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Medicare Rule Q&A
by Michael Powe

Medicare's newly expanded coverage policy for PAs is another milestone in the AAPA's ongoing efforts to enable PAs to extend access to quality medical care to all Medicare beneficiaries.

The new rules, released in late March 1997 by the Health Care Financing Administration (HCFA), have generated a great deal of interest among PAs, physicians, billing personnel, and others.

The following questions and answers should help to explain the details of Medicare's coverage policy for PAs.

These changes do not apply to certified Rural Health Clinic, which are covered under a different (cost-based) system of reimbursement.

Q: What does the new law accomplish for PAs?

A: The new law, effective January 1, 1998, changes Medicare's coverage policy for PAs in three important ways.

1. Reimbursement for PAs treating Medicare patients in hospitals (inpatient, outpatient, or in the emergency department) or who first assist at surgery was increased to 85 percent of the physician fee schedule, from 75 percent and 65 percent, respectively. Medicare coverage when PAs provide services in nursing facilities remains in effect at 85 percent of the fee schedule. PAs are now covered at 85 percent of the fee schedule for services delivered in offices and clinics as long as they are working in accordance with state law.

2. In the past, except in federally designated rural Health Professional Shortage Areas, the only method for covering PAs in the office or clinical practice setting was through the "incident-to" provision. Under the "incident-to," Medicare required that the physician be physically on site when PAs provided care. There was also a requirement that the physician personally treat all new patients to the practice, as well as established patients who present new medical problems.

3. PAs are now able to treat new Medicare patients, or established patients with new medical problems, with supervision determined by state law. Independent contractor (Form 1099) employment relationships have been approved for use under Medicare. Previously, PAs were limited to W-2 employment relationships.

Q: Has "incident-to" coverage been eliminated?

A: No, the "incident-to" provision that allows services provided by PAs in the office or clinic to be billed under the physician's name and provider number at 100 percent of the fee schedule remains an appropriate method of billing. It's important to understand that the "incident-to" provision:

• Only applies to the office or clinic (not in hospitals or nursing facilities)

• Requires the on-site presence of the physician when you are treating Medicare patients

• Requires that the physician personally treat Medicare patients on their first visit to the practice or when established patients come to the office with new medical problems. Simply having the physician see the patient or co-sign the medical record/chart does not equate to personally treating the patient. Over the past 18 months, HCFA has indicated that future policy changes to "incident-to" are being considered. One reason the AAPA worked so hard for passage of this legislation was to ensure that PAs would be covered by law in all outpatient practice settings and not be subject to HCFA policy changes.

Q: What services are covered?

A: Generally, Medicare covers physician medical services provided by a PA. PAs are covered under Medicare Part B for any professional service that would have been covered if provided by a physician. State law or your hospital's/nursing facility's regulations may be more restrictive than Medicare's policy and would still have to be followed.

Q: Are PAs covered for home visits?

A: Yes, the new law allows PAs to deliver medical services to homebound Medicare beneficiaries at the 85 percent rate for reimbursement. This coverage refers to medical care delivered in the patient's home, not home health services.

Q: Do I have to be an employee of the hospital for my services in the hospital to be covered? I heard that there could be a problem for my services if I'm employed by the hospital.

A: Your services are eligible for coverage under Medicare whether you are employed by the hospital, a solo physician, or a physician group. If you are employed by a solo physician or a physician group, services provided in the hospital are covered under Medicare Part B.

If you are employed by the hospital, there are two options for coverage of your services under Medicare. Your services may be billed to Medicare Part B (which covers professional fees for PAs and physicians) or the hospital may choose to include your salary in the hospital's cost reports under Medicare Part A (which covers facility charges and DRG payments).

If you are hospital-employed, you should be aware of odd language that appears in the legislation. The language, which refers to care delivered in hospitals, says that PAs are covered providers "only if no facility or other provider charges or is paid any amounts with respect to the furnishing of such services." This language simply means that a hospital may not bill for the PA's services under Medicare Part B and include the PA's salary in the hospital's cost reports under Medicare Part A at the same time. That would be considered double billing. You and the hospital should decide which billing option is more advantageous in your particular situation.

Q: Am I required to have a Medicare provider number?

A: Yes, Medicare, will require that all PAs who treat Medicare patients have a provider identification number (PIN). If you don't have a PIN, call the provider relations office of your Medicare carrier and request the HCFA 855 Health Care Provider/Supplier Application form (Form 855G if you are in a group practice).

Q: How should the HCFA-1500 claim form be filled out for an office visit?

A: If you work for a solo physician, your PIN must be placed after "PIN#" in box 33. Box 33 should also contain your employer's name and address as this is where Medicare will send the payment. If you work for a group practice, your PIN must be placed in box 24K (titled "reserved for local carrier use"). The group's PIN number, name, and address should be placed after "GRP#" in box 33. For more details about filling out the 1500 claim form, contact the claims office for your local Medicare carrier. Continue to bill "incident-to" services as you have in the past with the physician's name and provider number on the 1500 form.

Q: My office tried to submit a claim for a patient I treated in January when the physician was not on site. My local carrier sent the claim back and asked that my office hold future claims. Why did this happen?

A: Instructions for implementation of the new law should have been available before January 1. Unfortunately, they were not. Because of HCFA's delay in issuing official instructions, local Medicare carriers were unsure about how to process claims for certain provisions of the legislation. The local carriers were either rejecting claims or asking practices to hold claims until HCFA released implementing instructions. Those instructions were received by carriers on March 26, 1998. All billable services performed after January 1 are covered. HCFA has instructed carriers to pay all previously submitted appropriate claims including any applicable interest that may be due. If a claim was rejected because the carrier had not received HCFA instructions and you have a provider number, the claim should be resubmitted.

Q: How should the 1500 claim form be filled out for services I provide in hospitals, nursing facilities, rural Health Professional Shortage Areas (HPSAs), and for first assisting at surgery?

A: For first assisting at surgery, little change has occurred. Place your PIN in box 33 and continue to use the modifier code "AS." HCFA has discontinued the use of modifier codes for services delivered in hospitals, nursing facilities, and rural HPSAs.

Q: As an independent contractor, am I able to directly bill Medicare for my services?

A: No, your employer will continue to bill Medicare for your services. After receiving payment from Medicare, the employer may "pass" the reimbursement to you and issue a 1099.

If you have further questions about the new Medicare provisions, contact Fauzea Hussain, AAPA Manager, Reimbursement and Professional Affairs, at 703/836-2272, ext. 3219.