Medicare payment for services of nonphysician practitioners
Medicare pays for NPP services in one of three ways. First, NPPs may bill directly for their services under the physician fee schedule.6 In this case, NPPs or their employers receive a percentage of the fee s c h e d u l e payment. Second, services may be billed incident to physician services, in which case physicians bill for the services at 100 percent of the fee schedule payment, even though NPPs provided the services. Third, the services of NPPs may be included in the payment bundle for services provided in hospitals and skilled nursing facilities. The accompanying box provides additional detail on the first two payment paths.
Payment for nonphysician practitioners
Medicare payment for services provided by nonphysician practitioners depends on whether
the service is directly billed by the nonphysician practitioner under his or her own billing
number or billed “incident to” under the physician’s billing number.
Direct billing under the physician fee schedule
Before enactment of the Balanced Budget Act of 1997 (BBA), Medicare paid for services of nurse
practitioners (NPs) and clinical nurse specialists (CNSs) only when provided in rural settings, in
nursing facilities, or when assisting at surg e r y. Services were paid at 75 percent of the physician fee schedule amount when furnished in a hospital and at 85 percent of the fee schedule amount when furnished in other settings. Payments for assisting at surgery were 65 percent of the rates for physicians who assist at surg e r y. Finally, payment for services provided in an urban nursing home was made to the NP’s or CNS’s employer, rather than directly to the NP or CNS.
Physician assistant (PA) services—when provided under the supervision of physicians—were
covered in hospitals and nursing facilities and in physician offices in rural areas designated as health professional shortage areas. Services also were covered when the PA acted as a first assistant at s u rg e r y. Payments were made to the employer at 65 percent of the physician fee for assisting at s u rg e r y, 75 percent of the physician fee for services provided in a hospital, and 85 percent of the physician fee for services in other settings.
The BBAexpanded payment for services provided by NPs, CNSs, and PAs by removing restrictions on geographic areas and settings in which these providers could be paid by Medicare. The legislation also increased the payment for these providers to a uniform 85 percent of the physician fee schedule.
The BBA did not change payment policies for certified nurse-midwives (CNMs), who were not
subject to the same geographic and setting restrictions as the other nonphysician practitioners.
Services of CNMs are paid at 65 percent of the physician fee schedule.
Medicare also allows direct payment for some other nonphysician providers. Certified registered nurse anesthetists receive payment at 100 percent of the physician fee if not medically directed, but 50 percent if medically directed (in which case the anesthesiologist providing medical direction receives the other 50 percent). Physical and occupational therapists and clinical psychologists are reimbursed at 100 percent of the physician fee schedule. Clinical social workers are reimbursed at 75 percent of the physician fee schedule.
Billing incident to a physician service
Services provided by NPs, CNSs, PAs, and CNMs are paid at 100 percent of the physician fee
schedule if they are billed by the physician as incident to services in a physician’s office or clinic.
Incident to services must be provided by employees of a physician under the physician’s direct
supervision. In addition, the physician must be in the office suite while the service is being provided and be immediately available to provide assistance and direction. The physician also must have provided direct, personal professional services to initiate the course of treatment and must furnish subsequent services at a frequency consistent with active management of the course of treatment. Incident to billing is not allowed for the first visit for a new patient or for subsequent visits that present a new problem. In these cases, physicians must personally examine patients to bill for services at the physician rate; otherwise, services are billed at the nonphysician practitioner rate.