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ECONOMICS, EDUCATION, AND HEALTH SYSTEMS RESEARCH

Increasing the Value of Time Reduces the Lost Economic Opportunity of Caring for Surgeries of Longer-Than-Average Times

Amr E. Abouleish, MD, MBA^*, Donald S. Prough, MD^*, Charles W. Whitten, MD, and Lydia A. Conlay, MD

*Department of Anesthesiology, The University of Texas Medical Branch, Galveston, Texas; Department of Anesthesiology and Pain Management, The University of Texas Southwestern Medical Center at Dallas, Dallas, Texas; and Department of Anesthesiology, Baylor College of Medicine, Houston, Texas

Address correspondence and reprint requests to Amr E. Abouleish, MD, MBA, Department of Anesthesiology, The University of Texas Medical Branch, Galveston, TX 77555-0591. Address e-mail to aaboulei{at}utmb.edu

	Abstract

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Anesthesiology groups that provide care for surgical procedures of longer-than-average duration are economically disadvantaged by both increased staffing costs and reduced revenue. Under the current billing system, anesthesia time is valued the same regardless of the total case duration. In this study, we evaluated the effect on four academic anesthesiology departments of two hypothetical scenarios by changing the anesthesia care billing system to make more valuable either 1) all time units or 2) just second-hour and subsequent time units. From the four departments, case-specific data (anesthesia Current Procedural Terminology code and minutes of care) were collected for all anesthesia cases billed for 1 yr. Basic units were determined from the American Society of Anesthesiologists (ASA) relative value guide. The average time for each case was defined as the average anesthesia time for that specific Current Procedural Terminology code, as published by the Center for Medicare and Medicaid Services (CMS). The actual total ASA units per hour (tASA/h) was determined by adding all the basic units and time units and dividing by hours of anesthesia care (minutes of anesthesia care divided by 60). We then calculated a hypothetical CMS tASA/h for each group by substituting the CMS average time for each anesthesia procedure time for the actual time reported by each group and using 15-min time units. For each group, the Actual (Act) tASA/h and CMS tASA/h were calculated for both options—changing the interval for all time units or only for second and subsequent hours. Intervals were 15, 12, 10, 7, 6, or 5 min. When changing all time units, Act tASA/h and CMS tASA/h were never equal for all groups. The two productivity measures became approximately equal if only time units after the first hour were changed to 6- to 7-min intervals. When changes were applied only to the Act tASA/h (with CMS tASA/h remaining at 15-min intervals), at the 12-min interval either option resulted in a similar or higher Act tASA/h than CMS tASA/h. Both options increase the value of time and help compensate for the lost economic opportunity of longer-than-average surgical durations.

IMPLICATIONS: Longer-than-average surgical durations result in less potential revenue per hour under current billing methodology. This study quantifies the increase in billing productivity when the value of time is increased, when evaluating the billing productivity of four academic anesthesiology groups.

	Introduction

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Longer-than-average surgical durations result in financial challenges for anesthesiology groups—especially academic anesthesia departments—because of greater staffing costs associated with long durations (1) and lower charges billed per hour of care (2). Anesthesia care is billed by using a basic unit value, a variable number of time units, and modifiers (3). Although the American Society of Anesthesiologists (ASA) Relative Value Guide does not specify the number of minutes contained in a time unit interval, both Medicare¹ and Medicaid² define the interval as 15 min (i.e., four time units per hour) regardless of the duration of care. Therefore, if cases have the same basic units, more ASA units are billed per hour with shorter cases than with longer cases (2). In other words, hourly productivity, as measured by total ASA units billed per hour of care (tASA/h), is inversely related to surgical duration (4).

Because anesthesiology groups cannot significantly influence the duration of surgery, groups providing care to patients undergoing surgical procedures of longer-than-average durations are at an economic disadvantage. If the billing methodology were to increase the value of time in relation to the basic unit value, the economic effect of longer-than-average surgical durations could be reduced or eliminated. Although anesthesiology groups cannot negotiate the time unit value with government payers, it is possible to negotiate time unit values other than 15 min with commercial payers. For this study, we considered two methods to increase the value of time. First, the time unit interval for all time units could be reduced (i.e., increase the number of time units billed per hour). Second, the time unit interval for time after the first hour of care (second-hour and subsequent time units) could be reduced (i.e., increase the number of time units billed per hour only after the first hour). To analyze the effect of the two hypothetical scenarios, we evaluated, in four academic anesthesia departments, the effect of changing the anesthesia care billing system to make more valuable either 1) all time units or 2) just second-hour and subsequent time units. In addition, we compared multiple possible time intervals to determine the optimal time interval that would increase the tASA/h of four different academic groups with longer-than-average surgical durations to the tASA/h that would be generated if the durations were the same as national averages.

