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Medicare payment for physician assistants

By Thomas W. Greeson, Esq. & Keith T. Shiner, Esq.

Given the shortage of some physician specialties and the ever increasing demand for medical services, a number of physician practices are investigating the employment of physician assistants (PAs). The services of PAs are reimbursable under Medicare rules, but physicians must be mindful of their limitations and must be cognizant of the requirements for physician supervision of PAs imposed by state licensing laws.

The scope of a PA’s practice under the typical state law can be expected to include medical services provided under the appropriate supervision of a physician approved by the state board of medicine. States generally do not require full-time, physical supervision of the PA, but rather that the supervising physician and PA register with the state before the PA can practice under the physician’s supervision. Relevant state law should be consulted prior to entering into such an arrangement.

A PA’s professional services can be billed two ways under Medicare. First, under the PA’s license, the services may be billed as PA services, and they are paid at generally 85 percent of the fee schedule amount, both in the hospital and non-hospital setting. Second, at least for some nonhospital services, the PA’s services may be billed “incident to” physician services, in which case the services are paid at 100 percent of the fee schedule, as if the physician performed the service.

Directly as PA Services

The Balanced Budget Act of 1997 removed restrictions on the site of service for the services of PAs to be paid by Medicare. (See Program Memorandum AB-98-15.) Payments are allowed for PAs in all areas and all settings permitted under state law, unless a facility or other provider charge is paid for the same services. Services of PAs are paid at 80 percent of the lesser of actual charge or 85 percent of the physician fee schedule payment.

In general, to be covered by Medicare, PA services must meet the following conditions: (1) the services would be covered as a physician service if furnished by a physician and (2) the PA:

• Meets the qualifications of 42 CFR § 410.74(c) (i.e., graduated from a PA program accredited by the Commission on Accreditation of Allied Health Education Programs or passed the national certification exam administered by the National Commission on Certification of Physician. Assistants; and is licensed by the state as a PA).

• Is legally authorized to perform the services in the state where performed.

• Performs services not otherwise excluded from coverage.

• Performs services under the general supervision of the physician (the physician need not be physically present unless required by state law, but must be immediately available for consultation).

• Furnishes services that are billed by the PA’s employer.

No supervision beyond that required by the state license is required to bill the Medicare program in this manner. Medicare payment for PA services is made only to the PA’s employer, whether the PA is a W-2 or 1099 “employee.” The PA must reassign payment to the PA’s employer and complete Form CMS-855R. PAs must also enroll as individuals, and need to be assigned a Unique Physician Identification Number (UPIN).

“Incident to” Physician Services

Some services and supplies furnished “incident to” a physician’s professional services by non-physician personnel in private practice are paid by Medicare as if the physician actually performed the service (i.e., at 100 percent of the fee schedule). In general, to be covered incident to the services of a physician, services and supplies must be an integral, although incidental, part of the physician’s professional service, furnished under the physician’s direct personal supervision, and furnished by the physician or by an individual who qualifies as an employee of the physician. There is no “incident to” billing permitted for hospital patients.

Coverage of services and supplies “incident to” the professional services of a physician in private practice is limited to situations in which there is direct personal physician supervision. This does not mean that each occasion of PA service needs to be the occasion of actual personal professional service by the physician. Services can be considered “incident to” when furnished during a course of treatment where the physician performs an initial service and subsequent services of a frequency which reflect his/her active participation in and management of the course of treatment. Direct personal supervision in the office setting does not mean that the physician must be present in the same room with his or her aide. However, the physician must be present in the office suite and immediately available to provide assistance and direction throughout the time the aide is performing services. Colloquially, this is sometimes referred to as being “within shouting distance” (availability of the physician by telephone does not count).

To be paid as “incident to,” the PA providing services must be considered an employee under the common law test (generally, control of means and methods of work). The employee may be a part-time, full-time, or leased employee of the supervising physician, physician group practice, or of the legal entity that employs the physician who provides direct personal supervision. Services of non-employees are not covered under the “incident to” rule.

Practical Application

Physicians considering whether to employ PAs must consider the fit of a PA’s services to the physician’s practice, as well as the ability to bill for the PA’s services. In the hospital setting, if the PA has been appropriately credentialed, the PA’s services may be billed only as PA services, at 85 percent of the fee schedule rate, and the physician must provide the level of supervision required under state licensing laws. In the office setting, physicians can bill PA’s services either as PA services or, under certain circumstances, as “incident to” services that are paid as if the physician provided the service.

Services can be billed “incident to” where the physician provides direct personal supervision, which is generally more than is required under state licensing laws. The physician need not perform a service every time the PA does, but must perform an initial service and subsequent services sufficient to demonstrate the physician’s active participation in and management of the course of the procedure. In addition, physicians must consider the potential liability aspects from being responsible for the actions of another health care professional who they may supervise only on a “general” level.

Tom Greeson is a partner, and Keith Shiner is an associate, in the national health care group of the law firm of Reed Smith LLP. Both are resident in the firm’s Falls Church, Virginia office.

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