Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

June 2001 

OEI-02-00-00290 

Medicare Coverage of Non-Physician 

Practitioner Services 
OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 

protect the integrity of the Department of Health and Human Services programs as well as the 

health and welfare of beneficiaries served by them. This statutory mission is carried out through 

a nationwide program of audits, investigations, inspections, sanctions, and fraud alerts. The 

Inspector General informs the Secretary of program and management problems and recommends 

legislative, regulatory, and operational approaches to correct them. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 

Inspector General. It conducts short-term management and program evaluations (called 

inspections) that focus on issues of concern to the Department, the Congress, and the public. 

The inspection reports provide findings and recommendations on the efficiency, vulnerability, 

and effectiveness of departmental programs. 

OEI's New York Regional Office prepared this report under the direction of John I. Molnar, 

Regional Inspector General and Renee C. Dunn, Deputy Regional Inspector General. Principal 

OEI staff included: 

REGION HEADQUARTERS 

Nancy Harrison, Project Leader Jennifer Antico, Program Specialist 

Natasha Besch Tricia Davis, Program Specialist 

Vincent Greiber Brian Ritchie, Technical Support Staff 

Christi Macrina 

To obtain copies of this report, please call the New York Regional Office at 212-264-2000. 

Reports are also available on the World Wide Web at our home pate address: 

http://www.hhs.gov/oig/oei 
Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

June 2001 

OEI-02-00-00290 

Medicare Coverage of Non-Physician 

Practitioner Services 
EXECUTIVE SUMMARY 

PURPOSE 

To describe the scope of services nurse practitioners, clinical nurse specialists, and 

physician assistants provide to Medicare beneficiaries, and to identify any potential 

vulnerabilities that may have emerged since the Balanced Budget Act of 1997. 

BACKGROUND 

Nurse practitioners, clinical nurse specialists, and physician assistants are health care 

providers who practice either in collaboration with or under the supervision of a 

physician. We refer to them as non-physician practitioners. States are responsible for 

licensing and for setting the scopes of practice for all three specialties. Services provided 

by them can be reimbursed by Medicare Part B. 

The Balanced Budget Act of 1997 (BBA97) modified the way the Medicare program 

pays for their services. Prior to January 1, 1998, their services were reimbursed by 

Medicare only in rural areas and certain health care settings. Payments are now allowed 

in all geographic areas and health care settings permitted under State licensing laws. 

Furthermore, nurse practitioners and clinical nurse specialists are now allowed to bill 

Medicare directly. The services of a physician assistant, however, must continue to be 

billed by an employer. 

Our study is based on: a review of the State scopes of practice; an analysis of Medicare 

billing data from the years 1997, 1998, and 1999; and information obtained from 

Medicare Part B carrier medical directors. 

Because this inspection’s intent is to be a first look at the effect of the new coverage rules 

under BBA97, the findings are descriptive in nature. The inspection presents what the 

billing data show. It also describes the State scopes of practice that are used to control 

billing. It is not the purpose of this inspection to evaluate the benefits or disadvantages 

of non-physician practitioner services. 

FINDINGS 

Non-Physician Practitioner Billings Are Rising Rapidly 

It appears that the Balanced Budget Act of 1997 is having a substantial effect on nonphysician practitioner billing. In 1999, Medicare paid for 5.2 million services, compared 

to 1.2 million services in 1997. Because some of these services had been billed as 

“incident to” prior to 1997, we were unable to determine how much of the increase in 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services i OEI-02-00-00290 
billings was due to real growth in services and how much was due to simple changes in 

billing practices. The top services billed were for office or outpatient visits in office 

settings. 

State Scopes of Practice Provide Little Guidance to Carriers 

Our analysis found that the State scopes of practice are broad and as a result provide little 

guidance that carriers can use to process claims. Most scopes of practice contain only a 

general statement about the responsibilities, education requirements, and a non-specific 

list of allowed duties and do not explicitly identify services that are complex or beyond 

their scope. Carriers voice concerns over non-physician practitioners performing 

services such as surgery and endoscopies. Furthermore, when a service is not addressed 

in a scope, it cannot be assumed that a non-physician practitioner cannot provide that 

service. Scopes, as well as Medicare, call for collaboration with a physician. This may 

have the effect of either limiting or expanding the services that are allowed. If a nurse 

practitioner is directed by a cardiologist to make a complex diagnosis, there is nothing in 

the scopes preventing such a practice. In fact, States generally have a vague definition 

for acts such as diagnosis. 

Carrier Monitoring of Non-Physician Practitioner Claims is Limited 

Although all but one Medicare carrier acknowledges that non-physician practitioners are 

included in post-payment reviews, most carriers confirm that no pre-payment edits exist 

to monitor their claims. Several carriers state that monitoring is limited by the broad 

language in their scope of practice. Sixteen carriers do not verify that the non-physician 

practitioners are working within their scope, and at least 22 carriers do not check the 

collaborative or supervisory agreements. Most information given to carriers from HCFA 

include basic Balanced Budget Act language, and directives to treat non-physician 

practitioners as a physician when monitoring their claims. 

