Anesthesia Business Consultants: Communique summer07

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GAIN YOUR FAIR SHARE: GAINSHARING MAKES A COMEBACK . . . . 1

MGMA/ASA ANESTHESIA COST SURVEY . . . . . . . . . . . . . . . . . 2

DIVIDING THE FINANCIAL POTENTIAL OF ULTRASOUND . . . . . . . 8

CODING CORNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

EVENT CALENDAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Continued on page 4

SUMMER

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� INS IDE TH IS I SSUE :

Have you heard the news in connectionwith the “Rewarding Results” pay for perform-ance study funded by The Robert WoodJohnson Foundation, the CaliforniaHealthCare Foundation and theCommonwealth Fund?

No, it’s not that the three-year long studyresulted in a finding that payment of financialincentives to physicians motivates change.Rather, it’s the fact that someone convincedthese non-profits to throw money at a “study”of something so patently obvious. (If you closeyour eyes you might actually hear the sound ofa newsboy on a corner near you shouting“Extra! Extra! People motivated by money!”)Aren’t the federal and state anti-kickback andself-referral laws based on studies which showthat physicians’ practice patterns are affectedby monetary gain?

All kidding aside (and, sorry if this articleis a bit disjointed, as I’m simultaneously typinga $30 million grant proposal for a proposedstudy on whether mammals have hair), theanesthesia community should not look a gifthorse in the mouth: The pay for performance

movement (nicknamed “P4P”), supported bypayors and pundits alike, together with theDepartment of Health and Human Services’Office of Inspector General’s (“OIG”) 2005advisory opinions on gainsharing, signal thatthe time is ripe for anesthesia groups to nego-tiate for a share of the upside they can create.

New Communiqué WebsiteAnesthesia Business Consultants, LLC (ABC) is proud to announce the launch of a newCommuniqué website. This website will offer features not previously available.Communiqué continues to feature articles focusing on the latest hot topics foranesthesiologists, nurse anesthetists, pain management specialists and anesthesiapractice administrators. We look forward to providing you with many more years ofcompliance, coding and practice management news through Communiqué. Please logon to the Communiqué site at www.communiquenews.com.

GAIN YOUR FAIRSHARE: GAINSHARINGMAKES A COMEBACK

By Mark F.Weiss, J.D.

CommNEWS_summer07.qxd:CommNEWS_Winter04.hls 7/12/07 1:22 PM

Surveys, surveys, surveys…..how canthey help you and how can they hurt you? Asa wise person once said, “s/he who has thedata rules” so you better be one of the peoplewho has it. And you better also do your partto make it as representative as possible. TheMedical Group Management Association

(MGMA) Anesthesia AdministrationAssembly (AAA) and the American Societyof Anesthesiologists (ASA) are committed tothis mantra, which is why they have collabo-rated once again on the third annual 2006Cost Survey for Anesthesiology Practices (basedon 2005 data).

In the third version, participation hasincreased to 149 responses (129 usable) rep-resenting over 3400 doctors, or nearly tenpercent (10%) of active ASA members. Inaddition, there were 64 responses (52 usable)to this year’s inaugural pain managementsurvey, representing well over 100 pain man-

THE COMMUNIQUE SUMMER 2007 PAGE 2

As the spring conference schedulewinds downmany of us find ourselves ask-ing the same question. Some excellentspeakers have made some very interestingpresentations on a wide variety of practicemanagement topics at the Conference onPractice management in Phoenix and theAnesthesia Administrators’ Assembly inSeattle, but it is not quite clear what the bigissues are. Or, to put it another way, it isnot entirely obvious that there is, in fact,one overarching issue of the day. Thenational policy issues like Medicare reim-bursement cuts and Pay for Performancecontinue to be a source of concern and dis-cussion but one does not sense a highdegree of urgency to take up the cause.While the ASA and other organizationslike the Anesthesia Business Group aredoing a great job of keeping us focused onrealistic global strategies, it is pretty clearthat most anesthesiologists and CRNAs aremuch more focused at a different level. Yesit is true that anesthesia practices are wor-ried about having enough good people tomeet the service requirements of their cus-tomers, but what they are really worriedabout is the potential impact of the surgi-center across the street or and the future oftheir current stipend.

Historians have suggested that the

march of civilization involves a regularswinging of the pendulum of public opin-ion from the general to the specific. Peoplebecome inspired by the big movements,civil rights and the rise of global terrorism,but they ultimately end up acting on theirspecific problems and challenges. Perhapswe are just in one of those periods of tran-sition. It is hard to stay focused on the bigpicture when the local view looks so turbu-lent. When a long-term exclusive contractat a county hospital in Bakersfield,California is given to a staffing companyfrom upstate New York with no experiencein the state, one begins to wonder what isreally driving such decisions. There is somuch anecdoctal evidence of hospitaladministrations turning on their anesthesiapractices is it any wonder many anesthesi-ologists are getting pretty anxious.

Our authors understand just how tech-nical and specific the issues affecting ourclients’ practices have become. They repre-sent a diversity of regional perspectives,historical areas of focus and distinct van-tage points. Marc Weiss gives us a westernlegal perspective on the concept of gain-sharing, a notion that many of us find sointriguing but which attorneys have triedto tell us is so problematic given the Starkguidelines. Needless to say, Marc’s ideas

provide some verythought-provokingoptions. Shena Scottwrites to us from thedeep south on a topic of key interest to any-one who has had to ask for financialsupport: what is the value of national sur-vey information and how can we all helpmake it more relevant. Our internal staffshare some of their insights as we all getready for the implementation of a new setof diagnosis codes. We also have somethoughts for you to ponder with regard tothe potential of ultrasound to guide yournerve blocks.

