Quantifying Indirect Billing Within the Medicare Physician Fee Schedule

Under certain circumstances, advance practice clinicians (APCs), such as physician assistants and nurse practitioners, can bill Medicare directly or indirectly (ie, incident to the services of a physician). With indirect billing, the submitted claim states the care was provided by the physician, and the reimbursement is higher.

To quantify volume and spending on office-based encounters billed indirectly in the Medicare program.

This cohort study used Medicare fee-for-service and Medicare Advantage claims data to identify indirectly billed APC services. To do so, office-based Medicare Part B claims (ie, clinician services) were linked to Part D claims for prescription drug fills. Because the latter contains the prescribing clinician's unique identifier, this linkage distinguished between directly and indirectly billed services provided by APCs. In this way, the fraction of encounters and component services billed indirectly by APCs and physicians were quantified.

Share of fee-for-service and Medicare Advantage office encounters provided by APCs and billed indirectly. Share of a physician's billed claims actually provided by an APC and billed indirectly.

In 2022, of all office encounters provided by an APC, 38.9% were billed indirectly. Conversely, for the median physician in 2022, indirect billing on behalf of APCs represented 11.1% of all billed encounters. Billing for care delivered by APCs was most common among surgical specialists (29.7% of encounters) and least common for primary care physicians (3.9%). If all indirectly billed APC-provided care was billed directly by the APC, Medicare would have saved $270 million in 2022.

The results of this cohort study suggest that APCs provide a substantial fraction of office-based care received by Medicare beneficiaries. Identifying indirectly billed APC-provided care is integral to understanding who serves Medicare beneficiaries.