Taking Action

Reimbursement Issues for Nurse Anesthetists: A Continuing Challenge

Frank Purcell

“I was taught that the way of progress is neither swift nor easy.”

—Marie Curie

This updates a chapter originally developed by John Garde, CRNA, MS, FAAN and Rita Rupp, RN, MA and draws substantially upon their excellent work.

A number of federal initiatives since 1980 have had a significant impact on the nurse anesthesia profession. Three federal reimbursement policies significantly affected the American Association of Nurse Anesthetists (AANA) and its 40,000 members. This chapter explores how federal policy can affect the economics of a profession, raise or lower barriers to practice, and cause or remediate inefficiencies in the delivery of anesthesia services. It also highlights that conflict can occur when two professional groups—in this case, Certified Registered Nurse Anesthetists and anesthesiologists—have overlapping scopes of practice and major stakes in policy outcomes.

Nurse Anesthesia Practice

Certified registered nurse anesthetists (CRNAs) are educated in the specialty of anesthesia at the masters or doctoral level in an integrated program of academic and clinical study, and must pass a national certifying exam to practice anesthesia. In addition, they must meet the requirements of recertification every 2 years. CRNAs are eligible to receive reimbursement for their services directly from Medicare, from most Medicaid programs, from TRICARE (the United States Department of Defense health program), and from most private insurers and managed care organizations.

CRNAs, working with surgeons, anesthesiologists, and, where authorized, podiatrists, dentists, and other health care providers, administer 32 million anesthetics annually in the U.S. CRNAs provide anesthesia for every age and type of patient using the full scope of anesthesia techniques, drugs, and technology that characterize contemporary anesthesia practice, as well as interventional pain management services. They work in every setting in which anesthesia is delivered: tertiary care centers, community hospitals, labor and delivery rooms, ambulatory surgical centers (ASCs), diagnostic suites, and outpatient settings. Predominant in rural America, CRNAs are the sole anesthesia providers in most rural hospitals, affording anesthesia and resuscitative services to these medical facilities for surgical, obstetric, and trauma care.

Nurse Anesthesia Reimbursement

Nurse anesthetists gained direct Medicare reimbursement in 1986. Medicare Part A establishes the regulations by which hospitals and ambulatory care facilities are reimbursed for services, supplies, drugs, and equipment used in the care of Medicare patients. Medicare Part B sets forth the payment regulations for health care professionals who are eligible to receive direct reimbursement through the Medicare program. With the advent of the Medicare program in 1965, payment for the anesthesia services provided by nurse anesthetists was provided through both Part A and Part B of the Medicare program. For the services provided by CRNAs who were hospital employed, the hospitals were reimbursed under Part A for “reasonable costs” of anesthesia services. For the services provided by CRNAs who were employed by anesthesiologists, the anesthesiologists who employed and supervised CRNAs could bill under Part B as if they personally had administered the anesthesia. These forms of payment were in effect until 1983, when Congress enacted the Prospective Payment System (PPS) legislation to control Medicare hospital costs. The law provided that all services by providers, other than those reimbursed through Medicare Part B, would be bundled into a hospital diagnostic-related group (DRG) payment. The legislation created serious problems relative to the payment for nurse anesthesia services. Hospitals would have been required to pay for their CRNA employees from the fixed DRG payment, jeopardizing their ability to recoup actual costs and creating a disincentive for hospitals to employ CRNAs. Further, because the PPS precluded the unbundling of services, anesthesiologists who employed CRNAs would have been forced to contract with hospitals to get the CRNA portion of the DRG. Simply put, CRNA services were effectively non-reimbursable.

In addition, hospitals that accrued Medicare cost savings by using the services of CRNAs stood to be hurt the most by the move to a DRG payment system. Hospitals using more physicians for such services did not need to take the costs from the DRG payment; physician services were reimbursed from Medicare Part B. Further, for every $1 paid to CRNAs, anesthesiologists were being paid $3 to $4. If the substitution of anesthesiologists for CRNAs were to increase, the cost of anesthesia care to Medicare beneficiaries could be expected to escalate (Garde, 1988).

Advocacy Issues in Anesthesia Reimbursement

Because of the potential negative effect of the PPS legislation on nurse anesthetists, AANA advocated several legislative changes, most notably that the Omnibus Budget Reconciliation Act (OBRA) of 1986 should include direct reimbursement for CRNAs (to become effective January 1, 1989, with extension of the two temporary provisions to the effective date of the legislation).

