Anesthesia Billing & Reimbursement

1. Anesthesia Billing & Reimbursement Sho Me da Money Jerry Stonemetz MD

2. Billing Basics • There are many clinical settings within anesthesia that have unique billing concerns. • OB • Critical Care • Pain Management • PEC • Here we will concentrate on billing for anesthesia for surgical procedures.

3. Billing Basics • Every surgical procedure generates three fees • Facility Fee: charged by the hospital/surgical center for the OR and support services • Surgeon’s Professional Fee • Anesthesiologists Professional Fee

4. Billing Basics • The each procedure has a certain value in units based on: • Surgical Procedure (Base Units) • Length of Procedure (Time Units) • Special Circumstances, Procedures or Techniques (Qualifying Circumstances Units) • BU + TU + QCU = Total Units

5. Billing Basics • Our fee is then calculated by: • Total Units x Conversion Factor = $$$

6. Base Units • Based on CPT (Current Procedural Terminology) codes. • Surgical versus Anesthesia CPT codes • CMS (Center for Medicare Services) defines the relative value units (RVUs) for each Anesthesia CPT code with input from the ASA. • Base units includes the preop assessment and preparation time.

7. Base Units

8. Time Units • Anesthesia time starts when the anesthesia practitioner begins to prepare the patient for anesthesia services in the operating room or the equivalent area and ends when the patient may be placed safely under postoperative care. • This excludes time for preoperative assessment and preop, placement of lines or blocks. • May include transport if documented.

9. Time Units • One time unit is equal to 15 mintues • The CMS now effectively treats time units as a continuous variable, thus • 180 min = 12 units • 185 min = 12.33 units • The time factor means each anesthetic is unique, making anesthesia billing the most complex in medicine.

10. Qualifying Circumstance/Modifiers • Allows units for provision of anesthesia services under particularly difficult circumstances that necessitate the skills of a physician beyond those usually required. • Emergencies, deliberate hypotension, hypothermia. • Allows units for certain specific procedures • Arterial lines, central lines, PA catheters, regional blocks (with GA), TEE

11. Conversion Factor • Unless reimbursement is non-par, this is essentially determined by the payer. • Managed care organizations negotiate discounted conversion factors with participating providers. CMS is usually among the lowest. • Reimbursement for Medical Assistance is lower still. • Indigent typically = No Pay.

12. Conversion Factor • According to the ASA 2016 Survey of Annual Fees • The national mean conversion factor among commercial payers is $71.02/unit ($71.92/unit in 2015) Stead et al. Commercial Fees Paid for Anesthesia Services - 2016. ASA Newsletter 2016; 80 (10)

13. Conversion Factor • Highest CF in survey $182/unit • 25th percentile in survey $32/unit • CMS pays $21.99/unit (national average) • Medicaid – less than $5/unit • Blended Unit Rate – Total revenue/total units • $100,000/2000 units = $50 per unit

14. Anesthesia Professional Fees • Incisional Hernia for 120 minutes with epidural for postop pain management: • BU (6) + TU (8) + QC (8) = 22 units • Conversion Factor = $70/unit • Charges = 22 units x $70/unit = $1540

15. Anesthesia Professional Fees • Incisional Hernia (22 units) - $1540 charge • Best Managed Care Contract ($70/unit) = $1540 • CareFirst ($40/unit) = $880 • Medicare ($19/unit) = $418 • Medical Assistance = $45 • Blended Unit Value ($40/unit) = $880

16. Corporate Compliance Program • Written Policies and Procedures • Assign a Compliance Officer • Conduct Effective Training and Education • Develop Effective Lines of Communication • Auditing and Monitoring • Enforce Standards through Publicized Guidelines • Respond to Detected Offenses

17. Stonemetz Tip! • Tip 1: When evaluating practices, ask what is the blended unit value. • Each group should know this value • Be very cautious accepting position unless you are reimbursed according to the blended unit value.

18. Distribution of Revenue • How group revenue will be distributed to individual physicians can either be a straight salary or a productivity based compensation model. • Straight salary is often offered to new associates, while productivity based compensation is reserved for partners. • Productivity based compensation models lie on a continuum between two extremes

19. Hunter Model • You eat what you kill! • Your income is based strictly on the revenue from the cases you do. • Pros • Strong incentive to increase efficiency and take on more challenging cases. Associated with high productivity. • Cons • Makes time spent on administrative duties, scholarly activities and overnight call relatively costly. • The risk of patient to patient payer variability is taken on by individual physicians. This can be particularly costly for new and relatively naïve associates.

20. Time-Based Compensation • Compensation is based on the number of hours or days worked. • Pros • Easy to incorporate additional compensation for call, overtime, administrative time and scholarly work. • Spreads inter-patient payer risk. • Cons • Less incentive for challenging cases and high efficiency. Associated with lower productivity.

21. Unit Variability

22. Side by Side Comparison • 7 Lap Choles • Start at 07:00 / End by 16:00. • (7 u + 4 u)7 cases • Generate 77 units • Bill out $3080 that day. • 2 AAA • Start at 07:00 / End at 18:00. • (12 u + 20 u)2 cases • Generate 64 units • Bill out $2560 that day (finish 2 hours later). Assume a blended unit value of $40/unit

23. Unit Variability • Confounding Factors – we have no control over: • Surgical duration (faster & shorter cases more productive). • Type of surgery (base units). • Scheduling (OR ends at noon)* • OB anesthesia – very unique billing environment (typically not a money maker).

24. Stonemetz Tip! • Tip 1: When evaluating practices, ask what is the blended unit value. • Tip 2: Every system will be gamed. • Make certain there is not a situation where you will be taken advantage of by the savvy partners. • Look for practices that rewards productivity if you want to work hard. • Make certain there is a benefit to doing the ‘big cases’. • Do they reimburse for QC units?

25. Looking for a job • Location! Location! Location! • Check out the Payer Mix (demographics). • Is very expensive to move after the first year (buy-in). • What if there are no openings at the group you want to join? • Do not use an agent to find a position. • Every occupation becomes a job; Find your passion.

26. Type of Practice • All MD practice • Lower income • Potentially higher malpractice risk • All CRNA practice • High call percentage • Putting out fires • Hybrid MD/CRNA • Highest income potential • Lower call percentage

27. Stonemetz Tip • Tip 1: When evaluating practices, ask what is the blended unit value. • Tip 2: Every system will be gamed. • Tip 3: Make sure you like your partners. • A corporation is a marriage. • Divorce is always ugly. • The worse investment you will ever make is to choose the wrong spouse or wrong partners.

28. Contract Negotiation • Do not hire an attorney! • Look for: • Group needs to purchase your malpractice tail regardless of reason you leave. • Watch out for non-competes. • Do your negotiations on the Addendum (Attachment), not the body of the contract. • Save the attorney for the partnership agreement.

29. Happy Hunting!!