Daniel Prevost: A Primer on Anesthesia Stipends

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Jeff McLaren (00:05):
Welcome to another edition of Anesthesia Economics. Today we have Daniel Prevost, who is Medaxion's Senior Vice President of Strategic Development. Daniel, welcome.

Daniel Prevost (00:19):
Thanks for having me, Jeff.

Jeff McLaren (00:26):
We talk all the time about the issues that surround stipends, whether it's cost management or revenue optimization, the two key components that are going to drive a stipend that an anesthesia practice might ask for a facility. What do you see as the evolution of this problem or this challenge I should say, particularly on the revenue side over the last five, six years? It just seems that the stipend discussion has become so acute over the last five or six years.

Daniel Prevost (01:06):
It has. Everyone in the industry is hyper-focused on the stipend issue, whether you're private practice negotiating stipends or a health system that is on the paying end of stipends or even health systems that have chosen to employ. There's still a financial gap with most anesthesia practices around the country, and everybody is trying to figure out how do you minimize that without impacting quality of care. So I think it has really, I think the energy around this has really hyped up in the last five or six years, like you said, for a number of different reasons. But I think at the most basic level, you have to maximize revenue on one end while at the same time optimizing or minimizing expenses on the other end in order to impact the stipend. So today, I know we're going to kind of drill into the revenue component of this, and I've been in the anesthesia revenue cycle industry now for 22 years.

(02:30):
So I've sort of seen it evolve from really a cottage industry where you had a lot of practice managers who really understood the depth of the revenue cycle related to anesthesia very, very well to really large multi-state groups or even large health systems that are now getting into the game and responsible for the revenue component. And it's changed how to manage it now has, I think, gotten more complex mainly due to the size and scale of the different footprints that you're managing. So a lot of times, I think in the past you had smaller groups that got pretty good at the revenue cycle component because they were only dealing with a subset of payers in one state. And the rule sets associated with that were pretty defined. They didn't change a whole lot over time, and as long as you didn't have a lot of turnover in your RCM team, you were able to get pretty good at doing that, even if it was a fairly manual process. But today you've got large multi-state groups, so you're dealing with just a host of additional complexity that you weren't dealing with years ago. And then to compound that, you have all kinds of other legislation and things that have changed, like the No Surprises Act that have really impacted a group's ability to maximize revenue.

Jeff McLaren (04:24):
Yeah, I was shocked when you and I started working together. I didn't have perspective on just how different some of the rules around charge submission can be state to state with various payers. I mean, you hit on that, but there's large variation there for sure. Do you think that, I think that there's a lot of disconnect. That's part of the subsidy negotiation problem with facilities is part of that disconnect, a misunderstanding around what practices can bill, what their revenue and leverage challenges are relative to prior periods. I suspect strongly that many hospital C-suite parties that are negotiating stipend just don't understand the challenges on the revenue side for practices.

Daniel Prevost (05:30):
They don't the industry, because a lot of health systems have moved into employing anesthesia providers, you now have sort of two sides to the industry. You've got those who are provider led, anesthesia provider led that have been in the industry for years that understand a lot of these challenges. And then you've got on the health system executive side that are those that are responsible for the revenue cycle component. They tend to lump anesthesia in with all the other specialties. So if you're employing urologists and general surgeons and a host of other specialties, the assumption at the executive level is anesthesia is just another specialty, and we can figure that out. And that is probably less true when you get into the head of the RCM team at a large health system. They know that there's some complexities associated with anesthesia, but I think there's still a tendency to believe that they can just figure it out over time.

(06:49):
And in a lot of cases when you go in and do audits, you discover that they really don't know what they don't know. So they think they're doing a great job, but when you look under the covers and you really understand what should be happening, it's not happening, but they're not aware that it's not happening or that it's even important. So there's still a great deal of revenue leakage when it comes to that. So I think you touched on this a minute ago, but I think there's also a lack of understanding at the health system executive level of how the No Surprises Act really cut the legs out from underneath anesthesia provider groups. So groups that were able to negotiate very favorable rates in the past are no longer able to do that. And so when the health system start having conversations with payers, if they're now responsible for the RCM component, they just assume that the rate that's being offered is a fair rate. And then when you start doing the math on it, it's drastically different than what we've experienced in our careers as the norm over the years.

