It’s no secret that Medicare fraud wastes tons of taxpayer money and inflates everyone’s healthcare bills. However, many may not realize that providers may comply with the expected medical standard of care yet still commit Medicare fraud by overbilling for those services. One of a myriad of examples where providers overbill Medicare for services—even those properly administered and medically necessary—is anesthesia.
The Centers for Medicare and Medicaid, the agency responsible for administering Medicare, publishes its Medicare Claims Processing Manual, which provides claims processing instructions for physician and nonphysician practitioners. In the Claims Processing Manual, Chapter 12, Section 50 applies to billing for anesthesiology services—whether administered by an anesthesiologist or one who supervises other non-physician practitioners, like certified registered nurse anesthetists (“CRNAs”) administering anesthesia under the physician’s guidance.
Billing and Medicare Payment Rates for Anesthesiology Services
The provider billing Medicare for these services must comply with the Claims Processing Manual, which includes detailed guidance on how to calculate the proper fee for the anesthesia service provided. For example, when a physician administers anesthesia as a service separate from the doctor who performs the surgery, Medicare reimburses for the anesthesia at different payment tiers. Each respective tier is reimbursed at a different payment rate. In other words, depending on the circumstances, Medicare may pay providers of anesthesiology services more or less money for two treatments that appear the same but are administered through different medical procedures. For anesthesia services, the different payment rates or tiers include:
(1) Payment at the Personally Performed Rate;
(2) Payment at the Medically Directed Rate;
(3) Payment at the Medically Supervised Rate; or
(4) Payment for Services Not Medically Directed.
To properly submit reimbursement claims for services at any tier, a provider must first comply with all CMS’ regulations established for that tier.
Ordinarily, services that qualify for reimbursement under the first and fourth payment rates may be relatively straightforward to identify. Under the first-rate, services are “personally performed” if the doctor performed the entire service alone. In other words, the anesthesiologist was not directing another eligible non-physician provider administering the anesthesia, such as a CRNA. Similarly, under the fourth (non)payment rate, no physician ordered the services and therefore reimbursement is wholly improper. Evidentiary issues aside, whether a physician ordered the services can be more readily ascertained by the facts.
Billing for “Medically Directed” versus “Medically Supervised” Anesthesiology Services
In contrast, thornier issues arise determining whether, based on a medical provider’s practices, payment is properly billed at the “medically directed” (and more lucrative) payment rate as opposed to the “medically supervised” payment rate—which pays out at a comparatively lower reimbursement fee. The difficulty arises, in part, from the CMS regulations that require a provider to satisfy several “conditions” in order to properly submit claims for payment under the higher “medically directed” rate.
To qualify for payment at the medically directed rate, a doctor must:
(1) Perform a pre-anesthetic examination and evaluation;
(2) Prescribe the anesthesia plan;
(3) Personally participate in the most demanding procedures in the anesthesia plan, including induction and emergence;
(4) Ensure that any procedures in the anesthesia plan that he or she did not perform were performed by a qualified anesthetist;
(5) Monitor the course of anesthesia administration at frequent intervals;
(6) Remain physically present and available for immediate diagnosis and treatment of emergencies; and
(7) Provide indicated post-anesthesia care.
Medical direction occurs when an anesthesiologist directs a CRNA in two but not more than four concurrent anesthesia cases and meets all seven conditions outlined above. In addition to the directing physician, separate CRNAs or other qualified non-physician providers administer the service to each patient. Conversely, a provider should bill at the medically supervised rate when the same anesthesiologist administers more than four procedures concurrently or is furnishing other medical services at the same time the anesthesia is administered.
The murky line between practices that properly qualify as “medically directed” and practices that are “medically supervised” leads to medical providers who bend the rules—i.e., providing “lower-rate” services but fraudulently billing Medicare at the premium rates. Even to outside observers, the differences are often subtle, making it difficult for auditors and even employees to detect fraud that will often persist for years.
 42 C.F.R. § 414.46(c)(1)(l).
 Medicare also requires that medical providers submit reimbursement claims for anesthesia services in accordance with Current Procedural Terminology Codes (“CPT”), among other requirements.
 Although, the Claims Processing Manual allows for a few nuances such as a teaching physician supervising a resident.
 42 C.F.R. § 414.46(f).
 42 C.F.R. § 415.110 (a)(1).
 See Medicare Claims Processing Manual, Chapter 12, §50.J for a definition of concurrent anesthesia procedures.