Understanding Physician Assistant Reimbursement

I currently work in surgery as a physician assistant, and I get a lot of questions from the surgeons who practice at our hospital on regulation of PAs, salary requirements, and appropriate supervision, among other issues.

Of all these issues, none gets more attention than reimbursement, because appropriate and fair reimbursement for the work that we do in medicine is a priority. There are other factors that are important to the practice of medicine, and our profession is based on serving those that need our help, but at the end of the day we have to feed our families and pay the rent like any other professional.

We have come a long way on the reimbursement front since the first PAs graduated from Duke University in 1967. I remember when many third-party payers didn’t cover services provided by PAs at the beginning of my now 30-year career. Yet the rules have grown along with my profession, which now counts more than 83,000 certified PAs in the county who saw approximately 319 million patients last year.

In this day and age, it is important to verify each payer’s coverage policies for PAs directly. Medicare, Medicaid, TRICARE and nearly all private payers cover medical and surgical services delivered by PAs.

Medicare guidelines are important to follow where PAs are concerned. As of Jan. 1, 1998, Medicare pays the PA’s employer for medical and surgical services provided by PAs in all settings at 85 percent of the physician’s fee schedule. According to the guidelines, settings include hospitals (inpatient, outpatient, operating room, and emergency departments), nursing facilities, offices, clinics, the patient’s home, and first assisting at surgery.

For payment, the claim is submitted at the full physician rate; the PA’s National Provider Identification (NPI) number on the claim alerts Medicare to reduce the payment to 85 percent of the physician’s fee schedule.

Hospitals that employ PAs must bill for their clinical services under Medicare Part B. Furthermore, PA salaries may not be included in the hospital’s cost reports unless the PA is providing administrative duties.

While PAs always work as a physician-directed team member, there is no Medicare requirement for the physician to treat the patient or be physically onsite when the service is being billed to Medicare under the PA’s name.

Services provided in offices and clinics may be billed under Medicare’s “incident-to” provision, as long as Medicare’s more restrictive billing guidelines are met. This provision allows payment at 100 percent of the fee schedule if:

1. The physician is physically onsite when the PA provides care;

2. The physician personally treats and establishes the diagnosis for Medicare patients on their first visit for a particular medical problem (PAs may provide the subsequent care); and

3. Established Medicare patients with new medical problems are personally treated and diagnosed by the physician (PAs may provide the subsequent care).

It is critical that employers of PAs and their billers understand these rules to make sure PA medical services are correctly billed, and that the documentation supports the billing method chosen.

Currently, all 50 states and the District of Columbia cover medical services provided by PAs under their Medicaid fee-for-service or Medicaid managed care programs. The rate of reimbursement is either the same as or slightly lower than that paid to physicians. Here is more detailed Medicaid-specific information, from the AAPA’s Resources page.

Nearly all private payers cover medical and surgical services provided by PAs. Some payers will separately credential and/or enroll PAs. Others require that services delivered by PAs be billed under the name and NPI number of the PA’s supervising physician.

There is no direct relationship between PAs being credentialed or enrolled with a particular payer and payment for medically necessary services provided by PAs. Payment for services provided by PAs is typically made regardless of whether payers separately credential PAs.

Further, private health insurance companies do not necessarily follow Medicare’s coverage policy rules.

As private entities, third-party payers are able to establish their own rules and procedures. The potential variation in policy among insurance companies makes it imperative that practices contact each company to verify the specific payment and coverage policies for PAs. Even within the same insurance company, PA coverage policies can change slightly based on the particular plan that an individual or group has selected, the specific type of service being provided, and the state in which the service is delivered.

The AAPA has extensive information about private payer policies online.

PAs can definitely contribute to a healthy bottom line for any practice, and are valuable members of the patient-centered, team-based healthcare model. Make sure that your billers are well versed in the rules for billing for PA services.

Find out more about Stephen Hanson and our other Practice Notes bloggers.

This blog was provided in partnership with the American Academy of Physician Assistants. For more information, visit www.aapa.org.