Demonstrating advanced practice provider value: Implementing a new advanced practice provider billing algorithm

Paula B. Brooks, DNP, FNP-BC, MBA, RNFA (Director of Advanced Practice Nurses) & Megan E. Fulton, MSPAS, PA-C (Director of Physician Assistant Practice)

Journal of the American Association of Nurse Practitioners

Background: Rapid changes in health care are driving the adjustment of work flow by which providers serve patients in team-based care. Specifically, there is a need to develop more effective and efficient utilizationwith accurate attribution of advanced practice providers' (APPs) productivity.

Local Problem: The Directors of the APP-Best Practice Center conducted assessments of each clinical area at MUSC Health, a large academic medical center. A knowledge gap was identified, not only regarding billingpractices of the APPs (nurse practitioners/physician assistants) but also in the utilization of APPs to practice to the fullest extent of their license, education, and experience.

Methods: By substantiating APPs' contribution margin through the process of implementing a new standardized APP billing algorithm, a change in practice was accepted by senior leadership and a new APP billing algorithm was built while following updated practice laws, compliance/legal standards, and hospital bylaws/regulations.

Interventions: A new billing algorithm was implemented on July 1, 2017, and outcomes were evaluated 12 months after implementation.

Results: This project uncovered the work already performed by APPs while increasing relative value units, collections, and overall patient encounters by the APP/physician team. Findings suggest improved utilizationand appropriate attribution of productivity.

Conclusions: With the APP work force growing, the implementation of electronic medical record systems, and today's health care financial constraints, it is imperative that health care systems standardize their billingpractices. The APP billing algorithm is a critical tool that will help to meet this demand.


Advanced practice providers (APPs), specifically advanced practice registered nurses (APRNs) and physician assistants (PAs), have a long and recognized track record of providing cost-effective, quality health care services, particularly for those in greatest need (Kurtzman & Barnow, 2017 Pittman & Williams, 2012 Timmons, 2017 Yang et al., 2018). Not only do APPs need to be competent clinicians, they also need to be knowledgeable in the financial aspects of providing care. Tracking reimbursement of the APP is crucial in today's health care environment. Advanced practice registered nurses and PAs need correct billing and coding skills, a comprehensive understanding of Medicare and other insurances' billing regulations, and an appreciation of the differences in reimbursement policies across all payer entities (Reimbursement Task Force and APRN Work Group, of WOCN Society National Public Policy Committee, 2011, 2012). They also need to have a strong knowledge base of the differences in inpatient versus outpatient billing guidelines. It is essential that reimbursement policies and systems reflect the true costs of care and promote sustainable practice for APPs (American Association of Nurse Practitioners, 2010).


Evidence supports utilizing APPs in the health care industry as one of the most cost-effective and achievable improvements to solving America's challenges of increased cost, poor quality, and lack of access in health care (Bauer, 2010 Green, Savin, & Lu, 2013). When APPs are appropriately optimized, with identifiable clinical and financial outcomes, APPs can add substantial value to an organization and help improve the health of the community (Donald et al., 2013 Kacik, 2018 Kilpatrick et al., 2014 Kuo, Chen, Baillargeon, Raji, & Goodwin, 2015 Lewis, Nicholson, Smith, & Alderson, 2014 Mills, 2009 ;Newhouse et al., 2011 Pennsylvania Coalition of NPs, 2016 Stanik-Hutt et al., 2013). Outcomes, such as fewer avoidable hospitalizations, readmissions, and emergency department (ED) visits, have been shown to improve when APPs are utilized appropriately in a wide variety of settings (Traczynski & Udalova, 2018 Vizientinc, 2017). These practitioners can fill an important gap in our complex health care delivery system.

