Reimbursement Rigors: An Overview of the Process
Vogel, MSN, FNP, AOCN®
is defined as an abrupt attack of shivering and sensation of coldness
accompanied by a rapid rise in body temperature and may be followed by
a feeling of heat with copious sweating. This is the way many of us feel
when we are asked about reimbursement issues! However, reimbursement is
critical to the survival of nurse practitioners (NPs). We need to be experts,
yet most of us shy away from this part of our practice.
Playing by the Rules
Third party payors who may reimburse NP services can fall into several
categories. These include Medicare, Medicaid, commercial indemnity insurers,
commercial managed care organizations, and businesses or schools that want
health services for employees or students. Each of these groups has a
different set of rules for NP reimbursement.
Medicare will reimburse NPs if they meet certain qualifications (state
license and national certification) and have a Medicare provider number.
As of January 1, 2003, any NP applying for a Medicare provider number
for the first time must have a master’s degree from an NP program. The practice or facility must accept Medicare’s payment,
which is 85% of the physician fee schedule rate for bills submitted under
the NP’s provider number. The services provided by the NP must be
performed in collaboration with a physician and within the state law scope
All NPs must obtain a Medicare provider number. NPs may acquire an application
by calling the local carrier or visiting www.cms.hhs.gov/providers/enrollment
on the Centers for Medicare and Medicaid Services Web site. The name and
telephone number of an NP’s local carrier can be found on the Internet
A UPIN (unique physician identification number) will be given with the
provider number to be used when ordering services or durable medical goods.
No restrictions are imposed on what NPs can bill. The only criteria are
that the service must be (a) a physician service and (b) allowed
under the state scope of nursing practice for advanced practice nurses.
NPs may bill any level evaluation and management (E & M) code. NPs
may perform and bill for consultations if the state scope of practice
allows. NPs also may bill for services provided in the hospital (unless
employed by a hospital and the NPs’ salaries are part of the hospital’s
Medicare cost report). NPs may bill for physician services provided in
a nursing home or for home visits.
Many questions come up in the discussion of “incident to”
billing. This is billing an NP’s service under the physician’s
provider number and receiving 100% reimbursement, instead of the standard
85% of the physician’s fee schedule. However, the rules for incident to
billing are rigid and restrictive, as noted in the following.
It probably is better not to bill incident to the physician for NP services.
The 15% difference in reimbursement usually will not make up for the difficulty
in scheduling and documentation for these patients. Do not assume that
the physician’s signature will suffice to assure Medicare of the
physician’s “readily available presence.” You must have
adequate documentation of the physician’s presence by other medical
records, scheduling logs, etc.
- Services must be under the physician’s direct personal supervision.
This means that the physician must be present in the same office suite
and immediately available. He cannot be reachable by pager or phone
or working in another office suite.
- The physician must perform the initial service and “subsequent
services at a frequency that reflects his or her active participation
in the management of the course of treatment” (Centers for Medicare and Medicaid Services, 2001, section 2050.2) This means that the NP cannot see
a new patient or an old patient with a new problem. The physician
also must see the patient every certain number of visits. The sticky
part is that your carrier may define how frequent. For instance, the
carrier in Northeast Tennessee, Cigna Medicare, defines that as every
- The NP may bill for services of a non-NP (RN, medical assistant)
under the NP’s provider number if the rules for incident to
billing are met. This means you may bill for an electrocardiogram
or chemotherapy charges if your office assistant actually performs
it. The services will be reimbursed at 100%.
- Incident to billing is not allowed for hospital charges.
- The NP must be employed by the physician.
NPs also may bill Medicaid. To obtain an application for a Medicaid provider
number, call your state’s Medicaid agency, ask for provider relations,
and request a provider application. Medicaid rules do not necessarily
follow Medicare rules. Each state’s regulations regarding the billing
of NP services vary. NPs with Medicaid provider numbers may bill Medicaid
on a fee-for-service basis for covered physician services (if the patient
is not enrolled in a managed care plan) and most states reimburse NPs
at 100% of the physician’s fee. This may not be true for Medicaid
recipients in managed care plans because each managed care plan’s
policies on NP reimbursement can differ.
Private insurers may or may not require a provider number. Each insurer
should be queried as to their requirements for NPs and their reimbursement
rates. In some instances, private insurers require NPs to bill incident to
the physician. Reimbursement for NPs will vary amonginsurers.
In managed care organizations, NPs must request an application for admission
to the panel of providers. When membership is received, NPs are designated
as primary care providers, credentialed, listed in the managed care organization
directory, and qualified for reimbursement. Some managed care organizations
may deny membership but allow NPs to provide services for enrolled patients
of their collaborating physician. Others may not allow NP services at
Evaluation and Management Coding
NPs must be extremely skilled in the use of E & M codes used for billing
Medicare and other insurances. Medical record documentation must meet
the criteria for the E & M code billed. An E & M code has three
Although it is beyond the scope of this article to teach you all you need
to know, I briefly will review some guidelines and then present some
tips on reimbursement. Current recommendations are that NPs take a course
in E & M coding at least once a year. Stay alert for revisions of
the documentation guidelines that may be changing in the near future.
Perform periodic audits comparing your coding and documentation. A helpful
tool for your personal digital assistant is the program Stat E & M
Coder™ (Austin Physician Productivity, LLC, Austin, TX). This can
be downloaded for free from www.Statcoder.com.
