The OIG identified $17.7 million in anesthesia overpayments in a 2025 audit, with most errors traced to missing documentation of medical necessity for anesthesia services during spinal procedures. The audit revealed straightforward documentation problems that happened case after case. A five-minute time discrepancy here, a missed modifier there, and by year-end, the revenue loss becomes significant.
This happened because anesthesia medical billing works differently from other specialties because payment depends on three variables: procedure complexity, case duration, and care delivery model. This guide explains how anesthesia payment is calculated in 2026 and what documentation protects your revenue.
Medicare introduced a two-tier conversion factor system in 2026, with APM participants receiving $20.6754 per unit while non-APM practices use a different rate. Commercial payers tightened documentation requirements, and regulatory scrutiny on anesthesia billing and coding increased significantly.
Every anesthesia payment follows the same calculation:
(Base Units + Time Units + Modifying Units) × Conversion Factor = Payment
Base units represent procedure complexity and are assigned by the American Society of Anesthesiologists. These values are fixed, you can’t change them, but you must use the correct CPT code.
Simple procedures carry 3-5 base units. Complex cardiac surgery can carry 20+ base units. A total knee replacement (code 01402) has 7 base units.
Time units determine the variable portion of your payment. Calculate by dividing total anesthesia minutes by 15, reporting to one decimal place for Medicare.
| Minutes | Calculation | Time Units |
|---|---|---|
| 45 | 45/15 | 3 |
| $63 | 63/15 | 4.2 |
| 129 | 129/15 | 8.6 |
That’s why you should document exact times, no rounding.
Medicare requires a modifier on claims in anesthesia RCM. Your choice determines the payment percentage.
| Modifier | Scenario | Payment |
|---|---|---|
| AA | Anesthesiologist alone | 100% |
| QZ | CRNA alone | CRNA alone 100% to CRNA |
| QK | MD directing 2-4 CRNAs | 50% to each |
| QY | MD directing 1 CRNA | 50% to each |
| QX | CRNA with direction | 50% to CRNA |
| AD | MD supervising >4 cases | 3 base units only |
Medicare doesn’t pay for physical status modifiers. Most commercial payers do, that’s $156 additional revenue on a P4 case at $78 per unit.
When you bill medical direction modifiers (QK, QY, QX), you need to document all seven steps:
Miss one and your payment drops or gets denied entirely. Medical direction covers up to 4 cases at once. Run more than 4 and you’re stuck with the AD modifier, which cuts payment down to just 3 base units. You also need the CRNA’s attestation showing physician involvement in your records.
Everything on your claim has to match your documentation exactly. Your anesthesia medical billing record needs patient identifiers that match the insurance card, start and stop times recorded to the minute, and the procedure code that matches what the surgeon actually did. Include physical status, what type of anesthesia you gave, and signatures from everyone who touched the case, relief providers included, with exact handoff times.
Most denials happen because of mistakes you can fix before you ever submit. Here’s what goes wrong most often.
Wrong modifiers account for 22% of rejected claims per CMS. Bill AA when you actually did medical direction, or forget QX on the CRNA’s claim, and it bounces back.
Mess up the math converting minutes to units, or don’t break out discontinuous time separately, and the payment won’t match. Do this on a few hundred cases and the lost revenue adds up fast.
Bill for what was scheduled instead of what actually happened in the OR; especially when the surgeon changes course mid-case, and the claim gets kicked back with wrong base units.
Bill medical direction when you’re running more than 4 cases without flipping to AD, or don’t document which cases overlapped, and you’re looking at denials and possible audits.
Some types of anesthesia medical billing have their own billing quirks on top of the standard rules. Here’s what changes for these specialties.
Labor and delivery uses codes 01960-01969. Code 01967 is for labor analgesia, 01968 is for cesarean after labor analgesia. Track time for each phase separately.
Cardiac cases (00560-00580) have higher base units because they’re more complex. These get billed separately, they’re not rolled into the anesthesia payment:
Kids under one year sometimes have their own procedure codes. When they don’t, add +99100 for extreme age (under 1 or over 70) to pick up an extra unit.
Only bill these separately when:
Anesthesia medical billing in 2026 comes down to executing the basics correctly. The payment formula is straightforward: base units plus time units plus modifying units times your conversion factor.
The challenge is getting each anesthesia revenue cycle management component right in every case. So document exact times, apply correct modifiers, verify procedure codes match what surgeons actually performed, and meet medical direction requirements.
Leverage AI for faster claims, reduced denials, and improved reimbursement.
Please provide the following information, so our team can connect with you within 12 hours.
Or call us as 800-640-6409
