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Reimbursement for Nurse Practitioners and Physician Assistants

Nurse practitioners and physician assistants (collectively referred to as Non-Physician Providers: NPPs) are being utilized more than ever by medical practices. Job growth for these professions is expected to grow exponentially in the next ten years. NPPs work either independently, in collaboration, or under the supervision of a physician. The advent of managed care, with a shift to capitation, spurred much of this development by creating incentives to save costs by using the least expensive, best-trained person to meet the patients' needs while saving the physician for his or her highest and best use. Much debate has surrounded how NPPs should be billed and their scope of practice. Currently, there are two ways in which to bill insurance companies for NPP services: direct or “incident to.” While direct billing has been somewhat self-explanatory, understanding Medicare Part B “incident to” billing has proven to be somewhat difficult for practices to adhere to. The Office of Inspector General (OIG) has scrutinized incident-to billing six times in the last decade. Great debate exists regarding changes in compensation by private insurers falling more in line with Medicare guidelines.

Scope of Practice:
NPPs follow guidelines dependent upon scope of practice as defined by the state in which they practice. Depending on the state, the scope of practice may be different for NPPs, but in most cases they are working either in collaboration or under the supervision of a physician. Physician Assistants and Advanced Practice Nurses’ services are limited to what they are legally allowed to perform in accordance with the state law.i Furthermore, scope of practice is governed by the credentialing committee (hospital or ASC) that governs what the NPP is allowed to perform in a particular facility. Some examples of what NPPs can provide include history taking, physical, lumbar puncture, and first assisting in the operating room.ii A NPP’s supervising physician is responsible for the overall direction and management of the NPP’s professional activities and assuring that the services provided are medically appropriate for the patient.iii Both Nurse Practitioners and Physician Assistants must meet certain criteria in order to obtain both licensure and certification. For example, Medicare regulations require that NPs must possess a master’s degree in nursing from an accredited educational institution.iv However, national board certification (ANCC or AANP), is not required in every state within the United States.

Billing and Collections:
There are two different billing scenarios that apply to NPP’s, including, direct billing and “incident to” billing. "Incident to" billing refers to a Medicare billing mechanism allowing services provided by NPPs to be billed under the physician’s National Provider Identifier (NPI).v With "incident to" billing, a practice receives 100% of the Medicare allowable for the physician when services are reported under NPI. The same service under NPPs, NPI will be allowed 85% of the Medicare NPPs can bill Medicare using their own provider number when "incident to" billing rules do not apply. In cases where a physician is not immediately present, a new patient for instance, or if the NPP has no Medicare provider number, then direct billing may be issued. You cannot bill Medicare for "incident to" billing in a hospital setting. Medicare does not allow it.vii Appropriate use of "incident to" billing would be if a physician evaluates and diagnoses a patient and the APN or PA conducts follow-up visits with the patient, treating the patient over weeks or months. The physician sees the patient every third visit and therefore the APN or PA can be billed under the physician’s NPI number. In conclusion, the provider has to initiate the course of treatment and the care provided by auxiliary personnel must be an incidental part of the patient’s treatment. "Incident to" claims that do not meet Medicare rules are considered false claims; these claims are punishable by the Department of Justice and the Office of the Inspector General (OIG).viii

Governing Bodies:
There are many reasons why practices are not billing these services correctly: lack of understanding of "incident to," difficulty documenting who provided the services, or trying to avoid reduction in reimbursement for services provided by non-physician practitioners.ix In 2009 OIG review found that when Medicare allowed physician billings for more than 24 hours of services in a day, half the services were not performed by a physician.x "Incident to" do not appear in claims data and can be identified only when reviewing a medical record. These claims are also vulnerable to overutilization. OIG will review physician billing for "incident to" services to determine if payment had a higher error rate than "non-incident to" services.xi

Maximizing Mid-levels:
Using NPPs helps fix the needs that may be unmet by a physician; this does not mean a physician is slacking on his or her patient care, but a heavy patient load may be dividing the physician’s attention. Using other qualified medical professionals is a great way to help balance the workload. NPPs affect practice workload by treating patients with less-complex problems and this frees up the physician to handle more complex cases. An NPP can provide call coverage and perform hospital rounds allowing the physician to work more efficiently day to day. This translates into higher patient productivity.xii NPPs can help reduce salary expenses; it costs significantly less to employ a NPP. Incorporating NPPs as independent providers can initially boost revenue by increasing the number of patients that can be seen in a practice at a more efficient cost structure.xiii Better performing orthopedic surgery practices use significantly more non-physician providers than their peers, according to data in the Medical Group Management Association’s (MGMA’s) Performance and Practices of Successful Medical Groups. Physician assistants held about 83,600 jobs in 2010.xiv

What the Future Holds:
The incorporation of more NPPs into both hospital and outpatient settings will allow these facilities to manage increased patient volume, and provide high quality care. Understanding of billing for NPPs will be crucial for financial success. Reviewing Medicare guidelines, understanding the difference between direct and "incident to" billing, and discussing options with billing experts will help both in and out-patient facilities maximize revenue and increase utilization of the NPP.

i (2013). PA NP CNS CNM Billing Guide. NHIC,corp, 9.0, 37
ii Pg.6
iii Pg. 6
iv Pg.8
v Grider, D. (Director) (2013, March 1). Coding & Billing "Get Paid for Your Work". Coding & Billing . Lecture conducted from American Medical Assoc., na.
vi Home - Centers for Medicare & Medicaid Services . (n.d.). Home - Centers for Medicare & Medicaid Services. Retrieved July 1, 2013, from
vii Lusk, S. (2013, February 27). Incident to and shared/split services. KLA Healthcare.
viii Cassano, H. J., & CPC. (2011, November 25). OIG to Focus on Billing for Incident-To Services on ADVANCE for Health Information Professionals. ADVANCE for Health Information Professionals. Retrieved July 1, 2013, from
ix Grider, Pg.5
x Lusk, Pg. 2
xi Grider,Pg.6
xii Hawkinson,Pg.2
xiii Hawkinson, Pg.4
xiv Hawkinson,Pg.6


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