Sean Callagy - Attorney and Entrepreneur: services

Are Hospitals Entitled to Reimbursement for anesthesia services?

The following article was written by Callagy Law’s Legal Team, and will focus on many common questions and concerns surrounding new developments, legal matters, and other procedures within the field of healthcare law Medical Revenue Recovery, PIP, Workers Compensation, and Commercial Insurance. Our mission is to answer any questions and give knowledge to many different aspects of these matters.

Anesthesia is a way to control pain during a surgery or procedure by using medicine called anesthetics. General anesthesia is used to ensure comfort and safety during certain types of procedures. Anesthesia effects and helps control a patient’s breathing, blood pressure, blood flow, and heart rate/rhythm, among other things.

When you get general anesthesia, in layman’s terms, “put under,” you are completely unconscious and immobilized. General anesthesia may be administered via gas, an IV line or a combination of both. Typically, major/complex procedures that require a long period of time to perform require general anesthesia.

A patient may present to an Ambulatory Surgery Center (ASC) or a Hospital facility to undergo these types of major/complex procedures. In a case where a patient presents to a Hospital facility to undergo a procedure, the Hospital provides the anesthesia and necessary supplies. The hospital provides the equipment, supplies and sometimes staff required to safely and effectively deliver anesthesia services during the procedure. The specific resources that the hospital provides vary depending upon the type of anesthesia the patient requires and the patient’s particular medical condition. The staff will also vary according to the hospital. Sometimes the staff are outside anesthesiologists working in the hospital, and sometimes, they are hospital employees.

So how is this billed to the insurance carrier? In the case of the outside anesthesiologist, they will bill separately for his or her professional services, as will your surgeon and the other physicians who provide services for you while you are hospitalized. They will bill for part of the services, called the professional component. The hospital will issue a separate bill for all of the services and items the hospital provided during your hospitalization and that bill will include charges for the hospital’s role in the delivery of anesthesia services based on the specific type anesthesia services a patient receives. The hospital’s bill is for what’s called the technical or facility component.

An insurance carrier may attempt to argue that the Hospital improperly submitted what constitutes duplicate billing of anesthesia for the date(s) of service that are at issue. Usually, this is based upon the fact that the anesthesiologist, who administered the anesthesia services on the date(s) in question, had already submitted his/her independent bills for the “same” instance of anesthesia services for the procedure. This is incorrect, as both the anesthesiologist and hospital are each billing only for their portion of the services provided.

The insurance carrier may also attempt to argue that pursuant to N.J.A.C. 11:3-29.4(o)(7) anesthesia materials, including the anesthetic itself, and any materials, whether disposal or reusable, necessary for its administration are not entitled to a separate charge. As such, the Hospital facility would not be entitled to reimbursement for anesthesia because anesthesia services were “bundled” into the main surgical code. However, this is not always the case.

There are several arguments that Callagy Law has successfully advanced where arbitrators in NJ No-Fault (PIP) arbitrations have determined that such anesthesia services are separately reimbursable to the hospital. Namely, if the procedure was an inpatient procedure, if it was an emergency procedure, or if it was an outpatient surgical procedure, where the main surgical code billed was not on the Hospital Outpatient Surgical Facility (HOSF) fee schedule. In each of these examples, there are strong arguments to be made that the technical/facility portion of anesthesia should have been reimbursed to the Hospital, despite the carrier’s arguments to the contrary.

Therefore, Hospital facilities are sometimes entitled to separate reimbursement for anesthesia services in addition to the anesthesiologist’s separate and distinct bill for his/her own personal services.

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Someone is injured in a motor vehicle accident, and they are treated in a hospital emergency room. As part of the evaluation of the patient, an X-Ray of the patient’s lumbar spine (lower back area), an MRI of the brain, and a CAT-SCAN of the left leg are all performed. The PIP carrier pays the hospital 100% of one of the radiology codes, and 50% of the 2 subsequent codes. This is what is known as the Multiple Modality Reduction formula, or “MMR.” Application of MMR in this context is misplaced and the carrier is underpaying the hospital in applying it.

An understanding of the reason for the MMR formula is helpful to understanding why it should not apply to radiology treatment provided as part of a hospital emergency room encounter.

Simply stated, MMR applies to surgical services provided “in the same operative session.” The concept is simple. When a surgeon performs more than one procedure during the same operative session, certain actions performed initially do not have to be repeated for the subsequent procedures. When a patient undergoes a surgery, and as part of the operative session undergoes various procedures, a PIP carrier is permitted to reduce the total amount paid by paying half of the amount due for subsequent procedures performed in the same session, because certain steps are not repeated in each subsequent procedure. The principle is that it takes less time and resources to perform three procedures in the same session than if those same three procedures were performed separately in three independent operative sessions.

For example, a patient undergoes right shoulder arthroscopic surgery for rotator cuff tears. The surgery includes diagnostic arthroscopy, rotator cuff repair, extensive debridement, and manipulation procedures of that shoulder. PIP insurers must pay 100% of the amount due for the primary procedure, and then they may apply a 50% reduction pursuant to the MMR formula toward payment of the other procedures performed in the same operative session. The formula makes sense in that context. The patient is prepared for surgery and certain efficiencies are created for the subsequent procedures. (Please note there are some exceptions to the MMR application for physicians.)

These efficiencies, however, do not occur with radiological services. There is no time or resources saved by doing the X-Ray, the MRI and the Cat Scan in the same session as opposed to separate “radiological sessions.” Accordingly, to apply MMR to different radiology treatment provided as part of a hospital emergency room encounter is completely misplaced.

In sum, MMR makes sense if a patient undergoes surgery and multiple procedures are performed in the same operative session. It makes no sense, however, to apply this reduction to radiology treatment performed as part of a hospital Emergency Room encounter. We have been very successful arguing against the application of MMR in this context, and rightfully so.