CRNA Reimbursement: Making the case for parity.

Jean Covillo, DNAP(C) CRNA

Managing Member, Excel Anesthesia, LLC

     Physician anesthesiologists and Certified Registered Nurse Anesthetists (CRNAs) are both qualified and licensed to provide anesthesia services. CMS directly reimburses both providers exactly the same, simply because it recognizes that both providers perform the same service, with the same patient safety outcomes, while adhering to the same quality performance standards. Reimbursement parity has already been established in law as clearly defined in the provider non-discrimination section of the Affordable Care Act (ACA). Why then, are commercial payers reimbursing CRNAs significantly less, for the same service?  The reason is clear, because they can.  As it stands, commercial payers are too rich, too powerful, and too influential to be held accountable by the “little folk”. The case for CRNA reimbursement parity is clear and convincing as outlined in the article below.   Winning the argument and effecting real change, is a much different story; more akin, to David and Goliath. 

The case for parity begins by reviewing important background information relevant to the argument: the historical significance behind the Medicare decision to accord CRNAs direct billing rights and a brief review of  the mechanisms associated with billing under the four anesthesia delivery models . The case will follow with a reliance on facts showing clear and compelling arguments in favor of legislatively mandated reimbursement parity, the consequential effects when ongoing disparities exist, and the importance of holding commercial insurance companies accountable to parity policies.


CRNAs were the first nursing specialty to be accorded the right to bill Medicare Part B, for services through the Omnibus Reconciliation Act of 1986 (OBRA), becoming effective in 1989 when payment rules and regulations were established. CRNAs are the only nursing specialty authorized by Medicare Part B, to receive direct reimbursement at 100% of the physician fee schedule while all other nursing specialties receive a lesser percentage.1 When CRNAs provide non-medically directed anesthesia services, under the QZ modifier code, Medicare reimburses at the same rate as physicians.2-4

The reason for the government’s decision to recognize parity, is likely due to the understanding that CRNAs were not considered “physician extenders” as stated in the Annual report to Congress in 1989, by the Physician Payment Review Commission (PPRC) appointed to determine payments.5 The PPRC report describes CRNAs as “distinctly unique compared to other Non-Physician Practitioners (NPP) in that they (CRNAs) were not considered “physician extenders”. The report states in part, “CRNAs began administering anesthesia in the mid-nineteenth century and, in doing so became the first nurse specialists. Their early role was not as physician extenders, but rather as primary providers of anesthesia.” 5 pg. 185 The PPRC report spoke directly to parity in payment between the two provider categories, making clear the intentions behind the decision.

“Beginning in 1991 and extending through the transition to the full Medicare Fee Schedule in 1996, the nonmedically directed CRNA conversion factor will gradually increase until it is equal to the physician conversion factor.  In essence, this places the nonmedically directed CRNA on parity with physicians and provides for a differential payment to medically directed CRNAs.5 pg. 194


Although Medicare authorized CRNA reimbursement at the same rate as physicians, commercial insurance payers have been reticent to do so.  Typically, commercial payers update reimbursement policies within days of Medicare changes, but in this case, many did not; probably because there has never been any recourse or consequence. Some payers continue to apply negative payment adjustments to the CRNA rates while others exclude reimbursement for some procedures. Some commercial and state Medicaid plan policies to this day do not recognize the CRNA as eligible for reimbursement for certain procedures under the QZ modifier even though the CRNA is authorized through their scope of practice to provide these services, consistent with state and federal governmental laws and regulations. In order to participate in commercial plans, CRNAs often must accept reduced payments and occasional denials, resulting in a lower percentage of the prevailing physician rates and in some instances, receive no payment at all. These practices and policies are contradictory to existing law as laid out in the provider non-discrimination section of the affordable care act (ACA).6 Reductions in CRNA reimbursement rates by commercial insurance, based purely on licensure of the provider rather than performance and quality, unfairly disadvantages the CRNA from freely competing in the health care market. Simply put, Commercial  payers need to be held accountable to the laws. 

Anesthesia Delivery Models and the QZ Modifier

Anesthesia reimbursement is calculated differently from all other physician procedures. Each procedure is assigned a base unit value. The number of base units is determined by the  “procedural complexity”; the more complex the procedure, the higher the base units. Each 15 minute interval is equal to one time unit. Modifier units can add more units to the procedure, i.e. hypotensive technique etc. as the procedure gains complexity beyond already established in base units.  Reimbursement is calculated by taking the  base units  + modifier units + time units in order to get the total billable units.  Total billable units are then multiplied by a conversion factor  (CF) to complete the billable charge.  The conversion factor is the rate or dollar amount assigned to 1 unit of work.   Medicare sets the value for the CF annually and both CRNAs and anesthesiologists are reimbursed the same according to this “set” rate.  But this doesn’t hold true with commercial payers.  Commercial payers negotiate the rate (CF) separately with each contracting  provider or group. Confidentiality and nondisclosure language inherent within these commercial contracts prevent providers from sharing their contracted rates.  Consequently, providers are hard-pressed to know what the prevailing rates are in the area or what the market will bear.

