Smart Practice

Changing Reimbursement Policies

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For as long as Medicare has recognized nurse practitioners as health care providers entitled to reimbursement, carriers have paid nurse practitioners at 85% of the allowable physician rate. Until recently, most private insurance companies did not make a distinction in reimbursement amounts based on provider type. Instead, they paid based on the CPT and ICD-9 codes billed, and NPs received the same reimbursement amounts as physicians doing the same work.

When health care costs began to skyrocket, insurance companies began to look for ways to cut costs. Recently, one solution has been to lower the reimbursement rates for NPs to 85% of the physician rate. So, for example, a CPT code that is reimbursed at $100 for a physician's services would be reimbursed at only $85 if the patient were seen by an NP. The insurance companies are justifying the change by saying they are bringing their reimbursement practices in line with Medicare.

Doing the Math

Estimated Revenue for Practice Billing NP Services at 85%

  • $80.75 per NP patient x 4 patients per hour = $323 per hour
  • $95 per physician patient x 4 patients per hour = $380 per hour
    Total: $703 per hour
  • $703 per hour x 8 hours per day x 244 days per year = $1,372,256 per year

    Estimated Revenue for Practice Billing NP Services at 100%

  • $95 per NP patient x 3 patients per hour = $285 per hour
  • $95 per physician patient x 3 patients per hour = $285 per hour
    Total: $570 per hour
  • $570 per hour x 8 hours per day x 244 days per year = $1,112,640 per year

    Difference: $259,616 per year

  • Panicked Reaction
    Some practices and institutions are now panicking at this 15% reduction in reimbursement. They're instituting policies that require a physician to "sign off" on every patient so the visit can be billed at 100%. While at first glance this might seem like a good way to combat decreasing reimbursement, in the long run this policy will decrease the revenue a practice or institution can generate by reducing the number of patients that both physicians and NPs can see.

    A physician cannot simply review and cosign a chart to obtain 100% reimbursement. The physician must meet face-to-face with the patient and conduct his or her own medical interview and physical assessment to bill the visit at the higher reimbursement rate.

    Do the Math
    Consider this: A moderate-complexity visit coded as a 99214 is billed by the practice at $120, reimbursed by insurance at $95 for a physician and at $80.75 if a nurse practitioner sees the patient. The time spent on the visit is 15 minutes. If an NP sees four such patients per hour, the revenue for the practice is $323. If these patients are seen by a physician at a rate of four visits per hour, the revenue for the practice is $380.

    If the NP sees the patient and then must locate the physician to come to the room, evaluate the patient and then confer with the NP on the diagnosis and plan of care, the visit will take at least 5 to 10 minutes longer and reduce the number of patients that both the physician and the nurse practitioner can see in an hour. This decreases the hourly revenue of the practice from $703 to $570, since each provider is now able to see only three patients per hour, and the patients can be billed for only one provider's services (the physician's), not both.

    Assuming that each provider sees patients for 8 hours per day and sees a minimum of four patients per hour, the loss of revenue for the practice would be $1,064 per day. This translates to a loss of $259,616 per year assuming each provider sees patients 244 days a year.

    The losses in emergency departments have the potential to be even greater when you consider time lost, inefficient use of exam rooms for patients waiting for a physician, and the high number of nonpaying patients and patients who leave without being seen due to increased wait times.

    Beyond the Math
    Not measurable in dollars are the frustration for both physicians and nurse practitioners - and the confusion for patients. Nurse practitioners do not need, and most do not want, such tight control on the way they practice. Physicians hire NPs to reduce their workload and to increase accessibility to care.

    Emergency departments employ NPs to handle the large number of patients who seek care for conditions that aren't emergent or even urgent. These patients do not require the expertise of a physician. To have these patients seen and evaluated by two providers is a waste of valuable time and resources.

    If a practice site requires direct supervision for the sole purpose of being able to bill an additional 15% of insurance reimbursement, ultimately revenues will decrease and provider satisfaction will plummet, access for patients will be reduced in number of appointments available, and delays in care will increase because time will be wasted while NPs present cases and physicians repeat evaluations on patients previously cared for by the NP alone.

    Lorraine Bock is a family nurse practitioner who owns Nightingale Health & Wellness Services in Harrisburg, Pa.


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