Despite evidence supporting the need to expand the Advanced Practitioner role, there continues to be many barriers to practice (Hooker & Muchow, 2015 Timmons, 2017). These occur at the national, state, and local levels. Barriers at the national level are highly driven by opposition from some medical organizations believing that advanced practitioners are not able to “provide quality, safe care at the same level” (American Medical Association, 2010 Fairman, Rowe, Hassmiller, & Shalala, 2011 Salsberg, 2015). However, a number of long-term studies prove otherwise. A systematic review of 69 studies from 1990 to 2008 clearly shows that, in a variety of situations, nurse practitioner (NP) outcomes in a broad sample that include both inpatient and outpatient settings are comparable to, and sometimes exceed, physician outcomes (Newhouse et al., 2011). Several other studies confirmed that PAs on inpatient hospitalist services decreased length of stay, inpatient mortality, rehospitalization rates, and cost of service (Capstack et al., 2016 Dhuper & Choksi, 2009 Roy et al., 2008Singh et al., 2011). These studies demonstrated that the care provided by the PA was equal or superior to teams including physician residents. A subsample from the National Ambulatory Medical Care Survey demonstrated that care provided by an NP or PA was largely comparable with that of the primary care physician in the community health centers (Kurtzman & Barnow, 2017).

Other reasons cited in the literature for physician resistance include: loss of income, concerns about malpractice and legal liability, and a belief that patients would be resistant to seeing advanced practitioners (Buppert, 2010 Pittman & Williams, 2012 Thrasher & Purc-Stephenson, 2007). Those physicians in support of APP practice recognize that APPs can aide in the physician shortage because APPs cover multiple patient geographical access points and facilitate in high-level triage and day/night call (Gesemsway, 2017 Green et al., 2013). These skill sets complement the team and ultimately increase patient access and revenue.

Reimbursement payment policies for APPs are also disproportionate at the national level. Insurance companies often pay the APP only a portion of what is paid to physicians for the same services. Medicare, Medicaid, and many of the third private payers reimburse APPs an average of 75–85% of what they pay physicians for the same services (Hansen-Turton, Ritter, & Torgan, 2008 Kaiser Family Foundation, 2006 Medicare Payment Advisory Commission, 2012 Pittman & Williams, 2012). However, when adjusting for salary differences, this decrease in reimbursement can be misleading. According to the Medical Group Management Association (MGMA) data (2017) Medical Group Management Association (MGMA) (2017) when comparing APP and physician salaries, at an average reimbursement rate of 85%, there is potential for the APP to have a higher contribution margin. In a recent study by MGMA researchers found that physician owned practices who had higher APP to physician ratios earned $100,748 higher in net incomes and $131,700 higher net incomes in hospital-based primary care practices (Kacik, 2018). Multispecialty practices earned 160% more in total revenue when the ratio of APP to physician was increased (Kacik, 2018).

Barriers to APP practice at the state level encompass differences in licensure and practice laws. Scope of practice, prescriptive authority, and collaborative practice requirements vary from state to state. This variation contributes to the reduction of patient access in many of the underserved areas and promotes APPs' migration from highly restrictive to less restrictive states (Advanced Practice Registered Nurse Consensus Work Group, 2008; Miller, Snyder, & Lindeke, 2005). In addition, state-level reimbursement payment is often dependent on licensure and scope of practice requirements (Gadbois, Miller, Tyler, & Intrator, 2015). States may limit the specialties for which direct reimbursement for APPs is allowed. They may also limit reimbursement for those who specialize in a number of different areas, such as family practice or pediatrics (WellCare of South Carolina, 2016). Practice agreements/scopes of practice with attending physicians are often required for those states that do allow APPs to enroll and directly bill the Medicaid program (Joy, 2015). These documents outline the joint practice of an attending physician and an APP in a complementary working relationship.

Obstacles involving both institutional and cultural barriers may include specific medical staff rules, regulations, and bylaws. Such restrictions include unnecessary or outdated cosignature requirements by the attending physician, restricting the evaluation of certain patient types, and/or performing certain procedures. Furthermore, despite APPs having the knowledge and capability to complete tasks such as patient coordination, scheduling, and basic phone call triage, these functions should be completed by other health care team members such as nurses or Certified Medical Assistants (CMAs) (Heinrich, 2018). Covering these tasks result in poor utilization and economic inefficiency. Advanced practice providers need to be considered providers and must practice to the fullest extent of their license and education.