As always, we hope you find our articlesrelevant and timely as you sort out the crit-ical issues for your particular practice,wherever it may be. Our only goal is to pro-vide you with reliable and valuable options.If there are issues that you would like ourpanel of experts to address please let usknow.We always love to hear from you andto know what matters in your next of thewoods.

Sincerely,

Tony Mira, CEO

ISSUES OF THE DAY

MGMA/ASA ANESTHESIACOST SURVEY

Shena J. Scott, MBA, FACMPEImmediate Past President, MGMA AAA and Executive Director,

Brevard Anesthesia Services, PA, Melbourne, FL


agement physicians. As participation hasgrown, information has been broken downinto more tables. New in 2006 were both aseparate set of academic tables within theanesthesiology section and a completely sep-arate section of pain tables. Participation iskey to not only ensuring the representationof the data but also in having sufficientresponses to “slice and dice” it in enoughways to make it meaningful for respondentsand others who would use it. With increasedparticipation in the future, we hope toimprove the number of columns withinexisting anesthesia tables, to add sections andtables in response to member needs, and to“grow” the pain management section.

The anesthesiology survey is dividedinto eleven different table groupings for eachof seven different “sections”of anesthesiologypractices. Within each section, tables are thenbroken into sub-sections (represented bycolumns within the table) for relevant break-points within that sub-section. MGMA has apolicy that it will not report any statistic withless than ten (10) responses, which is why youwill see some asterisks (*) populating somefields, indicating that there were insufficientresponses in this sub-category to report thisstatistic (supporting the argument as to whyincreased participation allows the data to be“sliced and diced” more ways). The firstnumber in a table indicates the “section” itrepresents and the numbers following theperiod represent the table number. Thus thedata points you find in Table 1.4a should bethe same data points you find in Table 5.4a(assuming there were sufficient responses topopulate 5.4a), except that the group beingrepresented in 1.4a is “all practices” respond-ing and the group being represented in 5.4a isdivided into columns based upon the staffingmodel of the practice.

The sections in the 2006 anesthesia cost sur-vey book are as follows:

1. All Practices2. 10 or Less FTE Physicians (smallpractices)

3. 11 to 30 FTE Physicians (mediumpractices)

4. 31 or more FTE Physicians (largepractices)

5. By Staffing Model — physician only,< 1 CRNA per FTE Physician (physi-cian heavy care teams), and >1

CRNA per FTE Physician (anesthetistheavy care teams)

6. By Government Payer Mix (30% orless, 31 to 49%, 50% or greater)

7. By Number of Trauma Centers8. Academic Only Practices

Within each section are several tablegroupings. Some of the important statisticsyou will on a per FTE physician basis are:

• ASA units• Procedures• Charges• Revenue• Total operating cost, with and withoutnon-physician practitioner (NPP) cost

• NPP cost• Physician compensation cost• Physician benefit cost

You will also find many of the same sta-tistics listed above as a percent of total medical,per anesthetizing location, per procedure type(e.g. surgical cases, labor epidurals, C-sections,other flat fees, etc.) and per ASA unit.

There is also a section revealing thenumber of groups who are receiving com-pensation from hospitals for the services theyprovide (often called a “stipend”) and theamount of compensation typically received.While numbers such as these can only beused as background, it is interesting to notethe high percentage (57%) of groups whomust now rely on such compensation inorder to be able to recruit and retainproviders in a marketplace that is unable toprovide such compensation frommore tradi-tional sources, such as patients and thirdparty payers. The median amount thesegroups report receiving from hospitals is over$1.2 MM, a fairly significant jump from the2005 report.

In the new pain management section,you will find many of the same types of sta-tistics broken down on a per physician andper procedure basis. From the report you willbe able to discern a typical reimbursementfor specific procedure types such as: newpatient consults/visits; established patientvisits; all other E&M visits; single shotepidurals; transforaminals; sympatheticblocks; facet joint nerve blocks; trigger pointinjections; nerve simulators/vertebranposty,and all other chronic pain procedures. Youwill also be able to understand the typicalmix of consults versus procedures, staffingratios, patients seen per day, and more.

In short, there is a wealth of informa-tion contained within these reports.Hospitals use it, managed care companiesuse it, and the government uses it. MGMAand ASA recognize this fact and have part-nered together in an effort to provide themost comprehensive and representativesample they can for, and in representationof, anesthesiology and pain managementpractices. The validity of the data, and theability to break it down into usable formats,depends on participation from all types ofgroups and practice styles across the coun-try. In an effort to enhance participation,we will be moving to an “every other year”format after this year. MGMA is trying toencourage online submission in an effort toachieve a variety of goals, including:enhancing accuracy of data with built inedits, improving turnaround time, creatingthe ability to integrate data from this surveywith data from other surveys (such as thePhysician Compensation and ProductionSurvey) down the road, and enhancing theability to provide trending information toindividual practices. Participants receive afree copy of the survey. Meanwhile, thosewho did not participate last year can pur-chase a copy of the 2006 version at a specialaffiliate price for ASAmembers by calling 1-877-ASK-MGMA or by visiting eitherwww.mgma.com or the practice manage-ment section of the ASA website(www.asahq.org).



What is Gainsharing?

Gainsharing is a pay for performancemodel particularly applicable to the anes-thesia-hospital relationship. Let’s take a stepback and look at what gainsharing is, andisn’t, on a larger scale.

