State and Federal Programs: Frequently Asked Questions

Q: A business in my community refuses to pay for services performed by a nurse practitioner. The company's health plan is serviced through Health Smart. I have applied to and have received from Health Smart a provider number and I am listed on their provider panel. However, the business states that since they are governed by the Employee Retirement Income Security Act, they do not have to follow state insurance laws. Therefore, the company does not authorize reimbursement for services provided by NPs and are not required by law to do so. Is this correct?

A:  Yes, unfortunately this is correct.

The Employee Retirement Income Security Act (ERISA) is a 1974 federal statute. It permits companies and unions to maintain benefit plans for their employees or members, and largely exempts those plans from conforming to state law.

The purpose of this ERISA preemption is twofold. In 1974, many states did not have adequate laws addressing the fiduciary responsibility of companies offering retirement plans. The preemption also allows multi-state companies to avoid a patchwork of state regulation and administer their benefit plans more uniformly and efficiently. Court rulings on ERISA clarify the preemption. Not all ERISA plans are exempt from state insurance and banking laws. However, self-funded ERISA benefit plans are exempt. Those plans in which the company and employee contributions pay the benefits provided under the plan are exempt from state banking and insurance laws, as long as the company’s primary business is not banking or insurance.

ERISA does not require a company to offer health insurance as one of its benefits. However, because of tax and recruiting advantages, many companies do so. Obviously, most companies do not know much about health care. Therefore, most companies contract with an insurance company or managed care organization to administer the health benefit plan. That is what happened in this case. The company pays Health Smart to administer its plan and those covered under the plan utilize Health Smart’s network of providers.

This creates two points at which a nurse practitioner, or any other health care provider, may have reimbursement problems. As in this case, the PPO or HMO must follow state law (HB 2846, Acts of the 75th Texas Legislature) and credential you to be a provider on the plan if your collaborating physician is already on the plan and requests that you also be credentialed. However, the self-funded company may establish coverage limitations such as limiting coverage to medical services provided only by physicians.

However, just because the company is technically correct does not mean you should not take any action in this matter. This is usually an education issue. You need to educate your patients that they should discuss the issue with their human resources department and find where to write to request a change in policy. NPs can also educate the human resources department. Companies’ decisions are usually based on economics. Many companies assume, by limiting reimbursement to physicians, they are saving money and ensuring their employees the best health care. NPs must counter this belief with the facts.

These are the facts. 1) NPs provide the same services provided by physicians. A company will not cover additional services just because their insurance plan includes services provided by NPs. The company will provide their employees greater choice at no additional cost. 2. Research shows the quality of NP services is at least equal to that of physicians, and often includes patient education that can lead to healthier employees, again, at no extra cost to the company. 3. NPs’ patients, as compared to the same type of patients seen by physicians, tend to have lower costs for laboratory tests, emergency room visits, hospitalizations and prescriptions. (Be sure to keep statistics in your own practice so you can show hard evidence of your economic advantage.) 4. Managed care companies in Texas should not charge higher credentialing fees for including NPs and other APNs as providers because PPOs and HMOs are already required to credential NPs under the Texas Insurance Code.

Obviously, it is most effective if you and your patients communicate directly with company decision-makers that negotiate benefit packages. Company employees should state clearly that they are asking for a change in the health benefit plan to cover NP services and why it is important for their family’s health. Companies do consider such requests because they have a vested interest in maintaining a qualified and satisfied workforce. Obviously, multiple requests from multiple sources have the greatest impact, so persistence pays.  

CNAP may also be able to help by offering a packet of information on advanced practice nurses and, barring prohibitive travel expenses, I would be happy to meet with company representatives or discuss issues by telephone (979-345-5974) or email (Lynda@cnaptexas.org). You can also obtain additional information on reimbursement and credentialing through CNAP’s Website, www.cnaptexas.org.

It is not always easy or cheap to resolve problems with self-funded ERISA plans, but it is important that all NPs address these problems in a direct and business-like fashion. So the next time a company says, “We don’t have to cover NPs because we are governed by ERISA.” you can say, “You are absolutely right, but let me tell you why your company should cover services provided by NPs.”
 

Q: Can a physician bill MEDICARE for services provided by an NP?

A: Sometimes, but specific conditions must be met.