Jeff McLaren (08:25):
Do you think that, is it a lack of understanding around just they don't understand the impact of the regulation, or do they think that the practice should be doing a better job to manage that? It's really a mission impossible situation in a way.

Daniel Prevost (08:45):
It is. I think there's definitely an understanding of the No Surprises Act. And I do think too,

Jeff McLaren (08:53):
It impacts them too at some level. Yeah.

Daniel Prevost (08:56):
It's happening with radiology, it's happening with emergency medicine. So they do understand the impact that No Surprises has had on anesthesia specifically. But the contract rate is really just one component. So if you're in the RCM business with respect to anesthesia, obviously the rate that you negotiate the unit rate, for lack of a better word, is one of the primary opportunities or areas of opportunity to maximize revenue. So if there's a ceiling associated with that due to the No Surprises Act, then you're immediately bound or limited in terms of what you can expect from a revenue standpoint. So I think the first hurdle is to understand what those bounds are, and then the next step is making sure that you're maximizing within those bounds, you're maximizing the revenue associated with what a practice can generate.

Jeff McLaren (10:20):
That makes sense. Do you think that, I guess I should say, how would you say arbitration has changed some of the dynamics here too? Because now there's whole frameworks in some organizations have a very sophisticated way of managing those frameworks to manage out of network situations through arbitration.

Daniel Prevost (10:44):
Yeah, I think that's a great point to bring up. I think the health systems may have some sort of a process in place to deal with arbitration, but I think some of the larger anesthesia groups across the country have done a really good job. And this isn't just happening with anesthesia, it's happening with radiology and emergency medicine too. But they've done a really, really good job of honing a arbitration process that has allowed them to stay at the top tier of that range that we talked about earlier. So I think that is one example of where size and scale is really starting to pay off from a revenue generation standpoint. And some of those large groups are now exporting that capability out to either other private groups or even health systems to offer that service. So it'll be interesting to see how that plays out.

Jeff McLaren (11:56):
And then it gets into a little bit of capital resources too, because if you're playing that game, you might ultimately be successful with a high percentage potentially of those arbitration cases, but you might be without that cashflow for 12 months or more.

Daniel Prevost (12:14):
Cashflow is one issue, and I don't know what the expense side of that equation looks like either. It's very labor intensive process. So unless you can come up with a way to automate that so that it's not a huge financial drain, so whatever gain you get on the rate, you're basically losing that in whatever expense it's costing you to go get the money. So that's another component as well.

Jeff McLaren (12:48):
I mean, it's almost as if it's a separate part of revenue cycle now is arbitration management. It's its own specialty within that domain.

Daniel Prevost (12:58):
It is. It really has become that for all hospital-based specialties. So it's now become an expectation. And I think there are some companies out there that are automating that process. I don't know what they're charging to do that, but I think we'll continue to see more and more sophistication around the arbitration process. And then maybe the legislation will change again in the future. Who knows?

Jeff McLaren (13:29):
Yeah, it might. We've been surprised clearly with the No Surprise.

Daniel Prevost (13:36):
No Surprise. Yes, exactly.

Jeff McLaren (13:39):
Exactly. I hear from some of the parties that we deal with that there's in-house capability that they've spun up whole departments on arbitration management. You mentioned there's likely software plays that are moving into that space. I would imagine separate firms are also going to move into that space that are going to be distinct from your traditional revenue cycle firms, but then the larger revenue cycle firms are probably doing that as a specialty as well.

Daniel Prevost (14:13):
They are. I think the whole RCM process, when I first got into the RCM space, it was a very defined process that had a sort of beginning and an end and one company would be responsible or handle the majority of that entire process, even if you were doing it in-house or outsourcing either one, you handled or managed that whole process over the last really 10 to 15 years, the process has really gotten decoupled. So you may have experts in one area like arbitration that do a really, really good job, or you may have experts in an area like patient collections, for example, or experts in automated coding, for example. And these are deep, deep, deep level expertise areas of expertise that you can now sort of assemble like Legos to create your own RCM process. And I think that's the challenge in today's world is what's the best practice or who's the best at coding or who's the best at patient collections, et cetera. And then assembling a process that is the best of the best in each area

Jeff McLaren (15:45):
With the right handoffs at each point, because clearly that's going to need precise definition for those disparate parties to work together effectively for the benefit of their client.

