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The Anthem Series ~ by Gordon Morewood, MD, MBA, FASE, FASA
The Anthem Debacle
On November 1st, 2024, Anthem Blue Cross Blue Shield disclosed plans to limit the anesthesia time that could be claimed with each anesthesia CPT code. One month later, on December 5th, Anthem announced the abandonment of this policy.
What exactly happened? What did the policy actually mean? Why would a major commercial insurer suggest such a policy? Why did they completely give up on the idea just five weeks later?
The Background Story
The current system for billing anesthesia services was introduced by CMS in 1992, with only minor changes since then.
When filing a claim for clinical anesthesia care, each episode is described using one of 275 anesthesia-specific Common Procedural Terminology (CPT) codes. Each anesthesia CPT code is linked to surgery on a defined anatomical region and/or a particular surgical technique. Each anesthesia code is allocated a set number of ‘base units.’ Anesthesia time is usually reported as one ‘time unit’ per 15 minutes. The claim for a specific anesthetic is determined by the sum of the base units plus the time units, multiplied by the specific insurer’s anesthesia ‘conversion factor.’ (Eg: a carotid endarterectomy that required 3 hours to complete through an insurer with a conversion factor of $80 / unit would pay: [10 base units + 12 time units] * $80/unit = $1760)
Over the past 30 years, this payment system for anesthesia services has been adopted by every single major government and commercial insurer across the U.S.
So why would Anthem decide to abruptly and unilaterally change this system?
Who The Heck is Anthem?
Anthem is the operating brand name of Elevance Health Incorporated. This for-profit publicly traded corporation is the second largest health insurance provider in the U.S. and the largest insurer in the Blue Cross Blue Shield Association.
Anthem operates health insurance plans in 15 states, providing coverage to almost 50 million individuals. In 2023, Anthem reported $170 billion in revenue and generated $8 billion in free cash flow. These profits funded healthy dividend payments to investors, stock buybacks worth billions to boost Elevance’s share price, and a $22 million compensation package for the CEO.
Meanwhile, unverified raw data collected by U.S. government agencies suggests that Anthem rejects one of every four claims filed under its commercial health insurance products.
So, what was Anthem up to with their new anesthesia policy?
https://www.elevancehealth.com/newsroom/elv-quarterly-earnings-q4-2023
https://www.beckerspayer.com/payer/elevance-healths-5-highest-earning-executives-in-2023.html
What Were They Really Going to Do?
On November 1, 2024, Anthem announced plans to use data from a publicly accessible CMS website to limit the maximum anesthesia time claimed for each anesthesia CPT code. The policy noted that any claim submitted with “reported time above the established number of minutes will be denied.”
Importantly, CMS does not limit anesthesia time, nor does it provide any explanation on its website regarding what the data in the spreadsheet actually represents. An official inquiry from the ASA to CMS requesting an explanation of the posted times remains unanswered.
In addition, the Anthem policy falsely claimed that “this update will not change industry standard coding requirements or the American Society of Anesthesiologists’ (ASA) anesthesia formula.” In reality, the Anthem policy would have completely upended long-established, universally accepted standards for filing anesthesia claims.
But how could the anesthesiology community fight back against this unilateral change?
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/clm104C12.pdf
Anesthesiology Pushes Back
Within days of Anthem’s announcement, leaders from the ASA as well as the state component societies from Connecticut and New York, demanded a meeting with the Anthem officials responsible for creating the new policy.
In addition, planning began for a wide-reaching public relations campaign. Major media outlets in the affected states were contacted and offered official statements and representatives from the specialty who could speak to the policy’s impact. Local anesthesiologists contacted state regulators, legislators, and members of the executive branch to ask for their comments. Plans were initiated to partner with academic medical centers in each state, which would disproportionately bear the cost of eliminating payment for longer anesthesia cases.
But was Anthem able or willing to justify this policy?
Driving Without a Learner’s Permit
A delegation from national and state societies met with Anthem officials on November 15th, 2024. Based on the facts disclosed in that meeting, the ASA representatives came to the following conclusions and opinions:
- The new policy was set for initial implementation in Connecticut, New York, and Missouri but would expand to most Anthem insurance products nationwide.
