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Coding & Billing
Medicare Billing for Anesthesia Done Right
Jay Horowitz
Publish Date: December 14, 2007   |  Tags:   Financial Management

Medicare billing fraud is a phrase you'll never want to hear, much less see, in a formal document delivered to your practice or facility. Yet in no area are the billing rules and laws more arcane and more fraught with peril than those that dictate the proper billing of anesthesia services.

Whether you're a CRNA, an anesthesiologist who has assigned billing rights to a group or facility, or an owner or partner of an anesthesia group, you'll need to know the implications of the Tax Equity and Fiscal Responsibility Act (TEFRA) regulations and how they affect your exposure to fraud charges; the proper billing procedures for medical direction; some alternative billing procedures to decrease your legal exposure while maintaining economic stability; and the implications for the provision of clinical anesthesia services at your facility.

No more than four
Current TEFRA rules limit to a maximum of four the number of concurrent cases for which an anesthesiologist can medically direct and bill. In every case, the anesthesiologist must:

    perform a pre-anesthesia exam and evaluation;
  • prescribe the anesthesia plan;
  • personally participate in the most demanding procedures of the anesthesia plan, including induction and emergence, if applicable;
  • ensure that a qualified anesthetist performs any procedures in the anesthesia plan that he doesn't perform himself;
  • monitor the course of anesthesia administration at frequent intervals;
  • remain physically present and available for immediate diagnosis and treatment of emergencies; and
  • provide indicated post-anesthesia care.

In addition to this, clinicians providing anesthesia services under medical direction must have uninterrupted, immediate availability of an anesthesiologist at all times. This anesthesiologist can't have ongoing medical direction responsibilities that would preclude him from temporarily assuming responsibility for an additional case. There are, however, six exceptions:

  • addressing an emergency of short duration in the immediate area;
  • placing an epidural or caudal for labor pain;
  • periodic, not continuous, monitoring of a laboring patient;
  • receiving patients in the OR for the next surgery;
  • checking on or discharging patients from the PACU; and
  • coordinating scheduling matters.

The rules are onerous, but before 1986 there was economic incentive to follow them. The Anesthesia Care Team (ACT) model — which requires an anesthesiologist to supervise a CRNA or AA during a procedure — allowed reimbursement at 120 percent of what could be collected as a solo provider. Unfortunately, many practices found it easier to certify that they met the requirements rather than to actually meet them. With reimbursement capped at 100 percent since 1998, that economic incentive no longer exists.

Are you committing billing fraud?
In general, "failing to meet the requirements and bill correctly constitutes billing fraud," says Alan Schabes, JD, a member of the Health Care Practice Group and a partner in the Cleveland law firm of Benesch, Friedlander, Coplan & Aronoff. "If services provided by an anesthesiologist or a certified registered nurse anesthetist are not billed correctly, whether it be by a billing clerk in a hospital or group practice or by the clinicians themselves, any or all involved in providing the services and responsible for billing may be liable under the Federal False Claims Act."

Ultimately, anesthesiologists and CRNAs may face federal prosecution if they don't follow billing laws, no matter how complicated or ill-suited the laws may seem from the realities of providing anesthesia care in the clinical setting. Moreover, the "empty head, full heart" defense is rarely recognized in court in situations where the provider knew or should have known how to bill correctly.

Failing to pay attention to how anesthesia services are billed can lead to a disastrous outcome. Violation of the False Claims Act can lead to a penalty of $5,500 to $11,000 per claim and three times the amount of damages that the federal government sustains. Violations of federal anti-kickback laws can result in a felony with a maximum fine of $25,000, imprisonment of up to five years or both. Conviction can also lead to exclusion from Medicare and Medicaid, effectively putting the practice out of business.

How much money is involved?
The total federal reimbursement is the same whether the anesthesia is performed by an anesthesiologist, by a non-medically directed CRNA or in a medically directed ACT model. When billing, the anesthesia provider must indicate via modifier the individual administering the anesthetic, which establishes for Medicare if one or two bills will be associated with the anesthetic service. In these cases an anesthesiologist or practice must use one of the following modifiers to bill Medicare:

  • AA. Anesthesia services personally performed by the anesthesiologist, 100 percent of allowable reimbursement per case.
  • AD. Medical supervision by a physician; more than four concurrent anesthesia services, less than 100 percent of allowable reimbursement per case.
  • QY. Medical direction of one CRNA, both in one case, 100 percent of allowable reimbursement.
  • QK. Medical direction of two, three or four concurrent anesthesia procedures involving qualified individuals, 50 percent of allowable reimbursement per case, two, three or four cases.