CONCLUSION 

The Balanced Budget Act successfully opened up the medical practice to non-physician 

practitioners, regardless of care settings. Non-physician practitioner billings are rising 

rapidly, but controls, which are based on scopes of practice, are limited. State scopes of 

practice are vague and broad. As such, carriers do not have sufficient guidance to 

distinguish which non-physician practitioner services should be reimbursed by the 

program and which should not. This creates potential vulnerabilities, both from payment 

and quality of care standpoints. Therefore it may be appropriate to consider other 

additional controls for Medicare payments to non-physician practitioners. We plan to 

monitor non-physician practitioner services for both overall trends and for complex 

services. 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services ii OEI-02-00-00290 
Agency Comments 

We received comments on the draft report from the Health Care Financing 

Administration. They concur with our conclusion regarding vulnerabilities when nonphysician practitioners bill Medicare. They are, however, sensitive to increasing the 

monitoring burden on contractors. The HCFA expressed a willingness to work with the 

OIG to monitor vulnerabilities in non-physician practitioner billings. We plan to do 

additional work to identify specific vulnerabilities by examining the billing practices of 

non-physician practitioners. 

The full text of HCFA’s comments are contained in Appendix F. 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services iii OEI-02-00-00290 
TABLE OF CONTENTS 

PAGE

EXECUTIVE SUMMARY ................................................ i

INTRODUCTION ..................................................... 1

FINDINGS .......................................................... 6

Non-Physician Practitioner Billings Rising .............................. 6

Scopes of Practice Provide Little Guidance ............................... 7

Carrier Monitoring is Limited ....................................... 11

CONCLUSION ...................................................... 14

APPENDICES

A. Services and Costs ............................................. 15

B. Most Frequent Settings and Services, 1999 ........................... 16

C. States’ Recognition of Non-Physician Practitioners ...................... 19

D. Prescriptive Authority ........................................... 20

E. Review Criteria for State Scope of Practice ............................... 21

F. Agency Comments ............................................. 22

Medicare Coverage of Non-Physician Practitioner Services OEI-02-00-00290 
INTRODUCTION 

PURPOSE 

To describe the scope of services nurse practitioners, clinical nurse specialists, and 

physician assistants provide to Medicare beneficiaries, and to identify any potential 

vulnerabilities that may have emerged since the Balanced Budget Act of 1997. 

BACKGROUND 

Nurse practitioners, clinical nurse specialists, and physician assistants are health care 

providers who practice either in collaboration with or under the supervision of a 

physician. States are responsible for licensing and for setting the scopes of practice for 

all three specialties. Nurse practitioners and clinical nurse specialists are licensed 

advanced practice registered nurses who have specialty training in primary care or acute 

care of patients. Both of these nurse specialties must practice in collaboration with a 

physician. In contrast, a physician assistant is a licensed health care professional who 

practices under the supervision of an immediately available physician responsible for 

delegating medical services to the physician assistant. All States limit the number of 

physician assistants a physician is allowed to supervise. Although there are other types 

of non-physician practitioners, such as clinical nurse midwives and nurse anesthetists, for 

the purposes of this inspection we will refer to nurse practitioners, clinical nurse 

specialists, and physician assistants collectively as “non-physician practitioners.” 

Medicare Payment 

Medicare provides health insurance to people who are 65 years and older, people who are 

disabled, and, people with permanent kidney failure. Medicare consists of two primary 

parts: Hospital Insurance, also known as Part A, and Supplementary Medical Insurance, 

also known as Part B. Medicare Part A provides coverage of institutional care such as 

inpatient hospital care, skilled nursing facility care, home health services, and hospice 

care. Medicare Part B pays for the cost of non-institutional care such as physician 

services, outpatient hospital services, medical equipment and supplies, as well as services 

provided by non-physician practitioners. Medicare uses entities called contractors to 

process claims. Fiscal intermediaries process Part A claims and carriers process Part B 

claims. Each Medicare Part B carrier must employ a medical director whose duties 

include: assisting in the review of claims; providing clinical judgment in medical review 

of claims; directing carrier personnel on the correct application of policy during claim 

adjudication; and providing advice to the Health Care Financing Administration (HCFA) 

on national coverage and payment policy. 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 1 OEI-02-00-00290 
To be reimbursed by Medicare, the non-physician practitioner must practice in 

accordance with State law. This law is embodied in the State nurse practice acts, which 

are also known as the State scopes of practice. The scope of practice typically defines 

the practitioner’s practice, qualifications, board representation, and fee/ renewal 

schedule. The scopes may also list specific examples of responsibilities such as taking 

histories, patient care, education and training. 

The Balanced Budget Act of 1997 

Allowed Expanded Billing. The Balanced Budget Act of 1997 modified the way the 

Medicare program pays for non-physician practitioner services. Prior to January 1, 1998, 

these services were reimbursed by Medicare Part B only in certain geographical areas 

and health care settings. Nurse practitioner and clinical nurse specialist services were 

covered when provided in collaboration with a physician in nursing facilities in urban 

areas and in all settings in rural areas. They could also bill Medicare directly for services 

provided in rural areas. Physician assistant services were covered when provided under 

the supervision of a physician in hospitals and nursing facilities, as an assistant to 

surgery, in physician offices and patient homes in rural areas, and in a rural area 

designated as a health professional shortage area. 

The Act also removed the restrictions on settings. Effective January 1998, payment is 

now allowed for non-physician practitioner services in all geographic areas and health 

care settings permitted under State licensing laws, but only if no facility or other provider 

charges are paid in connection with the service. Nurse practitioners and clinical nurse 

specialists are now allowed to bill directly in all settings in both rural and urban areas. 

The services of a physician assistant, however, must continue to be billed through an 

employer. 