	Methods

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Billing information for one calendar year (1999) was collected from four academic anesthesiology departments (Groups A through D) as previously described (2). Departments recorded data on individual claims by using either surgical procedure codes or anesthesia procedure codes (APT) and time of anesthesia care in minutes. For those claims that recorded only surgical procedure codes, the corresponding APT code was determined by using a database that cross-references surgical and anesthesia codes (5). Basic units for each APT were determined from a commercially available reference (3). All billed claims using ASA units were included except for obstetrical anesthesia (anesthesia for vaginal or cesarean delivery). All clinical sites (e.g., intensive care units, pain clinics, or preoperative screening clinics) that do not bill with ASA units were excluded. National average anesthesia times per APT used were from a database established by the Centers for Medicare and Medicaid Services (CMS).³

Hourly productivity (tASA/h) was calculated by dividing the sum of basic units and time units by the hours (60 min) of anesthesia care for all cases performed. For each group, tASA/h with actual anesthesia times was defined as Actual tASA/h (2). To calculate the tASA/h for each claim if the case had been performed at the national average time, the national average time obtained from the CMS database was substituted at the individual claim level; we defined the resulting calculation as CMS tASA/h. Because the substitutions were performed on individual claims, the CMS tASA/h was expected to be different for each group.

The Actual tASA/h and CMS tASA/h were determined for each group by using the standard 15-min interval. The tASA/h was recalculated by substituting each of the following intervals for all time units: 12, 10, 7, 6, and 5 min. For each group, we attempted to define the interval that would equalize the Actual tASA/h and CMS tASA/h.

The Actual tASA/h and CMS tASA/h were determined for each group by using the standard 15-min interval. The tASA/h was recalculated by substituting each of the following intervals for second-hour and subsequent time units: 12, 10, 7, 6, and 5 min. For example, using 12-min units for second and subsequent hours (i.e., five time units per hour), the total time units billed for a 2-h anesthesia case would be 9 U (4 U for the first hour and 5 U for the second hour). For each group, we attempted to determine the interval that would equalize the Actual tASA/h and CMS tASA/h.

	Results

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The 4 groups provided anesthesia for 64,634 cases, with a range of 11,742 to 24,369 (Table 1). The individual group averages of actual anesthesia time per case ranged from 2.37 to 2.68 h. The individual group averages of the national average anesthesia time per case ranged from 2.04 to 2.19 h. There are differences in the national average data for each group because the data were based on the unique types and numbers of cases performed by each group. Further, the academic groups provided care for a larger percentage of long cases (defined as >3 h of anesthesia time) than national average times would have predicted. For instance, 28% of Group A’s cases had anesthesia times exceeding 180 min; however, when national average times for the same types and number of cases were substituted, only 10.3% of the cases exceeded 180 min.

	Discussion

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These data are the first to quantify the effect of two different models of reimbursement that could help match the income of academic anesthesiology departments to the hours of service they provide. The first strategy studied (i.e., a uniform decrease in the time interval of individual time units) would increase tASA/h substantially (depending on the time interval chosen) but would provide equal increases in revenue for all anesthesiology providers. The second strategy studied (i.e., a decrease in the time interval of individual time units only after the first hour of anesthesiology) would increase tASA/h most for those departments (presumably most of which are academic) that provide care for a disproportionate number of cases of longer duration than national average times.

In the current system of determining value for time and basic units, one debatable issue is how much work is required during any given period of time. It may be argued that the work required in these longer cases, especially in the middle of the case, does not warrant an increase in the value of the time as proposed by this study. We did not examine how much work was done during the longer-than-average durations because this was not the basis for our study. In economic terms, the value of a product or service can be determined in several ways. It can be determined by how much a customer is willing to pay for the product. Another way that the value can be defined is the extent to which a customer is willing to forgo other products to buy the product. The latter definition is also known as economic opportunity. In investments, one evaluates the return on an investment by comparing it with what the return would have been in another investment (e.g., money-market investment, S&P index fund). In this study, it was designed on the basis of the loss in economic opportunity that results from longer surgeries. In other words, a group that provides care for surgical procedures of longer duration loses the economic opportunity that would have occurred if the same number of hours were worked but at average durations. In a previous study, this loss was estimated to be $600,000 to $960,000 in the four groups studied (2). In the current study, the design was focused on how to reduce this lost economic opportunity rather than on how to compare the amount of work performed.