Local problem

The Medical University of South Carolina (MUSC) started as a small private college for the training of physicians in 1824. The college expanded to become a state university with the medical center serving as a major referral center in South Carolina. To support its mission of providing excellence in patient care, teaching, and research throughout the state of South Carolina, MUSC Health needed to develop more effective and efficient utilization practices for APPs. It was also essential that APPs be incorporated as professional colleagues and considered integral members in team-based care. For this reason, an APP Task Force was created in 2012. At the recommendation of the APP Task Force Subcommittee on Education, Training, and Preceptorship, MUSC Health recognized the need to appoint leaders to provide operational oversight of PAs and APRNs. This would help to bridge the gap between the APPs and MUSC Senior and Clinical Leadership and help standardize practice. The position of Director of Advanced Practice for both APRNs and PAs was established and filled in May 2016. Together, these directors built a center of APP-Best Practice to help stimulate increased recognition, better utilization, and a voice for the APP within the organization.

Initially, a consult service was developed by the Directors of Advanced Practice, and assessments were conducted at the clinical department level. These assessments addressed utilization, billing practices, professional development, and communication among team members. Through the consult service, it was discovered that many of the APPs were not working at the top of their education, licensing, and training. Many of the APPs were working as scribes and had taken on a number of other responsibilities that should have been delegated to other team members. In addition, the methodology of billing under the physician's National Provider Identifier (NPI) resulted in the APP becoming invisible in the abstracted data and monthly financial dashboard. There were also concerns surrounding billing compliance. To accomplish this, a quality improvement project lead by the Directors of APP practice sought out to develop a simplified billing algorithm that was standardized across the institution for the APPs and their attending physician partner(s).


A standardized billing algorithm, following Medicare/Medicaid/Third Party payer guidelines, needed to be developed. The primary goal of this algorithm would direct APPs to either bill using their own NPI, unless the attending physician also participated in a split/shared visit encounter. Furthermore, there was a need to reduce compliance billing errors and eliminate patient confusion on receiving bills from the attending physician, although they were evaluated by an APP. Secondary goals were to help to ensure that APPs at MUSC were appropriately utilized to the top of their license and to decrease the number of APPs working as scribes. Finally, the algorithm would quantify the contribution of APP productivity with the development of an APP financial dashboard/scorecard. By following a standardized process, improved utilization would then be reflected in the data over time. Initial planning of the project involved developing a team and presenting evidence-based research, supporting new APP billing practices, to stakeholders at the medical center. The team included the Directors of the APP-Best Practice Center, Senior Director of Compliance, Compliance Manager, Senior Business Analyst, and the Director of the Electronic Medical Record (EMR). A three “R” solution was proposed to simplify the APP billing algorithm. This included Rebuilding, Reducing, and Recreating: rebuilding the billing algorithm, reducing compliance errors, and recreating a financial dashboard with data capture on the backend. The APP scorecard required a rebuild with the improvement of APP reporting in the EMR.

Presentations included information about billing practices at other large academic institutions factoring in capacity costs (Table 1) to demonstrate the inefficiency of utilizing APPs for tasks that should be fulfilled by support staff. These presentations included examples of actual return on investment for those departments appropriately utilizing their APPs. A comparison was made identifying contribution margins of APPs and physicians factoring in salaries and the average reimbursement rate of 85% (Table 1). Additional information on the nonreimbursable component of APP practice was highlighted. These included an increase in patient access, physician availability, provider satisfaction (both attending physician and APP), patient satisfaction, and throughput.