Anesthesia services are provided through one of the four delivery models:7 Physician “personally performed”, CRNA “personally performed” without medical direction by a physician (QZ), “Medical Direction”, and “Medical Supervision”. Two of these delivery models involve anesthesia delivery by a solo provider; anesthesiologist or CRNAIn the “personally performed” delivery model, reimbursement is fully allocated to the provider performing the service.  In other words, the provider is given the whole pie. When CRNAs provide anesthesia service alone, the QZ modifier code is used on the billing claim to signify the CRNA administered the services without medical direction from an anesthesiologist.  The two remaining anesthesia delivery models effectively increase non-reimbursed expense through the added overhead costs of another provider, supervising or directing the anesthesia delivery without any corresponding offset in reimbursement. When anesthesiologists “medically direct” or “supervise”, separate provider modifier codes are placed on the claim identifying the conditions in which the anesthetic is being delivered.  A properly submitted claim will show each of the providers codes.   The combination of codes used represents the anesthesia delivery model.   For example, the code QK/QX would signify a medically directed model and payment would be conditioned on the anesthesiologist performing all seven TEFRA steps (see table below for TEFRA steps).

The following table summarizes the modifiers, the conditions for payment assigned to each delivery model, and the percentage of the payment (or pie) that each provider receives for the procedure charge. Modifiers signify the provider type (physician or CRNA) and the delivery model. There are other modifiers but for the purposes of this discussion, these will be the only ones addressed.

Modifier Codes and Anesthesia Delivery Models7,8

Medicare Claims Processing Manual Chapter 12 – Physicians/Nonphysician Practitioners, see Section 50 for Anesthesiologist Services and 140 for CRNA Services

It is important to note, that in most cases, only one payment is allowed per procedure regardless of delivery model or anesthesiologist involvement.  In other words, there is only one pie.  “Medical direction” and “medical supervision” increase the number of providers billing for the same procedure, effectively forcing the pie to be shared between the two providers.  Though the billable charge remains the same, the anesthesia delivery model reallocates the payment between both providers.  In other words, the whole pie that was offered as payment to the solo providers is now split between the two.  The CRNA is always reimbursed for half the units delivered when not working alone but the anesthesiologist portion is dependent on meeting the conditions defined in the anesthesia delivery model. The medical direction model lists 7 steps that must be completed in order for the anesthesiologist to meet the conditions for payment.

When anesthesiologists are unable to perform these 7 steps, conditions are not met for medical direction and the model defaults to medical supervision (unless the anesthesiologist decides to bill the claim as QZ).  The medical supervision model results in pieces of the pie being left on the table and less payment than if the CRNA had performed the procedure alone.  In this instance, not only is the pie being divided, but parts of it are being left behind.  Under the “failed” medical direction model, the model defaults to “medical supervision” and payment is nearly cut in half; 50%  CRNA and 3-4 units for the anesthesiologists. This is definitely not cost-efficient.  Consequently, anesthesiologists provide a “workaround” when failing to meet the conditions of medical direction by submitting the claim under the QZ  modifier as a means to recoup the lost units instead of accepting the alternative of losing units under “medical supervision”.9 In this manner, the claim is reimbursed at 100% since the portion assigned to the CRNA increases.  Since the physician wasn’t able to meet the conditions, coding the claim as QZ  could be considered technically accurate, but using this code for this type of “workaround” renders any kind of reporting related to the QZ modifier useless since an anesthesiologist was onsite at the location.  As it stands, it is impossible to ascertain how many CRNAs are truly providing QZ services without an anesthesiologist onsite; what geographical location QZ services are provided, and in which settings these services are administered, i.e. hospitals, surgery centers, clinics, etc.

Methods of Valuation

The higher cost of education received by physicians as compared to CRNAs has formed the basis for arguments by physicians and insurance payers that rationalize disparities in reimbursement rates. These arguments would have merit, if the educational costs were included in the original methods of valuation. While all other physician specialties included the educational expense as one of the three components contributing to their valuation in the Medicare physician fee schedule (MFS),10,11 anesthesiologists did not. Instead, anesthesiologists valued the service on the total number of billable units derived from the procedure, where total units equal the sum of procedural base units, modifier units, and time units. The reimbursement amount is then calculated by multiplying the total units by a conversion factor (rate in dollars) which is determined by CMS. Base units are merely a reflection of “procedural complexity” and do not take into consideration operating costs such as overhead or education.

Given that both CRNAs and Anesthesiologists are licensed and qualified to provide the same quality anesthesia services for the exact same procedures, and educational expense never factored into the reimbursement valuation, it follows that these arguments cannot serve as a basis for any disparity in reimbursement rates.

Quality and Safety

Finally, arguments suggesting differences in “quality and safety” as the reasons for higher physician payments have been shown to be without merit. Multiple research studies have failed to demonstrate a difference in safety between the two groups.12-17 In a recent study conducted by Negrusa in 2016,15 more than 5.7 million anesthesia claims were identified from a 2011-2012 large commercial database. These claims were analyzed for differences in patient safety outcomes between the anesthesia delivery models.   The results suggest that there is strong evidence of differences in the likelihood of anesthesia complications by patient characteristics, patient co-morbidities, and the procedures being administered, but virtually no evidence that the odds of a complication differ by scope of practice or delivery model.