Clarified Education/Certification. The 1997 legislation clarifies the educational and/or 

certification requirements for certain non-physician practitioners to receive Medicare 

reimbursement. The regulations spell out the requirements as follows: 

Nurse practitioners must: 

• be a registered professional nurse; 

• be authorized to perform services in the State where they practice; 

• be certified by the American Nurses Credentialing Center (ANCC) or 

comparable certifying agency; and 

• hold a Master’s degree in Nursing, as of January 1, 2003. 

Clinical nurse specialists must: 

• be a registered nurse; 

• be licensed in the State where they practice; 

• be certified by the ANCC; and 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 2 OEI-02-00-00290 
• hold a Master’s degree in a defined clinical area of nursing from an 

accredited educational institution. 

Physician assistants must: 

• be licensed and authorized in the State where they practice and 

• either have graduated from an accredited educational program, or 

passed the National Certification Examination. 

Modified Reimbursement. The Act also set new reimbursement levels. It allows 

payment of 80 percent of the lesser of either (1) the actual charge or (2) 85 percent of the 

scheduled physician fee. Prior to the Act payment for nurse practitioner or clinical nurse 

specialist services, when furnished in all settings in a rural area, could have been made 

either directly to the nurse practitioner or clinical nurse specialist, or to the employer or 

contractor of the nurse practitioner or clinical nurse specialist at 75 percent of the 

physician fee schedule for services furnished in a hospital, 85 percent of the physician fee 

schedule for services furnished in other settings, and at 65 percent for assistant at surgery 

services. Payment for nurse practitioner services when furnished in skilled nursing 

facilities and nursing facilities in an urban area was made to the employer of the nurse 

practitioner at 85 percent of the physician fee schedule. Before the Act, payment for 

physician assistant services was made to the employer at 85 percent of the scheduled 

physician fee and at 65 percent of physician fee schedule for assistant to surgery services. 

Because the Act removed the restrictions on settings, interest has increased in the 

services non-physician practitioners are providing. The General Accounting Office’s 

January 2000 report, Lessons Learned From HCFA’s Implementation of Changes to 

Benefits, recommended that HCFA implement a recommendation made by an internal 

HCFA group that studied potential vulnerabilities brought about by the Act’s changes. 

This group suggested that HCFA (1) survey the States to establish a national database of 

allowable practices for possible use in forming policies, (2) work with national 

accreditation bodies to establish standard minimum scopes of practice, and (3) that 

HCFA conduct a baseline study to determine the volume and type of services billed by 

clinical nurse specialists and nurse practitioners. At the present time, HCFA’s Program 

Safeguard Contractor is conducting a baseline study in three States to determine the 

volume and type of services clinical nurse specialists and nurse practitioners are 

providing. 

The American Medical Association (AMA) is also interested in non-physician 

practitioner services. The AMA is leading a coalition of medical organizations that is 

concerned HCFA is not ensuring that advanced practice nurses are working in 

collaboration with a physician and within their scope of practice. 

Incident to services. The Act did not affect any services provided incident to physicians 

services. Incident to services are provided by employees of the physician under the 

physician’s direct on-site supervision. Incident to services may be provided by nurse 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 3 OEI-02-00-00290 
practitioners, clinical nurse specialists, physician assistants, medical assistants, 

technicians, nurses, and others employed by the physician. These services continue to be 

paid at 100 percent of the physician fee schedule amount as though the physician 

personally performed the services. The physician does not have to indicate on the claim 

that a non-physician practitioner performed the service. This inspection did not set out to 

examine incident to services. It focuses on services that the non-physician practitioner 

bills directly and services that are billed, as is always the case for physician assistants, 

through the employer with the non-physician practitioner specialty indicated. Carriers 

have complained that incident to services are difficult to track. 

SCOPE 

This inspection is intended to be a first look at the effect of the Balanced Budget Act of 

1997 which enables non-physician practitioners to bill Medicare for all allowable 

services in all settings. The findings of this inspection are descriptive in nature. 

The inspection presents what the billing data show about the services provided to 

Medicare beneficiaries. It also describes the States’ scopes of practice that govern these 

practitioners. Any agreements between the physician and the practitioner, however, are 

not the focus of this inspection. These agreements are unique to each physician and 

practitioner. In order to effectively evaluate these agreements as a control mechanism, 

they would have to be reviewed on a case by case basis. That level of scrutiny was 

beyond the scope of this inspection. It is also not the purpose of this inspection to 

evaluate the benefits or disadvantages of services performed by non-physician 

practitioners. 

METHODOLOGY 

Data were collected from three sources: the State scope of practice; Medicare billing data 

from the years 1997, 1998, and 1999; and interviews with carrier medical directors. 

Scopes of practice. We collected scopes of practice for physician assistants in 50 States 

and Washington, D.C., and both the advanced practice scope and the registered nursing 

scope for clinical nurse specialists and nurse practitioners in 50 States. First, we 

reviewed a sample of State scopes to determine common characteristics of 

responsibilities. From these common characteristics we developed a review document 

for all scopes. This document included educational requirements, written collaborative 

agreements, Board oversight, physician supervision, a statement of scope, and particular 

services such as taking histories, diagnosis, therapy, and treatment/ care plan 

development. We reviewed each scope of practice and noted the services allowed in each 

State for each specialty. We also reviewed the requirements for both the supervisory and 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 4 OEI-02-00-00290 
collaborative agreements between the physician and the non-physician practitioner as 

well as the prescriptive authority addressed in each State’s scope of practice. See 

Appendix E for more details. 

