The Case to Ignore "Incident to" Billing for PA Services

In a previous blog, I discussed rules regarding Medicare reimbursement and services delivered by PAs. PAs can be reimbursed by Medicare for services provided in a private office/clinic at 100 percent, if a number of specific conditions are met.

These conditions required a significant amount of additional work on the behalf of the physician staff, for a return that is not commensurate with the effort and work put forth. These "incident to" billing conditions include:

• Only services provided in the private office/clinic.

• Physician performs first full first visit.

• A physician presence onsite when a PA delivers care.

• PA must be "tied" to the group (W-2 or leased employee).

If all of these conditions are met, the services provided by the PA in the practice can be billed at 100 percent of the allowed fee. If you forgo incident to, services delivered by PAs are reimbursed by Medicare at 85 percent of the allowed fee schedule.

There are a lot of concerns related to "incident to" billing. For one, there are fraud and abuse concerns when practices ignore or are confused about the rules and bill everything "incident to" regardless of the conditions being met. This can result in an audit, as well as substantial fines and penalties. More important, "incident to" billing encourages inefficient practice patterns that can result in a loss of efficiency and reduced revenue generation. Lastly, "incident to" billing "hides" the PA under the physician's name and makes it very difficult to determine a PA's productivity and value to the practice.

Let's illustrate how ignoring "incident to" billing is in the best interest of your practice. For this example, we will use the Medicare reimbursement (Midwest region) for 99213 office visit. This visit is worth $69.27; 85 person of the reimbursement is $58.88, or $10.39 less. It is far from an accurate statement to say that practices are losing large amounts of money by not taking advantage of "incident to" billing.

By using a PA in your practice more efficiently (i.e., treats all patients, no shuffling of schedules, no wondering if the physician developed a plan of care for the patient, or if the physician was onsite at the time the services was delivered), you will likely increase the practice revenue stream to a much greater extent than the "lost" 15 percent. By treating just a couple of additional patients per day, the financial differential is more than wiped out with no additional overhead / salary cost.

Also considering that if you bill "incident to," and do it wrong, the cost of an audit, and the subsequent fines and penalties, will make that 15 percent look even smaller. Probably just as important as the "dollars and cents" is the concepts of value and productivity.

Depending on specialty and geography, PAs are paid approximately 25-40 percent of the salary of their physician counterpart. Because of the salary differential, the profit margin is much higher when the PA provides the service instead of the physician even at an 85 percent reimbursement rate, because PAs don't make 85 percent of a physician's salary.

Here is the bottom line. Not worrying about billing Medicare visits incident to, avoids:Treating a patient's existing medical problem "incident to" and identifying a new medical problem during the visit. New medical problems can't be treated if you bill "incident to" the physician.

• The belief by some that PAs can't treat new patients.

• The belief by some that PAs can only practice with a physician on site.

• Inconsistency regarding supervision between Medicare and state law.

I believe that I have made the case to just ignore incident to billing for the PAs in your practice, and just increase the patient visits. Practice revenue will be higher, the administrative and clinical burden will be less on physicians, and the practice billing staff and patients will be happier with the increase in patient efficiency.

For additional information, see AAPA's Reimbursement online guides and The Essential Guide to PA Reimbursement.