Medicare is the nation’s largest health insurance program. It provides coverage for more than 40 million people who are age 65 or older or disabled. Even if your practice does not include Medicare patients, the insurance payors that you do work with are, and have been, influenced by the rules and regulations and policies derived from Medicare decision making. In many aspects of healthcare insurance, Medicare has set the standards which in many cases have become adopted as the benchmark for other companies in the industry to follow.

Medicare is a federal program under the Centers for Medicare and Medicaid Services (CMS). However, rules regarding billing for physician services provided by PAs are very different between Medicaid (called Medi-Cal in CA) and Medicare. Medicare Part B covers professional services such as those provided by physicians and PAs. In California Medicare Part B is administered by Noridian Healthcare Solutions: Medicare, Jurisdiction E “Medicare administrator” for our state.)

The Balanced Budget Act of 1997 clarified and simplified Medicare regulations and reimbursement for PAs. It expanded the areas of coverage for PA provided services and eliminated restrictive requirements. PAs in California should enroll as Medicare providers through the Nordian Healthcare Solutions link provided above. When billed using their own name and identifier, Medicare covered services provided by PAs are reimbursed at 85% of the physician fee schedule. Reimbursement is paid to the employer or supervising physician and not directly to the PA. Medicare also reimburses for PAs who are the first assistant at surgery when all appropriate criteria and regulations are met. Medicare reimburses a physician first assistant at 16% of the primary surgeon’s fee and a PA receives 85% of the 16% (13.6%).

Medicare also allows for “incident to” billing for covered services provided by PAs. Services billed as “incident to” are reimbursed at 100% of the physician fee schedule and the bill is submitted using the physician’s name and identifier. There are significant restrictions regarding this type of billing and there is some confusion as to how this is applied in various situations. You should not use this billing option unless you are certain that you are complying with all of the regulations and you have adequate documentation. “Incident to” billing requires that the following criteria are met:

  • Can only be used for services provided in an office / clinic setting. It cannot be applied to hospital, ED or hospital clinic.
  • The service is one that is typically provided in a physician’s office.
  • The physician must be in the suite of offices when the PA provides the service.
  • The service is within the PA scope of practice under state law.
  • The physician must personally treat and diagnose the patient on the first visit to the practice and when there is a new medical problem / diagnosis.
  • Note: The above restrictions and limitations do not apply when the PA is billing under his/her own name and identifier.

    Watch the CAPA Magazine and the CAPA website for updates on reimbursement issues.


    Noridian Healthcare Solutions – PA Section
    AAPA Reimbursement Information