Even though nurse practitioners and clinical nurse specialists may obtain their own Medicare billing numbers, Medicare still allows physicians to bill for outpatient services provided by the NP or CNS if specific conditions are met.

1.    The NP must be an employee of the physician. (In addition to routine employment, Medicare recognizes employment situations in which the physician leases the NP’s time from another agency. The NP may not be an independent contractor.)

2.    The physician sees the patient for the initial visit. (At a minimum this means the physician has to repeat essential elements of the physical exam and review the history and make a separate note in the chart. The note cannot be “Agree with above assessment.”)

3.    The physician has active and ongoing involvement in the patient’s care. (“Ongoing involvement” is not defined, but is generally interpreted that the physician sees the patient for any new significant problem and, at a minimum, every third to fifth office visit.)

4.    The  physician directly supervises the NP. (While “direct supervision” does not mean the physician must see the patient, it is interpreted to mean the physician is in the office suite at the time the service is rendered and available to render immediate assistance if necessary. The physician cannot just be in the building.)

As you can see, billing Medicare for services provided by NPs under the physician’s name as “incident to” is a time consuming and risky practice unless the physician is always present in the office suite when the NP sees patients. Remember that “incident to” billing only applies to ambulatory care. This type of billing does not apply to inpatient situations. Given the fact that incorrect billing can lead to significant financial penalties and a consistent pattern of improper billing can lead to criminal charges of fraud, this is not a matter to take lightly.

 Q: Can physicians in Texas bill MEDICAID for services provided by an NP?

A nurse practitioner in a rural school-based clinic asked if she could bill Medicaid for her services under her collaborating physician’s name. She wishes to bill under the physician’s name because this allows the clinic to receive 100% reimbursement for her services versus 85% if she bills under her own name as an APN.

 A: Yes, Texas Medicaid rules allow a physician who delegates prescriptive privileges to an NP, or meets those supervisory requirements, wide latitude in billing for services provided by the NP in both inpatient and outpatient settings.

 The rules for Medicare and Texas Medicaid are very different. The Health and Human Services Commission (HHSC) allows physicians to bill Medicaid for services provided by an advanced practice nurse or physician assistant in both inpatient and outpatient settings. The rules specifically state that the physician does not need to be on site at the time the service is provided, and an APN is exempt from the supervision required of a physician who bills for the services provided by a resident in training. The rules do stipulate that the APN services must be provided under protocols and in accordance with any rules by the BME. Therefore, if a physician delegates prescriptive privileges to an NP in a medically underserved area, those services may be billed under that physician’s name if he or she meets certain minimum conditions specified in the BME rules. The physician must:

    1.  review and sign the practice guidelines or protocols annually;

    2.   be on site at least once every 10 business days;

    3.   review at least 10% of the charts while on site; and

    4.    maintain a record of the physician’s quality assurance activities and names of patients seen while at the APN’s practice site.

Although I certainly recommend that nurse practitioners bill under their own names whenever financially feasible, NPs should be aware that rules for billing Texas Medicaid under a physician’s name are much more liberal than when billing Medicare. For small practices that see a large proportion of Medicaid clients, the difference between 100% reimbursement and 85% can mean the difference between financial life and death. It is also important in many medical school settings that physicians know they can bill for an APN’s services without having to conform to the same supervision standards that apply to billing for services provided by residents.

 Whether billing under Medicare, Medicaid or private insurance, one word of caution is warranted. The NP and physician must be sure no double billing occurs for the same service. Obviously the physician and NP cannot bill for the same service. However, sometimes double-billing is far less obvious. For instance, neither the physician or NP can bill Medicaid for a service provided in a school-based clinic if the school district bills for that service under the School Health and Related Services (SHARS) program. Regardless of the circumstances, be sure that only one entity bills for any one service.

Billing Decisions Should Maximize Efficiency & Reimbursement

Q: The clinic has been billing my visits with my UPIN Medicare number, even though my supervising physician is in the building with me most of the time. They finally realized that I was being reimbursed only 85%. The doctor wanted to know why NP schools push us to have our own number since most of us work with a physician. He wants me to get the word out that PAs are more acceptable to doctors because they don't mess up the 100% reimbursement rate the docs get. If only we could receive 100% reimbursement! I am beginning to realize with dismay the discrimination we face as providers. I also have learned how expensive it is to run a clinic. We have experienced some tight financial situations over the past few months. I've even wondered if I would be able to keep my position. How should I respond?