Billing Data. We analyzed Medicare Part B services data for each of the three 

specialties from the Medicare Part B Extract and Summary System (BESS) for 1997, 

1998, and 1999. All service and charge data mentioned in this report reflect data for 

“allowed services” and “allowed charges.” We also examined settings and procedure 

codes. We concentrated on billing changes that have occurred since BBA97 and 

analyzed procedures with high increases in allowed services and/ or allowed charges. 

We also looked at procedures considered vulnerable by carrier medical directors. 

Medical Director Practices. We interviewed the 41 carrier medical directors from all 

the Medicare Part B carrier contractors. Our interviews focused on the process of 

reviewing non-physician practitioner claims and any changes in that process since 

BBA97. We asked about carrier screens and edits, use of State scopes of practice, and 

any concerns or potential vulnerabilities. The carriers also forwarded any of their nonphysician practitioner medical review policies and any instructions sent to them by 

HCFA. 

This inspection was conducted in accordance with the Quality Standards for 

Inspections issued by the President’s Council on Integrity and Efficiency. 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 5 OEI-02-00-00290 
)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 6 OEI-02-00-00290

FINDINGS

Non-Physician Practitioner Billings Are Rising Rapidly

It appears that the Balanced Budget Act is having a substantial effect on non-physician

practitioner billings to the Medicare program. 

paid for 5.2 million non-physician practitioner services (See Chart 1). 

increase since 1997, the year BBA97 expanded settings and allowed nurse practitioners

and clinical nurse specialists to bill Medicare directly in additional settings. 

same period, allowed charges also increased nearly fourfold from $55 million to $202

million (See Appendix A). 

to” prior to 1997, we were unable to determine how much of the increase in billings was

due to real growth in services and how much was due to simple changes in billing

practices.

 Chart 1: Non-Physician Practitioner 

 Allowed Services (in millions) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: Medicare BESS data

In 1999, non-physician practitioners billed about half of their services in an office setting

and another quarter of services were billed from skilled nursing or nursing facilities. 

top three services billed in 1999 were office or outpatient visit for the evaluation and

management of an established patient, subsequent nursing facility care for the evaluation

and management of the new or established patient (25 minutes), and subsequent nursing

facility care for the evaluation and management of the new or established patient (15

In 1999, BESS data show that Medicare

This is a fourfold

During this

Because some of these services had been billed as “incident

The
)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 7 OEI-02-00-00290

minutes), comprising almost a third of all services billed. 

details on billing data.

Although clinical nurse specialists have shown the greatest proportional increases in

services, nurse practitioners and physician assistants account for most of the overall

services in 1999 (See Chart 2).

 Chart 2: Allowed Services 1999

Source: Medicare

BESS data

 

State Scopes of Practice Provide Little Guidance to Carriers

Our analysis found that the State scopes of practice are broad and as a result provide little

guidance that carriers can use to process claims. 

collaboration with a physician which may have the effect of either limiting or expanding

the services that non-physician practitioners may perform.

Generally, State Nursing Boards set the scope of practice for clinical nurse specialists and

nurse practitioners, while State Medical Boards set the physician assistant scope. 

States also defer to a national certifying body’s scope, such as that of the American

Nurses Credentialing Center, which similarly lacks detail (see Appendix C). 

Characteristics of the scopes are critical because they control what non-physician

practitioners can do in their State and thus what Medicare will reimburse. 

to note that scopes were designed to implement medical practice and not to direct

Medicare reimbursement. 

See Appendix B for more

Scopes, as well as Medicare, call for

Some

It is important
Most scopes contain a statement about the responsibilities, a list of allowed duties, 

education requirements, supervisory/collaborative agreement requirements, and 

prescriptive authority. The scopes differ in the amount of detail given to each element. 

Additionally, with the exception of few physician assistant scopes, we found that no 

scope explicitly identifies services that these practitioners are not allowed to perform. 

Using just the scopes, it is difficult to determine if non-physician practitioner could 

provide highly complex services and be reimbursed by the Medicare program. Several 

carrier medical directors note that relying on the scopes to determine services that can be 

billed to the program may be problematic. One medical director comments that the 

scopes are “so vast and vague. [Non-physician practitioners] can do anything that is 

assigned to them.” A few medical directors suggest that more clarifications of duties are 

needed to improve the way their claims are reviewed. 

Also, non-physician practitioners may provide services if they are delegated by the 

collaborating or supervising physician (as mentioned, the nurse practitioner and the 

clinical nurse specialist must collaborate with a physician, and a physician assistant must 

be supervised by a physician). For example, if a nurse practitioner working in 

collaboration with a cardiologist is directed to make a complex diagnosis, there is nothing 

in the scopes of practice preventing such a practice. In fact, States generally have a 

vague definition for acts such as diagnosis. 

Scopes in 11 States provide guidance for an agreement between the clinical nurse 

specialist and/or the nurse practitioner and the collaborating physician. In some cases the 

guidance for the collaborative agreements merely contains a definition of collaboration. 

More State scopes provide requirements of what the physician’s supervisory role is in 

relation to a physician assistant. For example, some physician assistant scopes may 

require a supervisory agreement to provide specific information about the availability of 

the supervising physician, type of supervision required (physical, electronic, or 

continuous), or whether the agreement must be in writing. However, in the case of either 

the collaborative or the supervisory agreement, details that are not addressed within the 

State scope are left to the discretion of the physician and the non-physician practitioner. 