- History (including the chief complaint, history of present illness [HPI],
review of systems [ROS], and past, family, and social history[PFS])
- Physical examination (includes four different levels based on extent of
- Medical decision making (includes four levels based on complexity and
The codes first are subdivided by the type of patient: new patient, consult,
established patient, hospitalized, or emergency room visit. The components
or elements required to meet a certain level of coding may differ according
to the type of practice you have (general medicine versus obstetrics and
gynecology versus ophthalmology). The general multisystem examination
generally is used in oncology, and a discussion of its components follows.
The history component consists of HPI, ROS, and PFS. The depth
of the history taking determines the level assigned: problem focused,
expanded problem focused, detailed, or comprehensive. The number of elements
inquired about during the history taking determines the code level. A
nurse or medical assistant may take the history, but the NP must
review and document it, making additional notes as needed.
The examination component consists of various elements of your physical
examination. The more body areas you examine, the higher code you may
bill (provided the history and decision making meet the higher code elements).
For example, a comprehensive general multisystem examination would include
head and neck, chest, abdomen, genitalia, groin, buttocks, back and spine,
The medical decision-making component is often the hardest to quantify.
The NP must decide how complex the decision making was for each patient
visit. The number of diagnoses, if patients are acute or chronic or stable
or unstable, if treatments are ordered, if diagnostic tests are ordered,
etc., all must be considered.
These three components then are combined for the billing code. A certain
number of elements in each component must be met to qualify for a particular
code. The documentation must correspond to the code, showing that each required element was met.
The following are some helpful tips about billing.
What Are You Worth?
- Level 1 visits (99211) are generally for nurse visits (blood pressure
checks, immunizations, nurse assessments, etc.). NPs should bill 99212
- Remember the bell curve. The majority of your visits most likely
will be level 3 (99213) with a few level 2 and 4 and an occasional
level 5. However, for a specialty service like oncology, a disproportionate
number of level 4 visits may occur. If your bell curve of visits is
not bell shaped, you may be set up for an audit.
- If you are billing for a relatively new procedure or treatment,
keep a file of medical literature in case of denial of payment so you can
- Do not waive copayments. Medicare rules call for collection of a
20% copayment at time of service. If your practice doesn’t collect
copayments, then Medicare can take that as indication that 80% reimbursement
is adequate to cover medical expenses and will not raise reimbursement
- Document specific diagnoses or symptoms. For example, do not use
“rule out pulmonary embolus,” but use “shortness
of breath, acute.” Document comorbidities and qualify these
as acute, stable, improved, worsening, exacerbation, inadequately
controlled, etc. This can justify the complexity of your medical decision
making. Use five-digit ICD-9 codes because these often denote whether
a condition is controlled or uncontrolled, thus impacting your decision
- Document initiation of and changes to treatment. Include any instructions
or educational materials given to the patient. Documentation of the
different treatment or management options that you considered also
can justify the complexity of your decision making. Document noncompliance
and risk factors (e.g., smoking, obesity).
- Document referrals, consultation, advice sought, or consultation
from your collaborating physician. Document your request and perusal
of old records, review of phone calls to the office, etc., and how
this affected your level of decision making.
- Time can be a factor in billing. If coordination of care (counseling,
answering questions, reviewing plan of care, reassurance, etc.) is
more than 50% of the visit, you should document the time spent with
the patient. With proper documentation, you may be able to bill a
Want to ask for a raise? Trying to justify your salary request when interviewing
for a new job? How do you know what you are worth? The following is an
easy formula for calculating just that. NPs should know what they are
bringing to their practice. Even if your practice doesn’t share
this information with you (and they should!), you still can get a close
calculation of your cost to the practice and your contribution to its
- Know what your cost is.
Salary + benefits + your share of overhead + compensation for physician
consult = your cost to your employer.
This is what you have to bring in for your employer to break even.
Benefits may include insurance, malpractice, vacation, retirement,
continuing education, Medicare and Social Security premiums, and worker’s
comp. Your benefits coordinator should be able to tell you what
percent of your salary your benefits are worth. This generally is
around 26% of your salary. Oncology practices typically have a higher
overhead than general practices.
- Know your average number of patients per day and average charges
You can tally this yourself by keeping a record for two to three weeks
and knowing what your practice charges per visit.
Example: number of patients per day x 5 days per week x 48 weeks per
year x average charge per visit = what you are billing for the practice.
(But remember, what is billed and what is collected are two different
- Know what your collection percentage rate is. If it is below 90%,
you should be asking why.
Total yearly billings x your collection percent rate = the total revenues
you bring into the practice.
- Subtract your cost from your revenues. This is what profit you generate
for your practice each year. Any APN who generates $30,000–$40,000
per year should be considered worthwhile.
Centers for Medicare and Medicaid Services. (2001). Coverage and limitations: Services and supplies. In Carriers manual: Part 3: Claims process (section 2050.1–2050.2). Baltimore, MD: Author.
American Medical Association. (2002). Physician’s
current procedural terminology. Chicago: Author.
Buppert, C. (2000). The primary care provider’s guide to compensation
and quality. Annapolis, MD: Aspen Publishers.
Buppert, C. (2002). Billing for nurse practitioner services: Guidelines
for NPs, physicians, employers, and insurers. Medscape Nurses, 4(1). Retrieved July 1, 2003, from http://www.medscape.com/viewarticle/422935
MedLearn. (2002). Nurse practitioners’ guide to evaluation and management
coding. St. Paul, MN: Author.
Online Resources for Reimbursement
College of Nurse Practitioners
Centers for Medicare and Medicaid Services
Stat E & M Coder