First, gainsharing is not a healthcareindustry-specific notion. In fact, it is a toolthat has had general application acrossindustry lines for many years. Roughlyspeaking, gainsharing is a compensationsystem that aims to involve workers inimproving performance and that, by way ofmeasurement, shares between labor andmanagement the financial gains made.

Gainsharing is not a new concepteither. One of the earliest cited examples inthe United States is a system designed in the1930’s by a union official named JosephScanlon in order to save steel workers’ jobs.The “Scanlon Plan” encouraged workers toadopt more efficient production methodsby giving them half of the savings generat-ed.

What differentiates gainsharing fromother motivational type programs, such asquality circles, six sigma programs and totalquality management is that those tools arenot linked directly to compensation, whilegainsharing is.

Gainsharing is not profit sharing; thesystem need not have anything to do withprofitability, and is generally keyed to lower-ing costs. But, it can be linked to anynumber of factors, including quicker per-formance, exceeding quality baselines andthe like. Finally, gainsharing is not individ-ual-specific; rather, it is applied to groups ofworkers, the aim being to modify overallbehavior, and therefore output, howevermeasured.

Although there is no one single type ofgainsharing in healthcare, in general, theterm has been used to describe programs toalign physician incentives with those of hos-pitals by offering physicians a share of thehospital’s variable cost savings. Of course,gainsharing can also include payment for

measured quality improvement and forquicker case turnaround times, as well as forother cost savings or improvements.

Gainsharing and the OIG

The normally independent reimburse-ment mechanisms applied to hospitals, on theone hand, and physicians, on the other hand,are a hotbed for potential gainsharingarrangements. From the perspective ofMedicare, hospitals are paid on the basis ofDRGs (Diagnosis Related Groupings); inother words, a fixed fee not tied to the actualcost of providing care, while physicians arepaid on a fee for service basis. Under this sys-tem, in the absence of gainsharing, physiciansare not affected by the actual cost of hospitalservices, supplies and devices, and therefore,have no incentive to economize or standard-ize. Gainsharing conforms, to a certainextent, the otherwise differing incentives.

In the early 1990’s, I designed what werethen novel programs for anesthesia groupclients, contracting with hospitals for a signif-icant share of the savings resulting fromchanges in anesthesiologists’ practice patterns.But by the end of the decade, the regulatorywinds changed.

In July 1999, the Office of Inspector

General (“OIG”) of the Department of Healthand Human Services released a SpecialAdvisory Bulletin entitled “GainsharingArrangements and CMPs [“civil monetarypenalties”] for Hospital Payments toPhysicians to Reduce or Limit Services toBeneficiaries.” Special Advisory Bulletins aredesigned to warn of practices that potentiallyimplicate the fraud and abuse laws subject toenforcement by the OIG.

The Bulletin focused on the SocialSecurity Act’s provisions that permit the gov-ernment to impose a civil monetary penalty,that is, a fine that can be levied administra-tively, if a hospital makes payment to aphysician as an inducement to reduce or limitservices to Medicare or Medicaid beneficiar-ies under the physician’s care. CMPs can betremendous: $2,000 per affected patient plus$50,000 per act plus up to three times theamount of the payment offered or made tothe physicians as an inducement. Althoughthe OIG conceded in the Bulletin that gain-sharing may result in benefits withoutimpacting the care received by Medicare orMedicaid patients, it held fast to the positionthat, nonetheless, gainsharing violated theCMP provision as the inducement itself vio-lated the law. The OIG’s position was that achange in the law was required in order for an


GAIN YOUR FAIR SHARE: GAINSHARING MAKES A COMEBACKContinued from page 1


exception to be made permitting gainsharing.Furthermore, the OIG stated that it wouldnot issue advisory opinions (that is, givesanction to a specific deal) regarding gain-sharing programs.

Although focused on presenting theissues under the Social Security Act’s civilmonetary penalty provisions, the Bulletinmentioned that gainsharing also raises con-cerns under the federal antikickback statute, astatue that is also enforced by the OIG. Theantikickback statute prohibits remuneration ifat least one purpose of the remuneration is toinduce referrals of items or services reim-bursable under a federal healthcare program.It’s easy to see that if the physician groupreceiving gainsharing payments also referspatients to the paying facility, there is a poten-tial kickback.

A False Start?

Despite its 1999 position, in January2001, the OIG issued Advisory Opinion No.01-01 to address a situation in which a hospi-tal proposed to share with a group of cardiacsurgeons a percentage of the hospital’s costsavings arising from the surgeons’ use of spe-cific supplies and medications duringdesignated cardiac surgery procedures.Advisory opinions, although binding only onthe parties to the specific transactions, give auseful glimpse into the considerations thegovernment takes into account; that informa-tion helps guide the design of transactions.

Although the OIG concluded that theproposed arrangement violated both theCMP law and the antikickback law, it deter-mined that it would not impose sanctions –this is the language of a favorable opinion.

The cardiac surgery group in the deal wasthe dominant such group practicing from thehospital. The hospital expected to include theother cardiac surgeons practicing at the hos-pital in similar gainsharing programs. Thehospital engaged a third party to administerthe gainsharing program. The programadministrator conducted a study and identi-fied nineteen specific cost savingopportunities, which were reviewed for med-ical appropriateness. The nineteenopportunities were broken down into threecategories: (1) opening packaged items only

as needed during a procedure; (2) the substi-tution, in whole or in part, of less costly itemsfor the items currently being used by the sur-geons; and (3) the use of a certainpreoperative (should this be: pre-operative?peri-operative?) medication only in respect ofhigh-risk patients.