Scopes do not fully describe non-physician practitioner responsibilities 

The scopes typically contain a broad statement of responsibilities. In these statements, 

25 States allow nurse practitioners to provide health care according to their own area of 

specialization; and in 19 States, physician’s assistants may provide health care as 

approved by State Nursing Board. In addition to the broad statement, State scopes 

usually give a general list of duties allowed to be performed which most often include the 

following: treatment/care plan development; diagnosis; assessments; dispensing 

medication; counseling; referrals; and education/teaching. 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 8 OEI-02-00-00290 
Table 1: Selected Non-physician Practitioner Responsibilities 

Responsibilities 

Number of State Scopes Allowing Specific 

Service 

Clinical Nurse 

Specialist 

(N=44*) 

Nurse 

Practitioner 

(N=50) 

Physician 

Assistant 

(N=50) 

Treatment plan development 

and implementation 

36 37 19 

Diagnosis 26 35 15 

Assessment/history/exam 33 37 26 

Dispensing medication 24 20 18 

Counseling 24 31 16 

Referrals 14 26 12 

Education/teaching 28 29 15 

*44 States recognize CNSs. 

Within the list of duties, scopes offer few specific guidelines. For example, diagnosis is 

allowed by many States, but few States define what diagnosis actually means or entails. 

Also, in the States where the scope is silent, such as the 19 States that do not address 

counseling by nurse practitioners, it cannot be assumed that the practitioner cannot 

perform these services. Even when a service is addressed, it is done in a very general 

manner. One State defines a treatment plan as “[The nurse practitioner] coordinates the 

health care plans to enhance the quality of health care and diminish both fragmentation 

and duplication of service.” Another State defines education/teaching as “develop 

individualized teaching plans with the client based on overt and covert health needs.” 

Other examples of services allowed but not fully outlined are counseling, referrals, and 

emergency expansion of role. 

State scopes generally have a clear definition of the education requirements for nonphysician practitioners. Although BBA97 currently requires only clinical nurse 

specialists to have a Master’s degree to receive reimbursement, most States’ education 

requirements stipulate that both the clinical nurse specialist and the nurse practitioner 

must have a graduate degree. There appears to be a difference between Federal and State 

requirements in that 11 States do not require clinical nurse specialists to have a master’s 

degree whereas Federal reimbursement requirements described in 42 CFR §410.74-76 

do. The remainder of the States do not stipulate whether a Master’s degree is required. 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 9 OEI-02-00-00290 
As of January 1, 2003, nurse practitioners will also be required to have a Master’s degree 

for Part B reimbursement. Physician assistants are not required to have a degree for Part 

B reimbursement. 

Every State addresses the prescriptive authority for at least one specialty. Forty-eight 

States provide guidance for the prescriptive authority of physician assistants and 41 

States do so for nurse practitioners. However, only 23 of the 44 States that recognize 

clinical nurse specialists provide any guidance for prescriptive authority in their scopes. 

See Appendix D for details of prescriptive authority. 

Some practices raise concerns 

Thirty-seven carrier medical directors cite at least one concern about non-physician 

practitioner services and/or payments. Common concerns include settings, procedures, 

and training and supervision. 

Settings. Our analysis of 1999 billing data indicates that 81 percent of all non-physician 

practitioner services were performed in three settings: offices, inpatient hospitals, and 

skilled nursing facilities/nursing facilities. Twenty-five carrier medical directors cite 

nursing facilities and skilled nursing facilities as problematic settings. Most think that 

these settings are problematic for at least one of the following reasons: medically 

unnecessary procedures performed; excessive billing; and lack of oversight. As one 

carrier medical director notes, “There’s not a lot of oversight in nursing homes and there 

is a great potential for abuse where there is not much oversight.” The carrier medical 

directors also discuss concerns about home health, hospitals, rural clinics, and both 

inpatient and outpatient mental health facilities, and give similar reasons for these 

concerns. 

Procedures. Nineteen carrier medical directors cite specific procedures that are 

problematic. Of these, most mention evaluation and management codes. Fifty-eight 

percent of all non-physician practitioner allowed services are for evaluation and 

management codes, and 8 of the top 10 procedures in 1999 are evaluation and 

management codes. Evaluation and management services and charges have increased by 

four times their 1997 levels. Several carrier medical directors express that it is 

problematic for non-physician practitioners to bill evaluation and management codes, 

especially those of a complex nature. Our data show that most evaluation and 

management services provided by them are of low-complexity. However, in 1999, eight 

percent of non-physician practitioner evaluation and management services were of high 

complexity. In order to merit high complexity, two of three key components (history, 

examination, or medical decision making) must meet the following criteria: the number 

of diagnoses or medical options must be extensive; the amount and/or complexity of the 

data to be reviewed must be extensive; and the risk of complications and/or morbidity or 

mortality must be high. 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 10 OEI-02-00-00290 
Within evaluation and management codes, complex consultations is one area of particular 

concern. A consultation is a type of service provided by a physician whose opinion or 

advice regarding evaluation and/or management of a specific problem is requested by 

another physician or other appropriate source. Other procedures that carriers find 

problematic due to their complexity are surgery, psychiatry, endoscopies, colonoscopies, 

and sigmoidoscopies. 

Training and Supervision. Eleven carrier medical directors express concerns about 

non-physician practitioners’ lack of training. Some carrier medical directors believe that 

too many complex procedures are being performed by these practitioners. One medical 

director recalls fighting efforts to allow complex procedures performed by non-physician 

practitioners, believing that some procedures are too close to physician work and are 

more complex than their training allows. 

