NRP/508 Week 6: Reimbursement, Managed Care and Financial Responsibility, sample paper

Eighty-Five Percent, Incident-To or the All-Inclusive Rate: How a Rural Health Clinic Is Paid for a Nurse Practitioner's Visit, and Why the Answer Hides or Shows Her Work

[Student Name]

University of Phoenix

NRP/508: Health Policy and Role of the Advanced Practice Nurse

Week 6 Assignment

[Instructor Name]

[Date]

The clinic and its figures are composites written for a model paper. Payment rules change; students should verify current rules.

A 67-year-old woman with diabetes comes to my future clinic for a follow-up visit. I review her glucose log, adjust her medication and update her foot examination. How that visit is paid depends on who bills, under which rules and in what kind of clinic. The answer matters to the clinic's survival and to how visible nurse practitioner care is in national data.

Route 1: Billing Under the Nurse Practitioner's Own Number

In most outpatient settings, when a nurse practitioner bills Medicare under her own National Provider Identifier, Medicare pays 85% of the physician fee schedule amount for the service. If the fee schedule amount for this visit were $110, the payment would be about $93.50. Billing under my own number records me as the clinician who provided the care.

Route 2: Incident-To Billing

Medicare's incident-to rules allow some services provided by a nurse practitioner to be billed under a supervising physician's number and paid at 100% of the fee schedule. The requirements are strict: the patient must be established with the physician, the service must follow the physician's plan of care, the physician must be present in the office suite and new problems generally do not qualify. When the rules are met, the clinic receives the full $110. When they are not, incident-to billing is improper.

Incident-to billing has a cost beyond compliance risk: it hides the nurse practitioner. Claims show the physician as the provider, so research using claims data undercounts nurse practitioner care. Perloff et al. (2016) studied nurse practitioners who bill under their own National Provider Identifier precisely because claims billed incident-to cannot be attributed to the nurse practitioner. Every visit billed under someone else's name is a visit the national data will never credit to a nurse practitioner.

Route 3: The Rural Health Clinic All-Inclusive Rate

My clinic is certified as a Medicare rural health clinic. Rural health clinics are paid an all-inclusive rate per visit for Medicare patients rather than fee-schedule amounts, and the rate is the same whether the visit is with a physician, nurse practitioner or physician assistant. Certification requires that a nurse practitioner, physician assistant or certified nurse-midwife be available to furnish care a large share of the time the clinic operates. In this setting, the 85% reduction does not apply, and there is no financial reason to bill incident-to.

Medicaid and Managed Care

Most Texas Medicaid enrollees are in managed care plans. Each plan contracts with clinicians, sets its own credentialing process and pays according to its contract, often a percentage of the Medicaid fee schedule. Rural health clinics receive special payment protections under Medicaid as well. For a nurse practitioner, managed care means credentialing with each plan, following each plan's prior authorization rules and understanding quality incentive programs that pay for measures such as diabetes control and cancer screening.

Commercial insurers vary: some pay nurse practitioners the same as physicians, some pay less and some require billing under a physician. Contracts must be read carefully.

The Value Argument

Payment debates often focus on the 85% rate. The more important question is value. The Medicare cost comparison reviewed in Week 5 found lower spending, not higher, among beneficiaries whose primary care was attributed to a nurse practitioner, across office and hospital settings (Perloff et al., 2016). Primary care nurse practitioners are more likely than physicians to practice in rural areas, work in a wider range of community settings and treat Medicaid patients (Buerhaus et al., 2015). Paying less for a service while nurse practitioners serve the patients who are hardest to reach is a policy choice worth questioning.

Scope, Payment and Access Together

Payment rules interact with scope rules. Where states grant wider scope, research finds more nurse practitioners in practice and more care used by residents (Xue et al., 2016). Where scope is restricted and payment is reduced, the incentives for a nurse practitioner to open or join a small rural practice weaken on two fronts, and where both are favorable, rural practice becomes more feasible. Payment policy is therefore workforce policy as well.

Documentation That Supports Payment

Every payment route depends on the note. For the diabetes visit above, the note must record the history reviewed, the glucose data analyzed, the medication change and its reasoning, the foot examination and the plan, in enough detail to support the level of service billed. Time-based coding is an option when most of the visit involves counseling or coordination, and the time must be documented. Clear documentation also protects the clinic in audits, which rural health clinics undergo periodically.

The Clinic's Financial Risks

A small rural clinic faces thin margins. Its payer mix, perhaps 40% Medicare, 25% Medicaid, 20% commercial and 15% uninsured, determines revenue. Its costs include staff, supplies, the electronic record and, in Texas, the fee for a prescriptive authority agreement. If the clinic loses its only physician, it could lose delegated prescribing and with it much of its revenue. A nurse practitioner who understands these numbers can help the clinic plan.

My Financial Responsibilities

As a nurse practitioner, I will be responsible for accurate documentation that supports the codes billed, for choosing codes that reflect the complexity of the visit and for understanding the rules of each payer. Undercoding loses revenue the clinic needs, while overcoding is fraud. I will review coding guidance each year, audit a sample of my own notes quarterly with the clinic's biller and ask questions when rules are unclear.

Productivity and Pay

New nurse practitioners are often paid a salary with productivity incentives based on visits or relative value units. I will ask how productivity is measured, how the clinic's rural health clinic payments are credited and whether quality measures count. A system that rewards only volume can push clinicians toward short visits that do not serve complex patients.

Value-Based Payment

Payment is slowly shifting toward value. Some Medicaid managed care plans pay bonuses for meeting quality targets, and accountable care organizations share savings when total costs fall and quality holds. A nurse practitioner who tracks her panel's quality measures, such as blood pressure control and screening rates, contributes directly to this revenue. I plan to learn the measures each plan uses in my first year.

Questions for My Employer

Before signing a contract, I will ask how my visits are billed, whether the clinic ever uses incident-to billing, how productivity is credited in the rural health clinic model and whether I will see my own quality and billing reports.

Conclusion

The same visit may be paid at 85% under the nurse practitioner's number, at 100% incident-to under a physician's number or at a single all-inclusive rate in a rural health clinic. Incident-to billing hides nurse practitioner care from the data that inform policy, while evidence shows nurse practitioner care costs less and reaches underserved patients. For a new nurse practitioner, understanding these rules is part of practicing responsibly and part of making the case for the role.

References

Buerhaus, P. I., DesRoches, C. M., Dittus, R., & Donelan, K. (2015). Practice characteristics of primary care nurse practitioners and physicians. Nursing Outlook, 63(2), 144-153. https://doi.org/10.1016/j.outlook.2014.08.008

Perloff, J., DesRoches, C. M., & Buerhaus, P. (2016). Comparing the cost of care provided to Medicare beneficiaries assigned to primary care nurse practitioners and physicians. Health Services Research, 51(4), 1407-1423. https://doi.org/10.1111/1475-6773.12425

Xue, Y., Ye, Z., Brewer, C., & Spetz, J. (2016). Impact of state nurse practitioner scope-of-practice regulation on health care delivery: Systematic review. Nursing Outlook, 64(1), 71-85. https://doi.org/10.1016/j.outlook.2015.08.005