Answer: Realized revenue per anesthesia hour is collections for a defined set of services divided by the anesthesia hours associated with those services. Then compare expected revenue with actual revenue for the same period. Keep charges, allowable payment and actual revenue separate in the discussion. To address realized revenue per anesthesia hour, also ask how the group defines its collection rate and which anesthesia hours it uses in the comparison.
The short answer
A practice management executive explains that most anesthesia charges and payments use base and time units. Total billable units are multiplied by the practice conversion factor to determine charges. Those units are multiplied by the payer conversion factor to determine allowable payment.
The two factors serve different purposes. The charge calculation tells you the amount charged. The payer calculation tells you the allowable payment.
An anesthesia business executive explains how to compare expected revenue under contractual payer rates with actual revenue for the same period. That analysis uses actual payer and case mix. It helps assess how closely the group approaches its revenue potential.
For an owner, the discussion starts with what the units generate under payer terms and continues with how actual revenue compares with that expectation.
What usually goes wrong
Using the practice charge factor as the payer payment factor mixes two separate inputs. The practice management executive assigns each factor a distinct role: one determines charges, and the other determines allowable payment.
An anesthesia business executive also separates utilization from payer mix. Poor operating room utilization limits billable units. Weaker payer mix lowers potential yield per billed unit. The executive links these pressures to the need for facility support.
Service categories can complicate the picture. A practice management executive explains that surgical anesthesia, obstetric anesthesia and services without time units follow different rules and conventions. Those differences can obscure practice performance in billing reports.
What a veteran checks first
- How base units and time units contribute to total billable units.
- Whether practice charge factors and payer payment factors are kept separate.
- How contractual payer rates enter the expected revenue calculation.
- Whether that calculation reflects actual payer and case mix.
- Whether expected and actual revenue cover the same period.
- How reports distinguish surgical anesthesia, obstetric anesthesia and services without time units.
- What the group means by collection rate and which anesthesia hours it uses when discussing revenue per hour.
What the payment framework says
A practice management executive identifies fifteen minutes as a typical time unit. Most anesthesia charges and payments combine base and time units in the calculation.
A federal payment authority explains that physician anesthesia payment generally uses allowable base and time units multiplied by a conversion factor specific to the locality. Exceptions apply within that framework.
An anesthesia business executive uses contractual payer rates and actual payer and case mix to calculate expected revenue. Comparing that expectation with actual revenue for the same period helps assess whether the group is approaching its revenue potential.
Another anesthesia business executive highlights the separate effects of utilization and payer mix. Fewer billable units and lower potential yield per unit put pressure on revenue through different parts of the calculation.
Questions to bring to the partner meeting
- How do we distinguish practice charge factors from payer payment factors?
- How does expected revenue reflect actual payer and case mix?
- Are we comparing expected and actual revenue for the same period?
- How do we separate utilization effects from payer mix effects?
- How do our reports account for differences among service categories?
- How are we defining collection rate and the anesthesia hours used in our revenue per hour discussion?
Sources
- Centers for Medicare & Medicaid Services
- David J. Platt, Senior Vice President, Anesthesia Division
- Jody Locke, MA
- Tony Mira, President and CEO
