost of overhead incurred by those owning or leasing the space.  Accordingly, some are concerned that, since the anesthesia provider is not the one who owns or leases the office, placing POS 11 on the anesthesia claim would inappropriately elicit greater payment to a provider who does not incur such overhead.  However, in the case of anesthesia services, POS 11 would not mean greater payment, as the anesthesia codes are based on a different calculation than that used for non-anesthesia services.  Medicare payments for anesthesia services are the same, adjusted for geographical differences, regardless of the setting.

Setting Up Shop

Providing anesthesia in a doctor’s office does come with certain challenges not normally found in the facility setting.  For example, does the office have its own anesthesia machine or will you have to bring your own mobile device?  Will the office be providing the drugs/narcotics or is that something you will have to both purchase and bring with you?  What about other supplies?  How do you arrange for payment for all these items?  These are important questions; and while there may be a lack of clarity in government guidance pertaining to some of these questions, there are some definitive answers that we can provide.  From a Medicare perspective, here is what we can say:

• Generally, Medicare will not pay for most supplies in the office setting, as the cost of such supplies has already been included in the practice expense (PE) relative value unit (RVU) of the payment calculation, pursuant to the Medicare Claims Processing Manual (MCPM), Chapter 12, Section 20.4.4.  You might protest that, since anesthesia code values are not calculated with such costs in mind, OBA providers should be able to make a separate claim for such supplies.  However, we find no provision in the regulations that would allow for this exception.
   
• Drugs, however, are not categorized as supplies.  Therefore, certain agents used by anesthesia providers, such as Propofol, can be reimbursed separately, in addition to the anesthesia service.  However, you cannot bill separately for local anesthesia drugs, such as Lidocaine.  Remember, in order to bill for a covered drug/agent in the OBA setting, it must represent an expense to you; that is, you or your group must have purchased it.
   
• Some OBA providers have tried to bill separately for oxygen supply.  However, from a Medicare perspective, there really is no code that fully captures this component.  The codes that most closely mirror supplying oxygen are the E codes, as found in the HCPCS coding manual.  CMS has classified E codes as coming under the durable medical equipment (DME) category, and DME services are not billable in POS 11 to Medicare Part B.

So, as you think about providing anesthesia in the office setting, you’ll need to determine which essentials to your service are already in place at the office versus the essentials that you will have to purchase, transport and provide.  Calculating these potential costs should be part of any decision on the financial viability of this new line of business. 

As part of this calculation, you should keep in mind that some commercial plans may pay anesthesia providers for certain purchased supplies utilized in the office setting.  We know of one group that executed a separate contract with a third-party payer that involved a flat rate, which covered their costs of drugs and supplies, as well as the anesthesia service itself.   So, payer mix and payer negotiations may be important factors in your consideration of whether you should move forward with an OBA opportunity.

Scrutinizing the Statutes

Our readers will recognize that OBA is a significantly different undertaking than providing anesthesia in a facility.  Hospitals and surgery centers are locations where anesthesia—including general anesthesia—is routinely provided every day.  There are procedures and equipment in place to deal with an emergency in these settings that may not be present in a doctor’s office.  Rescue capacity and proximity to a health facility are therefore crucial in the successful and safe operation of an office that acts as an anesthetizing location.  Because of this concern for patient safety and the potential for mishap, statutes and/or rules have been promulgated that seek to restrict or regulate OBA—at least in some jurisdictions.

While there are no federal rules on certifying offices for anesthesia, there are state rules.  Many states have a three-tiered system governing OBA, where different levels of anesthesia require a different level of licensing, inspection, and/or certification.  In such states, general anesthesia would obviously require the highest level of certification and inspection.  If you are in a state that has such rules and your anesthetizing location doesn’t meet the state’s certification requirements, the federal government can take the position that the services you rendered to Medicare or Medicaid patients at that location are non-reimbursable. 

Accordingly, before you sign an agreement to supply anesthesia services at an office location, we recommend you have your local healthcare attorney to (a) thoroughly check the state’s current OBA rules, if any, and (b) determine if the proposed anesthetizing location meets the state’s requirements.  It may also be wise to check with your medical malpractice carrier to see what rate hikes might be incurred by adding OBA to your line of business.  Finally, it may profit you to review the ASA’s own guidelines for OBA, which can be accessed by clicking on the following link: https://www.asahq.org/standards-and-guidelines/guidelines-for-office-based-anesthesia.

As always, we are here to help you in your analysis of such business decisions.  If you have questions about OBA from a coding, financial or compliance perspective, please reach out to your account executive or contact us at info@anesthesiallc.com.

With best wishes,

Tony Mira
President and CEO