Indirect billing by APCs common for office-based care

Indirect billing in Medicare is common for office-based encounters, suggesting underrepresentation of the care advanced practice clinicians, or APCs, provide to patients. 

A recent study in JAMA Health Forum analyzed Medicare fee-for-service and Medicare Advantage claims to quantify indirectly billed APC services versus the share of billed claims among physicians in 2022. 

At the time, nearly 39% of all office encounters were indirectly billed, indicating that the care was provided by an APC versus a physician. This accounted for 37.6 million APC-provided encounters billed indirectly. 

Medicare payment policy allows APCs to bill Medicare directly using their own national provider identifier or indirectly, meaning services are billed to Medicare as incident to a physician. With indirect billing, though, Medicare pays 85% of what is reimbursed to a physician billing directly. 

Researchers said that indirect billing is linked to an undercount of services provided by APCs and, conversely, an exaggeration of services provided by physicians. Understanding how often indirect versus direct billing occurs among APCs could save Medicare money, they explained. 

In 2022, Medicare fee-for-service spending on office-based services delivered during indirectly billed APC-provided encounters was $1.8 billion. If this care was billed directly, Medicare could have saved approximately $270 million, according to the study. 

Additionally, the study found that patterns of indirect billing changed over time, decreasing from about 45% in 2016 to nearly 39% in 2022. Indirect billing as a share of fee-for-service office-based care spending also fell from about 46% in 2026 to almost 41% in 2022. 

However, researchers found that the absolute number of indirectly billed visits increased from 2016 to 2022. 

Indirect billing was more common in Medicare Advantage versus Medicare fee-for-service. Evaluation and management services also accounted for the most indirectly billed services during the study period. 

Nurse practitioners, physician assistants and other APCs are increasingly working in patient care. These clinicians are licensed healthcare professionals who have additional education and clinical training compared to a registered nurse. APCs can independently diagnose and treat patients, including prescribing medications. They can also serve as primary care providers. 

APCs can improve access to care when physicians do not have the capacity to see patients, especially for same-day appointments. The growing APC workforce can also be deployed in underserved areas to increase access to care, particularly as the physician shortage increases. 

However, industry groups like the American Medical Association are leery about expanding the scope of practice for APCs. They want to focus on protecting physician-led, team-based care. Physician supervision is critical for patient safety and expanding APC scope of practice would compromise quality of care, they argue. 

But APCs are increasingly delivering direct patient care as claims data suggests. Understanding the prevalence of APC-provided care is key to improving the accuracy of Medicare payment policy, from quality measure and attribution in alternative payment models to fraud detection algorithms and productivity measurement, researchers said. 

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.