The program included safeguardsintended to protect against inappropriatereductions in services, including the use ofhistoric practice patterns to establish floorsbelow which no cost savings would be sharedand the adoption of clinical indicators thathad to be followed to assure that services anditems would not inappropriately curtailed inan attempt to share in the gains.

The program tracked the savings on eachof the nineteen categories and split the savingsequally between the surgery group and thehospital. Patients would be given prior writ-ten notice of the gainsharing program.

Following the 2001 opinion, the OIGremained silent in terms of advisory opinionson gainsharing for four years. Despite the factthat Advisory Opinion 01-01 gave a greenlight to the specific deal, most hospitalsremained concerned that the general scope ofthe 1999 Bulletin continued to reflect the gov-ernment’s disapproval of gainsharingarrangements and, therefore, shied away fromentering into such deals.

Change in the Tide: 2005

In January and February, 2005, the OIGbroke its four year silence and issued six con-secutive Advisory Opinions, numbered 05-01through 05-06, on gainsharing arrangements,finding that all six were structured so as not towarrant either the imposition of CivilMonetary Penalties or prosecution for viola-tion of the antikickback law.

Advisory Opinion No. 05-01 involved anagreement between a hospital and a cardiacsurgery group. The hospital engaged an inde-pendent third party to study potential costsavings and to administer, the gainsharingprogram for a fixed monthly fee. The sur-geons were to share up to fifty percent of thehospital’s savings resulting from the adoptionof a number of recommendations to curb theinappropriate use or waste of medical sup-plies. The recommendations were groupedinto four categories: (1) opening certain pack-aged items only as needed; (2) performingblood cross-matching only as needed; (3) sub-stitution, in whole or in part, of less costlyitems for items currently being used; and (4)product standardization of certain cardiacdevices where medically appropriate.

The OIG stated that the proposedarrangement contains safeguards intended toprotect against inappropriate reductions in


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GAIN YOUR FAIR SHARE: GAINSHARING MAKES A COMEBACK

services, including the use of floors belowwhich no savings would accrue to the surgicalgroup, as well as the continued availability ofthe same selection of devices as before thegainsharing arrangements were implemented.

Advisory Opinion No. 05-02 involved anagreement between a hospital and five inde-pendent cardiology groups. The hospitalengaged an independent third party to collectdata and analyze and manage the gainsharingprogram in return for a fixed monthly fee.Under the program, the hospital will pay eachgroup a share of the first year cost savingsdirectly attributable to specific changes in thegroup’s cardiac catheterization laboratorypractices to curb inappropriate use or waste ofmedical supplies.

The eighteen recommendations devel-oped by the third party programmanager canbe grouped into two categories: The first,standardization of the types of cardiaccatheterization devices (stents, balloons, inter-ventional guidewires and catheters, vascularclosure devices, diagnostic devices, pacemak-ers, and defibrillators) used by the group, wasto be safeguarded by a process in which theindividual cardiologists will make a patient-by-patient determination of the mostappropriate device; the full range of deviceswill continue to be available. The second, lim-iting the use of certain vascular closure devicesto an “as needed” basis for inpatient coronaryinterventional procedures and diagnostic pro-cedures, was to be safeguarded though the useof objective historical and clinical measuresreasonably related to the practices and thepatient population at the hospital to establisha “floor” beyond which no savings wouldaccrue to the groups.

Advisory Opinion No. 05-03 involved anagreement between a hospital and a cardiacsurgery group. Again, this would be a fifty-fifty split of the first year savings from theadoption of cost saving recommendationsdescribed as fitting within four categories, (1)open items as needed, including the dispos-able components of the cell-saver unit; (2)performing blood cross-matching only asneeded; (3) substitution of less costly productswith no appreciable clinical significance; and

(4) product standardization of heart valves.A floor beneath which no benefit would

accrue to the surgical group was to apply inthe case of the cell-saver and blood cross-matching recommendations. With respect tothe product standardization recommenda-tions for cardiac devices, the surgical groupcertified that the individual surgeons willmake a patient-by-patient determination ofthe most appropriate device and that the fullrange of cardiac devices will continue to beavailable. The OIG found no appreciable clin-ical significance (and, therefore, no potentialfor violation of the CMP law) in the proposedopen as needed policy for items other than thecell saver disposables and in the substitutionof less costly items.

Advisory Opinion No. 05-04 involved aseries of similar agreements between a hospi-tal and a number of cardiology groupswhereby each group would receive a share ofthe first year cost savings directly attributableto specific changes in the specific group’scardiac catheterization laboratory practices.The program administrator, to be paid a flatmonthly fee, identified cost saving opportuni-ties for each group after studying theirpractice patterns. In general, the recommen-dations involved changing practices to curbinappropriate use or waste of medical sup-plies. Specifically, there would be (1)standardization of cardiac catheterization

devices (stents, balloons, interventionalguidewires and catheters, vascular closure,diagnostic devices, pacemakers, and defibrilla-tors), where medically appropriate; (2)limitation on the use of certain vascular clo-sure devices to an “as needed” basis, with thedevices being readily available in the proce-dure room (which the groups certified will notadversely affect patient care); and (3) the sub-stitution of less costly contrast agents.

With respect to the “as needed” use ofvascular closure devices and the products sub-stitution recommendations, the gainsharingdeal would utilize objective historical andclinical measures to establish a “floor” beyondwhich no savings would accrue to any of thecardiology groups. With respect to the pro-posed product substitutionrecommendations, the administrator identi-fied national averages and historic patterns ofuse and established quality thresholds beyondwhich no cost savings will be credited. Inaddition, the physicians would continue tohave available the full range of products andwill make a determination of substitution ona patient by patient basis.

