Medicare Moves to Implement PA Direct Pay

Effective January 1, 2022

July 20, 2021

By Michael Powe

PAs moved one step closer to being eligible to be paid directly under the Medicare program when the Centers for Medicare and Medicaid Services (CMS) issued PA direct payment authorizing language in the 2022 proposed Physician Fee Schedule. The proposed rule implements legislative language championed by AAPA and will authorize PAs to receive Medicare direct payment effective January 1, 2022.

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Medicare permits health professionals who bill Medicare—physicians, advanced practice registered nurses (APRNs), physical therapists, psychologists, podiatrists, social workers, and others—to receive direct payment under their own name. Currently, PAs do not have the ability to receive direct payment from Medicare. Lack of access to direct payment hinders PAs’ ability to fully participate in certain practice opportunities.

The ability to receive Medicare direct payment will be especially important for PAs who choose to:

1. practice as self-employed independent contractors (e.g., PAs first assisting at surgery for several different surgeons on an “as needed” basis, but not having an employment relationship);
2. own their own practice and/or medical corporation;
3. work in certified Rural Health Clinics (RHCs) and want to ensure they receive reimbursement for “carved out” RHC services, such as certain diagnostic tests, that are not included in the all-inclusive RHC payment bundle. Reimbursement for these “carved out” services can occur under Medicare Part B when PAs have the authority to receive direct Medicare payment under their own name.

The majority of physicians and APRNs do not choose to receive direct payment. Instead, they assign their Medicare reimbursement to their W-2 employers. Many PAs will likely do the same. However, it is essential for PAs who want the opportunity of working in innovative and nontraditional practice arrangements to have the option to receive direct payment similar to other health professionals.

[The Essential Guide to PA Reimbursement]

Several states currently have laws or regulations prohibiting PA direct payment. If PA state law prohibits PAs from receiving direct payment, Medicare will not override those state provisions.

PA scope of practice and the rate of Medicare reimbursement paid for services provided by PAs will not change when PAs are authorized to receive direct payment. This direct pay policy applies to the federal Medicare program and does not impact state Medicaid programs or commercial payers. Finally, direct payment will not change the array of Medicare billing options available to PAs and their employers including billing under the “incident to” provision in the office setting and split/shared billing in the hospital.

Michael Powe is AAPA’s vice president of reimbursement and professional advocacy. For more information regarding reimbursement issues, contact AAPA’s reimbursement team at [email protected]. 

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