A: These are difficult issues, but the correct information will help you address the physician’s concerns and contribute to the financial viability of the practice. According to your explanation, the physician is making three false assumptions.

False assumption # 1: This 15% additional reimbursement is easy to capture. 

Correct information: To bill Medicare for services performed by a NP under a physician’s name, the physician must not only be in the building, but in the office suite at the time the service is rendered. In addition, the physician must see the patient regularly (every 3rd to 5th visit) and the physician must see the patient initially and for each new problem. If the physician is participating at this level of care for all the patients you see, then the physician should bill for the service under "incident to" provisions using the YR modifier and get 100% reimbursement. (Note that provisions for “incident to” billing only apply to outpatient situations. If you see inpatients, you must bill under your own number for those visits.)

Usually, when the office counts its actual costs of keeping track of all these requirements and ensuring compliance, the costs do not equal the 15% of Medicare reimbursement that is lost. I also recommend quantifying this 15% in dollars and cents so you and the physician can do a cost-benefit analysis.

False assumption # 2. Since physician assistants (PAs) always work under a physician’s supervision, the physician may bill services provided by the PA under the physician’s name.

Correct information: Medicare reimburses physician assistants at the same rate they reimburse NPs. If the physician bills for services provided by a PA, the “incident to” billing criteria must be applied, just as is true for NPs. The only difference is that PAs cannot be directly reimbursed. Payment for PA services must go directly to the physician or a clinic.

Remember that if your practice also bills Medicaid, Texas Medicaid rules on this issue are much more liberal than Medicare. Inpatient or outpatient services provided by NPs and PAs may be billed under the collaborating physician's name at 100%, as long as that physician and NP or PA have signed protocols and are working in accordance with state law. NPs billing Medicaid under their own names only receive 85% of the physician’s rate. PAs are not permitted to bill Medicaid under their own names.

False assumption # 3: Reimbursement for NP services should not be tracked and shared with the NP for fear the NP will want more money.

Correct information: The NP should receive a monthly statement with the services billed to each payor and the payment received. Margins are very slim in many practices so every provider must be aware of what they cost the practice in overhead and how much revenue they produce. Assuming an average amount of overhead and a reasonable volume, each provider must generate double the amount of income that they cost in salary and benefits in order for the practice to just break even.  It’s probably time to negotiate a raise when you produce three times your salary and benefits.

More NP jobs than I would like to count are falling victim to poor billing practices. If no one is tracking the NP’s billings and what percentage is being paid, then the practice gets nasty surprises when an audit is performed to find out why the practice is loosing money (as in your case). If each provider in the practice receives an individual profit and loss statement each month, then it is possible to see if your services are being billed at the maximum amount possible and that particular payors are not undercutting reimbursement.  Texas law allows insurers to reimburse NPs and PAs at a lower rate than physicians, but they can only do so based upon the same formula used to compute the physician’s rate.  By this method, a justifiable differential is usually less than 5%.

Tracking each provider’s revenue usually requires adjustments in the billing system since many NP services are billed under a physician’s name in order to receive maximum reimbursement. I recommend discussing these financial issues when interviewing for jobs. It is important that the computer and billing systems are adequate to track an additional provider, and that everyone is in agreement on how NP services will be billed for each payor. Of course, it will simplify billing systems when each provider can bill every payor under his or her own provider number and receive 100% reimbursement. Getting to this point will not be easy, but CNAP’s efforts toward equitable reimbursement are the best reasons for supporting CNAP with your dollars and involvement.

If the physician with whom you work wants to collect more money for the services you provide, he should urge AMA, and any national specialty medical societies of which he is a member, to drop their current efforts to limit Medicare services provided by NPs. In addition, the physician should support 100% Medicare and Medicaid reimbursement for covered services provided by NPs. Most doctors in Texas are members of TMA, so your collaborating physician should inform TMA that supporting increased reimbursement for NPs is also important for physicians. Same pay for same work is good public policy. It is also good policy for medical practices that want to drop red tape and remain financially viable.

Returning to the physician’s original question, “Why do schools of nursing push NPs to get their own numbers?” They recommend you obtain and bill under your own provider number to make it easier to track the services you provide and to avoid potential fraud or abuse charges. It isn't just the physician and practice that can get fined, embarrassed, or go to jail. The NP is responsible also.