How NP & MD Medicare Reimbursement Plays Out in Practice
Analyzing how much an insurance company, Medicare or Medicaid actually pays you as a nurse practitioner quickly gets messy. Your patients receive bills for the services you provide detailing dollar amounts that are not actually paid. Using a somewhat complex series of equations taking into account complexity of the visit or procedure and the location where the service was provided, the government or private insurer decides how much they are actually willing to reimburse you, the NP for treating the patient.
In some cases, services provided by nurse practitioners are reimbursed by insurers at rates equal to or close to those of a physician. In other instances, nurse practitioners receive only a fraction of the rate that a physician would receive for providing the same service in the same location. Understanding the way you are paid is important in the day to day operation of your practice.
How much revenue are you as a nurse practitioner generating for your practice compared to your physician colleagues when it comes to treating Medicare patients?
Medicare Reimbursement Rates
The Centers for Medicare and Medicaid Services (CMS) sets the tone when it comes to provider reimbursement rates across the board. Medicaid and private insurers reference Medicare’s reimbursement rates when setting their own. So, comparing NP and MD reimbursement at the Medicare level offers insight into the tone of the rest of the insurance market.
Most nurse practitioners are aware that Medicare reimburses nurse practitioners 85% of the physician rate. So, if a physician provides services to a patient Medicare deems worthy of a $100 reimbursement, the NP would be reimbursed $85 for providing the same care (there are ways to get around this).
How does this reimbursement schedule play out in practice?
Consider this theoretical practice scenario. A nurse practitioner works 5 days/week, 8 hours/day treating 3 patients per hour for 50 weeks/year and sees only Medicare patients. This means the NP works a total of 2,000 hours billing Medicare for 6,000 patient visits.
To keep things simple, consider that the nurse practitioner only bills for visits coded 99213, the CPT code for a basic established patient visit. For this CPT code, Medicare reimburses an MD about $73. Using Medicare’s 85% reimbursement rate for NPs, the nurse practitioner would generate about $62 in revenue for an equivalent visit.
Crunching the Numbers
Based on the scenario outlined above with the NP and MD each billing for 6,000 Medicare patient visits per year with a basic 99213 visit code, the MD would generate $66,000 more in total annual revenue than the nurse practitioner.
Using the Data to Your Advantage
An initial glance at these numbers might lead practices to believe that it is more profitable to hire a physician than a nurse practitioner. But, let’s take these calculations one step further. Medical practices must take into account how much providers are paid in looking at the financials behind NP vs. MD calculations.
The average family practice nurse practitioner salary is about $95,000. The average family physician salary is $189,000. Adjusting revenue for the salary a practice much pay each respective provider narrows the gap in revenue generating potential between nurse practitioners and physicians. NPs come out on top when salary enters the equation making them a more profitable hire for this practice scenario.
Bringing it Home
In reality, the revenues of both nurse practitioners and physicians are much higher than is represented in these calculations. Ancillary services such as labs and X-rays increase the cost of a patient visit and resulting reimbursement. Patient visits may fall under the ‘new patient’ category or qualify for a higher complexity 99214 CPT code further increasing revenues. Most practices treat a spectrum of patients including privately insured individuals bumping up revenue potential.
Caveats aside, these simplistic calculations help us as nurse practitioners know where we stand. An awareness of your revenue generating potential and the value you add to a practice helps with everything from interactions with your practice’s billing department to negotiating a salary.
How do you see Medicare reimbursement disparities affect your day to day practice?
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