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Coding Strategies for NPs

The best strategy for reimbursement is good compliance with the rules. Does your practice have a compliance plan? If it does, make certain it contains specific provisions for nurse practitioners. If there are no provisions for providers who are not physicians, work with the compliance officer to amend the plan.

Compliance for NPs generally requires a two-pronged approach, one to ensure that documentation supports the billed services and the other to make sure that the provider of record is appropriately credentialed via state law and with the third-party payer when possible.

Groundwork for Scrutiny

In 1995, President Clinton initiated "Operation Restore Trust" to investigate and prosecute fraudulent billing and coding practices and restore deteriorating Medicare funds. Medicare coffers have received millions of dollars as a result of this effort. The Centers for Medicare & Medicaid Services (CMS) is the administrator of Medicare. There are two branches of CMS for billing and reimbursement purposes: Part A pays hospitals and Part B pays providers such as physicians and NPs.

When a teaching physician bills HCFA Part B (physician and provider funds) for the work of a resident in clinic while she was in the OR, it is considered "double dipping" and is fraudulent. The final rule on teaching physicians billing in their own names became effective in July 1996. The regulations and documentation templates can be found on the American Association of Medical Colleges Web site at

Why should this concern NPs? Because NPs are not yet included in the rules governing teaching physicians. This rules are in the Medicare Carrier Manual in section 15016 ( Neither NPs nor PAs are listed in these definitions.

Best Strategy: Do not supervise residents or bill for residents' services .


The next significant piece of legislation was the Health Insurance Portability and Accountability Act of 1996 (also known as HIPAA or the Kennedy-Kassenbaum Act). Buried in this act are the False Claims Statutes, which provide the same set of prosecutorial teeth to all third-party payers. The act also defines criminal and civil false statements as they pertain to medical billing fraud (see for more details).

HIPAA causes potential problems for NPs under the "incident-to" regulations. CMS is the only third-party payer who has published a formal incident-to policy. In cases where a service was rendered but the documentation does not support the rendering of that service by the provider of record for the patient and the date of service on the bill (HCFA form 1500), a false statement has been made.

Best Strategies:

If you are personally billing under you own provider number, make certain there is a note in the chart supporting the service billed.

Supervision of an NP student has never been addressed for billing and reimbursement purposes and is not a billable service if the supervising NP has not made a personal note to support the service billed.

Signing a contract with a third-party payer means that when a HCFA form 1500 is submitted under your name and number, you are telling the payer that you personally performed the service you are seeking reimbursement for. This same rule applies to physicians and can be a pitfall in billing incident-to in uncertain situations (no published policy).

Credential yourself with all insurers that provide billing numbers to NPs.

When billing private insurers (who do not credential) for NP services, ask for the policy in writing. A phone call will not hold up under an audit.

Whenever possible, add contract language that says services may be provided by the physician or NP. In a teaching environment, add contract language citing that services may be provided by residents, NP students or PA students. Private payers may not have a legitimate claim for double-dipping by physicians at teaching hospitals, but they can cite false statements if the contracted provider of record on the HCFA form 1500 is not the provider of record in the patient chart. This can also be a breach-of-contract issue unless the language can be corrected.

E&M Guidelines

Another layer of fraud issues within the False Claims Act in HIPAA are penalties for unbundling and overbilling. Since 1995, three sets of Evaluation and Management Documentation Guidelines have been issued. A provider may select the set of documentation parameters that best suits her practice. The 1995 and 1997 documentation guidelines are the only two formally recognized. The most recent proposal has, at this writing, been shelved. The major difference between these two sets of guidelines (authored by the American Medical Association and CMS) is in the physical examination section. Many general practitioners report that the 1995 examination requirements make it "easier" to achieve adequate documentation. The 1997 examination guidelines are certainly more finite in the requirements for counting bullets, but this set of guidelines does offer specialty specific examinations not found in the 1995 version. These can be accessed and downloaded at:

Best Strategies:

Choose a set of guidelines that best suits your practice. Once selected, use it consistently. Educate yourself about the use and documentation requirements for that set of guidelines.