Under the current billing system, time units are constant regardless of the length of the surgical duration. For very long cases, this results in the hourly billing productivity approaching 4 U/h (for 15-minute time units) for all cases, independent of the basic units of the case (4). To increase the value for providing care for longer surgeries, the current system of base and constant-interval time units would need to change. Because the time unit interval is not defined in the ASA Relative Value Guide (3), individual anesthesiology groups can negotiate the interval when negotiating with third-party payers (nongovernment payers). If the same conversion factor is still applied but the time unit interval is reduced (e.g., to 12 minutes), then the group can increase both billings and revenue for all cases. In fact, some anesthesiology groups have already negotiated smaller time units.⁵ However, as noted in previous studies, Medicaid and Medicare set time units at 15-minute intervals.

In this study, we evaluated two modifications that would increase the value of time as compared with the basic units. The first option (reducing the interval for all time units) was evaluated because some groups have established precedents by negotiating time units of <15 minutes in their contracts with some third-party payers. The second option (reducing time unit intervals only after the first hour) was designed on the basis of the billing system detailed in the Australian Society of Anesthetists Relative Value Guide (10). In the Australian Society’s billing system, anesthesia care is billed by using basic units, time units, and modifiers. Time units are defined as 15-minute units for the first 4 hours and then 10-minute units afterward. In our study, we modified this system and examined a system in which the second-hour and subsequent times would be billed with smaller time units.

When the first option (reducing all time unit intervals) is applied to all groups, the groups with longer-than-average anesthesia times will always have lower tASA/h than those with average or shorter-than-average anesthesia times. Mathematically, tASA/h equals the sum of the base units billed per hour of care and the time units billed per hour of care. When all groups use the same time units, the differences between tASA/h for any two groups will equal the base units billed per hour, because time units per hour will be the same for all groups. For this study, reducing all time unit intervals did not eliminate the differences between groups that provided care for cases of different average duration. Of course, differences in basic units per hour can result either from different basic units per case or different numbers of cases performed per hour (4). In this study, by design, base units were identical between each group’s Actual tASA/h and CMS tASA/h values. The method used the same numbers and types of cases to determine CMS tASA/h but with national average anesthesia times. Therefore, the difference in base units per hour resulted from more cases performed per hour of care (i.e., shorter surgical durations per case).

In contrast, applying the second option (reducing the time unit interval for second-hour and subsequent times) to all groups equalized the Actual tASA/h and CMS tASA/h when 6- to 7-minute time units were used (i.e., 8–10 time units per hour after the first hour). This second option specifically focuses on the value assigned to longer cases. By increasing the number of time units that can be billed per hour after the first hour, groups with longer anesthesia times will increase hourly productivity in comparison to those with shorter or average times. As seen in Table 1, all academic groups included in this sample had a larger percentage of longer cases (anesthesia times longer than three hours) than the national average times for the same procedures.

The feasibility of changing the billing system is both a political and an economic challenge. In either option, by increasing the time units billed per hour, overall billed units would increase. If CMS or a state Medicaid program adopted either option but maintained overall budget neutrality, then the unit value (i.e., conversion factor) would be decreased. Under the second option, revenue would increase for those programs with longer-than-average surgery but would decrease for those with shorter durations. As noted previously, individual groups can negotiate with each nongovernment payer to define time units in the most appropriate manner.

If applied only to academic groups, under both options, a 12-minute time unit (for either all time units or for time units after the first hour) would result in increasing the tASA/h of those with longer-than-average times to tASA/h values that are similar or higher to those with national average times (with 15-minute time units) (Tables 3, 4). Of course, the feasibility of applying a change in billing methodology or payments only to academic anesthesiology groups also faces political and economic hurdles similar to those involved in changing the methodology for all groups. However, CMS has already set such a precedent by implementing specific compliance guidelines for teaching physicians.

However, the financial viability of academic anesthesiology groups is of concern for not only academic groups, but also for society in general. Without academic programs, the training of future anesthesiologists will not be possible. Therefore, it is in the interest of many stakeholders—including private-practice anesthesiology groups, hospitals, payers (government and nongovernment), and patients—to improve the financial viability of academic programs. The Task Force for Graduate Medical Education for the ASA has contemplated the issue of financial challenges facing academic groups. In the 2002 annual meeting, the Task Force recommended that the ASA lobby the CMS to change the reimbursement for teaching physicians.⁶ The focus of the recommendation was not changing the way anesthesia care is billed, but changing the CMS methodology for paying for teaching physician care.⁷ Under current CMS rules, the payment for care provided by a teaching physician who is medically directing residents is 50% of the allowable charge, with no payment for the resident’s care to the anesthesiology group. The recommendation called on the CMS to return to paying 100% of allowable charges.

