01.12.15

Health Care Group Newsletter – Winter 2015
Greg Koelling

Reap the Benefits of Non-Physician Providers (NPPs)
Nicki Chalik, CPA, MBA, MST

Non-physician providers (NPPs) play a central role in the future of health care delivery in the United States. Medical practices are finding that non-physician providers, also referred to as “NPPs,” can extend the therapeutic reach of their physicians with the added benefits of increased patient satisfaction and improved net profits. However, there are issues you should consider before proceeding.

Find the Right Person
There are two primary categories of NPPs:  Physician assistants and nurse practitioners. Which category is best for your practice depends on which is licensed in your state and the range of activities that the NPP in question is licensed to perform.

An NPP may be able to function independently or work under a doctor’s supervision — again, depending on relevant state law. Typical services that an NPP of either type may provide include:

  • Coordinating health education, patient counseling and patient care;
  • Ordering and/or performing diagnostic and therapeutic procedures;
  • Arranging patient referrals;
  • Delivering on-call care;
  • Performing physical exams;
  • Taking patient histories; and
  • Contributing to clinical decision making.

It is important to establish benchmarks to use when evaluating the person’s performance.

Find the Right Candidates
The most direct way to find good NPP candidates is through job listings on the websites of local and national associations for physician assistants and nurse practitioners. (Check out http://www.aapa.org for the American Academy of Physician Assistants, and http://www.aanp.org for the American Association of Nurse Practitioners.)

Keep in mind that the two professions are always represented by separate associations. Another source of candidates may be local schools that train NPPs.

How to Compensate NPPs
According to the MGMA Research & Analysis Report, NPP Utilization in the Future of US Healthcare, in 2012 the median annual compensation for a primary case nurse practitioner was $94,062, and for a surgical physician assistant, $112,689. Their physician counterparts earned $207,117 (family medicine physician) and $367,885 (general surgeon) respectively. Practices have several payment methodologies. For instance, you might offer an annual salary based on the NPP’s specialty and prorated for part-time. Or, you can choose an annual salary for full-time NPPs and hourly pay for part-time. The best option may be the one that incentivizes the NPP to work hard, such as a fixed-base salary plus bonuses for meeting or exceeding production goals.

What to Do Once You Hire a NPP
After you have interviewed and hired your NPPs, you will need to introduce them to two critical constituencies: Physicians and patients. When introducing them to doctors, clarify how the NPPs will fill your practice’s gaps in care. Then define the roles for physicians and NPPs and document applicable standing orders, protocols, collaborative agreements and supervision agreements. Last, send letters to patients explaining the hire of NPPs and the role they will play. Physicians should introduce the NPPs to their patients during their next visits.

How to Get Paid for NPPs’ Services
For Medicare patients, an NPP can bill for services in two ways:

  1. “Incident to” a physician’s care, using the doctor’s National Provider Identifier (NPI); or
  2. Directly after being credentialed by Medicare, using the NPP’s own NPI.

Under the first option, after an initial visit by a doctor, the NPP can provide services under the physician’s direct supervision or while the doctor is available in the office to give immediate assistance. To continue billing subsequent visits with the NPP as “incident to,” the physician must actively participate in and manage the patient’s treatment, with commensurate documentation in the patient’s medical record.

Unless all of an NPP’s services fall within the “incident to” definition, the NPP must use the second option — that is, to enroll in Medicare, obtain an NPI and bill directly. NPPs who bill directly receive lower reimbursements than when they bill “incident to.” It is 85% of the full physician fee schedule rate vs. 100%.

Billing Commercial Payers for NPPs’ Services
Private commercial payers have their own rules about reimbursing NPP services. They usually apply separate criteria for credentialing NPPs, sometimes not allowing them to bill directly.

Plus, they typically reimburse NPPs at lower rates than for supervising physicians. Your practice must bill under the doctor’s NPI and follow the billing guidelines in the payer’s provider manual. And you may need to append certain modifiers to the bill to correctly identify the NPP and supervising physician providing the care together.

Failure to satisfy the billing requirements of either Medicare or a private payer can create serious compliance problems for a practice. Regularly consult the websites of the Centers for Medicare and Medicaid Services and relevant private insurers to stay up to date on NPP billing rules.

Think About It
NPPs can bring substantial value to a practice, lightening doctors’ workloads and bringing in some fresh perspective. But integrating them into your operations and reimbursing them can be tricky. If you are intrigued by the concept, discuss it with your practice’s leadership and business advisors.

For questions, contact Nicki Chalik at nchalik@orba.com or call her at 312.670.7444. Visit orba.com to learn more about our Health Care Group.


Improving Your Profits with Proven Business Practices
Greg Koelling, CPA

There are many things that can affect a medical practice’s profits. External factors, such as the economy or changing demographics, can be beyond one’s control. However, many proven business practices can help you increase your bottom line.

Money Matters
One of the simplest ways to monitor your financial health is to use a budget.  You can create a basic budget by simply checking the previous 12-month financial statement and setting goals for revenue and expenses. Be sure you include each line item in your budget, including physician compensation.

The easiest way to increase your revenue is to collect for services that you have already provided.  Monitor your outstanding receivables based on date of service, not date of billing, and send account statements out monthly to any patient with an outstanding balance.  Follow up on all insurance denials for legitimacy.

Another simple method for adding to your top line (and bottom line) is to make sure you are utilizing the correct CPT code for your procedures.  Mistakes here can result in substantial revenue loss.  However, you must make sure that you are billing appropriately for the level of service provided.  Often, having an outside service perform a chart audit can provide you with peace of mind that you are both utilizing the most appropriate codes and not leaving any revenue on the table. .

Refinancing loans and credit lines can frequently reduce your cash outlay and increase your bottom line. Your CPA and banker can advise you of the optimal way to lower your interest rate or change your payout term.

Another way to reduce your overhead costs is to analyze your current equipment in conjunction with repairs and maintenance costs.  Are you spending more on maintenance than it would cost to simply replace the equipment?  Additionally, it makes sense to consider alternatives such as leasing and maintenance contracts while looking at these items together.

Personnel Costs
Is every person on your staff vital in achieving practice goals? Do you have the right mix of professional, semi-professional and administrative staff?  Look at each position objectively and then ask yourself how the position is helping patients or controlling costs.

Employee benefits are one of the largest expenses to a medical practice.  You should review the health insurance coverage you are providing your employees every year. There are many ways to reduce health insurance costs which are both common in the market place and expected by employees. Some of these options include:  Increasing deductibles, adding a Flexible Spending Account (FSA) or a Health Savings Account (HSA), instituting a waiting period for new employees, covering only full-time employees and allocating an annual fixed-dollar contribution to employees for medical plans.

The same should be done for any life or disability insurance that you provide as well.

An insurance broker is your best resource for these services, especially considering the potential costs and penalties that you could incur with the implementation of the Affordable Care Act.

Diligence Toward the Process
Once you implement the steps noted above, it is important to both monitor your progress and evaluate the results. As we approach a new year, it is an opportunity to start the next year off on the right foot.  If you need any assistance in creating a budget, analyzing your costs or developing tools to monitor those results, contact Greg Koelling at gkoelling@orba.com or call him at 312.670.7444. Visit orba.com to learn more about our Health Care Group.


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