Health Law Blog - Healthcare Legal Issues

Posts Tagged ‘Anesthesia Billing’

Anesthesia Service Profit Centers – OIG Advisory Opinion 13-14

Monday, November 25th, 2013

Anesthesia Billing Arrangements – New OIG Advisory Opinion 13-14

anesthesia billing advisory opinionThe Office of Inspector General has released a new advisory opinion addressing the implications of a contract for anesthesia services between an anesthesiology group and a psychiatry group.  OIG Advisory Opinion No. 13-15 was published on November 15, 2013.  The opinion illustrates the OIG’s difficulty with arrangements between existing anesthesiology groups who are forced to forego the right to bill for their professional fees in order to provide anesthesia services for patients of a provider who is not historically in the business of providing anesthesia services.  This type of arrangement seems to be arising more frequently as provider groups search for ways to capitalize on additional revenue streams from their existing patient base.

Opinion 13-15 involved a psychiatry group who proposed a  contract with an anesthesiology group to provide additional anesthesia coverage for patients of the psychiatry group who were undergoing electroconclusive therapy procedures.  Under the contract, the anesthesiology group reassigned its rights to bill and collect for its anesthesia services to the psychiatry group.  The anesthesia group agreed to accept a fixed per diem rate for providing anesthesia services for the psychiatry group’s patients.  The arrangement permitted the psychiatry group to profit from the difference between anesthesia billings and the per diem fee paid to the anesthesia group.

The OIG found that this arrangement created a risk of violating the Anti-Kickback Statute.  The OIG noted that the per diem amounts the psychiatry group would pay to the anesthesia group would not qualify for protection under the safe harbor for personal services and management contracts for a number of reasons, including the aggregate compensation to be paid over the term of the agreement would be neither set in advance nor consistent with fair market value.  Additionally, the safe harbor protects only payments made by a principal (here, the psychiatry group) to an agent (here, the anesthesia group).  The safe harbor does not protect the remuneration from the anesthesia group to the psychiatry group that is of issue in this case.

After determining that there was no safe harbor available to protect the arrangement, the OIG went on to analyze the risk that the arrangement would present under the Anti-Kickback Statute.  The OIG concluded that the arrangement appears to be designed to permit the psychiatry group to indirectly receive compensation, in the form of a portion of requestor’s anesthesia services revenues, in return for the psychiatry group’s referrals of patients to the anesthesia group.  The OIG concluded that the arrangement presents a significant risk that the opportunity to generate profit on anesthesia services would be in return for referrals.

Advisory Opinion 13-15 is just the latest in a long line of releases that casts a shadow on attempts of one provider group to profit from captive referrals for services that it does not ordinarily provide.  The OIG seems to permit the legitimate extension of services by groups like the psychiatry group at issue in 13-15.  The OIG had no difficulty with the psychiatry providing anesthesia services by a psychiatrist member of the psychiatry group who was also qualified to provide anesthesia services.  To contrast, the OIG is obviously suspicious of arrangements that permit the non-anesthesia group to profit from the services of the anesthesia group.  The consequences of a violation under the Anti-Kickback Statute can include both criminal and civil damages.  As a result, providers need to be extremely cautious about entering into the type of arrangement that appears contrived to permit a profit to be made from services that are normally billed by an anesthesia provider.

Please feel free to contact John Fisher, CHC, CCEP, in the Ruder Ware Health Care Industry Focus Group for more information.

Medically Directed Anesthesia Conditions For Payment

Wednesday, May 8th, 2013

Conditions For Payment Of Medically Directed Anesthesia

 medically directed anesthesia coverageIn my previous article regarding anesthesia billing practices, I neglected to mention another risk associated with over billing for medically directed anesthesia.  Engaging in the described practices tends to raise issues beyond the “double billing” issue that is directly raised.  This type of issue can also raise further scrutiny of the source bills.  For example, an insurer may decide to perform an extended audit of billings as a result of the billing anomalies that I described in my previous article.  The review might disclose a systematic problem documenting all of the prerequisites that permit the billing for medically directed services.

 In order to bill medically directed anesthesia services, seven primary elements need to be clearly indicated in the medical record:

  1. The physician must perform a pre-anesthetic examination and evaluation;
  2. The physician must prescribe the anesthesia care;
  3. The physician must personally participate in the most demanding aspects of the anesthesia plan, including, if applicable, induction and emergence;
  4. The physician must assure that any procedures in the anesthesia plan, that he or she does not perform, are performed by a qualified individual as defined in the operating instructions;
  5. The physician must monitor the course of anesthesia administration at frequent intervals;
  6. The physician must remain physically present and available for immediate diagnosis and treatment of emergencies; and
  7. The physician must provide indicated post-anesthesia care.

If one or more of these elements is not indicated in the medical record, the claim may be denied altogether, sometimes for both the physician and the CRNA services.  The physician alone is responsible for documenting each of these activities in the chart.  Like everything else, if it is not in the chart, it did not take place.


You can see how the originally risky billing practice could trigger a further audit and in turn uncover deficiencies in documenting the conditions for medically directed reimbursement.  If a systematic error is made in documenting the seven elements, there can be significant additional financial exposure to the group.

