The results are in. We asked readers whether indirect billing in Medicare policy is an outdated model and the answer was a resounding “Yes.” Ninety-three percent of the more than 650 respondents to our poll said that indirect billing (also known as incident-to billing) for nurse practitioner (NP) and PA services should be eliminated under Medicare policy. The majority of respondents (92%) also said that the 85% reimbursement rate for NPs and PAs under Medicare is not equitable, but considerable debate exists over how to establish parity in compensation.
Two-thirds of respondents (66%) said that incident-to billing was used at their practice for NP and PA services. However, many respondents said that their employers use incident-to billing inappropriately with supervising physicians not located in the same office suite when the NP/PA renders the service, as is required under Medicare policy.
One respondent said that their group practices with a hybrid system in which indirect billing is used only when appropriate. Another clinician said indirect billing is appropriate when physicians are directly involved in patient care: “I do probably 70% of the work, but my attending sees every patient that I do, does their own exam, and we discuss the plan so the oversight is higher than most APPs.”
We also asked the Centers for Medicare and Medicaid Services (CMS) to comment on statements from the American Association of Nurse Practitioners (AANP) and American Academy of PAs (AAPA) calling for an end to indirect billing as this practice “undermine[s] the foundation of value-based reimbursement” and makes it difficult to accurately quantify data on the number and quality of medical services delivered by NPs/PAs.
A CMS spokesperson said:
“The Medicare statute provides for coverage and payment for certain services and supplies furnished as ‘incident to’ a physician’s professional service or certain other practitioner’s professional service. The regulation at § 410.26 defines and delineates the conditions for payment for ‘incident-to’ services. While CMS engages with stakeholders on an ongoing basis to identify and understand changes in health care, including the evolving roles of medical teams in delivering care, it is important to note that a change to statutory rules requires Congressional action.”
NPs and PAs Feel Invisible When Incident-to Billing Is Used
The word “invisible” was used by multiple respondents in reference to what indirect billing does to the NP and PA professions. “It makes the NP and PA invisible in the payment world,” said one respondent “We have to be visible to have value. The quality measures must be attributed to the rendering provider (NP or PA). With incident-to billing, the data is skewed in favor of the physician as the billing provider. It also provides a false sense of physician oversight, which frankly is not happening under the conditions listed [by CMS]. NPs are in the office alone; see new Medicare patients and handle new problems and the NP is responsible for the care we provide to our patients. I teach NPs to ask how their services are being billed and challenge the incident-to billing model (as failure to comply [with the Medicare policy restrictions] may be viewed as fraudulent).”
Another respondent said that Medicare incident-to billing is used to “pad the RVU [relative value units] of physicians so that they can excel in productivity and gain a bonus. We all know that many physicians use this billing and they aren’t even in the same office. They use the phone call away defense …”
The Issue of the 85% Reimbursement Rate
Changing Medicare policy is complex. The 85% reimbursement rate for NPs and PAs would need to be increased to eliminate indirect billing, many respondents said. “I work in rural health with complex patients and a shortage of MDs plus our overhead is high. Eliminating the Medicare policy would only benefit rural health if reimbursement would be 100%,” wrote one respondent. Another respondent agreed, stating “we need providers, and cutting reimbursements to providers adds further barriers to providing care to patients.”
Can increasing reimbursement improve access to care? “As we move away from fee-for-service models toward results/outcome-based [models], reimbursement should reflect quality of care not credentialing of the profession. The current reduced reimbursement [for NPs/PAs] limits APPs from an administrative perspective as profits drive decision-making. These limitations often result in increased [issues related to] access to care, especially in rural and inner city areas where access to care is already limited.”
Would changing reimbursement make NPs/PAs services less affordable? One respondent agreed that indirect billing is antiquated but had mixed feelings about changing the 85% reimbursement rate for NPs: “We tout ourselves as more affordable, and that is part of the reason for utilizing NPs, but if we lose this aspect, then we likely are not more affordable. Yes, NPs do many of the same jobs as our physician counterparts but part of the reasoning for our benefit is cost savings. Physicians should be paid more in my opinion. They underwent more extensive training and have a deeper breath of knowledge, for the most part. We can’t have it both ways. We can’t say we are more affordable and yet deserve equal pay. Getting rid of the incident-to billing, [however] would allow this research to be done.”
Other respondents said that the reimbursement rate should depend on whether an APP is practicing independently. “Nurse practitioners with an autonomous practice who run their own operations incur similar expenses as physicians; NPs who work in a group practice share the same overhead as their physician counterparts. Physicians should be utilized for higher acuity patients, thereby billing a higher level of service and reimbursement while NPs should be working under their scope and seeing less acute/complex patients (especially early in their careers), thereby earning less income. Organizations should be utilizing provider skillsets appropriately.” Another respondent concurred “I am a licensed independent provider. Why is a physician linked to the work I do and do alone?”
One respondent said that the answer is specialty-dependent. “Most clinical services are the same or better when rendered by an APP. Specialty procedures that require physician-level training and license to practice at this level are different. However, if an APP is trained and approved for minor procedures (eg, Mohs surgery, some types of fluoroscopic procedures, or flow cystometrogram), then it seems reasonable that reimbursement for those APPs should be at 100% because they are doing the procedures.”
What about DNPs? Should they have parity in compensation to MDs/DOs if they complete a comparable number of training hours? Respondents noted that DNP programs are variable with some requiring 3 years of training and others requiring 6 years including residency. Another respondent said “NPs are not equal to MDs. When NP education and training become equivalent [to that of MDs] then pay should be too.”
Many other respondents disagreed: “many studies have demonstrated that the quality of patient care delivered by NPs is equal or even sometimes superior to MDs therefore NPs should be reimbursed the same amount as MDs.” Numerous respondents said that the same level of care should be compensated at the same reimbursement rate regardless of whether a physician, NP, or PA is providing the service.
Background on Indirect Billing
Clinical Advisor recently reported on the often hidden practice of indirect billing in the US and recent findings in Health Affairs showing that eliminating this billing model would save Medicare more than $194 million annually. Medicare pays 85% of the Physician Fee Schedule (PFS) rate for services billed by NPs and PAs but pays the full 100% of that rate when the same services provided by NPs/PAs are billed for by a supervising physician. The practice also makes it difficult to assess the number and quality of services delivered by advanced practice providers (APPs), experts say.
“When this occurs, it is nearly impossible to accurately identify the type, volume, or quality of medical services delivered by PAs and APRNs,” AAPA wrote in a 2021 letter to CMS. “Accurate data collection and appropriate analysis of workforce utilization [are] lost. This lack of transparency has a negative impact on patients, health policy researchers, the Medicare program, and PAs/APRNs.”
The 85% reimbursement rate for Medicare services provided by NPs and PAs was established by Congress in the Balanced Budget Act of 1997. However, the professional landscape has changed since that time with 26 states plus the District of Columbia now granting NPs full practice authority. In 2022, CMS permanently authorized PAs to receive direct payment from the Medicare program.
Clinical Advisor will keep readers updated on legislative efforts to change incident-to billing practice under Medicare and appreciate the outpouring of comments we received.