Build templates as aids to achieving appropriate documentation.

Provide an ongoing regular schedule of internal auditing to make certain the level of documentation billed was actually documented.

The safest venue for internal audit is to audit prior-to (prospective) billing, since this avoids generation of false claims or the need to correct an over- or underpayment if charts are reviewed retrospectively.

BBA '97, Medical Necessity

The Balanced Budget Act (BBA) of 1997 set forth a mechanism for NPs to procure billing numbers from the federal government. Section 410.74 of the rule sets out the qualifications and conditions for payment of services provided by NPs, PAs and CNSs. Section 414.52 states that for services furnished by NPs, 85% of the physician fee schedule amount will be paid. This set of rules clearly identifies that the scope of practice for NPs must be consistent with state credentialling guidelines.

Best Strategy: Provide your business office with a set of practice parameters for your state.

BBA '97 also set forth significant requirements for medical necessity reporting. It is essential to make certain that your ICD-9 CM diagnosis codes adequately support medical necessity for services rendered and billed. In cases where multiple services are rendered in an encounter, map the ICD-9 CM code to the procedure it supports when generating the HCFA 1500 form. Section 1862(a)(1) of the Social Security Act states that Medicare will not be responsible for services deemed "not reasonable and necessary."

Best Strategies:

According to AHA Coding Clinic guidelines for coding physician billing (First Quarter 1990, pp 12-13), ICD-9 CM codes must be assigned at the highest level of specificity. Example: Assign three-digit codes only if there are no four-digit codes within that code category; assign four-digit codes only if there is no five-digit subclassification for that category; and assign the five-digit subclassification code for categories where it exists.

Also according to AHA Coding Clinic's basic coding guidelines for outpatient services (First Quarter 1990, pp 4-7), do not code outpatient diagnoses documented as "probable," "suspected," "questionable" or "rule out" as if they are established. Rather, code the condition to the highest degree of certainty for that encounter or visit, such as symptoms, signs, abnormal test results or other reason for the visit.

Verify that the encounter ticket for the practice does not have outdated diagnoses listed to draw from. Update these annually.

Remove all "not elsewhere classified" (NEC) and "not otherwise specified" (NOS) codes from the superbill when possible or appropriate.

Avoid the ICD-9CM codes designated as "non-specific" unless absolutely necessary.

Answer the question "why now?" and list only the diagnoses that correlate.

The ICD-9 CM code circled on the superbill must be documented in the progress notes.

The documented diagnosis should be coded.

Code symptoms when a definitive or more "specific" diagnosis has not yet been established. Once a diagnosis has been established, it is no longer necessary to code the related symptoms. More is not always better.

Become familiar with local medical review policies (LMRP) in your area ( These are local Medicare or third-party payer policies that indicate which ICD-9 CM diagnosis code can be billed with a given CPT code. In the event that the patient encounter does not support a diagnosis for the service in the LMRP, an advanced beneficiary notice must be signed and placed into record before providing the service. This allows a practice to bill the patient if the service is denied for medical necessity. A waiver of liability statement on file (GA) modifier would need to be appended to the service to show that an advanced beneficiary notice (ABN) is in place. Contact your local Medicare carrier for an ABN template (a national template is in the works but was not available at press time).

Match the diagnosis to the procedures appropriately on HCFA form 1500.

Tip of the Iceberg

The strategies discussed in this article are the tip of the iceberg when it comes to ensuring good compliance and appropriate reimbursement. Ongoing monitoring of claims denials and newly published policies are also essential to the financial health of any practice. Reimbursement is a journey that begins when the patient makes an appointment and ends when payment for a claim is received. Each point along the journey must be closely monitored in an ongoing effort toward achieving compliance and success.

Nancy Reading is a nurse and certified coder who has been specializing in coding and reimbursement for 12 years. She is a member of the national advisory board for the American Academy of Professional Coders and lives in Salt Lake City, Utah.


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