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Appreciating the Complexity of Anesthesia Billing

August 4, 2023


Anesthesia is not your average bear from the billing perspective. Unlike most other specialties, complex rules have been put into place to account for the appropriate coding and payment of anesthesia claims. Due to the complexity of this process, it pays to outsource the billing component to an experienced team of revenue cycle management professionals. 

The percentage of anesthesia practices that have elected to outsource their billing has increased dramatically over the past decade or more. What is it about anesthesia billing that makes it so difficult to execute effectively? There was a time when many practices—even some very small ones—thought all they needed was a few good employees and an effective software package to optimize their cash flow. The fact is those days are long gone. Now, it takes a significant team of qualified accounts receivable specialists to effectively navigate the complicated and ever-changing waters of American medical payment. Why is this? It is time to do a quick review of the evolution of anesthesia billing challenges.

Anesthesia Billing Is Unlike Any Other

Anesthesia billing is unique and quite different from that of all other medical specialties. Since payment for all other services is based on CPT codes and fee schedules, the anesthesia charge and payment calculation implied that payers had to develop their own way of interpreting anesthesia claims. The base value plus time unit calculation has resulted in a number of interesting payment variations. Some payers, such as Medicare, refused to accept certain claim features, such as the use of modifiers for age and physical status. Many insurance plans refused to accept the concept of rounding time units up to the nearest whole unit; the old Health Care Financing Administration (HCFA) had long since decided that anesthesia services would be paid based on the actual minute of time reported. As individual payer conventions evolved, it became increasingly important to submit claims based on the payers’ unique claim requirements; and it was even more important to verify that claims were, in fact, being paid accurately.

Take the example of a surgical hernia repair. Because there is just one surgical CPT code reflecting this service, all surgeons submitting a claim to a given payer will receive the same payment; but each anesthesia claim will be for a different amount based on the speed of the surgeon, the physical status of the patient and other patient and operative factors. One reason that anesthesia billing software is so complex is that it must accommodate not only the standard ASA billing parameters but all the specific payer variants. As a result, all possible and potential details of a service must be captured so that the necessary requirements can be filtered out for each specific claim.

No Opportunity to Validate Patient Demographics

The submission of insurance claims requires that the details of the service provided be married to the patient demographics. In other words, the goal of billing is to get an appropriate claim to a valid payer as expeditiously as possible. The problem is that anesthesia practices must rely on the accuracy of hospital admissions staff to ensure that they have the necessary details of patient name, address and insurance coverage. Over the years, studies have consistently shown that at least 15 percent of demographic information obtained by hospital staff is inaccurate. The reality is that, unlike office-based medical practices that have the opportunity to validate patient insurance coverage, anesthesia practices must work with what they are given.

This is one of the specific challenges of hospital-based provider practices. It would be very useful if, for example, the hospital made a copy of a patient’s insurance card and shared it with the anesthesia providers; but this very rarely happens. The result is that the anesthesia billing staff must employ a variety of validation tools to enhance the accuracy of their claims submission. Verification of Medicaid coverage can be a particularly onerous example of this. A particularly frustrating consequence of this reality is the number of patients who are labeled as self-pay. Based on our verification checks, we find many times that these patients actually have Medicaid or are pending Medicaid coverage.

Anesthesia Value Is Not Always Obvious to Patients

As Americans we inevitably prioritize all the bills we receive. Mortgage and utility bills tend to receive the highest priority for obvious reasons. No one wants to lose their house, their power or their internet service. Medical bills, by contrast, tend to be viewed as discretionary. In fact, many a patient has the perception that providers should be grateful and satisfied with the payment they receive from insurance.

The concept of the anesthesia value proposition is almost a paradox. Anesthesia providers love to tell their patients that they are at greater risk getting to the hospital than undergoing general anesthesia in the operating room. While this can be very reassuring to patients, it leaves them with the impression that they are not under any risk relative to their surgical procedure. The irony is that anesthesia providers do more to enhance the patients’ comfort and safety than the surgeon. In fact, more can go wrong due to anesthesia problems than anything the surgeon can do. The problem is that most patients simply do not appreciate the true value of the specialty. 

The economics of American medicine is particularly impactful to anesthesia. If one goes to Best Buy to purchase a television, one cannot leave the store without paying the indicated price. In medicine, however, services are provided without any meaningful discussion of price. It is only after the service has been provided that the insurance will determine what the service should be worth. In other words, it is the mix of patient insurances that ultimately determines what a practice will be paid for its services.

Why Do So Many Anesthesia Practices Outsource Their Billing?

American medicine is subject to an economic battleground. Providers are constantly struggling to get paid for the valuable services they provide while payers are always exploring all possible means to limit the cost of American medicine. It is a never ending and forever evolving state of affairs in which individual providers and provider groups have little or no leverage. Outsourcing is simply the best and most logical option. By contracting with a large national billing company, anesthesia groups are able to take advantage of the tools and resources that have been amassed over the history of the organization. There is no better example of this than Coronis Health.

With best wishes, 

Rita Astani

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