Anesthesia Billing Company Costly Advise Medically Directed Anesthesia

Monday, January 23rd, 2012

Agressive Anesthesia Billing Advice Can Be Costly

I wanted to alert anesthesia groups to what I consider to be some very bad advice that is being provid ed by some billing consultants.  If taken, the advice could put your group in the midst of a lawsuit with a third-party payor or even a claim of insurance fraud under state insurance laws.

By now, pretty much everyone understands the general rule for billing multiple medically directed CRNAs.  It is industry standard to compensate a provider for up to four medically directed CRNAs; provided that the seven basis elements for medical direction are performed and documents in the patient’s record.  Industry standard and Medicare regulation permit reimbursement for multiple medical directions, but total reimbursement is never allowed in amounts that would exceed 100% of what the anesthesiologist would be paid if he or she had performed the service on their own.

 Medicare imposes the 100% restriction by compensating both the anesthesiologist and the CRNA 50% each when the anesthesiologist is medically directing up to four CRNAs.  The overall limitation is generally followed in the private insurance context by either reimbursing 100% of the anesthesiologist charge or by paying 100% of the first claim to be processed.

Some billing companies have begun giving extremely aggressive, and I believe extremely risky, advice to their anesthesia clients.  In some cases, there may be a history of the anesthesia group “self-discounting” their medically directed cases so they cannot be viewed as double billing for medically directed cases.  Double billing would occur if the group billed and collected for 100% of both the anesthesiologist and the CRNAs charge.  This is fairly clear.  Billing for both providers can be justified in some instances, but the presence of both providers must be medically directed and well documented in the medical record.  Special coding modifiers are used to indicate when a claim is being made for 100% of both the CRNA and anesthesiologist’s time.

Some aggressive billing companies will recommend that the anesthesia group end a previous practice of pre-discounting their bills without notice to the insurance provider.  This is sometimes done by the billing company without first advising the client.  This practice has the effect of greatly increasing revenues because it in effect double bills the insurer for medically directed cases.  The case coding remains the same as the group previously coded; indicating a medically directed case.  The effective per unit cost doubles virtually overnight.  In some cases, it may continue undetected.  Usually the insurance company will eventually notice that anesthesia costs are increasing.  At the point of discovery, the insurance company will seek recoupment of amounts that it has overpaid.  Most contracts will permit the insurance company to withhold future payments to offset previously overpaid amounts.

Even though the group may have relied on the advice of a billing company, the group really has no meaningful defense once the insurance company discovers that a change in billing practice without prior notice resulted in a significant overpayment.  The amount of overpayment can climb into the millions of dollars before it is discovered.

 If this practice took place involving the Medicare program, there is no question that it would create liability under the False Claims Act and could possibly even trigger criminal charges for false billing.  Most states have insurance fraud statutes that create civil and/or criminal liability for submitting false or fraudulent insurance claims that could apply to the type of practice.

The Federal False Claims Act could expose the practice to three times the actual total amount of the improperly billed claims plus between $5,000 and $11,000 per claim.  There can be hundreds of claims involved, so the dollar amount of exposure can be financially devastating.  The application of state insurance law statutes will vary by state.  However, the financial and criminal exposure from this type of practice can be significant under state law as well.

The group will always remain “on the hook” for the consequences of billing for their services; even when they were advised to undertake the practice and often even when the practice was commenced without their knowledge.  You may have a lawsuit against the billing company, but the insurer, the OIG, DOJ or state enforcement agencies will look primarily to the physician or the group when problems arise.

If you have been presented with “unique” billing opportunities that promise to net your increased revenue, take great care.  It is always possible that you can legitimately amend your practices to net more revenue.  You should be cautious before implementing any changes in billing practices.  If you are being promised something that may be too good to be true, it probably is.  If you have any doubts, contact a health care attorney before changing your practices.

Once the issue is raised by a third party, you will necessarily be on the defensive.  The additional revenues that you receive along the way will not come close to justifying the pain and anguish you will go through following detection.

Be careful of who you choose to do your billing.  Make certain that you bind them to a contract that restricts the type of activity described in this article.  Make certain that you have an ongoing dialogue with your billing company about their practices.  Make certain that you periodically audit their activities under your compliance program.

John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
500 First Street, Suite 8000
P.O. Box 8050
Wausau, WI 54402-8050

Tel 715.845.4336
Fax 715.845.2718

Ruder Ware is a member of Meritas Law Firms Worldwide

The Health Care Law Blog is made available by Ruder Ware for educational purposes and to provide a general understanding of some of the legal issues relating to the health care industry. This site does not provide specific legal advice and you should not use the information contained on this site to address your specific situation without consulting with legal counsel that is well versed in health care law and regulation. By using the Health Care Law Blog site you understand that there is no attorney client relationship between you and Ruder Ware or any individual attorney. Postings on this site do not represent the views of our clients. This site links to other information resources on the Internet; these sites are not endorsed or supported by Ruder Ware, and Ruder Ware does not vouch for the accuracy or reliability of any information provided therein. For further information regarding the articles on this blog, contact Ruder Ware through our primary website.