HCFA loosens rules on use of nonphysician providers

Medicare will pay if guidelines are met

Question: We are using an increasing number of nonphysician practitioners in our practice and in our health system. What are the latest Medicare requirements for payment for these employees?

Answer: Here’s good news for physician practices that employ nonphysician practitioners. The Health Care Financing Administration (HCFA) has modified its carrier instructions so Medicare will pay for services by "leased," or temporary, employees, says Ira J. Coleman, JD, an attorney with McDermott, Will & Emery, in their Miami offices.

The new policy, contained in a revision to the agency’s Medicare Carriers Manual, creates some new uncertainties. It also offers more flexibility in crafting arrangements for nonphysician services.

"Historically, HCFA has required that the nonphysician be an employee of the physician," says Coleman. That precluded temporary employees. Now the new provision allows the employee to be a part-time, full-time, or leased employee. That employee can work for a solo physician, group practice, or any other legal entity that employs the physician, such as a management service organization. You’ll recognize the same, familiar terminology in the provision — services furnished by nonphysicians "incidental to" physician services remains intact. The category simply is expanded to temp workers.

Under the new policy, a leased nonphysician employee must work under a written agreement providing that:

• The nonphysician, although employed by the leasing company, provides services as the leased employee of the physician or other entity.

• The physician or other entity exercises his control over all actions taken by the leased employee to the same extent as if there were a direct employment relationship.

Following physician standards

Whether a physician exercises sufficient direction over a leased employee is determined by how well the physician meets standards set by the Social Security Act and policy related to that act regarding employment vs. independent contractor status. These standards constitute the so-called "common law employment" test.

Here is a summary of those standards:

• The individual contracting for services may dismiss the individual providing the services.

• The contracting party furnishes the individual with equipment and office space.

• The individual is trained by the contracting party or is required to follow that person’s instructions.

• The individual must do the work personally and generally may not hire, supervise, or pay assistants.

• The contracting party sets the individual’s hours of work, requires full-time work, or restricts the individual’s work for others.

• The individual is paid by the hour, week, or month.

Factors to be wary of, which could lead to a finding that the relationship is not a true employment relationship, include:

• The individual may make a profit or suffer a loss.

• The individual is hired to complete a certain job and may be liable for damages if he or she quits before it is done.

• The individual works for a number of physicians or companies at the same time.

• The individual advertises his or her services to the general public.

• The individual pays his or her own expenses and has his or her own equipment and office.

Keep in mind that HCFA’s modified policy retains most of the key requirements for coverage of "incidental to" services, including that the services be:

• an integral, although incidental part of the physician’s professional services;

• commonly rendered without charge, or included in the physician’s bill;

• of a type that is commonly furnished in a physician’s office or clinic;

• furnished under the physician’s direct personal supervision.

"HCFA’s increased flexibility with respect to leased employees will clear the way for less convoluted relationships between physicians and practice management companies," Collier says. Nevertheless , take care in deciding which classes of personnel should be leased or directly employed by the physician or group practice, he advises.

For example, it may be more advisable for a physician to directly employ allied health professionals whose services are covered by Medicare and who can submit their own claims, he says.