The limitations of using the national averages from the CMS database were discussed in detail previously (2). The methodology substituted national average times at the procedure level (i.e., the case level) to account for differences in the types and numbers of anesthesia cases. The difference between the actual durations of academic anesthesiology groups and calculated national average durations for those groups is not equivalent to the difference between academic and private-practice groups, because the national averages include both groups. The national average, in all likelihood, occurs somewhere between the longer durations in academic practice and the shorter durations in private practice (9,11). For instance, when reducing the second-hour and subsequent time units, equality between actual and national average tASA/h occurred when using the six-minute time unit. Logically, the actual tASA/h would still be less than the private-practice average tASA/h. Similarly, if the billing method is changed only for academic groups (using a 12-minute time unit for second and subsequent hours), the actual tASA/h is similar to or more than the average tASA/h but not necessarily more than private-practice average tASA/h.

Hourly productivity as a measurement for comparing the effect of the billing changes was chosen because the measurement focused on how much revenue is produced for every hour of care and because it is independent of utilization rates, staffing, scheduling, operating room allocation, and turnover time. Potentially, the financial status of anesthesiology groups could improve by addressing these other factors (12–15). In contrast, surgical duration (which defines anesthesia time) cannot be significantly changed by anesthesiology groups. A previous study examined two powerful factors that influence the economics of academic anesthesiology groups—the salary level of the providers and the payer mix (i.e., average conversion factor) (1). This study shows that changing the value of time can more equitably reimburse groups caring for patients with longer case times.

In conclusion, longer-than-average anesthesia times and surgical durations result in both increased staffing costs and decreased hourly productivity as defined by billed units. This study examined two options for increasing the value of anesthesia time relative to the basic units of anesthesia care. The first option, reducing the time interval for ALL units, increased hourly productivity equally for groups providing care with longer-than-average anesthesia times and groups with national average times. In contrast, the second option, reducing the time interval for second-hour and subsequent times, to 6- or 7-minute units resulted in equalization of hourly productivity between groups providing care to longer-than-average anesthesia times and groups with national average times.

	Acknowledgments

 
The authors thank Jordan Kicklighter, BA, and Christy Perry in the editorial office of the Department of Anesthesiology at the University of Texas Medical Branch (Galveston, TX) for preparing and editing this manuscript.

	Footnotes

 
Presented at the annual meeting of Association of University Anesthesiologists, Milwaukee, WI, May 1–3, 2003.

¹ Anesthesia. Dallas, TX: TrailBlazer Health Enterprises, 2003.

² Time units; physician. In: Texas Medicaid provider manual. Austin, TX: Texas Department of Health, 2001:38–9.

³ Centers for Medicare and Medicaid Services. Physician time associated with work RVUs used in creating 1999 practice expense relative values. Available at: http://cms.hhs.gov/physicians/pfs/resource.asp. Accessed: May 29, 2003.

⁴ Gravenstein N. 2002 SAAC salary survey. 10-24-2002. Written personal communication.

Biernstein K, Medicare anesthesia conversion factor is $17.05. ASA Newsletter 2003;67:23–5.

Biernstein K. Survey of hospital administrators about anesthesia coverage. ASA Newsletter 2002;66:29–30.

⁵ Locke J. E-mail communication. June 24, 2003.

⁶ Taskforce on Graduate Medical Education, American Society of Anesthesiologists. Report 400-5 (p. 2, line 27), 2002 ASA House of Delegates Handbook.

⁷ Written communication to Mr. Thomas Scully from Senator Hillary Clinton, April 22, 2003.

	References

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This Article Abstract Full Text (PDF) Alert me when this article is cited Alert me if a correction is posted Services Email this article to a colleague Similar articles in this journal Similar articles in Web of Science Similar articles in PubMed Alert me to new issues of the journal Download to citation manager Request Permissions Citing Articles Citing Articles via Web of Science (1) Citing Articles via Google Scholar Google Scholar Articles by Abouleish, A. E. Articles by Conlay, L. A. Search for Related Content PubMed PubMed Citation Articles by Abouleish, A. E. Articles by Conlay, L. A. Related Collections Economics and Health Care Research