PA Direct Payments Support Greater Healthcare Equity and Access

When the Centers for Medicare & Medicaid Services announced it would implement direct payment to physician associates (PAs) as part of its 2022 Physician Fee schedule, many PAs rejoiced.

Sondra DePalma, DHSc, PA-C, vice president of Reimbursement and Professional Practice at the American Academy of Physician Associates (AAPA), said that prior to that ruling, Medicare allowed nearly every type of healthcare professional to directly bill and receive reimbursement for services — including nurse practitioners and physical therapists. PAs, she said, were the “notable exception.”

“Medicare often sets the gold standard for payment within healthcare — and it’s often followed by Medicaid programs and commercial payers,” she explained. “That change was important to the PA community, particularly for PAs who want to work as independent contractors, work in flexible staffing models within health systems, and reassign payments to someone other than employers, and those who want to 100% own their own practices or corporations and want to receive payment for the services provided there.”

Private Practice Arrangements

DePalma said that the AAPA does not have a full accounting of how many state Medicaid programs, and commercial payers have followed suit — they are currently conducting a survey — and private payers may offer direct reimbursement depending on whether state laws allow them to do so. However, one big question was whether PAs were interested in the “innovative and nontraditional” practice arrangements that direct billing and reimbursement support.

A 2023 National Commission on Certification of Physician Assistants survey found that only about 6% of PAs were full or part owners of a practice or worked as independent contractors. And many PAs who do own a practice ask patients to pay them directly to forego insurance hassles. Denise Wald, a PA with 27 years of experience in New York State, said that having worked for a family practice, she’s seen just how difficult billing can be.

“The structure is so complicated and layered,” she said. “Private physicians usually hire people who are specialized in billing and coding. Even if all the payers were to offer direct reimbursement, that’s an extra cost that PAs would have to manage. I see a lot of younger PAs who are interested in starting their own businesses, but I don’t see a lot of them wanting to tackle the billing side of things.”

Direct Payments to Promote Healthcare Access and Equity

Those layers might be more manageable if PAs were authorized to bill for and receive direct payment for their services — regardless of the type of payer organization providing it. The AAPA currently has model state legislation encouraging states to adapt to support that. DePalma said it’s an ongoing advocacy effort for the organization.

“From our perspective, payment rules should be indiscriminate if the provider is trained, credentialed, licensed, and authorized,” she said. “Given that we know that PAs, in particular, tend to provide care in underserved communities, like rural areas, we want to make sure that PAs are not encumbered and can provide care to the people who need it.”

Ed Friedmann, PA-C, who owns a rural health clinic in Redfield, Iowa, approximately 36 miles east of Des Moines, agreed. He’s been the sole healthcare provider for the community of 835 residents for more than three decades. Prior to the 2022 Medicare rule change — and the state Medicaid program following their lead — he was able to get some services covered as a certified Rural Health Clinic. But other services and tests were not covered, which cost his practice $5000 or more each year.

“They not only denied coverage for the Medicare Part B services but they also lowered our Part A payments because we had to carve out the cost of providing these services for our patients,” he said. “Having direct payment is important to keep clinics like mine open. Because I’m the only one here providing care to the people in Redfield. And, with this rule in place, maybe when I retire, I can pass on my clinic to another PA so the people here can continue to get care,” Friedmann told Medscape Medical News.

While DePalma said that it’s only been 2 years since Medicare allowed direct payments to PAs — and there are both legislative and logistical hurdles for payers to make sure that all PAs can benefit from the change — she said that she is heartened by the fact that it will open up new opportunities for PAs in the future.

“We’ve definitely heard from more PAs who are inquiring about opening their own practices,” she said. “The numbers may not be that high right now, but if direct reimbursement is available, we may see more PAs starting their own practices or working in different types of staffing arrangements that can provide increased benefits and access.”

Friedmann is happy that direct payments are helping him provide better care to his patients and basic healthcare services to those who may be unable to afford them.

“Having an extra $5000 a year may not seem like much,” he said. “But this will help improve access to medical care by simplifying billing. It treats PAs like other practitioners. And, most importantly, it helps practices like ours to continue using a sliding income scale for our patients without insurance or high deductibles.”

Kayt Sukel is a healthcare and science writer based outside Houston.