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Virtuous Coding and the Coming Revolution in Payment for Professional Services

Clark, Randall M. MD

doi: 10.1213/ANE.0000000000001068
Editorials: Editorial

From the Department of Anesthesiology, University of Colorado School of Medicine, Children’s Hospital Colorado, Aurora, Colorado.

Accepted for publication September 18, 2015.

Funding: None.

The author declares no conflicts of interest.

Reprints will not be available from the author.

Address correspondence to Randall M. Clark, MD, Department of Anesthesiology, University of Colorado School of Medicine, Children’s Hospital Colorado, 13123 East 16th Ave., B090, Aurora, CO 80045. Address e-mail to

Clipboard in hand, with a stack of blank billing forms tucked away, the anesthesiologist completed her billing paperwork before going to meet the family of the next patient. Although she could coordinate her start time (on the minute, of course) with the operating room nurses, the anesthesia end-time was usually up to her to specify. She added the additional information to “justify” her use of the higher ASA physical status modifier for this particular patient. Within several days, the paperwork made its way to the billing and collection service and away from her attention. Rarely would she be asked to provide clarification or further justification of the billing information she had entered.

This quaint manual system, subject to the vagaries of personal opinion and possible exploitation, has now been replaced by armies of professional coders and billing information automatically extracted from electronic health records. But is the billing and payment system for anesthesia services in the United States ready for the demand of health care reform?

Can upcoding and other distortions of billing information exist in the 21st century? The answer is certainly yes. By design, some aspects of patient assessment are subjective and are personally determined by the anesthesiologist responsible for the patient. For claims submitted to Medicare, Medicaid, and some private payers, additional billing codes are required to specify if the service is provided by an anesthesiologist working alone or with anesthetists or trainees. The QZ code is especially problematic. Some practices have chosen to use the QZ modifier (a nurse anesthetist working without medical direction by a physician) to avoid the documentation requirements of medical direction and possible subsequent audits of those services. In a large number of practices and institutions, the QZ code is used even in circumstances where an anesthesiologist is actively engaged in the care of the patient.1,a Except in circumstances of very high supervision ratios, the total payment for the service is the same. Incorrect assessments of who is actually involved in the anesthesia care will then propagate through the entire Medicare claims database potentially corrupting any analyses and policy decision made with that data.

The prototypical example of a required subjective assessment is the >50-year-old ASA physical status modifier. Although initially devised to be an indicator of the patient’s general medical condition, the Centers for Medicare and Medicaid Services and its derivative accrediting agencies have come to require the determination and recording of ASA physical status as a measure of perioperative risk.b

Despite the belief that patients with higher ASA physical status are at higher risk for death or complications, the Centers for Medicare and Medicaid Services does not extend this thinking into the payment system. Because Medicare and Medicaid do not pay for ASA physical status and other modifiers, and because anesthesia procedural codes are groups of similar procedures rather than specific procedures, the anesthesia coding and subsequent payment for the anesthesia care of an unstable premature infant are the same as it would be for a healthy young adult having an anesthetic that is billed using the same anesthesia Current Procedural Terminology code. The opposite is generally true for contracts with private payers. ASA physical status modifiers, and other modifiers under the American Society of Anesthesiologists Relative Value Guide, usually have an agreed upon dollar value. Because it can affect the final payment for the professional service, the subjective ASA physical status determination might be subject to distortion and possible upcoding.

In this issue, Schonberger et al.2 use a large data set from the National Anesthesia Clinical Outcomes Registry and a quasi-experimental regression discontinuity design analysis to determine whether ASA physical status assignment differences exist between patients above or below age 65 years, the age at which most U.S. citizens become enrolled in Medicare and are therefore no longer eligible for payment for ASA physical status III and above.2 No statistically significant upcoding was found. By the introduction of deliberate upcoding into the database, the authors were able to determine that an upcoding rate >2% would be detected by the statistical method. Although the data were confined to those practices participating with the National Anesthesia Clinical Outcomes Registry, the results show that anesthesiologists do not systematically bill individual patients differently based on their insurer. If there was a direct relationship between ASA physical status coding and payment, it likely would have been detected.