Daniel Prevost (15:56):
You got it. I want to touch on this too. We talked about the arbitration piece, which is related to the contracting component, but once you get past that contracting component, I think there's a lot of education that needs to happen mainly with health system executives on how anesthesia billing, just the pure revenue cycle component of it is different than all other specialties. And the way I've always described it is it's really like a cab fair where you have, you get into a cab and the driver pushes a button and there's a base fee to get you to the airport, and then every quarter of a mile there's a click on that, and then ultimately it ends up in a fair, very similar to that anesthesia billing is different than every other specialty out there. So every other specialty essentially has codes associated with what they did. And there's a fixed amount of money that's negotiated that's specific to the code

Jeff McLaren (17:18):
Regardless of how long it takes.

Daniel Prevost (17:19):
What they did, regardless of how long it takes regardless of complexity, regardless of anything else. And anesthesia was sort of a trailblazer back in the days of the creation of these CPT codes where they argued and one that their specialty was different and they didn't want to be penalized by cases that took an extraordinarily long amount of time to complete, or they didn't want to be penalized by cases that had an extremely extreme amount of complexity. So they built in a reimbursement methodology and sold it to the government where all of that is in play. So instead of getting paid a specific amount for a specific code, they're now what happened in the operating room, which could be a number of different things. It could be the patient had an odd position where they may be vertical instead of horizontal or they may be upside down instead of right side up, or it may be an emergency situation versus just a normal surgical case.

Jeff McLaren (18:45):
You know what you're saying is that in anesthesia billing and billing for anesthesia, the context of the case is critical where another areas of medicine, the codes, the code, if that's the procedure based on this diagnosis, well that's what it is in anesthesia. The context is critically important.

Daniel Prevost (19:04):
So back to the cab fair analogy, if you're the driver pushing the button on the base fair to the airport, that base fair is really a component of all of those things that happened in the operating room. So all of those things that happened in the operating room translate over to an anesthesia code, which has a base unit value, and then you start adding things onto that like time in 15 minute or whatever increments that build on top of that. And then you have other circumstances like emergency or positioning or things like that.

Jeff McLaren (19:51):
Or patient age, whatever it might be.

Daniel Prevost (19:54):
That are essentially add-ons on top of that. And then you sum all of that up and you have a total value for the surgical case. I think some of the knowledge associated with that, because of the scale, size and scale of some of the RCM shops, some of the knowledge associated with the specifics of how that gets calculated has been lost in the industry a little bit. So, you know-

Jeff McLaren (20:29):
Do you think that loss is just due to the increasing corporatization where you had pockets of expertise that inherently were local because the practices were smaller and they did some of their own billing or the billing group that they utilized was local, so you had a number of knowledgeable people that had to have the knowledge to do the work that gets rolled up and there's an assumed upper level of knowledge, but maybe not at the rolled down levels. Is that largely true?

Daniel Prevost (21:04):
It is. I think this has to be understood at a high level so that you can make sure that that knowledge gets pushed down within the RCM team in your organization. And it can't just be a few people on the team that understand that. It really has to be the whole team that's oriented around that. And you have to have a process that's oriented around making sure that you collect the entire context of information out of the place of service in order to be successful at that. So you and I, our nemesis and our business is still documentation on paper records. That's still a thing out there in the industry, which it's hard to even believe it's 2026 and there's still paper handwritten documentation going on in the operating room with respect to anesthesia. But there's no way, I've never seen a handwritten anesthesia record that is able to capture the context of what we just talked about in a meaningful way.

Jeff McLaren (22:17):
I guess there's no feedback loop to a piece of paper. Correct. So if this data point is true, oh, prompt on this other condition that might also be present, that would then roll into some of those add-on fees base or the base unit, the context of the case.