- The Anthem officials responsible for the new policy had no understanding of how anesthesia time was determined.
- The same individuals had no functional knowledge of how anesthesia claims were generated from timestamps in the EMR.
- No one on the Anthem team understood that a single anesthesia CPT code could crosswalk (be matched with) between 2 and 200 different surgical CPT codes, resulting in significant variations in anesthesia times and resource requirements.
- Anthem had no appreciation of the policy’s adverse consequences on medical centers that care for a disproportionate number of patients in poor health or undergoing more complex surgeries.
According to the Anthem officials in the meeting, the purpose of the new policy was to “reduce fraud and abuse and eliminate the possibility of a few bad actors placing their finger on the scale when reporting anesthesia time.”
Did the facts actually matter to Anthem?
Commence Peddling Backwards!
During the November 15th, 2024 meeting with Anthem, the anesthesiologists present were able to correct several of the company administrators’ misunderstandings regarding anesthesia time, service coding, and claims processing.
Once faced with facts, the policy appeared to evolve in real time during the meeting. Anthem representatives stated that any anesthesia claim denied under the new policy could be re-submitted with documentation from the EMR demonstrating that the anesthesia time accurately reflected the recorded anesthesia start and stop times, allowing for payment. Of course, appeal of the initial denial would saddle each affected anesthesia practice with significant costs and delay of payment.
The anesthesiologists in the meeting expressed the opinion that nearly 100% of denied claims would be supported by the anesthesia start and stop times in the EMR. When asked, Anthem admitted that they had not performed an audit of anesthesia times and had no evidence of fraudulent claims being submitted. Nonetheless, they brushed aside the request to complete such an audit before implementing the policy, stating that “the new policy can always be rescinded at some point in the future if no fraudulent claims are identified during the appeal process.”
The call ended with Anthem clearly aware of the irrational nature of the new policy, but with no commitment to reconsider their plan.
What can be done when decision-makers have no interest in the facts?
Attachment: Anthem Sen Gordon letterThe Anthem Debacle – The Insurance Industry is Regulated by the States
Coincident with the meeting with Anthem on November 15th, a concerted grassroots effort was launched at the state level. Anesthesiologists were recruited to reach out to their local contacts in the legislative and executive branches of government. At the same time, the public relations campaign continued through local and national media channels.
The combination of relentless social and commercial media coverage quickly began to gain visibility with state politicians and regulators who could affect insurance company behaviors. On November 20th, 2024 Republican State Senator Jeff Gordon from Connecticut (a practicing hematologist) wrote to the Director of Government Relations for Blue Cross & Blue Shield Connecticut (Anthem) taking them to task for an irrational policy and urging them to reverse course. Connecticut Attorney General William Tong and Comptroller Sean Scanlon took similar steps. More state and national elected politicians began to publicly oppose the Anthem policy and on December 4th the Democratic Governor of New York, Kathy Hochul, posted on X that the policy was “Outrageous. I’m going to make sure New Yorkers are protected.”
But could the politicians who write the rules really overcome the political power of a $170 billion corporation’s lobbying efforts?
The Final Straw
As public backlash mounted and politicians began to take notice, a singular act of violence shocked the nation and crystallized the public’s erupting frustration with the health insurance industry. On December 4th, 2024, Brian Thompson, CEO of the nation’s largest healthcare insurer, UnitedHealthcare (UHC), was shot and killed outside a Manhattan hotel in what appears to have been a targeted, premeditated murder.
The death of Mr. Thompson was an unspeakable tragedy. Yet, it also unleashed a firestorm of pain and anguish from those desperately caught between their genuine medical needs and an insurance industry increasingly disconnected from its raison d’etre of delivering effective healthcare.
On December 5th, 2024, Anthem announced it would abandon the proposed policy to deny anesthesia claims based on arbitrary time limits. In our opinion, Anthem disingenuously, claimed the policy “was only designed to clarify the appropriateness of anesthesia consistent with well-established clinical guidelines” and blamed the reversal on “significant widespread misinformation” about the policy.
Does this change mean that the anesthesiology community won this fight?