Medicare's Final Rule On Billing Requirements For Teaching Physicians
The Effect of the Rule on Physician Assistants

BACKGROUND

The Health Care Financing Administration (HCFA), the federal agency that administers the nation's Medicare program, has issued a new regulation governing how physicians may bill for their professional services when they are also teachers/clinical preceptors or supervisors of physician residents. A resident is defined as a doctor of medicine, osteopathy, dentistry or podiatry.

The spirit of the regulation is to clarify when physician billing is appropriate under Medicare, if a physician is serving in the dual capacity of a clinical preceptor as well as a provider of physician services to Medicare beneficiaries.

Under current law, Medicare subsidizes the cost of physician residency training through funding known as Graduate Medical Education (GME). GME funds flow to institutions that train residents, generally teaching hospitals. GME has two components. The first is Direct Medical Education payments -- i.e., the actual cost of a resident's stipend; the second is Indirect Medical Expenditures, which is a premium paid to institutions for the added expenses associated with being a teaching facility. In FY96, Medicare spent approximately $1.9 billion on DME and about $4.9 billion on IME, for a total of nearly $7 billion.

In the regulation, HCFA states that a physician who is teaching a resident may not bill Medicare for his or her professional services unless the physician performs the "key portion" of the service for a Medicare beneficiary. So, if the physician is precepting a physician resident (thus functioning primarily as a teacher), and the resident is providing the "key portions" of the service, then the physician may bill Medicare neither for his or her services nor the services rendered by the resident. This is for essentially two reasons.

First, HCFA contends the physician is in some way being compensated for his or her teaching/preceptor time through the GME payments flowing to the teaching institution. Compensation may be, for example, by virtue of being on staff in a teaching institution or by working under contract as a clinical preceptor. Second, the resident's services are already paid for by GME. HCFA thus concludes that when key portions of the physician services provided to a Medicare beneficiary are provided by a resident, then Medicare, through GME, has already paid for the resident's time; it is therefore illegal to submit what is essentially a second bill.

For a number of reasons this regulation, which does not mention Physician Assistants and has no bearing on PAs, has nevertheless caused confusion for PAs and their supervising physicians. PAs who serve as clinical preceptors for physician residents have been asked what impact this regulation has on the practice in which they work. Confusion has also arisen about what effect this regulation has on physician billing for PAs.

DISCUSSION

The HCFA teaching regulation, which appears in the December 8, 1995, Federal Register, and took effect July 1, 1996, does not mention or address PA practice. Nor does the regulation affect the physician-PA relationship. However, in an attempt to address questions that have been posed to the Academy regarding the regulations, the following Q&A format has been prepared.

1. Can my supervising physician still bill for my services? Does he or she now have to provide the "key portions" of a Medicare patient's exam?

The teaching regulations have no bearing on PA coverage under Medicare. PAs are covered providers of physician services under Medicare based on the setting in which they work, or in the case of assisting at surgery, based on the service performed. Physician services provided by PAs in nursing homes, hospitals, rural health professional shortage areas, or for assisting at surgery are billed to Medicare at a percentage of the physician fee schedule. Physician services provided by PAs in outpatient settings are billed under HCFA's "incident-to" policy, meaning the physician or employer bills Medicare under the physician's UPIN number, as though the physician had provided the service, at one hundred percent of the physician fee schedule.

None of this is affected by the teaching regulation, because PAs are not residents nor have the PAs' services already been paid for under GME. While physicians do legally supervise PAs, the physician-PA relationship is not one of preceptor-resident. Therefore, when a physician (or a PA's employer) bills Medicare for the physician services provided by a PA to a Medicare beneficiary, it is not necessary for a physician to perform the "key portions" of the care. Further, because Medicare has not yet paid for the services of the PA -- as it has for residents under GME -- HCFA expects the Medicare program to be billed for the physician services delivered by a PA to a Medicare beneficiary.

Remember the spirit of the law -- Medicare will pay for all physician services rendered to Medicare beneficiaries, so long as they are not rendered by a resident whose services have already been paid for by GME. The regulations clarify that Medicare will pay a teaching physician for his or her services if those services include rendering "key portions" of the care to a patient. However, when a physician is acting as a clinical preceptor to a resident, Medicare is already paying the physician for his or her time through GME and is already paying for the resident's time through GME.

