NSG 5000 DQ Health Policy: Reimbursement of NPs

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NSG 5000 DQ Health Policy: Reimbursement of NPs

NSG 5000 DQ Health Policy: Reimbursement of NPs


Faculty will assign students one DQ and lead the discussion.
Please post your original post by Day 2, and respond by Day 6 to at least 2 of
your cohorts opposite question. Continue to respond to the cohorts and faculty
in your original thread until the last day of the week. Follow the rubric
criteria ( see below)

DQ 1 For this question, conduct an Internet search and
produce at least one research article ( study design must be discussed)
addressing one or more of the concepts noted.

How does APN practice demonstrate cost-effectiveness,
reduction in errors and misuse or overuse of services?

DQ 2 For this question, conduct an Internet search (
including the online library as well as specialty organizations) and address
the following questions relative to the Nurse Informaticist’s:

When would you consult with the nurse informaticist’s?

What role does the nurse informaticist’s play in primary

What qualifications and credentialing are held by nurse

Suggested URLs to
assist you in answering this DQ:

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American Nursing Informatics Association, the NI Community
of HIMSS , the Alliance for Nursing Informatics or the Nursing Informatics
Special Interest Group of the American Medical Informatics Association

Reimbursement for Nurse Practitioner Services
Except for a minority of patients who pay their own medical bills, every encounter between an NP and a patient has a third-party participant—the payer. Whether an NP is employed by a medical practice or self-employed, the reimbursement policies of third-party payers often will determine whether an NP continues to provide care on a long-term basis.
▪ Payers
There are five major categories of third-party payers:
  • Medicare
  • Medicaid
  • Indemnity insurance companies
  • Managed care organizations (MCOs)
  • Businesses that contract for certain services
Each type of payer has its own reimbursement policies and fee schedules, and each operates under a separate body of law. Some payers reimburse NPs in the same manner as they reimburse physicians. On the other hand, some payers have NP-specific rules and policies regarding reimbursement. Not every payer will pay every NP for every service.
▪ Medicare
Medicare is a federal program, administered nationally by the Center for Medicare and Medicaid Services (CMS) and administered locally by Medicare carrier agencies. Medicare covers: (1) patients 65 years and older who have enrolled and pay premiums; and (2) disabled individuals who qualify for Social Security disability payments and benefits.

Medicare pays for the care of an enrolled patient under one of two arrangements. If a patient covered by Medicare is not enrolled with an MCO, Medicare reimburses the patient’s healthcare provider on a fee-for-service basis through a local Medicare carrier agency. If a patient has enrolled in a managed care health plan, there is an extra payment step between payer and provider. Medicare pays the health plan on a capitated basis, an all-inclusive lump sum per month for each patient. Health plans then pay providers on a fee-for-service or capitated basis.
Fee-for-Service Medicare
Fee-for-service reimbursement is payment for specific healthcare services under a fee schedule. A health service might be an office visit, surgery, ear irrigation, suturing of a wound, a Pap smear, or any one of thousands of other services. Fees are based on a complex variety of factors, including the number and type of services provided, the Current Procedural Terminology (CPT) and International Classification of Diseases (ICD) codes, the geographic area of service, and certain office and training expenses of the provider. All reimbursable services have a CPT code. CPT is a uniform coding system developed by the American Medical Association and adopted by third-party payers for use in claim submission. All CPT codes have a corresponding Medicare fee. All medical diagnoses have an ICD code.
Fees for CPT codes may vary in different locations and for different providers depending upon a complex variety of factors, including the geographic area of service and certain office, malpractice, and training expenses of the provider. Under Medicare, NPs may be reimbursed at a rate of 85% of the physician fee schedule. Under a fee-for-service system of reimbursement, the more services an NP performs, the more money he or she will generate.
The physician fee schedule is determined using a system called a resource-based relative value scale (RBRVS). The RBRVS, developed by CMS, the federal agency charged with administering Medicare, determines reimbursement for Medicare Part B services. The RBRVS assigns a relative value to each procedural code (CPT code). Under the RBRVS system, services are reimbursed on the basis of resources related to the procedure rather than simply on the basis of historical trends.
There are three components to a relative value: (1) a practice expense component, (2) a work component, and (3) a malpractice component. Each component is adjusted geographically, using three separate Geographic Practice Cost Indexes (GPCIs). The final formula to arrive at an area-specific relative value is:
(Practice Expense RV × Practice Expense GPCI) + (Work RV × Work GPCI) + (Malpractice RV × Malpractice GPCI) = Relative Value
The relative value is then multiplied by a single “conversion factor” to arrive at the geographic-specific fee schedule allowable for a given area. The conversion factor is based on whether the service is surgical or medical. RBRVS affects payments made to physicians, NPs, and other providers entitled to Medicare and other forms of thirdparty reimbursement.
An NP wishing to provide service to a Medicare patient on a fee-for-service basis applies to be a Medicare provider. Once an NP has a provider number, the NP submits bills to the local Medicare carrier agency for each visit or procedure. A standard form, the CMS 1500, is used. NPs who are self-employed receive 85% of the physician charge for the billed procedure. When an NP is employed by physicians and can meet “incident to” requirements, the practice may receive 100% of the physician charge for the billed procedure, subject to the “incident to” rules.
“Incident to” Services
The full term for incident to is incident to a physician’s professional service. Incident to is a term peculiar to Medicare. The legal definition of “incident to” services is services furnished as an “integral, although incidental, part of the physician’s personal professional services in the course of diagnosis or treatment of an injury or illness.”1 To qualify under this definition, the services of nonphysicians must be rendered in a physician’s office under a physician’s “direct personal supervision.” Nonphysicians must be employees of a physician or physician group or have an independent contractor relationship with the group. Services must be furnished during a course of treatment in which a physician performs an initial service and subsequent services of a frequency that reflects the physician’s active participation in and management of the course of treatment. Direct personal supervision in the office setting does not mean that a physician must be in the same room. However, a physician must be present in the office suite and immediately available to provide assistance and direction throughout the time that an NP is performing services. Incident to may refer to the services of office nurses and technicians as well as NPs.
Capitated Medicare
Capitation is a fee paid by a managed care organization (MCO) to a healthcare provider, per patient, per month, for care of an MCO member. Capitated fees for primary care vary, based on a patient’s age and sex. Under a capitated system of reimbursement, NPs and physicians are paid a set fee per patient per month for all services agreed to by contract. If an NP has agreed to provide all primary care services for a patient, then the NP must provide an unlimited number of primary care visits. On the other hand, if a patient never visits, the NP operating under a capitated system of reimbursement still is paid.
An NP wishing to provide care for a Medicare patient enrolled in an MCO applies to the MCO for admission to the organization’s provider panel. For information about applying for admission to managed care provider panels, see Exhibit 9-1.
Individuals covered by Medicare may choose between traditional fee-for-service coverage and managed care.

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