May 2, 2022

The once renowned Harvard economist, John Kenneth Galbraith, wrote that anyone who thinks writing is easy is either a terrible writer or a terrible liar. It is our considered opinion that the same could be said of anesthesia billing. Anyone who thinks it is easy to navigate the plethora of payer policy issues that impact so many anesthesia claims probably does not really understand their subtleties and nuances. Not only is anesthesia a dynamic specialty but payer responses to the changing scope of professional services are in a constant state of evolution. Only committed students of the specialty and payer policy have a fighting chance of keeping up and optimizing their clients’ collections and cash flow.

A Complexity of Rules

Fitting the complexity of anesthesia charges into a reimbursement system that was developed for surgical and medical services has involved numerous workarounds and compromises. Consider the three categories of service provided by the typical practice: time-based surgical anesthesia, obstetric anesthesia and non-time-based services paid from a surgical fee schedule. Billing software and staff knowledge must accommodate each and its unique requirements. The standard payer contract provides a conversion factor that only applies to surgical anesthesia. One should be able to validate the allowable payment by multiplying billed units by the contract rate per unit. The problem is that not all units are determined the same way. The ASA Relative Value Guide is usually a reliable reference for the basic value, but there is considerable variability in the calculation of time units and the consideration of modifier units for age, physical status and emergency. Medicare is not the only notable exception. Many other plans also calculate the payment based on actual minutes of anesthesia care. Many also don’t recognize additional units for unique patient or operative status. The industry has come to rely on software options to keep track of all the specific payer requirements.

Anesthesiologists are the only physicians who are specifically paid to medically direct non-physician providers like CRNAs. Medical direction guidelines began as a Medicare program concept, but over the years other payers have adopted similar guidelines. The net result is that for each claim a calculation of concurrency must be included to determine the number of cases a given physician was responsible for at any point during the case. While the impact of medical direction on actual payment calculations has evolved over time, suffice it to say that each payer's guidelines must be understood and incorporated into the billing software. The issue is further complicated by the fact that some plans pay for CRNA services at different rates than they pay anesthesiologists. 

Uniqueness of Obstetric Cases

Some clients wonder why we view obstetric anesthesia as a very distinct and separate subspecialty practice. There are three reasons for this. First of all, not all payers pay for obstetric anesthesia the way they pay for surgical cases; time units are often subject to unique conventions, such as two units per hour for the management of an epidural. Coding also conforms to a different paradigm: the code and base value are determined by the outcome of care. An uncomplicated epidural will generate five base value units while an epidural that goes to Cesarean section will generate eight units. When providing surgical anesthesia, one provider only manages one case at time, while the OB anesthesia provider may be responsible for multiple epidurals simultaneously—a fact that actually factors into the payment for some Medicaid plans. While a common measure of performance for surgical anesthesia is yield per unit, this does not apply to obstetric cases, where yield per case is a more appropriate measure.

When Time Doesn’t Matter

The best way to understand how anesthesia billing has changed over the past ten years is to look at the number of non-time-based services provided. These include invasive monitoring (arterial lines, CVPs, Swan-Ganz catheters and TEES), nerve blocks, USG (ultra-sonic guidance), consults and follow-up visits. The number of nerve blocks performed for orthopedic cases across the country has increased dramatically, as has the number of USG charges. Not only are these charges paid from a fee schedule instead of ASA units, but there are specific documentation and Correct Coding guidelines that have to be met.

The good news is that USG charges will be paid for interscalene, femoral and sciatic blocks, but USG is not payable when used for TAP blocks. In fact, the jury is still out on payment policy for USG; many observers predict it is just a matter of time before these payments become bundled into the block payments.  It should also be mentioned that not all of today’s commonly performed blocks are recognized by CPT. Cervical plexus, Ipack, erector spinae and quadratus lumborum blocks are still not recognized by CPT and must be billed as unlisted procedures.

Payment Verification

Where this really comes to bear is in the verification of payments. There are three concepts that must be clearly understood to evaluate performance. The first is expected. Ideally, when the original charge is calculated, the system should also calculate an expected payment based on the patient’s primary insurance. This expected should match the allowable indicated on the remittance advice, even though actual payment amounts may be different. Medicare, for example, should pay 80 percent of the allowable, unless the patient has a deductible. Other plans may have different patient responsibility percentages. The point is that, unless the billing software can calculate the expected for each type of charge, there is no way to confirm that the payment is correct.

Many billing service clients take the ability to verify payment amounts for granted, but this is often a misplaced confidence in their service. Our software, F1RSTAnesthesia, was specifically designed to accommodate all manner of payer rules so that we can monitor this and address any shortfalls with the payers. Any system that does not distinguish the three types of service explained above will never be able to generate accurate performance metrics.

Adding It All Up

It has often been noted that there are three types of knowledge. We know what we know. We know what we don’t know. But we don’t know what we don’t know. Too often, the nuances of anesthesia billing fall into this third category. When we don’t realize the significance of some aspects of anesthesia billing, we fail to appreciate their impact. We all know that one cannot manage what one does not measure. Partnering with a billing company that can track and monitor all the various aspects of anesthesia billing is even more essential in the current environment where there is constant downward pressure on reimbursement. 

If you have a question about today’s topic or would simply like to touch base, we invite you to contact your account executive or go to info@anesthesiallc.com.

With best wishes,

Tony Mira
President and CEO