Advisory Opinion No. 05-05 involved anarrangement between a hospital and a cardi-ology group whereby the group wouldreceive a percentage of the first year cost sav-ings resulting from adopting therecommendations developed by a programadministrator engaged by the hospital for afixed fee. As in Opinion No. 05-04, the sub-ject is reducing cost in the cardiaccatheterization lab.

Divided into two categories, the first cat-egory consists of product standardizationwhere medically appropriate. The secondconsists of limiting the use of vascular clo-sure devices to an “as needed” basis forinpatient coronary interventional proceduresand diagnostic procedures.

The OIG found there were multiple safe-guards in place, including the fact that thevascular closure devices subject to limitationwould remain readily available and that thereduction in use will not adversely affectpatient care; and the fact that, with respect tothe product standardization recommenda-



tion, the individual cardiologists will make apatient-by-patient determination of themost appropriate device and the availabilityof the full range of devices will not be com-promised by the product standardization.Additionally, the OIG was satisfied with thefact that the proposed arrangement wouldutilize objective historical and clinical meas-ures reasonably to establish a “floor” beyondwhich no savings would accrue to the cardi-ology group.

Advisory Opinion No. 05-06 involved ahospital’s proposal to share with a group ofcardiac surgeons the first year cost savings toresult from the implementation of costreduction measures. The program adminis-trator engaged by the hospital to implementand oversee the gainsharing program stud-ied historical practices and identified twentyseven recommendations to curb inappro-priate and wasteful use of medical supplies.Grouped into four categories, recommenda-tions concerned (1) adopting an open asneeded policy for packaged items; (2) limit-ing the use of certain supplies to those casesfor which they are needed; (3) substitutingless costly items; and (4) product standardi-zation of certain cardiac devices andsupplies where medically appropriate.

In respect of the open as needed policy,the OIG found that the insubstantial time ittakes to open a package of supplies is not aperceptible reduction or limitation in theprovision of items or services to patientssufficient to trigger the CMP. With respectto the specific product substitution recom-mendations, the OIG determined that thesubstitutions will have no appreciable clini-cal significance and therefore do notconstitute a perceptible reduction or limita-tion in the provision of items or services topatients sufficient to trigger the CMP.

Even though the remaining recommen-dations involving limitations on use ofcertain surgical supplies and product stan-dardization would trigger the CMP, the OIGconcluded that it would not seek to imposesanctions, as the proposed arrangementprotects against inappropriate reductions inservices by ensuring that individual physi-cians will still have available the sameselection of cardiac devices.

A Stark Contrast?

On the basis of the six gainsharing OIGopinions, it’s obvious that a gainsharing pro-grams can be legally structured – at least asconcerns the statutes within the OIG’spurview. The problem, of course, is that“Stark,” the federal “self-referral” prohibition,is outside of the OIG’s range of authority.

For Stark to be triggered, a physicianmust make a referral, in respect of a Medicarebeneficiary, for certain designated health serv-ices. The referral must be to an entity inwhich the physician, or certain family mem-bers, has a direct or indirect financialrelationship.

For many physician groups, notably thecardiology and cardiac surgery groups whichreceived the favorable OIG opinions discussedabove, Stark is a significant problem, as thosephysicians clearly refer patients to the gain-sharing-paying hospitals.

On the other hand, for anesthesia groupsthat provide perioperative services only, thechance of a Stark issue is slight, as it is unlike-ly that the group’s physicians will makereferrals – a necessary element of a Stark vio-lation. However, for groups providing,whether alone or in addition to perioperativeservices, chronic pain management servicesthat refer patients to the gainsharing facility,the Stark issue requires detailed analysis.

It should also be noted that state law maycontain similar, or different, antikickback andself-referral prohibitions. If so, solving theStark and federal antikickback/CMP issues isonly part of the compliance analysis that mustbe performed before any deal is implemented.

What Gain to Share?

Assuming that the relationship betweenthe anesthesia group and the hospital does notpresent unsolvable compliance issues, possiblesubjects for gainsharing are very much tied tofacts of your specific hospital or surgery cen-ter and warrant serious thought andinvestigation.

For example, possible gainsharing dealsmight focus on drug cost savings, proceduresto split bottles of drugs, or increased O.R. pro-ductivity based on case turn-around times. Infact, let me turn this around on you, the read-er: Send me your suggestions on otherpossible gainsharing “targets” for a follow uparticle and, if you’re the first to make a specif-ic suggestion, I’ll send you a copy of my bookon anesthesia employment agreements.

It’s clear that both the regulatory trendsand the willingness of payors to adopt per-formance-linked payment make this the righttime to consider possible gainsharing deals.As with most other economic arrangementswith facilities, one of the key factors in negoti-ating a successful gainsharing program is toimplement a long term strategy to make thefacility well aware of the benefits that thegroup provides, as well as of the potentialadditional value that it can help create.

Mark F. Weiss is a nationally recognizedexpert, and a frequent author and speaker, onthe business and legal issues affecting anes-thesiologists and anesthesia groups. Hepractices law with Advisory Law Group, AProfessional Corporation, with offices in LosAngeles and Santa Barbara, California, and isClinical Assistant Professor of Anesthesiologyat USC’s Keck School of Medicine at which heteaches a course on law and business to resi-dents. Mr.Weiss offers our readers a series ofcomplimentary educational materials. Hemay be contacted via e-mail [email protected].


