Inspector General clarifies billing rules

By Caral Edelberg

President, Medical Management Resources

Jacksonville, Florida

In recent months, the Health Care Financing Administration (HCFA) has received numerous requests for clarification on policies governing payment for physician assistant (PA) services provided to ED and/or hospital patients under the "incident to" guidelines. Furthermore, significant inconsistencies among carriers have resulted in a wide range of billing practices by providers, many of which are incorrect.

‘Incident to’ services defined

In order to understand what constitutes the concept of "incident to," one must first understand HCFA’s two basic principles for payment of independent physician services: (1)The services must be personally furnished to an individual patient by the physician and contribute directly to the diagnosis or treatment of an individual patient; and (2) the services must ordinarily require performance by a physician.

The Medicare "incident to" guidelines outline five "incident to" coverage requirements. In order for a PA service to be covered as "incident to" the services of a physician, the services are required to be:

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

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

• of a type that are commonly furnished in physician’s offices or clinics;

• furnished under a physician’s direct personal supervision;

• furnished by the physician or by an individual who qualifies as an employee of the physician.

For example, the office-based physician may bill for the injections and dressing change provided by the nurse that he employs because these services are an "incidental" part of the normal physician service.

HCFA policy further requires that a direct, personal, professional service be furnished by the physician to initiate the course of treatment, of which service performed by the non-physician practitioner is an incidental part. There must also be subsequent services by the physician of a frequency that reflects his or her continuing, active participation in and management of the course of treatment.

It is HCFA’s position that "incident to" services, payable in the office and clinic settings, are not payable for hospital patients, including those treated in the ED. HCFA further contends that this ruling has been in effect for many years.

The exclusion of "incident-to" payment in the hospital setting is based on "bundling provisions" that prohibit carriers from paying for PA services provided to hospital patients, even when the PA is independently employed by the ED practice. The "bundling provision" of the Medicare statute (Section 1862(a)(14), Social Security Act) prohibits payment for most non-physician services to hospital patients unless services are furnished directly by the hospital or under arrangements that guarantee that only the hospital will bill for them (Section 1861(w)(1)). (Note: Medicare Part A applies to hospital services; Medicare Part B applies to physician services.)

If the PA is employed by the emergency physician or group and provides an identifiable service within the PA scope of practice, the emergency medicine group, as employer of the PA, may bill Medicare for the independent PA services with the -AN modifier as applicable under individual carrier policy. This modifier identifies the type of PA service and limits payment to 75% of the physician fee schedule amount. (Note: the -AN modifier is listed with the CPT-4 procedure codes identified for billing of the patient encounter. Example: 99283-AN.)

Some Medicare carriers require the -AS assistant-at-surgery modifier when the PA assists the physician in performing surgical procedures. Assistant-at-surgery is defined as a physician who actively assists the physician in charge of a case in performing a surgical procedure. When a PA, not a physician, provides the assistant-at-surgery service, a lesser amount of the Medicare fee schedule amount is paid. Assistant-at-surgery guidelines for teaching hospitals are more restrictive.

If the emergency physician supervises the PA and he or she employs but provides no personal, identifiable service, no Medicare payment can be made to the physician at the full Medicare payment amount. Supervision of the PA in the hospital environment alone does not constitute a physician’s professional service, so the payment will reflect the reduction as a PA service. The emergency physician or group who provides PA supervision for a PA employed by the hospital may seek payment for such supervision from the hospital. It is the employer of the PA, not the supervisor of the PA, that is entitled to Medicare payment for the PA services.

Independent physician services

If the physician, not the PA, personally performs the service for which payment is sought, a physician charge may be billed. For example, the physician might use the PA’s assistance in obtaining and recording the history, followed by the physician’s review of the history, personal examination of the patient (assistance from the PA is acceptable), and performance and documentation of medical decision making.

The AMA/HCFA Documentation Guidelines allow the physician to review and confirm portions of the history taken by ancillary personnel such as a PA. All other elements of the evaluation and management (E/M) service must be personally performed by the physician. For purposes of clarification, the physician examination must meet the criteria as established for each E/M level; and the physician’s involvement in the three components of medical decision making (amount and/or complexity of data reviewed; number of diagnoses or management options; and risk) must be documented consistently with the level of E/M code billed.

No physician charge may be rendered for PA services when the PA is employed by the hospital, although the emergency physician may be called upon to supervise the services provided by the PA. In these instances, the emergency physician supervisor must seek payment from the hospital for supervision services. The hospital may bill and receive payment for the services provided by the PA by using the -AN modifier.

If both the emergency physician and the PA are employed by the hospital, only the hospital is entitled to bill for the service performed by the PA. The physician assigned to supervise the PA would be required to seek compensation from the hospital for supervisory services, which are not be considered to be Part B services and thus are not separately billable by the physician.

For the hospital-employed emergency physician to submit a bill for a service assisted by the PA, the emergency physician is expected to personally review the patient’s history if taken by the PA, personally examine the patient, personally make the medical decisions and document, per HCFA documentation guidelines, the extent of the service provided. The only PA service that could be included in the physician service would be the taking of the history, specifically allowed under the HCFA-AMA documentation guidelines. (See chart listing billing and reimbursement options above.)

When the PA is performing ED services independently, the supervising physician must be in close enough proximity to direct the PA’s work but not necessarily physically present in the room with the PA. In all cases, applicable state PA licensing law will establish the independent services that may be performed by the PA. The independent services performed by the PA under supervision by the supervising physician require addition of the -AN modifier for billing.

The rules governing Medicare payment for ED services performed by registered nurse practitioners (RNPs) are considerably more restrictive. The "incident to" rule is not applicable to RNPs in the hospital setting, and independent billing of RNP services in the ED is generally excluded from Medicare’s payment guidelines.

In cases where the carrier issues separate identification numbers for PAs, this number would be required on the billing form. In most cases, however, the billing is done in the name of the supervising physician. The application of the -AN modifier identifies the individual service as a PA service and is paid by Medicare at 75% of the Medicare fee schedule amount. Without the -AN modifier, the payment to the provider whose number appears on the claim form would be made at the full Medicare amount.

Some emergency physicians have suggested that the problems of payment for PA services could be resolved by restricting PAs from treating Medicare patients, which in turn would require that Medicare patients be treated exclusively by physicians. Under no circumstances should Medicare patients be designated for treatment by a physician and not a PA for clearly economic reasons.

Emergency department triage status should be determined by patient acuity and never by payment considerations. For example, in the low-acuity ED "fast track" setting, patients may often be seen by PAs working under limited emergency physician supervision. Under these circumstances, the PA’s service would be billed by the employer of the PA with the -AN modifier for 75% of the physician fee schedule amount.

Medicare Part B Carrier Alerts are being prepared to clarify PA payment policies for providers and hospitals. If Part B carriers identify billing errors, they are required by HCFA to assure the following actions:

1. Notify intermediaries (Medicare Part A) of circumstances involved in inappropriate billing of bundled services.

2. Reopen and deny any previously paid claims and notify physicians that the hospital was previously paid for the service. This means the physician will owe money back to Medicare for the overpayment.

3. Educate providers.

Hospitals will be held accountable if they fail to comply with their reporting responsibilities required under their hospital provider agreement. HCFA is expected to take action for recovery of inappropriate payments.