Daniel Prevost (22:34):
You got it. So what you're capturing from the operating room environment and how you're capturing the specificity of the information coming over one, the provider has to be very engaged in that process to make sure that there's a high level of understanding of how these different situations impact the revenue component on a case. And I do see a loss in that area. The larger the organization, the harder it is to have a training program to make sure that all of the providers understand what they do and what they capture at the point of care, how that impacts revenue downstream. So you have to have a very sophisticated organization to be able to push that all the way down to every CRNA in the organization when you've got 3000 CRNAs that you're responsible for training. So it's just a huge task.

Jeff McLaren (23:48):
No, that's true. And it is a task that really never ends. You have to keep up with it. You have to have a constant feedback loop. And I remember a decade and a half ago, 20 years ago, the groups that maximized revenue had tight feedback loops to their providers around documentation slippage or things that were causing problems. And of course, they all had at that point in many groups, they had incentives because they were partners in the business. And so not only is that that constant feedback loop required, you have to substitute what previously was an incentive with diligence on communicating to the providers because incentives are just different now.

Daniel Prevost (24:33):
They are. So, like you said, in the old model where you had IT physicians that were highly incentivized to make sure that that was actually happening across their practice, some of the employed models that exist today, you have to compensate for the loss of that incentive with oversight. And it has to be a system oversight process because it's not scalable to do manually. So you really have to have a systematized way of making sure that that is happening and that, like you said, there's a feedback loop in place in order to validate that there's a connection to the providers and that somebody is watching that.

Jeff McLaren (25:28):
That's right. And that there's honest feedback because we all need that feedback when we might've deviated from either our own diligence or documenting a certain thing. We need that kind of feedback to get us back on track. I mean, that's just how performance is generated in organizations. We talked a little bit about paper records and the challenge because the data has to be either transcribed or somehow lifted off that paper through in most cases pretty difficult means. But then there's also systems that are installed in hospitals that are in some ways relative to revenue cycle, overly clinically centric. And they're put in place for really great reasons to manage documentation around the clinical procedure. But if RCM is not in the loop in terms of the types of prompts and data that's collected, there's a missing element there too.

Daniel Prevost (26:31):
Absolutely. Back to the paper record issue, I would encourage any health system leader that's listening to this that has never gone the step of actually looking at a paper anesthesia record that's handwritten. And I want you to just imagine being on the other side of that, trying to interpret from a coding perspective all the things that we talked about earlier that happened on the case to understand the context in order to maximize revenue. So I'm a big believer that you really have to have an electronic record in the first place to be able to manage that process. And then as you and I have talked about, then there's, I believe it sets you up for not only being successful with the revenue cycle, but it sets you up to be able to mine data now where before you weren't able to mine any data because you didn't have any. All you had was-

Jeff McLaren (27:38):
That's right. So then you go beyond just maximizing the ability to charge for the work, but then you have the data that can actually help you manage the resources. That's the other side of the subsidy equation.

Daniel Prevost (27:52):
Correct. And I think you and I are still discovering different use cases of what you can learn from the information that is coming over in data form versus what historically has been kind of the paper record documentation methodology. So I think being able to manage the staffing footprint is a huge component, but also you get into drug usage, drug reconciliation. I mean there's just a number of different things that you can do with real data that you couldn't do before in the old paper documentation methodology.

Jeff McLaren (28:42):
Yeah, it is interesting because clearly information that's put on paper has to be pulled off of a paper and there's no real time prompts. And so you're left with the organization of the page itself. I was always struck when I got into the industry of how proud groups were in different facilities of their paper form. And I think that pride had to do with the fact that they went through a whole process of recognizing the data that needed to be entered in deficiencies in that entry and coming up with bold font or isolating certain data points in a box. I mean literally, right. And that drove behavior. So one of the things that was interesting back when paper was much more of a thing, it's still a thing, but when it was more of a thing is you had this pride of iteration of the form itself because that engendered conversation with the team.

(29:43):
And what you get with some of some electronic systems is they're put in place and they're way too rigid either because it's hard for people that need to iterate that to think through because it's not an eight and a half by 11 and they can't see it in a quadrant. It's a little bit more abstract. And the cost of doing it, creating a new paper form is almost just force of will and having someone that will print the different form. But when you've got to change data entry or prompting in an electronic tool that happens to be rigid, that can be a problem.

