MedPAC Suggests Elimination of Incident To Billing for APRNs, PAs

June 18, 2019 - CMS should do away with “incident to” billing for advanced practice registered nurses (APRNs) and physician assistants (PAs) and pursue a stay-based payment design when implementing a unified post-acute care (PAC) payment system, the Medicare Payment Advisory Commission (MedPAC) recently suggested.

In its June 2019 report to Congress, the commission also advised CMS to establish national emergency department (ED) coding guidelines for hospitals to ensure more accurate payments.

MedPAC intends for the clinician payment recommendations to ensure Medicare is paying providers an appropriate amount for specific services. The commission provides their recommendations for improving clinician payments twice a year.

The latest report found no reason to generally update clinician payment rates. But the commission did express concerns with specific billing and payment policies, including incident to billing, a unified PAC payment system, and ED coding.

Eliminate incident to billing for APRNs, PAs

To bolster primary care, MedPAC recently advised ditching the Medicare reimbursement rule that allows PAs and APRNs, which include nurse practitioners, clinical nurse specialists, nurse anesthetists, and nurse midwives, to engage in incident to billing.

READ MORE: Greater Non-Physician Staffing Helps Healthcare Revenue Cycle

Under incident to billing, APRNs and PAs can use a supervising physician’s national provider identifier (NPI) to bill Medicare at 100 percent of the reimbursement rate for certain services rendered. The non-physician providers can bill Medicare using their own NPI in certain circumstances. However, Medicare will pay the provider 85 percent of the fee schedule rate.

With the recent growth in the APRN and PA workforce, incident to billing no longer makes sense and actually creates significant primary care payment accuracy issues, MedPAC stated.

The combined number of NPs and PAs who billed Medicare more than doubled from 2010 to 2017, reaching 212,000 in 2017, the commission found. But the rapid growth in incident to billing obscures “important information on the clinicians who treat beneficiaries … inhibiting Medicare’s ability to identify and support clinicians furnishing primary care.”

Eliminating incident to billing and requiring APRNs and PAs to bill independently would “update Medicare’s payment policies to better reflect current clinical practice,” the commission explained in the report.

Additionally, the policy would benefit Medicare, beneficiaries, clinicians, and researchers by improving the accuracy of the physician fee schedule, enhancing program integrity, and allowing for better comparisons between the costs and quality of care delivered by physicians and non-physician providers, MedPAC said.

READ MORE: Exploring the Fundamentals of Medical Billing and Coding

The commission also projected the elimination of incident to billing to save Medicare $50 to $250 million in the first year. Although, some practices that employ APRNs and PA would see a decline in revenue because of the lower reimbursement rate for services rendered by the non-physician providers.

Establish national ED coding guidelines

With the coding of ED visits shifting to higher levels, MedPAC advised CMS to create national ED coding guidelines for hospitals to ensure payments to providers and patients are accurate.

Providers in the ED are more frequently coding patients at the highest level on Medicare’s Levels 1 through 5 scale. Specifically, MedPAC found that hospitals coded 66 percent of ED visits as Level 4 or Level 5 in 2017, up from 37 percent in 2005.

The analysis of Medicare data did not provide a clear explanation as to why hospitals are coding for more Level 4 and Level 5 visits.

But the shift in ED coding did not necessarily mean hospitals were treating older and sicker patients that needed more resource intensive care. The analysis also did not show a correlation between the rate of coding ED visits at Level 5 and the growth in urgent care center use, MedPAC stated.

READ MORE: Clinical Documentation and Coding Top Revenue Cycle Vulnerability

“Our data analysis found that hospitals are providing more intensive care to ED patients. However, the conditions treated in EDs and the reasons that patients had given for seeking care in EDs were largely unchanged over time, which undercuts the argument that patient complexity has increased,” MedPAC stated in the report.

Hospitals may be coding patients in response to payment incentives, MedPAC explained. Therefore, CMS should update its ED coding guidelines to improve payment accuracy.

The agency should start by establishing a system of ED codes that are based on national coding guidelines and that account for the resources hospitals use to treat ED patients, the report stated. For example, the Current Procedural Terminology (CPT) codes that hospitals use to code ED visits only reflect the work and resources of physicians, not hospitals, so CMS may want to respond to the lack of CPT codes for hospitals.

“A set of CPT codes that has multiple levels and is based on national guidelines would allow payments for ED visits to more accurately reflect the cost of each visit level. However, incentives to upcode are likely to be present in any set of ED codes that has multiple levels, and it will be essential for CMS to minimize these incentives in implementing a set of CPT codes with national guidelines,” the report stated.

Implementing a unified PAC payment system

CMS and policymakers are in the process of developing a unified payment system for post-acute care providers, including home health agencies, skilled nursing facilities, inpatient rehabilitation facilities, and long-term care hospitals.

Bringing all four PAC providers under one Medicare reimbursement system would reduce Medicare spending on PAC services and simplify the payment process, policymakers argue.

However, actually consolidating the current PAC payment systems and ensuring providers transition smoothly to a new reimbursement model is challenging, MedPAC explained. The commission is dedicated to helping CMS create an effective unified PAC payment system.

As part of its commitment, MedPAC suggested that CMS use a stay-based payment model to implement the unified payment system despite the potential efficiencies gained by using an episode-based mechanism.

“[G]iven the overpayments for short episodes and underpayments for long ones that would likely result, some providers could respond in unintended ways that could impair access to high-quality care for beneficiaries,” the commission stated regarding the flaws of an episode-based model. “Past behavior suggests that some providers would respond to the financial incentives by avoiding beneficiaries who would likely require extended PAC and by basing treatment decisions (such as whom to admit and when to discharge or transfer a patient) on financial considerations rather than what is best for the beneficiary.”

To create an effective unified PAC payment system, CMS should also reconsider the use of functional assessment data when it comes to determining payment rates, MedPAC advised.

A recent analysis conducted by MedPAC revealed that PAC providers do not consistently report functional assessment data, which CMS uses to calculate payment rates.

“Our analyses and past experience with PAC providers responding to payment incentives raise questions about whether this information should be relied on for establishing payments. Even if the data appeared consistent, we question whether Medicare should base payments on a factor of care that is firmly in a provider’s control,” the report stated.

The June 2019 report to Congress contained significant clinician payment reform recommendations. If finalized, MedPAC’s suggestions would have a material impact on hospital revenue and Medicare spending rates.