Technological devel-opments in medicinetend to fall into two cat-egories: dramaticallynew breakthroughs andthe clever application ofexisting technology to

new applications. Despite the enthusiasmof practitioners involved with the intro-duction of a new technique or approach toan age-old problem, reimbursement tendsto favor incremental advances over quan-tum leaps. The insurance industry has afrustrating tendency to view any new clin-ical solution with skepticism until theevidence has been carefully considered andvalidated, a process that may involvenumerous changes of position over time.

The development of the fluoroscope,while based on radiological concepts, rep-resented a quantum leap in the ability tovisualize the anatomy on a real-time basis.Its value to the pain management physi-cian has now been clearly demonstratedthrough empirical assessment. Based onthis evidence insurance plans, for the mostpart, have acknowledged the additionalcosts of the fluoroscope in allowing sepa-rate reimbursement when fluoroscopy isused for needle guidance for most nerveblock procedures. But such was not alwaysthe case. For years pain managementphysicians complained persistently as thependulum of reimbursement swung fromone extreme to the other before finallyresulting in its current position. Before thiswould happen, though, new CPT codesspecifically defining the nature of the serv-ice to be reimbursed would have to becreated and accepted by payors as an inte-gral part of their fee schedules. Some mayargue that codes 77002 (formerly 76003)

and 77003 (formerly 76005) still do notadequately compensate the practitionerbut at least the uncertainty has beenresolved.

Now ultrasound is being used withincreasing frequency for the same or a verysimilar application: the visualization ofneedle placement for nerve blocks in thepain clinic. For all the enthusiasm of itspromoters, age old questions are beingasked in an effort to determine whether thetime and effort necessary to master theapplication will bear similar results. On theone hand, the convenience of the technol-ogy holds great promise, while at the sametime suspicion clouds the value of theinvestment and its potential for financialreturn. It is a familiar story; we just don’tknow how it will end.

The arcane process that leads from theintroduction of a new medical techniqueor procedure to consistent and appropriatereimbursement is neither linear nor pre-dictable. It is, instead, a curious interplayof a variety of clinical, political and eco-nomic factors, the slightest change in therelative proportion of which can dramati-cally affect the outcome. Who proposes asolution and who disposes of its value canbe key factors in the outcome. As in somany things, timing is everything.

The clinical value of new technologiesmust be proven on its own merits longbefore the editors of the CPT (CurrentProcedural Terminology) will consider itsinclusion. As in so many things, a crediblechampion can move this process alongfairly expeditiously. The problem is thatmany techniques have attained the statusof numerical codification in CPT withoutever becoming incorporated into payor feeschedules. It is an important first step.

Consider the fate of two distinct approach-es to endotracheal intubation. The use of afiberoptics for resolution of difficult intu-bations was never recognized as aseparately reimbursable service, its use inthe performance of a bronchoscopynotwithstanding, while the insertion andplacement of double lumen tubes did formthe basis for new codes specifically reim-bursing anesthesiologists for one lungtechniques. Today ASA codes 00529 (11units), 00541 (15 units) and 00626 (15units) ensure a positive reimbursementdifferential when the use of one lung anes-thesia is clearly documented.

Anesthesiologists should make a spe-cial note that while the ASA Relative ValueGuide was accepted by Medicare in the1980s, subsequent updates must all beevaluated on their own merits. To wit, the


DIVINING THE FINANCIAL POTENTIALOF ULTRASOUND

By Jody Locke, CPC



ASA attempted to address payor policyissues concerning reimbursement for TEE(Trans-esophageal Echocardiography)with the introduction of a TEE monitor-ing code (93318), but the inclusion of thecode accomplished little and has yet to berecognized by a major insurance plan. Themessage here is that while it is essential tohave an appropriate code, a code does notensure reimbursement.

The good news for the pain practi-tioner eager to apply ultrasound guidanceto needle guidance for nerve blocks is thatultrasound is already recognized by CPT.The anesthesiologist hoping to use fluoro-scopic guidance in the routineperformance of a block for a regionalanesthetic or for purposes of post-opera-tive pain management cannot hope to seeany additional reimbursement for the useof ultrasound. What remains to be provenis whether the historical CPT descriptionfits the new application. Code 76942 canbe found in the radiology section. As sucha few caveats must be noted. Radiologyservices have two components, a technicaland a professional component. As a gener-al rule of thumb, the technical componentis worth significantly more than the pro-fessional component. A place of servicedifferential can also result in some verycurious disparities between the facility fee,so named because the facility gets a sepa-rate payment, and the non-facility fee.Claims for reimbursement must be clearlyidentified by use of an appropriate modi-fier and place of service indicator. Theimpact of all these factors on reimburse-ment for the Detroit metropolitan area for2007 is indicated in the table shown.

Lest the reader be left with the wrongimpression here, the typical provider isonly entitled to the lowest rate indicated.Very specific criteria must be met for theindividual practitioner or practice to beentitled to either the technical componentor the facility fee itself. These are intendedto reimburse the facility for both the tech-nician and the overhead.

As if all these distinctions are not confus-ing enough, anesthesiologists often getdistracted by the inclusion of these sameservices in their own ASA Relative ValueGuide. ASA Relative Value units havenothing to do with reimbursement poten-tial of services paid based on a fee schedulebasis. A recent MGMA list serve discussionof the value of ultrasound focused onstrategies to obtain a two unit reimburse-ment. Unfortunately, such a focus missesthe point. A reimbursement consultantwith a national billing company wrote that“many of my providers are using ultra-sound guidance for regional blocks and Iam seeing exactly that (extra 2 units) beingreimbursed for this technique.”None of usdispute his claim that ultrasound may wellreplace fluoroscopy as a more practicaland convenient way to accurately targetpain-inducing anatomy; the question iswhether the reimbursement communitywill assess the convenience of the tool andits potential to be a standard of care anddetermine that it is a bundled service andnot worth separate reimbursement.