Presentations were prepared and reported to multiple committees throughout the medical center including hospital special operations, department administrators, EMR leadership, and senior leadership. This approach secured stakeholder buy-in, which was critical in obtaining medical center–wide support and compliance. Savings would result from increasing contribution margins due to improved patient access, promoting additional ambulatory encounters while decreasing patient wait times. It would also increase provider satisfaction (both attending physician and APP) by allowing both providers to work at the top of their license. Most importantly, it would increase patient satisfaction, as the patient would be scheduled directly with an APP or have the opportunity for a shared visit encounter. All these factors contribute to an overall increase in downstream revenue for the medical center.

Through the work of the team, the numerous processes to bill a patient encounter were condensed into a simplified two-column billing algorithm for both inpatient and outpatient visits (Figure 1 and 2).

For patient encounters provided solely by the APP, column A would be followed. The APP would bill the visit under their own billing number if the APP evaluated, diagnosed, and treated the patient. In addition, if the attending physician briefly visits the patient during the appointment but did not perform and document a portion of the physical examination and/or face-to-face medical decision-making, column A would be followed. If, however, the APP and attending physician both evaluated the patient in provider-based clinics and the attending physician performed and documented a portion of the physical examination and/or face-to-face medical decision-making, column B would be followed. This visit would be billed under the attending physician's billing number, but the APP would receive credit as the performing provider. This algorithm (column B) follows Medicare-shared guidelines. The inpatient algorithm follows similar principles except the APP was considered the service provider (provider who examined the patient) rather than the scheduling provider (provider in which the patient is scheduled to see in an outpatient setting) in a shared visit encounter (column B).

Special considerations needed to be taken for procedures, admission history and physical notes, and discharge summaries to comply with Centers for Medicare and Medicaid Services (CMS). This ensured that the documentation rules implemented complied with Federal and State statutes, as well as hospital rules and regulations/bylaws.

There were departments that were exempt from using the proposed billing algorithm. Pediatric APPs were exempt because they receive lower reimbursement rates when practicing in subspecialties. It was also decided, because the ED has their own coding system, to exclude this group of APPs during the first implementation phase.

Once the algorithms were written, they were tested and retested multiple times. This involved running different scenarios to determine whether the bills were being appropriately submitted under either the APP (column A) or the attending physician (column B). It was also determined whether the APP was recognized as the author or performing provider/service provider (column B). Advanced practice providers mostly billing shared visits under the attending physician were asked to follow the algorithm for 1 month. Data were compiled preimplementation and postimplementation, and were evaluated for inconsistencies.


Once approval was obtained from senior leadership, a plan for the educational roll out was developed. This involved providing a number of mandatory educational sessions for the APPs by the Directors of Advanced Practice. Representatives from compliance and the EMR were also present during these sessions to answer questions. In addition to the power point presentations, a recorded presentation narrated by the Directors of Advanced Practice was placed in MyQuest, the campus-wide learning management system that provides compliance training and learning opportunities for providers and employees. The implementation date, two months later, coincided with the beginning of FY18 and a new funds flow model of compensation for the health system. In this model, each department would receive payment based on the number of work relative value units (wRVUs) generated by providers in the department. Work RVUs, a national standard used for measuring productivity, budgeting, allocating expenses, and cost benchmarking, are a measure of value used in the Medicare reimbursement formula for provider services. The dollar per wRVU for various subspecialties was determined using national standards (a combination of MGMA and United Health Care data) for APP and physician productivity and compensation. The goal of implementing this funds flow model was to align revenues and costs for more informed decision-making, and to create cash on hand for outreach expansion.


Initially, compliance monitored progress of APPs utilizing the new APP billing algorithm in multiple practice areas including inpatient and outpatient locations on a weekly basis for 6 weeks. This included 1,183 charts that were reviewed. The review was to validate both APP-independent billing and shared visit charges that contained the APP as performing/service provider and the attending as the billing provider. The compliance review was agnostic to insurance carrier or clinic location (excluding the ED locations and all pediatrics).

Compliance performed audits, gave feedback to the providers, and after 5 weeks the error rate decreased 36%. Ongoing monitoring is in place to ensure continued improvement. Inconsistencies identified in the compliance monitoring program suggested that the APP was not following outpatient/inpatient algorithms when seeing patients independently. Any deviation from the billing algorithm would not capture the APP as the performing/service provider and/or billing provider.

