California Supreme Court Upholds Physician Supervision Opt Out Decision
By Christine Locay, JD, RHIA, CPC
Vice President, Corporate Compliance Counsel
On June 29, 2012 the California Supreme Court upheld California Governor Arnold Schwarzenegger’s 2009 decision to opt out of federal regulations that require a CRNA to be supervised by the operating practitioner or an immediately available supervising anesthesiologist. To date, the list of opt out states includes Kentucky (April 2012), Iowa, Idaho, Nebraska, Minnesota, New Hampshire, New Mexico, Kansas, North Dakota, Washington, Alaska, Oregon, Montana, South Dakota, Wisconsin, Colorado and California. The decision to opt out is often very controversial with the debate focusing on patient safety and the ability to control health care costs, particularly in rural areas.
Opt Out Requirements
In order for a state to opt out of the supervision requirement, the Governor of the state must submit a letter to the Centers for Medicare and Medicaid Services (CMS) requesting an exemption. The Governor must “ attest that he or she has consulted with State Boards of Medicine and Nursing about issues related to access to and the quality of anesthesia services in the State and  has concluded that it is in the best interests of the State’s citizens to opt-out of the current physician supervision requirement, and  that the opt-out is consistent with State law.” The request for exemption is effective upon submission.
In reviewing “consistency” with state law, medical practice and hospital licensing laws, regulations, and rules must be considered. According to the American Association of Nurse Anesthetists (AANA), most states do not have laws or regulations that require CRNAs to be “supervised” by a physician. Without citing states, the AANA asserts that 39 states do not specifically require “supervision” in medical practice laws; 31 states do not require physician supervision or direction of CRNAs in hospital licensing laws and regulations; and 24 states do not require physician supervision or direction.
Defining “Supervision” and “Direction”
In discussing this issue, there is often confusion regarding the terms “supervision” and “direction.” The terms have different meanings depending on the context in which they are used. When these terms are used in reference to state law, state law determines the meaning, and these terms are often undefined. In reference to Medicare Conditions of Participation (which require physician supervision in absence of an opt out), the term “supervision” means immediate availability of the supervising physician. Even in states that have opted out, hospital bylaws, policies, or contracts may require supervision by an anesthesiologist. These contract terms are often undefined.
When the terms are used in the billing context, they have very specific meanings and refer to the billing model utilized by the group. If a group uses the “medical direction” billing model, the medically directing anesthesiologist must meet the 7 medical direction requirements and medically direct no more than 4 concurrent cases. Reimbursement is usually split 50/50 between the physician and CRNA. “Supervision” in the billing context means the supervising anesthesiologist is supervising 5 or more concurrent cases (or in some cases that there is incomplete “medical direction”). Most payors reduce payment for cases that are “supervised” as the term is used in the billing context.
In the “collaborative” model, the anesthesiologist is “supervising,” as that term is defined under state law or hospital policy, but the claim is submitted with the name of the CRNA only. Reimbursement is usually 100%, but reimbursement may vary depending on payor policies.
So long as state law and hospital requirements for “supervision” are met, groups may choose the “medical direction” or “collaborative” billing model even in states that have not opted out because the Medicare Conditions of Participation do not require that anesthesiologists medically direct; however, payor reimbursement policies must be considered in selecting the billing model because reimbursement may vary based on the billing methodology.
The information presented herein reflects general information that is current as of the date it was first published. In light of changes that may occur in the health care regulatory and compliance environments, the author’s presentation of this information might become outdated. Please check with your individual legal and/or compliance advisor(s) prior to taking any significant actions based upon the information and advice presented. This alert does not constitute legal advice.