The Outlook for the Physician Assistant Direct-Payment Rule

With the 2022 Centers for Medicare and Medicaid Services final rule, physician assistants (“PAs”) joined the ranks of physicians, nurse practitioners and clinical nurse specialists in having the ability to receive payments directly from Medicare. Previously, they had to be employed by a billable entity (e.g., physician, group or facility) and reassign their services. Payment would go directly to the entity, not the PA. 

Since we are now only just into the implementation phase, it may be too early to assess the outcome, but we can speculate on how this may influence health care delivery.

The rule change likely reflects the impact of nonphysician practitioners’ delivery of medical care, especially primary care. The prevalence of mid-level providers caring for patients is seen in almost every type of facility, including physician’s offices, clinics, hospitals and long-term care facilities. In outpatient settings, these mid-level providers can furnish services “incident-to” a physician when certain requirements are met. In this instance, the reimbursement for the entity is at the physician fee schedule rate. In some other settings, services can be provided as “split/shared” where the service and documentation requirements are shared between the mid-level provider and the physician. These rules, too, are changing, perhaps also based on the evolving models of health care delivery.

Reimbursement for independent services will not change based on the new regulations. PAs still receive 85% (or other carrier-designated amount) of the physician fee schedule. In this way, the PA will not directly benefit via increased compensation. However, PAs can now practice independently, if they so choose, if the services provided are within the scope of practice for their region. This could lead PAs to form medical practices with others or work independently as self-employed contractors. These new models could supplement health care entities that rely on outsourced employees, such as those that provide telehealth, home-based or remote digital services. 

While adoption by commercial carriers is not mandatory, we frequently see them follow behind federal guidelines. Based on the reduced reimbursement to this group of providers, as compared with physicians, the change may promote better health care affordability for some frequently provided services. According to the Bureau of Labor Statistics, employment for PAs is expected to grow by 31% from 2020 to 2030. As such, the setting is ripe for change.