What we must also not forget is thatreimbursement is the product of somevery simple but fundamental economicprinciples. Average fee scheduleallowances for epidural steroid injectionshave gone down over time in inverse pro-portion to their frequency ofadministration. The law of supply anddemand suggests that the more a particu-lar service is performed the less payorsneed to pay for it. In other words, thepayor view is that they obviously do notneed to provide a financial inducement tophysicians to perform it. It is the dramaticgrowth in claims for CPT Code 62311 (the

best code for spinal injections) that hasalso prompted most Medicare intermedi-aries to implement LCDs (Local CoverageDeterminations) to warn practitioners ofthe potential for abuse.

There is a tendency to look at currentreimbursement data for a particular serv-ice and draw conclusions about the futureof reimbursement. Pain managementreimbursement consultants are all toofamiliar with the three phases of reim-bursement for a new service. Many claimsfor valid codes get paid without questionuntil the payors start to understand whatthe claims are for. Anyone who wasinvolved with getting paid for IV PCA adecade ago understands how misleadingreimbursement data can be. Once claims

76942-TC Technical $138.70

76942-26 Professional $35.45 $35.45

76942 Global $174.15

Continued on page 10

Code on claim Component Facility Non-FacilityAllowable Allowable



adjudicators begin to identify a patternthey start questioning the medical necessi-ty of the service. For many services, like IVPCA, this is the kiss of death. Others, suchas TEE survive after considerable debate,policy clarification and the implementa-tion of specific reimbursement guidelines.(TEE is now reimbursable by mostMedicare intermediaries if the anesthesiol-ogist completes a report documenting hisor her assessment of valvular function andhemodynamic efficiency.) To achieve per-manent status on payor fee schedules (thethird phase of the process) a number ofspecific criteria have to be met.

First, the service or technique musthave a clear and obvious clinical value.There must be evidence that additionalreimbursement is necessary to induceproviders to perform the service. This maypertain to the cost of the technology or theskill and training of the practitioner toperform the service reliably. There mustalso be a compelling argument to unbun-dled the reimbursement. Payors areespecially suspect of every attempt tounbundle a particular service and wouldrather increase reimbursement for anexisting service if the standard of care haschanged than allow extra reimbursementunder a second code. There is no betterexample of this phenomenon than Aetna’sapproach to reimbursement for fluo-roscopy a couple of years ago. Seeminglyout of the blue and without warning Aetnastarted denying claims for fluoroscopyclaiming that since it had become a stan-dard of care for the administration ofnerve blocks the reimbursement should betied to the block code and not the separatefluoroscopy code. Because CMS hadalready addressed the issue and come to adifferent conclusion Aetna policy eventu-ally changed to conform to an industrynorm. The problem for proponents ofultrasound guidance for nerve blocks isthat there is no such Medicare precedent.

Even when reimbursement guidelinesappear to have been resolved they are oftensubject to capricious revision. Any numberof factors can trigger a post-paymentreview of a particular service. A routineaudit of claims for single shot and contin-uous femoral and axilary blocks by BlueShield of Louisiana led its executives toconclude that nerve block techniques per-formed as an adjunct to an anesthetic,even a general anesthetic, should not meritseparate reimbursement and that, more-over, all monies paid out over the course ofthe past year for such services were paid inerror and must be refunded.Unfortunately, this is a not uncommonoccurrence in the world of reimburse-ment. Despite our desire to assume thatbeing paid for a service constitutes legiti-mate reimbursement, this is not always thecase and nothing is more frustrating thanto have to pay back monies to which wethought we were entitled.

Clearly, the value of a medical service

should not be assessed only in terms ofreimbursement potential. Such thinkingdemeans the specialist and only feedspayor cynicism with regard to physicianmotives. If a service is valuable and trulyjustifies separate reimbursement, its costs,risks and benefits should be argued withreliable and empirical data. Just as weshould not be too quick to accept currentreimbursement patterns as a prediction offuture revenue potential, neither shouldwe be deterred by the political and strate-gic challenges to a reasonable fee schedulepayment. Wanting to get paid for a partic-ular service and believing it has value isnot enough. Demonstrating the value,however, and getting those who hold thepurse strings to accept it is an entirely dif-ferent matter and a goal worthy ofpersistent commitment. If there is onething the experience of the past fewdecades has taught us, it is never easy topredict how reimbursement decisions willultimately get resolved.

DIVINING THE FINANCIAL POTENTIAL OF ULTRASOUNDContinued from page 9



Coding CornerCoding Corner

The International Classification ofDiseases, Tenth Revision, ClinicalModification (ICD-10-CM) and TheInternational Classification of Diseases,Tenth Revision, Procedure ClassificationSystem (ICD-10-PCS).

Currently 138 countries have imple-mented ICD-10-CM for mortalityreporting and 99 countries have imple-mented it for morbidity reporting, with theUnited States still using the ICD-9-CM sys-tem it is difficult to compare our healthdata with international data. Although, theUnited States implementation of either oneof these systems has not been announced,draft legislation contains a provision toimplement ICD-10. Implementation willbe based on the process for adoption ofstandards under the Health InsurancePortability and Accountability Act(HIPAA). There will be a two-year imple-mentation window once the final notice toimplement has been published in theFederal Register.

If passed, HR 4157, The HealthInformation Technology Promotion Act,would require the Secretary to implementICD-10-CM and ICD-10-PCS on October,1, 2009.

Benefits� Improvements to the quality of careand patient safety.