2. Do the regulations prohibit PAs from precepting physician residents?

No. The regulations do not nor are they intended to establish who may precept residents. That responsibility rests with the individual residency programs and the respective accrediting body and standards under which they operate. Rather, the regulation clarifies the distinction between a physician billing for performing "key portions" of the care he or she provides to a Medicare patient, versus billing for his teaching/preceptor services, which are already paid for through GME.

3. Can my practice continue to bill Medicare for the physician services I render, even if a resident is with me?

Yes. It is important to understand that PAs are not included in the teaching regulation, nor do the teaching regulations affect already-established HCFA policy for the billing of physician services by PAs. Medicare billing for PAs remains as it has always been -- billing for physician services provided by a PA occurs under: (1) "incident-to" for outpatient visits, or (2) the appropriate modifier for services rendered in nursing homes, hospitals, rural HPSAs, or in-patient settings, as well as for assisting at surgery.

While there is no requirement to do so, practices that have both physicians and PAs teaching residents may choose to hold the PA to the same standard as the PA's supervising physician. For instance, because of the teaching regulation, physicians will need to develop criteria to establish when they have performed the "key portions" of a service. This will necessarily vary with the type of service being provided based on the patient's age, diagnosis, and overall medical condition. Using those "key portion" criteria, billing staff will determine whether or not to submit a bill to Medicare on behalf of the physician (remember, a bill would not be submitted if it was determined that the key portions of the service were performed by a resident, because the resident's time is already paid for under GME).

The Academy is aware that the regulation does not address billing by non-physician teachers/preceptors. Based on Academy-initiated conversations with HCFA, the agency knows that non-physicians teach residents (the example cited by HCFA was psychologists teaching psychiatric residents). The agency has made the assumption that the amount of non-physician teaching is not significant, as evidenced by its decision not to address in the regulation Medicare billing by non-physician providers who also teach.

Nevertheless, the Academy believes it is important to avoid any appearance of double billing Medicare. Specifically, if the supervising physician would not bill for his or her services because a resident is providing "key portions" of the care for a Medicare patient, neither should the PA. If, however, the PA is providing the key portions of the care when he or she is precepting a resident (using the same criteria established by his or her supervising physician), the practice should bill for the physician services provided by the PA in the same manner it always has (be it incident-to, or setting/service-specific as discussed above). Again, the spirit of the regulation is to prevent Medicare being billed for services it has already paid for with GME funds -- which includes the resident's time and the teacher's time. While it is true that the PA is not compensated under GME for his or her teaching time, the PA's supervising physician presumably is. Thus, it is likely that HCFA would argue that Medicare has already paid for that unit of teaching time, whether the teacher is a physician or a PA. If so, submitting a second bill -- for teaching services rather than the provision of physician services -- would be inappropriate.

However, at no time has Medicare, through GME, paid for the physician services provided by a PA who also happens to be a clinical preceptor. Conversely, GME has paid for the resident's services. Therefore, if the PA is rendering physician services to a Medicare patient, Medicare can and should be billed. If, however, the resident rather than the PA is providing the "key portions" of the care, no charge to Medicare should be submitted.

4. Can my practice bill for the services provided by a resident?

No. The resident's services are already paid for by GME.

5. Can a PA be a resident's supervisor?

No. PAs are legally supervised by doctors of medicine or osteopathy. Thus it is illogical to conclude that a PA could supervise a doctor of medicine or osteopathy.

6. Is it the same to be a resident's supervisor and a resident's preceptor/teacher?

No. The temptation to confuse one who is a legal supervisor with one who may teach a particular skill should be avoided at all times, whether it involves the teaching regulation or not.

7. Does this regulation, be it for billing, supervision, or the performance of "key portions" of an exam, apply to PA students or those who are clinical preceptors to PA students?

No. This regulation applies only to those who meet the definition of "resident," which PAs do not.

Issue Brief: Medicare's Final Rule on Billing Requirements for Teaching Physicians 8/96

 

 

Last Revised: 6/18/03