Medicare in Hospitals – Pennsylvania Society of Physician Assistants

MEDICARE REIMBURSEMENT FOR PHYSICIAN ASSISTANT SERVICES IN PENNSYLVANIA HOSPITALS
William E. Dalton, MS Ed., PA-C, CPC

Since January 1998, when Medicare began paying for physician assistant (PA) services at 85% of physician fees, we have seen significant changes and improvements in Medicare reimbursement and recognition of PA services in all patient care settings. The 1998 change affected PA services in virtually all patient care settings, and include but are not limited to, solo or group physician practices, hospitals (including teaching hospitals), home care, nursing facilities, and PAs providing assistant-at-surgery services. Additionally, PA employment arrangements have expanded to include working as hospital employees, independent contractors, and as leased employees.

Since October 2002, by elimination of the “split-billing” requirements previously mandated, Medicare has demonstrated their recognition of the value of PA-provided evaluation and management (E/M) services in hospitals. And, although by definition PAs are not classified as teaching physicians, they are recognized as educators of physician residents in teaching hospitals. We have indeed seen great strides in the recognition of PAs as integral providers of healthcare for Medicare beneficiaries.

Now, let’s take at a look at some of the nuances of providing patient care and billing for those services in compliance with Medicare regulations. More specifically, we will look at PAs working in hospitals, both non- teaching and teaching, and how to bill for E/M services provided in those institutions. We will also look at general guidelines for reimbursement of PA hospital services, incident-to requirements, billing for the PA assistant-at-surgery, employment of PAs as leased employees, and Medicare payment for services provided by PAs.

PAs IN HOSPITALS
As previously mentioned, since October of 2002, Medicare has eliminated “split-billing” requirements for PAs providing evaluation and management (E/M) services in hospitals (includes emergency department, inpatient and outpatient care), when both the PA and physician provide part of the patient’s care on the same day. As long as they are both employed by the same employer, the physician provides a portion of the care face-to-face with the patient, and the service provided is an E/M service and not a procedure, the combined PA/physician services can be billed under the physician’s Medicare identification number (PIN) at 100% reimbursement of the fee schedule. If the physician does not see the patient, then the E/M service should be billed under the PA’s Medicare provider number to be reimbursed at 85% of the physician fee schedule.

Medicare will cover E/M services whether provided by hospital or non-hospital employed PAs. The difference being, for those PAs hired by a physician, their in-hospital services will be covered under Medicare Part B (professional fees) at a percentage of the physician fee schedule, whereas hospital employed PA services may be reported under Medicare Part A as part of the hospital cost report, or billed under Part B as a professional fee.

PAs IN TEACHING HOSPITALS
Many PAs are working in teaching hospitals, and as a part of their duties are teaching resident physicians. In this instance, questions sometimes arise as to whether or not a PA may bill Medicare for providing the services of a teaching (supervising) physician, and how they should bill their services to Medicare.

According to HGSA, the Medicare insurance carrier in Pennsylvania, under Medicare Carriers Manual (MCM) Section 15016, the definition of a teaching physician, who may provide supervision of residents, is “a physician (other than another resident) who involves residents in the care of his or her patients.” Therefore, by definition, a PA (a non-physician provider) does not meet these criteria, and may not bill for services as a teaching (supervising) physician. However, Medicare does not preclude PAs or other non-physician providers from participating in the education of residents.

Moreover, a PA in a teaching hospital, or outpatient setting, may as a part of their duties provide resident education and patient care services. In this setting, the PA may bill Medicare for his or her medical services, without regard to resident teaching responsibilities. In other words, PAs working in teaching hospitals may provide patient care services as they would ordinarily, and then bill Medicare as usual, either at a percentage of the physician fee schedule when working in a hospital, or as incident-to or at a percentage of the fee schedule when working in an outpatient setting such as an office or clinic.

For an excellent review of billing requirements for teaching physicians, and how these rules may or may not affect PAs, please see the Amercian Academy of Physician Assistants (AAPA) article Medicare’s Final Rule On Billing Requirements For Teaching Physicians.

MEDICARE REQUIREMENTS FOR BILLING PA SERVICES
Reimbursement for PA services may only be made to employers of PAs who are qualified to receive assignment of Medicare benefits, and not directly to the PA. When billing Medicare for services, whether under “incident-to”, or as “physician services”, providers must conform to Medicare PA supervisory requirements. Medicare requirements for supervision of physician assistant services by physicians are not meant to supplant state laws governing PA practice, but instead are meant to supplement them. Billing for PA services as incident-to a physician service only applies to settings such as a physician office or clinic, and not to a hospital or nursing facility.

The Medicare Carriers Manual, Section 2050.1, describes incident-to services as those services provided as “an integral, although incidental, part of the physician’s personal professional services in the course of diagnosis or treatment of an injury or illness.” A detailed description of covered incident-to services deserves attention outside of this article; however, the following are the general parameters that must be met to qualify as incident-to services:
– The service provided must be within the PA’s scope of practice
– The service must be provided in a non-hospital or non-nursing facility setting
– Physician must provide direct supervision by being present in the office suite (on-site), and immediately available to provide direction and assistance during the time a service is provided
– Service(s) provided must be those that are typically provided in a physician office
– For a new patient, the physician must provide the initial care of the patient at the first visit, and initial care for any new problems an established patient may have

HGSA Contractor Policy Number Z-10F, Services of Physician Assistants, effective May 13, 2002, states: “Payment for PA services will be based on the lowest of either 80 percent of the actual charge or 85 percent of the physician fee schedule amount. For assistant-at-surgery services, payment equals 80 percent of the lesser of either the actual charge or 85 percent of the fee paid to a physician performing these services (16 percent of the physician fee schedule for the surgical procedure).”