A CRNA must use one of the following modifiers when billing Medicare for anesthesia services:

  • QX. CRNA service with medical direction by a physician, 50 percent of allowable reimbursement for one case.
  • QZ. CRNA service without medical direction by a physician, 100 percent of allowable reimbursement for one case.

Supervision and medical direction needs vs. perceptions
One problem often encountered by facilities is that their actual needs differ from what is thought to be required to provide a safe patient environment.

When using CRNA services in a facility, the issue of "supervision" often presents itself. According to Black's Law Dictionary, direct supervision means to be physically present or within an immediate distance, such as on the same floor, and available to respond to the needs of someone. It doesn't mention instructing the practitioner how to do the supervised job, only that the physician should be "available."

Supervision laws vary from state to state, but all bear the common legal meaning that the licensed independent practitioner (LIP) who orders the administration of an anesthetic must be "available" to the CRNA. No state laws mention the LIP managing the anesthetic. State laws recognize that CRNAs are experts in anesthesia administration, not the prescribing LIP. However, it is evident that what appears to be straightforward when we say "supervision" is not always that way in practice.

The arcane TEFRA billing requirements add to the confusion. Many practitioners believe that they've been grossly misinterpreted as standards of care for clinical practice rather than the steps necessary to receive payment for services rendered. Case law is clear that the liability of a surgeon supervising a CRNA doesn't extend to responsibility for anesthesia malpractice unless the surgeon attempts to direct or control the administration of the anesthetic.

Therefore, control determines liability. Surgeon liability is identical with both types of anesthesia providers as noted by the American Association of Nurse Anesthetists and the American Society of Anesthesiologists. The surgeon's duty to his patient is to select a qualified anesthesia practitioner, regardless of the credentials of the provider.

Authority for CRNA practice and actual liability
CRNAs are the only nurse practitioners held to the identical standard of care as their physician counterparts. The authority of a CRNA to practice, unlike that of a physician's assistant, for example, doesn't derive from the delegated authority of a physician.

CRNAs practice under their own authority, as embodied in state law, even in states that don't recognize CRNAs as licensed independent practitioners. That's the reason that no supervision law suggests that the prescribing licensed independent practitioner has or should have actual control of an anesthetic administered by a CRNA. It is never a legal defense for a CRNA to excuse an adverse outcome as the result of following orders from a physician. CRNAs, even when practicing with an anesthesiologist, are fully responsible for their own actions.

This is why CRNAs have their own malpractice insurance with the same limits set by the insurers of anesthesiologists. The law is quite clear that the function of a CRNA is the practice of nursing, even when it's identical to the function of an anesthesiologist practicing medicine.

So why isn't CRNA practice the same in every state? For the same reason that medical practice is not identical in every state. Each state sets its own requirements for practice and licensing. Even so, no state mandates that a CRNA must work with an anesthesiologist. Supervision laws infer that CRNAs will consult with their physician colleagues as necessary. Yet they don't require that CRNAs accept direction on the management of the actual anesthetic from another practitioner. This is why the law recognizes that a surgeon isn't responsible for the conduct or outcome of an anesthetic unless the physician attempts to control the administration of the anesthetic.

Over the last two decades several studies have tried to show a difference in outcomes between various anesthesia providers. The older ones, produced during periods of heightened friction between anesthesiologists and CRNAs, received attention even by the editors of the journals in which the studies were published for the unsound science on which they were based. In the end, Robert Stoelting, MD, former vice president for scientific affairs of the ASA, had it right in December 1996 when he wrote in Anesthesia & Analgesia: "The participation of certified registered nurse anesthetists in delivery of anesthesia care would have ceased many years ago if there was evidence that this participation resulted in less favorable outcomes compared with anesthesia personally administered by an anesthesiologist."

Keep it real
As with any business practice, choice of anesthesia providers for any facility should reflect the actual, not the perceived, needs of the facility. If your anesthesia providers use the ACT model and invoices for anesthesia services are submitted with the QK (medically directed) modifier, then they must follow all of the TEFRA rules at all times. Checking a box on an anesthesia record or having a clerical staff member apply a sticker indicating compliance will be insufficient if evidence exists that doesn't support this documentation. Invoices for anesthesia services submitted with the QZ (non-medically directed) modifier won't change your clinical practice paradigm. The practical and clinical aspects of supervision and collaboration, which ensure your patients get the best care, is unchanged. So is the compensation for services rendered.