Inconsistencies identified by the attending providers were using incorrect attestations to the APP note as well as inconsistencies in documentation practices. This was mostly a result of the use of incorrect resident attestation verbiage or incomplete documentation of the physical examination/medical decision-making (Medicare Manual, 2018). Direct communications were sent via compliance to several providers to correct these errors.

After 12 months of APP RVU data, comparisons were made with baseline RVUs and collections for FY 2017 versus FY2018 (Table 2). Data samples were examined from outpatient clinics in primary care, specialty medicine, and surgical teams. As suspected, the APPs' RVUs and collections rose dramatically in all groups. This increase was statistically significant in all four groups (p < .05, CI 95%).

When focusing specifically on the general internal medicine group, the APPs' RVUs increased by 7,745 (p = .04, CI 95%). After group adjustments for new hires, there was a 608% increase in RVUs for the APPs. In addition, there was a 3% RVU increase for the attending physicians in internal medicine. Looking at the team of APPs and attending physicians in internal medicine, there was an overall RVU increase of 24%. Collections also increased for both groups. For the attending physicians in internal medicine, they saw a 5% increase in collections. The APPs saw a 769% increase in collections with a team total for internal medicine of 29% increase in collections when adjusting for new hires (Table 2).


Improvements as a result of this quality improvement project

As seen by these results, the new APP billing algorithm encouraged improved utilization and efficiency of the APP/physician team. Compliance errors successfully decreased among both APP and attending physician providers. From the financial perspective, the APP billing algorithm attributed each provider's RVU contribution to productivity. Before implementation of a standardized billing algorithm, RVU inflation occurred for the attending physicians due to the APP billing under the physicians' NPI. However, when the APP began to bill under their own NPI, the physicians' RVUs continued to increase. Accurate attribution of data now can assist to project APP/physician staffing needs and determine clinic space and calculate appropriate support staff. From a retention perspective, it allows a practice/department to use these data to develop potential incentive programs to reward individual high performers, APP-physician teams, and successful departments within a health care system. Most importantly, the APP algorithm drives increased opportunities to access care through improved work flow efficiencies.

Revisions necessary

As expected, a number of issues needed to be addressed after implementation of the new APP billing algorithm. One concern during a shared visit was that attending physicians were not able to view their patients once the scheduling provider was changed to the APP. When the APP changed encounter provider, the patient was removed from the attending physician's schedule. To resolve this issue, the buttons in the EMR needed to be reprogrammed to reflect: “Shared Visit” and “APP Visit.” The APP would no longer need to change the scheduling provider to themselves. This allowed the patient to remain visible on the attendings' schedule.

Another concern revolved around return communication back to the referring provider after a consult was completed. If the APP was the service provider, all letters to the referring providers were generating the APPs' signature rather than the attending physician's signature. During a shared visit, attending physicians requested that referring providers receive communication from the attending physician. Once the “Shared Visit” and “APP Visit” button was developed, this issue resolved.

On the inpatient side, a major challenge of the algorithm occurred when the note was sent from the APP to the attending physician for cosignature. In the EMR, once the APP sent the chart to the attending for cosignature, if the attending changed the service provider field, the system would not recognize the APP as part author. In this case, the APP would not receive credit as performing provider. These vagaries of the EMR confounded the ability to capture the APP as the service provider. After testing and retesting, these variations were corrected so that the “Service provider” field could be locked by the service provider, even when encounters required cosignature by an attending physician. To avoid this compliance error, after the APP entered their name in the service provider field, it would automatically lock so that the attending physician could not change the name.