Five carrier medical directors note that the lack of supervision of non-physician 

practitioners could be problematic. One mentions that their “background and education 

is not parallel with physicians; they were originally created as physician extenders but 

now they are operating independently.” Another worries that the non-physician 

practitioners’ ability to practice independently could exacerbate medical problems. 

Three carrier medical directors express concerns that the practitioners and their 

collaborating physician(s) share too many responsibilities. One of these directors adds 

that he can’t address his concerns because there are no guidelines for non-physician 

practitioners. 

Carrier Monitoring of Non-Physician Practitioner Claims is

Limited 

Carrier medical directors may monitor non-physician practitioner claims through prepayment or post-payment reviews. Pre-payment reviews are automated edits in the 

claims payment system that occur before the claim is paid, and either involve requesting 

additional documentation or denying the claim outright. When asked if any specific prepayment screens or edits exist for non-physician practitioners, 30 of the 41 carrier 

medical directors confirm that no edits exist specifically to monitor these claims. Some 

of the specific edits include surgery, assistant at surgery, anesthesia, nursing home 

procedures, and particular evaluation and management codes. One carrier plans to 

implement edits that will disallow complex-level services provided by non-physician 

practitioners. This carrier is awaiting feedback from HCFA about these edits. 

All carriers but one include non-physician practitioners in their post-payment reviews. 

These are conducted manually after the claim is paid, and are triggered by such things as 

aberrant billing or outliers. One type of post-payment review is a comprehensive medical 

review, which looks at one specific provider’s billing over a period of time. In the last 2 

years, 11 carrier medical directors report conducting comprehensive medical reviews on 

non-physician practitioners. In one example, nurse practitioners were visiting nursing 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 11 OEI-02-00-00290 
homes and changing patients’ bandages but billing for debridement, a surgery code which 

is both more complex and more expensive. Another carrier medical director reports 

conducting three comprehensive medical reviews. All three involved nurse practitioners, 

and resulted in overpayments totaling over $900,000. The cases involved duplicate 

billings, upcoded claims, and self-referrals. 

Several medical directors mention that monitoring is limited by the broad language in 

their scopes of practice. Because the scopes offer little detail, carrier medical directors 

may not use them. One medical director says, “Unfortunately, in [this State] it is 

impossible for [non-physician practitioners] not to be within their scope of practice. 

There is no way we can deny [the claim] based on the scope of practice.” Sixteen carrier 

medical directors state that they do not verify that non-physician practitioners are 

performing services within their State scope of practice in pre-pay or post-pay activities. 

Only seven carrier medical directors check with the State nursing board or the scope of 

practice to verify services. At least 22 carriers do not check the collaborative or 

supervisory agreement. Additionally, the carriers acknowledge that they do not have 

specific settings or procedures which prompt them to refer to the agreements 

consistently. 

Carrier medical directors report receiving memoranda or other guidelines from HCFA 

regarding non-physician practitioner claims when the 1997 legislation went into effect. 

Some report receiving the BBA97 guidelines. Others report receiving information from 

the carrier manual or program memoranda, and some say they were told to treat nonphysician practitioners like medical doctors. Six carrier medical directors report 

receiving no instructions from HCFA regarding these claims. Most carriers say they 

have not changed the way they review claims as a result of the Act. Some carriers, 

however, say they now pay more attention to non-physician practitioner claims. 

In addition to the general guidance given by HCFA, a few carriers have implemented 

their own medical review policies affecting non-physician practitioners. One example is 

a policy that offers specific instructions for the amount of supervision needed for 

myocardial perfusion imaging, a diagnostic procedure that is performed in order to 

evaluate how well blood is flowing to the heart. 

Moreover, some carrier medical directors would like to have additional pre-payment 

review or edits. Examples of the desired edits include specific evaluation and 

management codes, incident to services, and setting-specific edits. Some carrier medical 

directors would also like to have additional post-payment reviews, including levelspecific reviews, specialty-specific reviews, psychiatric service reviews, and spot checks 

of collaborative agreements. Other medical directors suggest modifying State laws or 

having further clarification of non-physician practitioner duties as a means of improving 

the way these claims are reviewed. 

Some carrier medical directors state that although they want to monitor more closely, 

they are limited in their ability to do so. Five carrier medical directors mention the need 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 12 OEI-02-00-00290 
for national guidelines on how to use the scopes to review claims. One carrier explains, 

“We’d like some instructions- to have a list from HCFA on codes that are inappropriate.” 

Another carrier medical director comments that the carrier is hindered: “[We] can’t 

develop every claim—[we] have no way of monitoring if they overstep their 

bounds—our hands are tied.” 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 13 OEI-02-00-00290 
CONCLUSION We are able to draw several conclusions based on our analysis. We can conclude that the 

The Balanced Budget Act successfully opened up Medicare billing for non-physician 

practitioners, regardless of care settings. Non-physician practitioner billings are rising 

rapidly, but controls, which are based on scopes of practice, are limited. State scopes of 

practice are vague and broad. As such, carriers do not have sufficient guidance to 

distinguish which non-physician practitioner services should be reimbursed by the 

program and which should not. This creates potential vulnerabilities, both from payment 

and quality of care standpoints. Therefore it may be appropriate to consider other 

additional controls for Medicare payments to non-physician practitioners. Until such 

controls are developed, the situation deserves careful monitoring. We plan to do so for 

both overall trends and for complex services. 

