Medicare Provisions Affecting Physician Assistants
in the Balanced Budget Act of 1997 (Public Law 105-217)

SEC. 4512 INCREASED MEDICARE REIMBURSEMENT FOR PHYSICIAN ASSISTANTS

(a) Removal of Restriction on Settings - Section 1861(s)(2)(K)(i) (42 U.S.C. 1395x(s)(2)(K)(i)), as amended by section 4511, is amended

(1) by striking "(I) in a hospital" and all that follows through "shortage area" and
(2) by adding at the end the following: "but only if no facility or other provider charges or is paid any amounts with respect to the furnishing of such services,".
(b) Increased Payment
(1) Fee schedule amount. Section 1833(a)(1)(O) (42 U.S.C. 1395l(a)(1)(O), as amended by section 4511, is further amended
(A) by striking "section 1861(s)(2)(K)(ii)" and inserting "1861(s)(2)(K)", and
(B) by striking "nurse practitioner or clinical nurse specialist services" and inserting "services furnished by physician assistants, nurse practitioners, or clinic (sic) nurse specialists".
(2) Conforming amendment - Paragraph (12) of section 1842(b) (42 U.S.C. 1395u(b) is repealed.

(c) Removal of Restriction on Employment Relationship - Section 1842(b)(6) (42 U.S.C.1395u(b)(6), as amended by section 4205, is amended by adding at the end the following new sentence: "For purposes of subparagraph (C) of the first sentence of this paragraph, an employment relationship may include any independent contractor arrangement, and employer status shall be determined in accordance with the law of the State in which the services described in such clause are performed."

(d)Effective Date - The amendments made by this section shall apply with respect to services furnished and supplies provided on and after January 1, 1998.


CONGRESSIONAL EXPLANATION
(FROM THE BALANCED BUDGET ACT CONFERENCE REPORT, H.REP. 105-217)
Current Law -- Separate payments are made for physician assistant (PA) services when provided under the supervision of a physician: (1) in a hospital, skilled nursing or nursing facility, (2) as an assistant at surgery, or (3) in a rural area designated as a health professional shortage area.

House Bill - Removes the restriction on settings. Payment for PA services could only be made if no facility or other provider charges were paid in connection with the service. Payment would equal 80% of the lesser of either the actual charge or 85% of the fee schedule amount for the same service if provided by a physician. For assistant-at-surgery services, payment would equal 80% of the lesser of either the actual charge or 85% of the amount that would be recognized for a physician serving as an assistant at surgery. The PA could be in an independent contractor relationship with the physician. Employer status would be determined in accordance with state law.

Effective Date. Applies with respect to services furnished and supplies provided on or after January 1, 1998.

Senate Amendment - Identical provision.

Conference Agreement - The conference agreement includes provisions that are identical in the House bill and Senate amendment.


AAPA EXPLANATION
Removal of Restriction on Settings -- Congress deleted the references to hospitals, skilled nursing and nursing facilities, and rural Health Professional Shortage Areas (HPSAs), which were the only locations in which PAs were Medicare covered providers. Thus the language in section 1395x(s)(2)(K) of the U.S. Code now authorizes, in any location, Medicare coverage of services "which would be physicians' services if furnished by a physician...which are performed by a physician assistant...under the supervision of a physician...and which the physician assistant is legally authorized to perform by the State in which the services are performed."

Increased Payment -- Congress removed the references to rates of payment for services provided by PAs, which had been 75% in hospitals, 65% for assisting at surgery, and 85% in nursing facilities and rural HPSAs, and made the reimbursement uniform at 85% in all settings for all services.

Removal of Restriction on Employment Relationship -- Although payment is still made to the PA's employer (section 1395u(b)(6) of the US Code), Congress added language allowing employment relationships to include "any independent contractor arrangement," and specified that "employer status" shall be determined in accordance with state law. This new language provides more flexibility in the business arrangements between PAs and their physician supervisors/employers or between PAs and the companies for which they work.

PAs are still required to accept assignment when treating Medicare beneficiaries.

Effective Date -- These changes in Medicare become effective January 1, 1998.

Until then, services provided by PAs in hospitals are covered at 75% of what a physician would have been paid, and first assisting at surgery is reimbursed at 65% of what a physician would have been paid for that service. Outpatient services in rural HPSAs and services provided in skilled nursing and nursing facilities are covered at 85%.

Until January 1, 1998, employers that bill Medicare for outpatient services performed by PAs in settings that are not located in rural HPSAs must use the incident-to billing mechanism. Medicare will pay for these services at 100% of the physician fee schedule provided several requirements are met. The physician must be in the building when the PA sees the patient. PAs may not see Medicare patients on their first visits to the practice, and the physician must see all Medicare patients with new conditions. Because incident-to was originally designed to cover services that were commonly furnished without charge (that is, "incidental" to the physician's service), Medicare requires that the physician remain responsible for the overall treatment of the patient and perform services at a frequency that reflects his or her active and ongoing participation in the management of the patient's course of treatment.

After January 1, 1998, billing under Medicare's incident-to provisions will be superseded by the new language that recognizes PAs as covered providers. Reimbursement for physician services provided by PAs will be at a slightly discounted rate, but covered provider status will allow greater flexibility in scheduling and treating patients.

The Health Care Financing Administration is expected to issue new instructions to carriers regarding implementation of the new law, covering details such as provider numbers, modifier codes, and what criteria may be used to determine if a visit should be billed at the physician or PA coverage rate.
AAPA Issue Brief: Medicare Provisions Affecting
Physician Assistants in the Balanced Budget Act of 1997 -- 8/97


 

 

Last Revised: 9/19/07