Daniel Prevost (30:20):
And just to make this practical, I think if health system executives understood the value associated with making sure that you're getting all of the information you should be getting, A perfect example of that is an orthopedic case where maybe a spine surgery where if you were prompted to make sure that you entered all the information that happens on a spine case like instrumentation, then there's a significant amount of improvement in revenue associated with that specificity. So in a spine case, it's five base units and an additional that's a of money. That's a lot. Money's a lot of money. Additional five base units associated with a spine case that has instrumentation, which the majority of them do. So if you go back and did an audit on records, that often gets left off of records. And if you're a practice that gets a hundred dollars a unit in reimbursement from commercial payers and you leave all five base units, you just lost $500 on a case. So it's significant revenue.

Jeff McLaren (31:44):
And if it's not documented, it didn't happen.

Daniel Prevost (31:46):
Correct. Another example of that I think that often gets missed is you think about how many procedures kick off as diagnostic procedures. In fact, many procedures start off as a diagnostic procedure.

Jeff McLaren (32:04):
They don't know until they get in there, right?

Daniel Prevost (32:05):
You don't know until you open the patient up what you're going to end up doing. And if the CRNA isn't or physician isn't in direct communication with the surgeon during that process of flipping it from a diagnostic procedure to an actual procedure, then there's significant revenue loss associated with communicating that back to the RCM team. So if all you do is push the procedure that gets scheduled, you're going to have a exploratory lap, for example, that gets put on the schedule, and if the provider doesn't change that to an appendectomy or whatever happened on the case, then there's significant revenue loss associated with that. And I can't tell you how many audits I've been a part of where that's just not happening. Whatever procedure gets put on the schedule, which is in a lot of cases, diagnostic just gets sent to the billing office as what happened. So in the billing office can't change that unless they go in and read every single surgical op note, which isn't practical either.

Jeff McLaren (33:25):
No, it's not. Yeah, I think that's really interesting. And then you get into incentives by the revenue cycle team to chase ever smaller incremental dollars that given the percent they make on the case, let's say that group makes 5%, 7%, whatever it is, that little incremental bit that the coder or whoever in their organization has to chase might not be worth the time that they have to spend to chase it. Now, the 95% of that that would've gone to the group is a much bigger deal. So it's interesting how these incentives work. So if you don't get the data capture to start with, the chasing gets into conflicting incentives on these organizations.

Daniel Prevost (34:24):
Yeah. I mean, you think about an organization that's getting, pick a number 5% on the patient portion of the bill, and if the patient owes a hundred dollars after insurance, then that means the billing company's going to get $2 and 50 cents for collecting a hundred dollars from the patient, and it's a dollar just to send a statement out. So if you think about the loss associated with chasing the $2 and 50 cents, there's not a lot of incentive there to go get the a hundred dollars. But like you said earlier, if you're keeping 95 of the a hundred dollars, that's a whole different equation.

Jeff McLaren (35:15):
You want that $95.

Daniel Prevost (35:18):
Absolutely. Absolutely.

Jeff McLaren (35:23):
Yeah. That's definitely interesting. So Daniel, this has been a lot of fun today.

Daniel Prevost (35:31):
This has been fun.

Jeff McLaren (35:34):
There's a lot happening on the revenue cycle side of anesthesia. It seems like there's the organizations that are changing the landscape that's changing. It's happening definitely every year, if not every quarter. There's large changes a foot.

Daniel Prevost (35:52):
Well, I commend you for digging in on all the different things that I know you're a part of right now, and I think you're in a unique position to, I think, be able to impact a lot of different areas in this specialty. So I commend you for digging in and pursuing that.

Jeff McLaren (36:13):
Well, the key thing is to have conversations with people that know what they're talking about, to try to uncover and to make clear what some in the industry feel are obvious, but many, many in healthcare do not understand and they need to understand because being asked to pay ever larger subsidies, that's impacting the contribution of the OR to the organization.

Daniel Prevost (36:39):
Yep. Agree.

Jeff McLaren (36:42):
Thank you, Daniel. So for all those that are viewing, thank you for viewing and stay tuned for another episode of Anesthesia Economics.

Daniel Prevost (36:52):
Thanks, Jeff.

Jeff McLaren (36:54):
Thank you.

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