By Daniel B. Vukmer, Esq.
There is growing recognition by physicians, health insurance organizations and legislators of the value of physician assistants and other non-physician medical providers. Legislators are increasingly recognizing the importance and use of physician assistants in the managed care setting through a number of pending bills nationwide. However, with this recognition comes increased scrutiny of clinical and billing activities.
The use of such non-physician providers has increased over the past few years in large part due to the financial climate necessitated by our changing health care system. In short, physician assistants can provide high quality patient care, somewhat independent of physicians, and reduce the cost of delivering that care. In addition, they provide a very cost-effective revenue source for practices because the direct and overhead costs associated with physician assistants is low relative to physicians. However, before a medical practice or facility jumps onto the physician assistant bandwagon, it must recognize its obligations to properly supervise the assistant under the requirements of state and federal law and to understand the regulatory implications of the contractual arrangements under which the physician assistant is engaged.
Lack of appropriate supervision not only results in potential tort liability of the practice but also affects reimbursement for services provided by the physician assistant. In fact, the 1998 Work Plan of the federal Office of Inspector General (OIG) has specifically identified the billing for services rendered by physician assistants as a target for heightened scrutiny and investigation for fiscal year 1998. With increased funding for OIG investigations from the 1997 Balanced Budget Act, it seems clear that potential OIG targets should pay special attention to governmental requirements. To avoid becoming another OIG statistic, providers must adhere to both the Medicare supervision and billing requirements as well as state regulations.
The method of engaging a physician assistant also has ramifications on reimbursement. Recent Medicare regulations now allow physician assistants to be hired as “leased employees” of the provider for the provision of “incident to” services. This is a change in the old law that required providers to employ physician assistants directly. In addition, physician assistants can serve as “independent contractors” to a provider for the provision of “physician services.” Although these options provide some added flexibility in the operation of a practice, they also affect the method of billing for physician assistant services.
State Law Requirements
Physician assistants are governed by the State Board of Medicine. Therefore, to what extend a physician assistant can exercise discretion in the performance of a medical service is dictated largely by the Board through its regulations. The regulations provide two primary areas of emphasis in this regard: physician supervision over the physician assistant’s activities, and the scope of medical services to be provided.
The scope of medical services that can be performed by a physician assistant is quite broad. The regulations contain 14 broad categories of services but the list is “not intended to be all-inclusive.” The enumerated services range from patient screening and taking of patient history to performing physical examinations, initiating lab tests and performing clinical procedures such as prescribing medications and performing minor surgical procedures. Therefore, the use of a physician assistant can be quite extensive.
Any procedures to be performed by a physician assistant must be set out in a written form and approved by the Board. This is a double-edged sword. Although it requires the practice to specifically describe the procedures to be performed, and to provide a host of other tedious information, it also provides a vehicle for practices to justify why their physician assistant should be allowed to perform procedures which are not enumerated in the regulations. In any event, this written statement is key; without Board approval of the statement, the physician assistant cannot perform any medical functions.
Pennsylvania law also provides supervision requirements. The supervising physician will have ultimate responsibility for the control and personal direction of the physician assistant. Specifically, the physician must be immediately available for the physician assistant to contact by some form of telecommunication, although the constant physical presence of the physician at the practice site is not required.
Not surprisingly, Medicare has its own set of rules. However, Medicare also requires compliance with state law; thus, the Medicare requirements supplement rather than replace state law. Although the Medicare supervisory rules are written as clinical requirements, billing the Medicare program for procedures that were not properly supervised subjects the provider to liability for overpayments and, possibly, allegations of Medicare fraud.
There are two types of supervision required under Medicare regulations. One applies to “incident to” services and the other to “physician services.”
“Incident to” services are those which are integral, although incidental, to a physician’s professional service that is commonly furnished in a physician’s office. The supervision requirement for “incident to” services is much more stringent than Pennsylvania law. It requires that the physician “be present in the office suite and immediately available to provide assistance and direction throughout the time the physician assistant is performing services.” However, this does not require the physician to be physically present in the same room as the physician assistant.
Physician services can also be performed by physician assistants. These are broadly defined under Medicare as “the type that are considered physician’s services if furnished by a doctor of medicine or osteopathy.” Again, the scope of these services would be limited by state law. The supervision requirement for physician services is very similar to Pennsylvania law: the physician must be immediately available for consultation purposes by telephone or “other effective, reliable means of communication.”
Leased Employees vs Independent Contractors
New Medicare regulations allow a physician to hire a physician assistant as a “leased employee” for “incident to” services. This must be done through a written employee leasing agreement with the physician assistant’s actual employer that provides for control over the employee by the physician as if the physician assistant was a bona fide employee of the physician. Billing for the “incident to” services is done as if the physician assistant was the employee of the physician.
There exists no comparable Medicare regulation for the leasing of a physician assistant for the provision of “physician services.” However, unlike the “incident to” rules, the regulations do allow a physician assistant to work as an independent contractor to the physician. Also, the method of reimbursement for “physician services” changes when the engagement changes from an employee relationship to an independent contractor arrangement. If the physician assistant served as an employee of the physician, then the reassignment of Medicare payments would be treated under the “employee” reassignment rules; whereas, if the engagement is on an independent contractor basis, then reassignment would have to meet the “clinic” reassignment rules. Providers should consult with their billing agents to ensure that the appropriate reassignment method is being used.
The use of physician assistants can be a cost-effective means of delivering health care. However, the supervisory requirements must be met to avoid tort liability for the conduct of the physician assistant and to ensure proper billing and reimbursement under government programs such as Medicare. The type of engagement and method of billing for physician assistant services must also be coordinated to ensure that the billing method is consistent with the relationship.
With the increased use of physician assistants, one can be assured that scrutiny by both state and federal governments will increase proportionally. The complexity of the Medicare regulatory scheme makes strict compliance difficult, and providers’ misunderstanding of the law has historically been a gold mine for the government. Although there are significant benefits to the use of physician assistants, the combination of governmental scrutiny and the possibility of big payouts to the government dictates a thorough review and monitoring of physician assistant relationships.
Daniel B. Vukmer, Esq., is with the Health Law Practice Group of Houston Harbaugh, P.C. in Pittsburgh.