Some things to consider before hiring nurse practitioner

Practice Pointers. By Karen S. Schechter, amednews contributor. Jan. 21, 2002.

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Question I am an ob-gyn in a busy four-physician practice, and I am trying to decide whether it is time to hire a nurse practitioner. Are there any guidelines regarding when it becomes cost-effective to hire one? And what do I need to be aware of if I bring one into my practice?

Answer Physician extenders, such as nurse practitioners, can be an asset to your practice. But as you indicated, you must determine what it will take to turn this additional expense into a profitable venture.

The first question to ask is why you think you need a physician extender. Are you finding yourself spending too much time on administrative activities instead of direct patient care? Are you trying to expand your patient base by opening a second site? Are you trying to cut back on your hours? Your answers to these questions may help you determine if you need a physician extender and what type of skill set would meet your needs most effectively.

For example, if you are looking for help with administrative tasks, returning phone calls and patient education, a registered nurse may be the answer. But if you want someone to help carry part of your patient load and perhaps expand your patient base, then that might merit consideration of a nurse practitioner.

Once you've decided you want a nurse practitioner, you need to determine how you plan to bill for his or her services, review the logistics of having that person in your office or at a separate location and look at the financial impact.

Billing and reimbursement

Medicare provides two mechanisms for reimbursing nurse practitioners: direct billing for services rendered or "incident to." The nurse practitioner can provide services and bill under both.

Under direct billing, nurse practitioners are reimbursed at 80% of the lesser of the actual charge or 85% of the fee schedule amount for physicians (Section 1848). In the case of an assistant at surgery, the reimbursement is 80% of the lesser of the actual charge or 85% of the amount that would otherwise be recognized if performed by a physician who serves as an assistant at surgery. To do direct billing, the nurse practitioner must have a Medicare provider number.

"Incident to" means that the nurse practitioner's services are billed under the physician's provider number. The services are furnished as an integral, albeit incidental, part of the physician's personal professional services in the course of diagnosis or treatment of an injury or illness.

The physician must be involved with a portion of the services billed. Physician involvement may take the form of personal participation in the service or may consist of direct personal supervision coupled with review and subsequent approval of the service notes.

Physicians and nurse practitioners are required to enter into a written collaborative practice arrangement. This document includes protocols or standing orders that are allowed by state statutes and specifies the terms and conditions under which the latter are to provide professional services to patients.

Other payers typically follow the billing and reimbursement guidelines mandated by the state's insurance commission. Typically, these payers follow expanded "incident to" guidelines.

Logistics

A physician does not have to be in the same location for nurse practitioners to receive reimbursement for their services. The physician relationship for reimbursement is defined by the requirements in each state's Nurse Practice Act and Rules and Regulation for nurse practitioners and/or insurance commission.

The rules for "incident to" services are limited to services provided as a follow-up to the physician's plan of care. If "incident to" services are provided by a nurse practitioner, the physician must be on site and the visit cannot be with a new patient or with an old patient with a new problem.

These rules may impact how you want to use the nurse practitioner and whether it's feasible to set up that person at a separate site. If you have a small Medicare patient population it may not matter where the nurse practitioner is located -- the practitioner either would not see Medicare patients or see them only at your site.

Cost-benefit analysis

Nurse practitioner salaries range from $50,000 to $65,0000, depending on experience, specialty and geographic location. This does not include benefits and overhead, which may include additional office staff to handle telephone calls, appointment scheduling and billing tasks. If the nurse practitioner works out of another location, then there may be additional costs incurred.

Research indicates that it will take about six months for a physician to break even on the investment in a nurse practitioner. After 12 months, losses of the first six months should be recouped, and during the second year of employment, the nurse practitioner should be making a profit.

Therefore, it will be important to look at your income and expenses for the past year and make cash flow projections for the following 12 to 24 months, incorporating anticipated revenues and expenses associated with adding a nurse practitioner.

Not for all

Nurse practitioners, or other physician extenders, are not for everyone. You must be willing to give up some income during the first six to 12 months as the nurse practitioner becomes integrated into your practice. As a physician, you must supervise and delegate effectively.

If your reason for hiring a nurse practitioner is to generate revenue, then you must assume additional responsibilities (and dedicate the associated time) for reviewing documentation and following up with the additional patients.

But if you are satisfied with your income, and you are seeing more patients than your preferred lifestyle can abide by, it may be worth it to bring on a nurse practitioner to help lighten your patient load and allow you more time away from the office.

Practice Pointers is provided by the St. Louis-based accounting and management consulting firm Stone Carlie & Co. LLC. The author and publisher are not rendering professional advice and assume no liability in connection with its use. Consult with professional advisers regarding your specific situation. Readers are invited to submit questions to the Business Editor (bob.cook@ama-assn.org).