Reimbursement Parity Vs Cost-Effective Strategies

Parity in reimbursement, means reimbursing CRNAs at the same rate/unit as their physician counterparts when providing the same service.  Medicare has fixed rates that effectively establish parity between the two provider categories; both are reimbursed through the same conversion factor.  Commercial payers negotiate these rates with each contracting group of providers.  CRNA groups that don’t include physicians under the contracting roster are reported to receive a much lower rate by these payers than physician counterparts.  Oftentimes payers negotiate CRNAs rates based on a percentage of the physician rates.  CRNAs who wish to participate in the plan are forced to accept these lower rates or risk even lower out of network payments.

CRNAs that argue against parity do so out of concern that parity demands could be misconstrued as a “not so subtle” CRNA campaign to increase salaries. While others rely on the flawed premise that cost-effectiveness cannot be attained when reimbursement is the same.  Reimbursement and cost-effective strategies are not synonymous, nor are they similar terms (other than both relating to money). Cost-effective strategies do not relate to the “fixed cost” of an item. In this case, the “fixed cost of reimbursement” refers only to the cost of the anesthesia procedure and does not contemplate additional expense arising from the service itself, i.e., number of providers needed per case, call services, and time otherwise spent between cases, all of which add to the underlying operating expense.  CRNAs are more cost-effective simply because the non-reimbursed operating expense associated with the “CRNA-only” delivery model is significantly less than other models that  require the “pie” or reimbursement to be split  between two equally qualified providers18-24.  In addition, the CRNA salary is less than half that of an anesthesiologist which further reduces operating costs and contributes to a much more cost-efficient service. Even though reimbursement is fixed, profitability is translated directly to hospitals and surgery centers through lower operating costs and contracts free from stipends or guarantees. When reimbursement parity exists, the reimbursement amount is sufficient to offset these costs.  Without it, hospitals are left to make up the difference which unfairly disadvantages the CRNA in the competitive market.

CRNAs serving hospitals and surgery centers across the country must negotiate with commercial insurance payers for their reimbursements. Many of these nurse anesthetists report an inability to negotiate payment rates equivalent to their anesthesiologist counterparts. In addition to lower rates, commercial payers are refusing to reimburse CRNAs for procedures they are qualified to perform. This form of payment discrimination obstructs free and fair competition within the market. In the presence of reimbursement parity, operating expenses associated with the actual cost of providing anesthesia services (24-hour call and down time between cases), could be fully offset through the QZ delivery model. True reimbursement parity is blind to the credentials of the anesthesia provider. An equitable payment model enables CRNA services to become self-sustaining and competitive in today’s healthcare market.

The Case for CRNA Parity in Reimbursement

Arguments for CRNA reimbursement parity are simple:

  1. CMS has set the value for the anesthesia procedures and reimburses only those providers “qualified” to perform them. CMS has deemed CRNAs “qualified” as long as the procedure is within the CRNA state scope of practice. Reimbursement parity between the two provider categories is recognized and established by Medicare Part B, in reimbursement rules and regulations.
  2. Both physicians and CRNAs are licensed and qualified to deliver the service.
  3. CRNAs are not physician extenders and are not dependent on anesthesiologists to provide the service.  Both providers deliver the same service with the same patient safety outcomes, and both deliver this service according to the same quality and performance measures and standards.
  4. The reimbursement payment is in exchange for the delivery of the procedure itself. The method of fee schedule valuation chosen by the physician anesthesiologists prioritized the inclusion of time units over education and training expense.  This method has been in use for nearly 30 years. There is simply no rationale that supports a higher payment for one qualified provider over another when the exact same procedure is delivered.
  5. When commercial payers “short” CRNA reimbursement, hospitals are left holding the bag when guaranteed minimums aren’t met.
  6. The easiest argument to be made is that the law requires it to be so.

Patient Protection and Affordable Care Act. 42 U.S. Code § 300gg–5 – Non-discrimination in health care.6

a)Providers  – A group health plan and a health insurance issuer offering group or individual health insurance coverage shall not discriminate with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider’s license or certification under applicable State law. This section shall not require that a group health plan or health insurance issuer contract with any health care provider willing to abide by the terms and conditions for participation established by the plan or issuer. Nothing in this section shall be construed as preventing a group health plan, a health insurance issuer, or the Secretary from establishing varying reimbursement rates based on quality or performance measures.


The healthcare system relies on cost-effective anesthesia care and CRNAs are well positioned to provide it.  The passage of the Affordable Care Act has resulted in the provision of medical and preventive health services to an additional thirty million people.  For a country in the midst of a national pandemic, with more than 12.5 million people unemployed and arguably the highest health care costs in the world, it is important to recognize the value CRNA directed care brings to hospitals struggling to stay afloat. This can only be achieved through reimbursement parity and ensuring the policies of commercial insurance companies reflect equitable payment among providers.  Choosing to maintain the status quo, payers may soon be facing the consequences of their discriminatory policies.


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