Agency Comments 

We received comments on the draft report from the Health Care Financing 

Administration. They concur with our conclusion regarding vulnerabilities when nonphysician practitioners bill Medicare. They are, however, sensitive to increasing the 

monitoring burden on contractors. The HCFA expressed a willingness to work with the 

OIG to monitor vulnerabilities in non-physician practitioner billings. We plan to do 

additional work to identify specific vulnerabilities by examining the billing practices of 

non-physician practitioners. 

The full text of HCFA’s comments are contained in Appendix F. 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 14 OEI-02-00-00290 
APPENDIX A 

Services and Costs 1999, by Category 

Nurse Practitioner Clinical Nurse 

Specialist 

Physician Assistant All Non-Physician 

Practitioners 

Services Charges Services Charges Services Charges Services Charges 

Anesthesia 137 $14,397 3 $151 159 $21,963 299 $36,511 

Integumentary 50049 $1,623,825 7093 $262,846 62408 $2,683,342 119550 $4,570,013 

Musculoskeletal 10905 $732,838 706 $88,378 92646 $12,734,886 104257 $13,556,102 

Respiratory 595 $53,750 19 $2,941 7169 $844,971 7783 $901,662 

Cardiovascular 3455 $430,214 272 $49,364 123066 $21,424,366 126793 $21,903,944 

Lymphatic 14 $1,176 19 $2,088 586 $37,393 619 $40,657 

Mediastinum 27 $4,328 0 $0 364 $39,925 391 $44,253 

Digestive System 1655 $151,939 319 $32,412 11497 $1,050,466 13471 $1,234,817 

Urinary 6274 $365,168 226 $14,399 2256 $163,322 8756 $542,889 

Male Genital 69 $9,033 2 $391 667 $110,433 738 $119,857 

Laparoscopy (Elim) 435 $62,401 81 $8,206 4179 $393,070 4695 $463,677 

Female Genital 2358 $126,500 149 $6,328 1497 $120,566 4004 $253,394 

Maternity 62 $7,503 0 $0 9 $3,170 71 $10,673 

Endocrine/ Nerves 2349 $209,462 233 $28,343 23473 $2,426,799 26055 $2,664,604 

Eye 73 $4,116 0 $0 693 $91,044 766 $95,160 

Ear 11229 $325,073 47 $1,428 8369 $246,676 19645 $573,177 

Radiology 36872 $1,174,244 583 $31,287 48730 $1,245,475 86185 $2,451,006 

Pathology/ Lab 249021 $1,935,797 2002 $12,602 136528 $1,118,289 387551 $3,066,688 

Medicine 361401 $9,906,512 103358 $6,115,443 121261 $2,455,480 586020 $18,477,435 

Evaluation & Mgmt 1855424 $73,999,925 67433 $3,622,695 1103259 $46,597,602 3026116 $124,220,222 

Temp 437430 $4,210,872 5302 $74,871 228974 $2,635,335 671706 $6,921,078 

Total 3029834 $95,349,073 187847 $10,354,173 1977790 $96,444,573 5195471 $202,147,819 

These categories are in order of their Current Procedural Terminology (CPT) number 

Source: Medicare BESS data 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 15 OEI-02-00-00290 
APPENDIX B 

Most Frequent Settings and Services, 1999 

1. Most Frequent Settings, 1999 

Health Care Setting 

Office 

Skilled Nursing Facility (SNF) 

Nursing Facility (NF) 

Inpatient Hospital 

Other - unlisted facility 

ER - hospital 

Outpatient Hospital 

Home 

Custodial Care 

Number of 

Services 

2,598,999 

757,564 

433,169 

414,285 

316,571 

241,995 

199,994 

85,837 

49,616 

Community Mental Health 35,234 

Center 

Proportion of all Services 98.8% 

Source: Medicare BESS Data, 1999 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 16 OEI-02-00-00290 
APPENDIX B 

(cont.) 

2. Most Frequent Services, 1999 

CPT 

Code 

Service Description Number 

of 

Services 

Percent 

of total 

99213 Office or outpatient visit for the evaluation and management of an 

established patient which requires at least two of these components: 

C an expanded problem focused history; 

C an expanded problem focused examination; 

C medical decision making of low complexity. 

The presenting problem(s) are of low to moderate severity. Physicians 

typically spend 15 minutes face-to-face with the patient and/or family 

645,979 12.4% 

99312 Subsequent nursing facility care, per day, for the evaluation and 

management of the new or established patient, which requires at least two 

of these components: 

C an expanded problem focused interval history; 

C an expanded problem focused examination; 

C medical decision making of moderate complexity. 

Usually, the patient is stable, recovering or improving. Physicians typically 

spend 25 minutes as the bedside and on the patient’s facility floor or unit. 

508,954 9.8% 

99311 Subsequent nursing facility care, per day, for the evaluation and 

management of the new or established patient, which requires at least two 

of these components: 

C a problem focused interval history; 

C a problem focused examination; 

C medical decision making that is straightforward or of low 

complexity. 

Usually, the patient is stable, recovering or improving. Physicians typically 

spend 15 minutes as the bedside and on the patient’s facility floor or unit. 