Need for the development of a new financial dashboard

The new APP billing algorithms allowed for the capturing of more accurate billing data to recognize APPs as performing and/or billing providers. However, a revision in the monthly APP provider financial dashboard was necessary to provide a more detailed, user-friendly APP record for APP providers and departments to access. The financial dashboard was developed by the Directors of APP practice, and this was built in Tableau (Tableau Server Version: 10.5.3-10500.18.0404.1406, Tableau Server Version, 2018), a proprietary software used at MUSC, with the assistance from internal IT Solutions Consultants (Figure 3). The objective of the financial dashboard was to allow providers and administrators to clearly identify APP/attending physician productivity.

The financial dashboard includes Revenue Cycle, Access (PATH), and The Clinician and Group Consumer Assessment of Healthcare Providers and Systems scores. These metrics, specific to the organization, allows providers to assess their productivity and patient satisfaction scores.

The Revenue Cycle tab attributes RVUs by APP-independent visits (APP is both the billing and performing provider) and by APP/attending physician shared visits (APP is the performing provider and the attending physician is the billing provider). Other revenue cycle metrics include monthly charge lag (number of days in which a chart is signed and closed by the billingprovider), new patient billed visits, and total number of patient visits (including preoperative and postoperative). The APP and/or administrator can view current month or 13-month wRVU history, top service codes billed by the specific provider, total payor mix (break down of patient's insurance type), and the RVUs generated during shared visit encounters with a particular attending physician. On the Access (PATH) tab, the provider is able to review variables that affect access on a daily basis and compare it with the past fiscal year. Finally, the Patient Experience tab allows APPs to review patient satisfaction scores.


An organizational plan to standardize billing practices for APPs is necessary in today's changing health care environment. The plan should include developing a task force comprising APP representation, compliance, EMR/IT, and business analytics. This ensures that the standardized billing is built with checkpoints that include updated practice laws, compliance/legal standards, hospital bylaws, and the ability to extract data and reporting metrics. Once a task force is in place, assessment must be made of the current state. This includes a first pass of data capture that differentiates between independent APP encounters and APP/attending physician shared encounters. Next, there needs to be an evaluation of the actions that are required when an APP enters a level of service (one through five) and visit diagnoses (ICD-10) codes. Finally, a compliance audit needs to be performed regarding current documentation and billing practices for independent APP encounters and APP/attending physician shared encounters.

When developing the APP billing algorithm, CMS guidelines must be followed. The task force should streamline steps for the APP to follow when billing an independent versus a shared visit encounter in both inpatient and outpatient settings. Billing data need to be reflective of independent versus shared visit encounters. Furthermore, the shared visit encounters should attribute the APP as performing provider and the attending physician as billing provider. The algorithm should outline proper supporting documentation to be completed by the attending physician to meet CMS guidelines.

Next, an educational rollout and go-live date needs to be agreed on for key stakeholder groups including senior leadership, department administrators, physician leaders, compliance managers, EMR educators, attending physicians, and APPs. Once education is completed with a go-live date, a 6-month and 1-year data review including RVU and collections can be compared with preimplementation and postimplementation of the algorithm. Once implemented, a data review can be run in parallel with monthly compliance audits to ensure proper usage of the algorithm. At one-year postimplementation, a review of the steps is necessary to refine the algorithm to simplify steps for providers and reduce errors.

As demonstrated by this quality improvement project, buy-in needs to be secured from senior leadership to review current billing practices/data output and will be the impetus to propose standardized billing for APPs. With the APP work force growing, the implementation of EMR systems, and today's health care financial constraints, it is imperative that health care systems standardize their billing practices. All professional services delivered by providers need to be accurately captured by the EMR. This ensures that all professional services delivered by APPs are attributed to the appropriate health care provider, despite services billed under the attending physician (EHR Toolkit, 2018).

Acknowledgments: Special thanks to MUSC Compliance Managers, Dixie McMahan, CPC, CPMA, CEMC and Senior Director Julie Acker; Arthur Ellis, MA, IT Senior User Adoption Specialist; Haylee McBrayer, MHA, Solutions Consultant for Information Solutions; Adam Bacik, MHA, Sr. Manager, Capacity Management; Brian Allenspach, MBA, Manager User Adoption & Training and all the Advanced Practice Providers at MUSC.


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