� Fewer rejected or questionablereimbursement claims.

� Improved information for diseasemanagement.

� More accurate reimbursement ratesfor emerging technologies.

� Better understanding of the value ofnew procedures.

Major changes in the ICD-10-CMinclude:

� 21 chapters (ICD-9 has 17).� The E-codes and the V-codes are

incorporated within the new systemrather than the current supplemen-tary classifications.

� Identification of trimesters toobstetrical codes.

� Expanded diabetes, injury,alcohol/substance abuse, and post-operative complications.

� Ability to report laterality (to speci-fy whether a medical conditionoccurred on the right or left side).

� Standard definitions for “excludes”notes.

� Combination diagnosis/symptomscodes.

� Identification of initial encounter,subsequent encounter, and sequelaeof injuries.

� Expanded external causes ofinjuries.

� Improved clinical detail.� Addition of a sixth character.� Addition of a seventh characterextension in some chapters. (ICD-9,max 5).

The ICD-10-CM is published by theWorld Health Organization (WHO) youmay find the guidelines for the use of thisclassification in the Official Coding andReporting Guidelines of ICD-10-CM(www.cdc.gov/nchs/icd9.htm).

Major changes in the ICD-10-PCSinclude:

� 15 sections in the ICD-10-PCS withalmost eighty eight thousand codescompared to the maximum of tenthousand codes of our present sys-tem.

� Consists of alphanumeric codesrather than all numeric codes. Thecurrent system contains amaximumof four numbers with a decimalpoint, the new system has a maxi-mum of seven characters with no

decimal point.� The includes and excludes notes arenot included in the new system.

� All codes have a unique definition� Ability to aggregate codes across allessential components of a proce-dure.

� Extensive flexibility.� New procedures and technologiesare easily incorporated.

� Code expansions do not disrupt sys-tematic structure.

� Limited use of NOS and NEC cat-egories.

� Terminology is precisely definedand used consistently across allcodes.

� No diagnostic information isincluded in the code.

� Increases accuracy and efficiency bybeing able to recognize and reportthe procedures performed.

For detailed information on the devel-opment of ICD-10-PCS visit the CMSWeb site: http://www.cms.hhs.gov/ICD9ProviderDiagnosticCodes/08_ICD10.asp

As our world grows smaller the needfor accurate health data will benefit us all.

THE FUTURE OF CODING –ICD-10-CM AND ICD-10-PCS


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Permit No. 45ANESTHESIAANESTHESIABUSINESS CONSULTANTSBUSINESS CONSULTANTS

Aug. 4-8, 2007 American Association of Nurse AnesthetistAnnual Meeting

Denver Convention Center,Denver, CO

www.aana.com

Sep. 27-30, 2007 New England Society of AnesthesiologistsFall Annual Conference

The Mount Washington Hotel,Bretton Woods, NH

www.nesa.net

Sep. 14-16, 2007 Ohio Society of AnesthesiologistsAnnual Meeting

Cincinnati Westin Hotel,Cincinnati, OH

www.osainc.org

Oct. 12, 2007 American Society of Critical Care AnesthesiologistsAnnual Meeting

Grand Hyatt,San Francisco, CA

www.ascca.org

Oct. 12, 2007 Society for Ambulatory AnesthesiaMid-Year Meeting

San Francisco Hilton,San Francisco, CA

www.sambahq.org

Oct. 12, 2007 Society for Pediatric AnesthesiaAnnual meeting

Hilton San Francisco,San Francisco, CA

www.pedsanesthesia.org

Oct. 12, 2007 Society of Neurosurgical Anesthesia & Critical CareAnnual Meeting

San Francisco, CA www.snacc.org

Oct. 13-17, 2007 ASA Annual Meeting Mascone Center,San Francisco, CA

www.asahq.org

Oct. 13, 2007 American Association of Clinical DirectorsAnnual Meeting

San Francisco, CA www.aacdhq.org

Oct. 28-31, 2007 MGMA Annual Conference Pennsylvania Convention Center,Philadelphia, PA

www.mgma.com

Nov. 2-4 2007 Association of Anesthesiology ProgramDirectors/Society of Academic AnesthesiologyChairs Annual Meeting

Mandarin Oriental,Washington, D.C.

www.aapd-saac.org

Nov. 12, 2007 Minnesota Society of AnesthesiologyFall Meeting

Crowne Plaza Northstar,Minneapolis, MN

http://www.mmaonline.net/SpecialtySocieties/msa.cfm

Dec. 7-11, 2007 New York State Society of AnesthesiologistsPostgraduate Assembly in Anesthesiology

New York Marriott Marquis,New York, NY

www.nyssa-pga.org

Jan. 25-27, 2008 ASA Conference on Practice Management Tampa Marriott Waterside Hotel,Tampa, FL

www.asahq.org

Apr. 30-May 4, 2008 Society of Obstetric Anesthesia and PerinatologyAnnual Meeting

Renaissance Chicago Hotel,Chicago, IL

www.soap.org

Jun. 18-22, 2008 Society of Cardiovascular AnesthesiologistsAnnual Meeting

Vancouver Convention Center,Vancouver, BC, Canada

www.scahq.org

May 17-18, 2008 MGMA Pain Management Preconference Philadelphia Marriott Downtown,Philadelphia, PA

www.mgma.com

May 18-21, 2008 MGMA AAA Annual Conference Philadelphia Marriott Downtown,Philadelphia, PA

www.mgma.com

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Anesthesia Business Consultants: Communique summer07

Health & Medicine

Transcript of Anesthesia Business Consultants: Communique summer07