Anesthesia Coding Alert

As anesthesia coders and practitioners flip their calendars to 2002, they will prepare for reimbursement based on lower conversion factors for the year. The physician fee schedule for 2002 published in the Federal Register goes into effect Jan. 1, 2002, and includes important changes that coders need to know.

Medicare and Anesthesia Changes

One conversion factor change that affects medical practitioners across the board is a lower Medicare Part B conversion factor, what Medicare will pay per unit for any given procedure. The new conversion factor for 2002 is $36.1992, a 5.4 percent reduction from the 2001 conversion factor of $38.2581. This conversion factor is the base dollar amount that is multiplied by the relative value units (RVUs) of each procedure to calculate the national Medicare payment rate for procedural codes based on RVUs.
 
Because anesthesia reimbursement is based on procedure units plus time units instead of just RVUs, anesthesia has its own conversion factor. A national average conversion factor for anesthesia (ACF) is set, but the actual local factor used by practitioners can vary depending on the area's cost of living, business expenses, insurance expenses and more. For example, nine different anesthesia conversion factors will be in effect for California in 2002, ranging from a high of $18.23 for San Francisco to a low of $16.48 for much of the rest of the state. Other highly populated states such as New York and Texas also have several different conversion factors in place. Although the anesthesia conversion factor is the same throughout states such as Montana and New Hampshire, it often is still below the national average factor. (Montana's anesthesia factor for 2002 is $15.33, and New Hampshire's is $16.29.)
 
The national average conversion factor for anesthesia (ACF) will be $16.60 effective Jan. 1, down 6.9 percent from the average ACF for 2001 of $17.83. This change will affect providers' reimbursement levels. Consider these comparisons of how the same procedure would be reimbursed based on the ACFs for 2001 and 2002.

Example 1

Coronary artery bypass graft (CABG) surgery is performed on a patient (using, for example, 33511, coronary artery bypass, vein only; two coronary venous grafts). The base amount for anesthesia during this procedure is 20 units. If the procedure takes six hours and 21 minutes to complete, that equals 26 time units (four 15-minute time units for each of six hours and two 15-minute time units for the extra 21 minutes). The 26 time units are added to the 20 base units for a total of 46 units that the anesthesiologist can charge for the procedure.
 
If the patient is on Medicare, the average pay for the procedure in 2001 would have been $820.18 ($17.83 x 46 units); the average pay in 2002 for the same procedure on a Medicare patient will be $763.60 ($16.60 x 46 units).
 
If the patient has private insurance, reimbursement can increase but still may not cover the anesthesiologist's charges. In the case above, if the average reimbursement from the private carrier is $29.10 per unit, the anesthesiologist will now receive $1,338.60 for the procedure ($29.10 x 46 units). That may appear better than the Medicare situation, but may still represent a loss for the provider. If the anesthesiologist charges $50 per unit, his or her total charge for the procedure would be $2,300, or almost $1,000 more than the carrier will reimburse for.

Example 2

Anesthesia is provided during an appendectomy (00840, anesthesia for intraperitoneal procedures in lower abdomen including laparoscopy; not otherwise specified). The appendectomy is a six-unit procedure, plus time. If the procedure lasts for two hours, the time translates to eight units, bringing the total billable units for the procedure to 14 (six base units plus eight time units). Reimbursement for the procedure in 2001 would have been $249.62 ($17.83 x 14 units); the reimbursement for 2002 will be $232.40 ($16.60 x 14 units).
 
The write-offs associated with anesthesia care can be extreme; even what seem to be small losses on single cases combine to make a big difference in the anesthesiologist's bottom line. A simple way to look at it is that for every ten units billed, the average anesthesiologist will now receive $166.00 in reimbursement instead of $178.30.

Pain-Management Conversions

Fortunately for pain-management practitioners, procedures they perform often are reimbursed based on the overall conversion factor instead of the ACF. Although payment for these services, such as 64400*-64484 (diagnostic and therapeutic nerve blocks) or 20552-20553 (trigger point injections), will still be lower than in 2001, it won't decrease as much as other anesthesia services.
 
Again, the exact factor will vary by area (as with the ACF), since the $36.1992 figure is an average amount rather than an across-the-board implementation.