420,926 8.1% 

99212 Office or outpatient visit for the evaluation and management of an 

established patient which requires at least two of these components: 

C a problem focused history; 

C a problem focused examination; 

C straightforward medical decision making 

The presenting problem(s) are of low to moderate severity. Physicians 

typically spend 15 minutes face-to-face with the patient and/or family 

353,654 6.8% 

G0001 Routine venipuncture for collection of specimen(s). 206,094 4.0% 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 17 OEI-02-00-00290 
CPT 

Code 

Service Description Number 

of 

Services 

Percent 

of total 

99214 Office or outpatient visit for the evaluation and management of an 

established patient which requires at least two of these components: 

C a detailed history; 

C a detailed examination; 

C medical decision making of moderate complexity. 

The presenting problem(s) are of low to moderate severity. Physicians 

typically spend 15 minutes face-to-face with the patient and/or family 

148,671 2.9% 

99313 Subsequent nursing facility care, per day, for the evaluation and 

management of the new or established patient, which requires at least two 

of these components: 

C a detailed interval history; 

C a detailed examination; 

C medical decision making of moderate to high complexity. 

Usually, the patient is stable, recovering or improving. Physicians typically 

spend 35 minutes as the bedside and on the patient’s facility floor or unit. 

100,231 2.0% 

99283 Emergency department visit for the evaluation and management of a 

patient, which requires these components: 

C an expanded problem focused history; 

C an expanded problem focused examination; and 

C medical decision making of moderate complexity. 

Usually, the presenting problem(s) are of moderate severity. 

98,636 1.9% 

90862 Pharmacologic management, including prescription, use, and review of 

medication with no more than minimal medical psychotherapy. 

94,969 1.8% 

99231 Subsequent hospital care, per day, for the evaluation and management 

of a patient, which requires at least three of the following components: 

C a problem focused interval history; 

C a problem focused examination; 

C medical decision making that is straightforward or of low 

complexity. 

Usually, the patient is stable, recovering or improving. Physicians typically 

spend 15 minutes at the bedside and on the patient’s hospital floor or unit. 

79,738 1.5% 

Total 2,657,852 51.2% 

Source: Current Procedural Technology 1999, Standard Edition and Medicare’s National Level II Codes--

HCPCS 1997, American Medical Association 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 18 OEI-02-00-00290 
APPENDIX C

States’ Recognition of Non-Physician Practitioners 

State NP CNS PA 

AL T T

AK N, T T

AZ T T

AR T T

CA T T

CO T T

CT T T

DE T T

DC NR NR T

FL T T

GA T MH T

HA T T

ID T T

IL T T

IN T T

IA T T

KS T T

KY N, T N, T

LA T T

ME T T

MD T T

MA T T

MI N, T T

MN T T

MS T V

MO N, T N, T

T

V

T

T

T

T

T

T

V

T

T

T

T

T

T

T

T

T

T

V

V

T

T

T

State NP CNS PA 

MT T T

NE T T

NV T T

NH T V

NJ T T

NM T T

NY T MH T

NC T T

ND T T

OH T T

OK T T

OR T D T

PA T T

RI T MH T

SC N, T N, T

SD T T

TN i i T

TX T T

UT N, T N, T

VT T MH , N T

VA T T

WA T T

WV T T

WI T T

WY T T

T

T

T

T

T

T

T

T

T

T

T

T

T

T

T

T

V

T

T

T

T- Recognized to practice in State

NR- Not Recognized

MH- Mental health clinical nurse specialists only.

i - Not board certified. Recognizes only RNs. However, NP may obtain a certificate of fitness to prescribe drugs. 

N- Defers to national certifying body.

D - Drafting Scope

V - Non-respondent 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 19 OEI-02-00-00290 
APPENDIX D 

Prescriptive Authority 

Prescriptive Authority 

Number of States allowing service 

Clinical Nurse 

Specialist 

(N = 44) 

Nurse 

Practition 

er 

(N = 50) 

Physicia 

n 

Assistan 

t 

(N = 50) 

Medical devices 4 11 16 

Legend drugs 9 18 17 

Starter dosages/samples 12 19 15 

Schedule I * 0 2 2 

Schedule II* 5 14 14 

Schedule III* 8 20 26 

Schedule IV* 9 20 26 

Schedule V* 8 20 26 

* Controlled substances 

Source: State Scopes of Practice 

The prescriptive authority usually contains specific information about dispensing 

samples, prescribing prescriptive or legend drugs (the legend of the prescription 

must contain the dosage amount and the frequency with which to take the drug), 

controlled substances (any narcotic or barbiturate drug ranging from simple cough 

medicine to heroin), and medical devices. 

)))))))))))

Medicare Coverage of Non-Physician Practitioner Services 20 OEI-02-00-00290 
APPENDIX E 

Review Criteria for State Scope of Practice 

In reviewing the State scopes of practice, our review instrument focused on the 

following responsibilities: 

C Assessments, histories, and physical exams, including screening and 

interpretation of lab data; 

C Therapy, including physical, occupational, and respiratory, as well as 

therapeutic diets and therapeutic interventions; we did not review drug 

therapy; 

C Treatment plan/ care plan development, including formulating, 

implementing, reviewing, and evaluating plans; 

C Patient care and management, including hospital rounds, accessing 

catheters and tubes, and care of sprains and fractures; 

C Surgery, including first assistant, minor surgery and suturing; 

C Supervision; 

C Education and teaching; 

C Counseling; 

C Emergency services, including EMT; 

C Expansion of scope in the event of an emergency; 

C Collaboration with Physician/ Supervision of non-physician 

practitioner, and; 

C Other relevant services such as anesthesia, diagnostic problems, and 

subspecialization in fields like optometry or obstetrics. 

21
APPENDIX F 

Agency Comments 

22