For example, for clinical services covered under E/M patient service Current Procedural Terminology (CPT®) code 99213, Dr. Smith, PA Jones’ supervising physician, charges $150 and the Medicare physician fee schedule amount is $120 for this service. If PA Jones provides this same level of service for a patient, and it is not incident-to, the Medicare reimbursement for the visit will be $102 (85% of the Medicare fee schedule amount of $120).

BILLING FOR PA ASSISTANT-AT-SURGERY SERVICES
For PA assistant-at-surgery services, Medicare will only pay for PA services one time. So, when a hospital reports the PA services as a surgical assistant on their cost report, the surgeon cannot bill for the PA on Part B. In other words, Medicare will pay a hospital, on the hospital cost report (Part A of Medicare), or the surgeon (Part B of Medicare), but not both. Similarly, when the hospital employs the PA and provides his or her services to a physician group, the group cannot bill for the PA on Part B, because the PA is already being reported on the hospital cost report.

However, if a physician group or a surgeon hires the PA directly as a “W-2” employee, as an independent contractor (1099), or leases the PAs’ services, then the group or surgeon can bill Medicare Part B for the PA services provided. For example, if surgeon Smith leases the services of a surgical PA from Hills of Pennsylvania Hospital, and the PA is no longer reported on the hospital cost report, the surgeon can bill Medicare, under Part B, for the surgical assisting services of the PA. And, when the PA is hired directly by surgeon Smith as a W-2 employee, the PA’s surgical services can be billed to Medicare Part B. With the exception of Pennsylvania Blue Shield, most other private insurance carriers will pay for PA surgical assisting fees when they are part of global surgery charges or included in the surgeon’s fees.

As noted above, when looking at reimbursement for PAs providing assistant-at-surgery services, HGSA policy states: “…payment equals 80 percent of the lesser of either the actual charge or 85 percent of the fee paid to a physician performing these services (16 percent of the physician fee schedule for the surgical procedure)”, we need to keep in mind that Medicare pays a physician first assistant at surgery 16% of the physician (surgeon) fee schedule for the procedure. So, to calculate the PA reimbursement for this service, we use the formula 85% X 16% = 13.6% of the fee paid to the surgeon. For example, if Medicare pays $100 (to make calculations easier) for a surgical procedure, and another physician is the surgeon’s assistant-at-surgery, the physician assistant-at-surgery will be reimbursed $16 (16% of the $100). However, if a PA provides this same service, the PA reimbursement will be $13.60 (85% of the $16 paid the physician assistant-at-surgery).

BILLING FOR LEASED PA SERVICES
As previously stated, Medicare now allows physicians to lease the services of a PA to provide incident-to services. To bill Medicare for these leased services there must be a written agreement that indicates the PA’s actual employer, perhaps a hospital, is allowing the leased PA to work under the direction of the physician, as if the PA was actually an employee of the physician. This agreement will allow the physician to bill Medicare as if the physician directly employs the PA.

MEDICARE PAYMENTS FOR SERVICES PROVIDED FOR PAs
In all employment arrangements, PAs may not directly bill Medicare for payment of their services. Instead, Medicare pays the employer of the PA, and the employer pays the PA a salary or by other remuneration arrangements that have been made. This applies to directly employed, independent contractor, and leased PAs.

In conclusion, Medicare continues to champion the value and use of PAs as healthcare providers at the national and state levels. Our attributes as providers have been recognized in various ways, including increased levels of reimbursement, expanded allowable services, and a diversification of acceptable employment arrangements. We look forward to our continued role, as an integral part of the team of providers meeting the healthcare needs of Medicare beneficiaries.
CPT ® is a registered trademark of the American Medical Association

GLOSSARY
Accept (receive) assignment – accept Medicare payment as payment in full for services provided.
Charge – the actual amount charged for the service provided by the physician.
CMS – Centers for Medicare and Medicaid Services (Formerly HCFA).
Current Procedural Terminology (CPT®) – a list of identifying codes and terms for reporting physician provided medical services and procedures. CPT codes, descriptions, modifiers, instructions, guidelines, and other data are Copyright 2001 AMA.
HGSA – HGSAdministrators, the Centers for Medicare and Medicaid Services (CMS) designated contracted Medicare Part B insurance carrier for Pennsylvania
Medicare Part A – “Hospital Insurance” covers beneficiary inpatient care in hospitals, skilled nursing facilities (SNF), critical access hospitals, and care received in hospices, and for some home health services. (CMS)
Medicare Part B – “Medical Insurance” helps cover medically necessary services and supplies for beneficiaries provided by physician and non-physician providers (such as physician assistants, nurse practitioners and others) as approved by CMS, and may help pay for some physical and occupational therapist services, and home health care not covered under Medicare Part A. (CMS)
Hospital cost report – the hospital annual filing to CMS that reports the costs associated with providing care to their (hospital) Medicare beneficiaries. Such costs may include physician and physician assistant salaries when they are paid by the hospital, operating expenses and supplies.
Physician fee schedule amount – the amount that Medicare is willing to pay for a specific service

William E. Dalton, MS Ed., PA-C, CPC, is with Compliance Concepts, Inc., a healthcare Medicare and Medicaid compliance consulting group and a new member of the PSPA reimbursement committee.

Published in Winter 2003 PSPA News