A significant premise of payment reform under the Affordable Care Act is the concept that payment drives physician behavior. In an attempt to improve quality and other “value-based” goals, the Secretary of Health and Human Services has set a target of having 50% of all provider payments in alternative payment systems by 2018.c Unfortunately, many specialties, including anesthesiology, are still behind in having workable alternative payment proposals for the majority of the services we provide.

In an economic sense, anesthesiologists, by and large, do not control their own workload. With the possible exception of pain management services, anesthesiologists cannot arbitrarily provide more or fewer anesthesia services for an individual patient based on economic or other incentives. So while the negative connotation associated with fee-for-service payment systems, that is, society is “rewarding” volume of service rather than services designed to improve health, may not apply to anesthesia care as directly as it does to other specialties, U.S. anesthesiologists will be required to adopt new alternative payment methodologies. The only way for anesthesiologists to fit into a system that measures and pays for improved quality, patient satisfaction, and cost is to move into better integrated systems of care with our specialist colleagues and hospitals.

In these future payment systems, we should reduce or eliminate subjective or distortable codes. Ideally, we would have payment systems that are ironclad in defining value and measuring work. Outcomes reporting must be detailed and widely adopted. Finally, we must develop robust demonstration projects for testing broad-based alternative payment models to see whether they really work. The track record to date is mixed.3,4 We should not move from fee-for-service to alternative payment models unless these systems have been tested and show positive and sustainable results.

These efforts will take time and talent, but there are things that we do know now. The American Society of Anesthesiologists is rapidly expanding its work in helping anesthesiologists meet the new requirements of the 2015 Medicare Access and CHIP Reauthorization Act (MACRA), which puts changes to the Medicare payment system in place. The Anesthesia Quality Institute and the National Anesthesia Clinical Outcome Registry’s rapidly growing database will be an invaluable tool. Statistical methods such as those used by Schonberger et al.2 will be necessary to show that the payment systems we develop are unbiased. Finally, U.S. anesthesiologists must collectively develop the will to change the way we practice, and yes, bill for our services. The economic health of anesthesiology in the United States depends on it.

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Name: Randall M. Clark, MD.

Contribution: This author prepared the manuscript.

Attestation: Randall M. Clark approved the final manuscript.

This manuscript was handled by: Franklin Dexter, MD, PhD.

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a Byrd JR, Merrick SK, Stead SW. Practice Management: Billing for Anesthesia Services and the QZ Modifier—A Lurking Problem. ASA Newsletter 2011; Vol 75, No 6. Available at: Accessed September 10, 2015.
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b Centers for Medicare and Medicaid Services, Appendix A of the State Operations Manual, Interpretive Guidelines §482.52(b)(1). Available at: Accessed September 10, 2015.
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c US Department of Health and Human Services Press Release. January 26, 2015. Available at: Accessed September 10, 2015.
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1. Miller TR, Abouleish A, Halzack NM. Anesthesiologists are affiliated with many hospitals only reporting anesthesia claims using modifier QZ for Medicare claims in 2013. A&A Case Reports. 2015 [epub ahead of print]
2. Schonberger RB, Dutton RP, Dai F. Is there evidence for systematic upcoding of ASA physical status coincident with payer incentives? A regression discontinuity analysis of the National Anesthesia Clinical Outcomes Registry. Anesth Analg. 2016;122:243–51
3. Kahn CN III, Ault T, Potetz L, Walke T, Chambers JH. Assessing Medicare’s pay-for-performance programs and whether they are achieving their goals. Health Affairs. 2015;34:1281–8
4. Friedberg MW, Schneider EC, Rosenthal MB, Volpp KG, Werner RM. Association between participation in a multipayer medical home intervention and changes in quality, utilization, and costs of care. JAMA. 2014;311:815–25
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