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AAOS Now

Published 6/1/2007

Hiring a PA? Here’s how to get paid

Primer on third-party reimbursement for medical services provided by Pas

Medicare coverage for PAs
The first Medicare coverage for physician assistant services was authorized by the Rural Health Clinic Services Act in 1977. Over the next 20 years, Congress incrementally expanded Medicare Part B payment for PA services by authorizing coverage in hospitals, nursing facilities, and rural health professional shortage areas, and for first assisting at surgery.

In 1997, however, the Balanced Budget Act extended coverage to all practice settings at one uniform rate. As of January 1, 1998, Medicare pays a PA’s employers for medical services provided by a PA in all settings at 85 percent of the physician’s fee schedule. This includes hospitals (inpatient, outpatient, and emergency departments), nursing facilities, homes, offices, and clinics, and first assisting at surgery.

Medicare reimburses a physician who first assists at the rate of 16 percent of the primary surgeon’s fee. PA first assistants are covered at 85 percent of 16 percent—or 13.6 percent of the primary surgeon’s fee (Table 1).

Payment for evaluation and management services
As of October 25, 2002, the Centers for Medicare and Medicaid Services (CMS) issued new rules that give PAs and their supervising physicians increased latitude in hospital and office billing for evaluation and management (E/M) services. The new requirement (Medicare Transmittal 1776) allows PAs and physicians who work for the same employer/entity to share visits made to patients on the same day, with the combined work of both billed under the physician at 100 percent of the fee schedule. That is, if the PA provides the majority of the service for the patient and the physician provides any face-to-face portion of the E/M encounter, the entire service may be billed under the physician. This rule does not extend to procedures, however. All procedures should be billed under the practitioner who performs the majority of the procedure.

Remember: To combine the professional work done by a PA and a physician, the following guidelines must be followed:

  • The PA and the physician must work for the same entity.
  • The regulation applies only to E/M services and not to procedures.
  • The physician must provide some face-to-face portion of the E/M services. Simply reviewing or signing the patient’s chart is not sufficient.
  • “Incident to” billing has never applied to the hospital setting—and still does not apply.

If the physician does not provide some face-to-face portion of the E/M encounter, then the service is appropriately billed at the full fee schedule amount under the PA’s national provider identifier (NPI) with reimbursement paid at the 85 percent rate. (All PAs who treat Medicare patients must have an NPI.)

Outpatient billing
Outpatient services that are provided in offices and clinics may still be billed under Medicare’s “incident-to” provisions if Medicare’s restrictive billing guidelines are met. This allows payment at 100 percent of the fee schedule if the following conditions are met:

  1. The physician is physically on site when the PA provides care.
  2. The physician treats all new Medicare patients (PAs may provide the subsequent care).
  3. Established Medicare patients with new medical problems are personally treated by the physician (PAs may provide the subsequent care).

According to the Balanced Budget Act, PAs (using the 85 percent benefit) may be either W-2, leased employees, or independent contractors. However, the employer should still bill Medicare for the services provided by the PA.

CMS policies regarding PA ownership, ASCs
Effective April 1, 2002, CMS issued new Medicare Carriers Manual instructions that expand employment and practice ownership opportunities for PAs. This policy removes a restriction on PA ownership by allowing a PA to have up to a 99 percent ownership interest in an approved corporate entity (such as a professional medical corporation) that bills the Medicare program. Previously, CMS prevented payment to corporate entities in which a PA had any ownership interest.

Medicare requires that at least 1 percent of the corporation be owned by someone other than the PA (such as the PA’s spouse), but there is no requirement for any degree of physician ownership of the corporation. This policy also removes a provision that prohibited Ambulatory Surgical Center (ASCs) from employing PAs.

Medicaid coverage
All 50 states cover medical services provided by PAs under their Medicaid programs. The rate of reimbursement, which is paid to the employing practice and not directly to the PA, is either the same as or slightly lower than that paid to physicians.

Private insurance
Private insurers generally cover medical services provided by PAs when they are included as part of the physician’s bill or as part of a global fee for surgery. The challenge in dealing with private insurers lies in the large number of insurance companies, HMOs, and PPOs in the market and their differing policies regarding the way PA services are covered and how claim forms should be submitted. Even within the same insurance company, PA coverage policies can change based on an individual’s particular plan, the specific type of service being provided, and the part of the country in which the service is delivered.

Most private insurers require that the bill for medical services provided by PAs be filed under the physician’s name and provider number, just as Medicare requires these same services to be filed under the “incident to” provision (with payment going to the PA’s employer). However, a few insurers want the claim to be filed under the PA’s name. Check with the individual insurance company for its particular policy on coverage for medical and surgical services provided by PAs.

What to ask, how to ask it
When contacting private insurers to determine their policy on coverage for PAs, be sure to phrase your questions with terminology the company understands.

Don’t ask “Are physician assistants reimbursed for services provided under the company’s health plan?” Most companies do not directly reimburse PAs, so you may not receive the answer you’re looking for.

Instead, ask “Are physician services performed by a PA covered when the physician submits the bill?” This will usually get a positive response.

Being aware of all company policies and restrictions is essential to ensure proper reimbursement. Be sure to ask for clarification regarding company policies on supervision, initial visits, and other practice issues.

Following are some sample questions to ask when trying to clarify a company’s policies on coverage:

  • Do you cover medical or surgical first assisting services provided by PAs who are working under the supervision of a physician?
  • Are PAs issued their own provider numbers? If not, is it acceptable to submit bills under the supervising physician’s provider number?
  • Can the PA see the patient on the initial office visit?
  • Are there any specific supervision requirements?
  • Do you defer to state law regarding the services PAs can provide?
  • Is coverage also provided in a hospital setting?

TRICARE/CHAMPUS
TRICARE, formerly know as the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), covers all medically necessary services provided by a PA. The PA must be supervised in accordance with state law and the supervising physician must be an authorized TRICARE provider. As with other payors, the employer must bill for the services provided by the PA.

The allowable charge for all medical services provided by PAs (except assisting at surgery), is 85 percent of the allowable fee for comparable services rendered by a physician in a similar location under TRICARE Standard, the fee-for-service program. Reimbursement for assisting at surgery is 65 percent of the physician’s allowable fee for comparable services.

Physician assistants are eligible providers of care under both of TRICARE’s managed care programs—TRICARE Prime and TRICARE Extra.

Note: This information was provided by the American Academy of Physician Assistants.