Anesthesiology Billing

Proper Reimbursement And Avoiding an RAC Audit

Author’s Corner

In his white paper, Somanathan B. Nathan, Client Operations Director, discusses anesthesiology practices’ unique vulnerability to Medicare audits. Somanathan also reviews the most common audit problems and how they can be prevented.

Please click on the video to the right to learn more about the author, his paper’s key takeaways, and his motivation for writing on this subject.

To discuss this white paper at length, please contact Somanathan using his information provided at the bottom of the page.

Anesthesiology practices are particularly vulnerable to Medicare audits because of the unique complexities of the billing process when it comes to time calculation, coding, and other areas. The federal government’s Recovery Audit Contractors (RAC) program fully understands this vulnerability and is making the most of it, with aggressive audits to recoup any money that the government deems was issued inappropriately.

The federal government has instituted the RAC program by contracting with non-governmental firms to provide audits, setting up an incentive plan whereby the auditors only get paid when they identify billing mistakes within a practice and recoup Medicare overpayments.

This sets the stage for a very aggressive auditing approach, with the federal False Claims Act setting penalties as high as $11,000 per claim, plus three times the claim amount, plus legal fees. Because the Tax Relief and Health Care Act of 2006 made the RAC program permanent, these aggressive audits will only continue over the coming years.

Common Audit Problems

A summary of the billing areas that are commonly cited as problems is included below. These billing areas are frequent stumbling blocks to ensuring an anesthesiology practice is reimbursed fully and appropriately for its work.

Time Coding Medical Direction Ancillary Services
OB Anesthesia Medical Necessity Incidental Services Unbundling

Key Points to Prevent an audit

Some of the information provided here is new and critical to proper coding and billing. Generally, these guidelines apply to all carriers (governmental as well as commercial).

Anesthesia is a professional service and is billed using the CMS1500 claim form. The anesthesia claim is calculated as follows:

  • Base Units (value assigned by the American Society of Anesthesia to each procedure/surgery) plus
  • Time Units (actual time of surgery as calculated by start and stop time) plus
  • Special Units (modifying units such as age of patient, medical condition, etc.)

If the surgery is a non-covered service, the anesthesia is also non-covered. In addition, coverage of certain procedures is limited by the diagnosis. If the diagnosis listed on the claim is not a covered service based on Medicare guidelines, the procedure will be denied. It is important to make sure that the diagnosis is coded to the highest level of specificity. In addition, it is important that the diagnosis match the surgeon’s operative notes.

Accurate Coding and Documentation are Vital

Good communication between the anesthesiologist and the billing staff is the key to proper anesthesia coding and billing. It all comes down to accurate and thorough documentation. Inaccurate or inadequately documented anesthesia records lead to inaccurate (false) claims. Providing complete and accurate information to the billing staff promotes compliance and accelerates the billing and collection process. Inconsistencies in the anesthesia record are potentially false claims. For example:

  • Documentation showing the same physician in two places at one time
  • CRNA with overlapping case times
  • Services marked on a billing slip but no accompanying documentation in the anesthesia record

Base Units

Each anesthesia CPT code has an established value assigned based on the complexity of the surgery. The ASA assigns and updates base units on an annual basis.

Pay attention to the items that Medicare considers integral parts of the anesthesia service and are included in the procedure. These services are paid as part of the “base units” and should not be billed separately.

Time Units

Errors and inconsistencies in time reporting continue to be a problem area. For example, if a surgical procedure starts at 9:05 a.m. and finishes at 10:05 a.m., an anesthesiologist might add five minutes to his or her time to include pre-op preparation, and so the billing company bills for one hour and five minutes. An auditor finds that the nurse’s notes say the procedure was only an hour and will claim that the anesthesiologist “padded” the time.

Most insurance carriers allow one time unit for each 15-minute interval, or fraction thereof, starting from the time the physician begins to prepare the patient for induction and ending when the patient may safely be placed under post-operative supervision and the anesthesiologist is no longer in personal attendance.

Special Units

Special Units, or modifying units, are additional units that may be added to the total billable units’ calculation if certain conditions are met. Examples:

  • 99100 – Patient is extreme age, one year or over 70 years -- additional one unit
  • 99116 – Anesthesia complicated by total body hypothermia – additional five units
  • 99135 – Anesthesia complicated by controlled hypotension – additional five units
  • 99140 – Anesthesia complicated by emergency condition – additional two units

Invasive monitoring devices

Placement of arterial, central venous and pulmonary artery catheters and TEE are not included in the base units. However, Medicare does include routine monitoring on TEE on heart cases in the base units.


Consultations for surgical patients are considered part of the anesthesia service and are not separately billable. However, consultations for pain management patients are allowable services.

Billing for personally performed services

Under Medicare regulations, an anesthesia procedure is considered “personally performed” by the anesthesiologist if the physician is continuously involved in a single case. When billing for personally performed physician services (AA modifier), the physician may not leave the operating room to perform other medical procedures.

The anesthesiologist must remain physically present in the operating room during the entire procedure. If the anesthesiologist is not continuously involved with the case, then it is not considered a personally performed service and should be reported using the medical direction modifiers.

Medical Supervision

The words "medical supervision" and "medical direction" are often used interchangeably, but for Medicare and many other insurance carriers for reimbursement purposes, the two terms mean different things. Understanding the distinctions is vitally important to accurate billing.

Concurrent procedure

Concurrency is defined as the maximum number of procedures the anesthesiologist is medically directing or supervising and whether these other procedures overlap each other, irrespective of the patient’s insurance carrier.

Anesthesia modifiers

Modifiers are two-digit indicators used to modify payment of a procedure code, assist in determining appropriate coverage, or identify the detail on the claim. Every anesthesia procedure billed to all carriers must include one of the following anesthesia modifiers:

Modifier Description
-AA Anesthesia services personally performed by the anesthesiologist
-QY Medical direction of one CRNA by an anesthesiologist
-QK Medical direction of 2, 3 or 4 concurrent anesthesia procedures
-AD Supervision, more than four procedures


There are two types of RAC audits today: 1) automated, where no medical record is requested, and 2) complex, where the medical records will be requested. The auditors can look back three years from the date the claim was paid. The RAC audit firms are using a pre-existing database of medical specialty claims to profile physician billing behavior and to identify providers submitting false claims.

The point is that RAC audits are a reality in medical practice today, and wise practitioners keep this reality top of mind. It is important to have a billing partner like Vee Healthtek that is working to ensure claim accuracy and avoidance of audit issues for our clients.


Meet the Author

Somanathan B. Nathan - Client Operations Director

Somanathan B. Nathan is a Senior Manager of Revenue Cycle Management at Vee Healthtek. Somanathan heads Vee Healthtek’s Salem unit, which consists of 300 associates, 14 team leaders, and four managers. He is involved in onsite and offshore transition and works on projects involving pre-registration, payment posting, credit balance resolution, and accounts receivables for hospitals and physicians.