Expanded Coverage for Medical Services Provided by PAs Under Medicare

  Provisions contained in the Balanced Budget Act (BBA) of 1997, effective January 1, 1998, expanded Medicare coverage for medical services provided by physician assistants (PAs). Congress, recognizing the increasingly important role of PAs in providing health care services to Medicare beneficiaries, eliminated a number restrictive requirements for PAs providing care in outpatient office or clinic practice settings and increased the rate of reimbursement for services provided by PAs in hospitals and for first assisting at surgery.

Restrictions Removed

The PA provisions contained in the BBA of 1997 removed the restrictions on the type of areas and settings in which the professional services of PAs are paid for by Medicare. Payments are allowed for medical services furnished by PAs in all areas and practicing settings permitted under applicable state licensure laws. Physician supervision requirements for PAs are also determined by individual state law.
 

Increased Payment

The BBA of 1997 increases the payment for medical services delivered by PAs in hospitals (inpatient, outpatient, or emergency department) and for first assisting at surgery to 85 percent of the physician fee schedule from 75 and 65 percent, respectively. Services provided by PAs in nursing facilities continue to be covered at 85 percent of the fee schedule.
 

Independent Contractor Arrangements

PAs have the option of selecting either a W-2 or a independent contractor (Form 1099) employment arrangement. Payment for services is made only to the PA's employer, regardless of whether the PA is employed as a W-2 employee or as a 1099 employee, who is acting as an independent contractor.
 

"Incident To" Services Still Available to PAs

Medical services provided by PAs "incident to" the physician in the office or clinic and payable at 100 percent of the physician fee schedule continued to be covered by Medicare. The "incident to" provision does not apply to hospital or nursing facility practice settings.

When PAs deliver services under the "incident to" provision, the physician must (1) be physically on site when the PA delivers care; (2) personally treat patients on their first visit to the practice (PAs may deliver subsequent care as long as the physician is in the suite of offices); and (3) personally treat established patients who present with new medical problems. Having the physician co-sign the chart/medical record or briefly meeting the patient does not constitute the physician's personal treatment of the patient.
 

Provider Numbers

Medicare now requires that PAs who treat Medicare patients have provider identification numbers. PAs without provider numbers who deliver care to Medicare patients should immediately contact the provider relations office of their local Medicare carrier to request a HCFA 855 Provider/Supplier Application to apply for a provider number. HCFA has instructed carriers to issue provider numbers "on a priority basis in the most expeditious manner possible."
 

Billing Requirements

When PAs are providing services in a non-group office or clinic practice setting, Form HCFA-1500 must contain the Provider Identification Number (PIN) of the PA after "PIN#" in item box 33. Item 33 must also contain the employer's name, address, etc. where payment is to be directed. If the PA's employer is a group practice, it must include the group PIN number in item box 33 after "GRP#", including the name, address, etc. where payment is to be directed and list the individual PA's PIN number in item 24k (the box labeled "reserved for local carrier use").

Billing for services provided in hospitals, nursing facilities, or rural Health Professional Shortage Areas (rHPSA) has changed. Previously, PAs were required to use modifier codes to distinguish services provided in these practice settings. That is no longer the case. Under the new requirements, the only instance in which a modifier code is used is when PAs first assist at surgery. The appropriate modifier code for first assisting is "AS."

Whether first assisting at surgery, or providing services in hospitals, nursing facilities, or a rHPSA, the PA's PIN should be used after the "PIN#" in box 33.

Continue to bill "incident to" services as you have in the past using the physician's name and provider number on the HCFA 1500 form.

If your Medicare carrier is not aware of the new provisions implementing the BBA, please contact Michael Powe in the AAPA Government and Professional Affairs Department at 703/836-2272, ext. 3211.

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Last Revised: 4/2/02