The mission of AANA was to convince Congress and the Health Care Financing Administration (HCFA, renamed the Centers for Medicare and Medicaid Services [CMS] in 2001) that CRNAs were concerned about health care costs as well as equitable reimbursement for their services. Even though the American Society of Anesthesiologists (ASA) opposed the direct reimbursement legislation, AANA’s message was understood because use of CRNAs in the provision of anesthesia services represents substantial cost savings from several standpoints. On average, the income of CRNAs is one-third that of anesthesiologists. Also, for providing the same high-quality of anesthesia care, the educational cost of preparing CRNAs is significantly less than that needed to prepare anesthesiologists. Congress passed the legislation granting CRNAs direct Medicare reimbursement, with two payment schedules incorporated in the law: one for CRNAs not medically directed by anesthesiologists and the other for CRNAs working under anesthesiologists’ medical direction (Gunn, 1997). As a result of this legislation, all CRNAs, regardless of whether they are employed or are in independent practice, now have the ability to receive reimbursement from Medicare directly or to sign over their billing rights to their employers. In addition to Medicare direct reimbursement, CRNAs were reimbursed through many health plans. Although CRNAs still face a variety of practice barriers in some facilities and health plans, they can and do serve as exclusive providers for the full range of anesthesia services at hospitals and ambulatory surgical facilities.

Tefra: Defining Medical Direction

Congress enacted the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) to, among other provisions, control escalating Medicare costs for hospital-based services including anesthesiology, pathology, and radiology. Among the many cost concerns that TEFRA addressed was a need to ensure that an anesthesiologist provided specified services when billing Medicare for medical direction when a CRNA was administering the anesthesia. Before enactment of TEFRA, an anesthesiologist could bill for services in conjunction with supervision of hospital-employed CRNAs, without demonstrating that the anesthesiologist had provided specific services to qualify for such payment.

In 1983, the HCFA published the final rules implementing TEFRA relative to payment for anesthesiology physician services, limiting medical direction payment to an anesthesiologist to no more than four concurrent procedures administered by CRNAs. The rules implemented seven conditions that an anesthesiologist must satisfy in each case to obtain reimbursement for medical direction (U.S. Department of Health and Human Services [USDHHS], 1983). Interestingly, the TEFRA regulations also increased health care costs by providing incentives for the additional involvement of anesthesiologists in cases that could otherwise be provided by a CRNA as non-medically directed. Medicare Part B did not require the involvement of anesthesiologists in CRNA services, except to the extent than an anesthesiologist submits a claim for medical direction.

In the early 1990s, in the course of the Physician Payment Review Commission (PPRC) study of anesthesia payments (which was intended to examine ways to reduce anesthesia team payments in cases involving both anesthesiologists and CRNAs), government-related study groups and individual research studies reported the need for changes in TEFRA. The 1992 Center for Health Economics Research (CHER) report to the PPRC recommended the following: “Refinements to the TEFRA provisions should be considered in view of the reductions in payments to the anesthesia care team. In particular, opportunities for increasing the flexibility of role functions should be reviewed. … [W]ith the implication of a capped payment, the HCFA should consider whether to review the TEFRA requirements to see if modifications of the TEFRA rules would permit greater efficiencies without decreasing the quality of care” (PPRC, 1993). The PPRC concluded that “the use of the anesthesia care team seems to be determined by individual preferences for that practice arrangement. There appears to be no demonstrated quality of care differences between the care provided by the solo anesthesiologist, solo CRNA, and the team.” No longer could anesthesiologists argue that medical direction of CRNAs by anesthesiologists and the TEFRA conditions under which medical direction is provided represent any safer or higher standard of care than the care provided by a CRNA practicing alone or an anesthesiologist practicing alone. The final conclusion reached by PPRC on anesthesia payment represented a milestone in the recognition of anesthesia services provided by nurse anesthetists. A single payment methodology for anesthesia services was recommended by PPRC and adopted by Congress, which resulted in a policy that the payment for anesthesia services—whether provided by a CRNA-anesthesiologist team, by a solo anesthesiologist, or by a solo CRNA providing non-medically directed services—would be the same. In the case of medically directed services, the payment would be split so that each practitioner received 50% (PPRC, 1993).

In 1998, the AANA initiated a regulatory advocacy program to revise the TEFRA medical direction conditions. In a joint meeting in 1998 with the ASA, AANA, and HCFA, proposals were advanced by both AANA and ASA for revisions in the seven conditions of payment for physician medical direction. The ASA and AANA reached consensus on a revised recommended set of medical direction requirements. However, a publication entitled “Anesthesia Answer Book—Action Alert” (1998) indicated that the ASA had second thoughts about the agreed-on revisions. The HCFA’s response to the concerns posed by ASA membership and several state anesthesiologist societies was to retain the current requirements established in 1983 (USDHHS, 1998b). The HCFA did decide that the medically directing physician must be present at induction and emergence for general anesthesia and present as indicated in anesthesia cases not involving general anesthesia, and that the medically directing anesthesiologist alone must attest in any claim for Medicare reimbursement of medical direction to having performed the seven medical direction tasks in each case (USDHHS, 1998b). The HCFA announced plans to study the medical direction issue further, welcomed comments, and suggested that it might propose changes in the future (USDHHS, 1998b). The AANA’s influence on the development of medical direction policy helped secure the following: