Practice Economics

Reimbursement Rights


Recent changes in healthcare have forced academic medical centers to seek additional resources in the delivery of quality care. In response to internal and external pressures to minimize length of stay, adhere to limitations on the maximum number of admitted patients, focus on evidence-based care, and improve outcomes of care, hospitalists have incorporated non-physician providers (NPPs), such as acute care nurse practitioners (ACNPs), into their group practices.1

Whereas traditional nurse practitioners focus on the promotion of health and management of chronic illness, ACNPs focus on the care of acutely ill patients. Hospitalists utilize NPPs to expand medical service capacity and improve the efficiency and quality of patient care.2

Research indicates physician/nurse practitioner collaboration in the multidisciplinary management of hospitalized medical patients reduces length of stay and improves hospital profit without altering readmissions or mortality.3 Billing and documentation standards for NPP services must comply with current state and federal regulations. Hospitalist groups should become familiar with these guidelines prior to billing for NPP services involved in this patient care model.

The following highlights inpatient services provided by nurse practitioners (NPs) and physician assistants (PAs).

Covered Services

Medicare pays for services considered reasonable and necessary and not otherwise excluded from coverage. NPPs may provide any service permitted by the state scope of practice and performed in conjunction with the appropriate level of supervision or collaboration, as outlined in licensure or billing requirements. Being only limited by state and/or facility regulations, NPP services comprise visits or procedures typically rendered by ancillary staff or considered a physician service (a doctor of medicine, MD, or osteopathy, DO). Additionally, NPPs must meet the insurer-specified qualifications.

Medicare Qualifications

To furnish covered physician assistant (PA) services, the PA must:

  • Have graduated from a physician assistant educational program that is accredited by the Accreditation Review Commission on Education for the Physician Assistant, its predecessor agencies, the Commission on Accreditation of Allied Health Education Programs (CAAHEP) and the Committee on Allied Health Education and Accreditation (CAHEA); or
  • Have passed the national certification examination that is administered by the National Commission on Certification of Physician Assistants (NCCPA); and
  • Be licensed by the state in which they work to practice as a physician assistant.

Payment for nurse practitioner (NP) services depends on your Medicare billing number. If you applied before Jan. 1, 2003, an NP must:

  • Be a registered professional nurse who is authorized by the state in which the services are furnished to practice as a nurse practitioner in accordance with state law; and
  • Be certified as an NP by a recognized national certifying body that has established standards for nurse practitioners.

If you applied after Jan. 1, 2003, an NP must satisfy the above standards and also:

  • Possess a master’s degree in nursing.

Independent Billing

Since 1998, designated NPPs are allowed to submit Medicare Part B claims for services, including procedures, provided in any inpatient or outpatient setting. For billing purposes, these “independent” services do not require physician involvement (e.g. physician initiation of care plan, physician-patient encounter, or physician presence on patient floor/unit) unless otherwise specified by state legislation or facility standards of practice. NPPs do not need to be employed by the physician group. The entity employing the physician group also may employ the NPP.

Claim requirements mandate the use of a national provider identifier (NPI) on all claims, therefore, all NPPs receive an NPI for claim submission. However, not all NPPs may directly bill Medicare or receive direct payment (e.g., physician assistant).1 In this situation, the NPP employer (i.e., physician or group), reports the service with the physician or group provider number and the NPP’s NPI included for identification of who actually provided the service.

Medicare Part B processes NPP claims reported under the independent billing option. Duplicate payments from any other Medicare Part A or Part B source is strictly prohibited and may result in refunds, fines and penalties. Generally, Medicare payment for NPP services is limited to 85% of the allowable physician rate. Financial impact of the 15% rate reduction is typically offset by the increase in physician time. Physicians may use this time to provide more comprehensive or complex services (admissions or consultations), potentially generating more revenue. Consistent with all provider documentation, NPP documentation must support the reported service.

Shared/Split Billing

The shared/split billing option first appeared in 2002 to address facility-based services provided to a single patient by an NPP and physician from the same group practice on the same calendar day. This option only applies to evaluation and management services provided in an emergency department, outpatient or inpatient hospital. It excludes consultations and critical care services. Unlike the independent billing option, the shared/split billing option only involves service provided by nurse practitioners, physician assistants, clinical nurse specialists, and certified nurse-midwives.

In order to qualify as a shared/split service, the NPP and the physician each must have a face-to-face encounter with the patient, although the extent of each provider’s involvement is left to provider discretion and/or local Medicare contractor requirements. The timing of each provider’s visit is irrelevant, as long as the two services are performed on the same date. For example, the NPP may see a hospital inpatient in the morning with a follow-up visit by the physician later in the day.4 When documenting, both the NPP and the physician should identify the name of the individual with whom the service is shared/split. This will allow for appropriate service capture, and ensure that the correct notes are sent to the payer in the event of claim denial and subsequent appeal. Each provider must document their portion of the rendered service and select the visit level supported by the cumulative encounter. The physician need not duplicate the elements performed and documented by the NPP, but merely perform and record the physician-determined critical or key portions. Do not confuse this billing option with teaching physician regulations. Physician and the specified NPPs cannot share or split a service with any other provider type (e.g., residents, medical or nursing students).

Only one claim may be submitted for a shared/split service. The physician may choose to report the service under his own name or under the NPP name. Reimbursement is dependent upon this selection. The physician name secures 100% of the Medicare allowable rate; the NPP name earns 85% of the allowable physician rate.

While the physician has the opportunity to report the service under his own name for the full service rate, the shared/split billing option requires the efforts of two individuals and may be an impractical approach for some physician groups.


Hospitalists, or their staff, may have encountered the term “incident-to” and wondered how this billing option applies to hospitalist services. “Incident-to” guidelines only apply to procedures and services performed in a private physician office. In this setting, the patient establishes care with the physician and the physician develops a patient-specific plan of care. Subsequent services may be provided to the established patient by the NPP, yet reported under the physician’s name for 100% of the allowable physician rate. “Incident-to” services cannot be reported by a hospitalist, since hospitalist services only take place in facility-based locations.


NPPs currently are involved in an extensive number of services within the hospital, and Medicare has two billing options for NPP services provided on behalf of or in conjunction with hospitalists. Each option involves specific rules and regulations with which NPPs and physician groups must comply.

Successful reporting requires understanding of and adherence to federal, state, and facility guidelines. It is important to identify NPP employment relationships, the NPP’s role in the provision of services, the state supervisory or collaborative rules, and local payer interpretations to prevent misrepresentation, misunderstanding, or erroneous reporting. TH

Carol Pohlig is a billing and coding expert with the University of Pennsylvania Medical Center, Philadelphia. She also is on the faculty of SHM’s inpatient coding course.


1. Centers for Medicare and Medicaid Services. Medicare benefit policy manual. Accessed September 12, 2008.

2. Howie J, Erickson M. Acute care nurse practitioners: creating and implementing a model of care for an inpatient general medical service. Am J of Critical Care. 2002;11:448-458.

3. Cowan M, Shapiro M, et al.. The effect of a multidisciplinary hospitalist/physician and advanced practice nurse collaboration on hospital costs. J Nursing Admin. 2006;36:79-85.

4. CMS. Medicare claims processing manual: Chapter 12, Section 30.6.1B. Accessed September 14, 2008.

5. Pohlig C. Nonphysician providers in your practice. In: coding for chest medicine 2008. Northbrook, IL: Am Coll Chest Phy. 2008;249-254.

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