Medicare’s Change to the Split/Shared Billing Rules: Implications for Physician Compensation Planning

1.  What is a split/shared service?

This term refers to evaluation and management services that are performed partly by a physician and partly by a non-physician practitioner (NPP) who is in the same practice group as the physician. NPPs performing split/shared services include nurse practitioners, physician assistants, certified nurse specialists and certified nurse midwives. Importantly, the term “split/shared service” refers to evaluation and management services that are performed in a hospital or facility setting, not a physician office setting.

2. What is the split/shared services rule change that everyone is talking about?

The rule change applies to when and under what circumstances a party may bill Medicare for a split/shared service provided to a Medicare beneficiary.

As background, the entirety of a split/shared service can be billed under either the physician’s provider number or the NPP’s provider number, but not both. If the service is billed under the NPP’s provider number as an NPP service, the level of payment for the service will be lower (paid at 85% of the allowable fee schedule). Historically, and even after the rule change, the provider who performs the “substantive portion” of the service is credited with the entirety of the service for Medicare billing purposes. For calendar year 2023, with a few exceptions, the “substantive portion” of a service is comprised of the entirety of any of the following:

• Clinical history; OR
• Physical examination; OR
• Medical decision-making; OR
• Spending more than half the total time of the service.

If the new rule goes into effect in January 2024 as planned, the “substantive portion” of a split/shared service will be defined exclusively by spending more than half the total time of the service. Under this rule change, providers performing split/shared services will have to track time, and the provider that spends the most time is the provider that is allowed to bill Medicare for the entirety of the service.

3. What split/shared activities count toward total time under the new rule?

Activities that can be counted toward the evaluation and management services under Medicare’s billing guidelines include the following services when performed on the same calendar day:

• Preparing to see the patient
• Obtaining and/or reviewing a medical history of the patient
• Performing a medically necessary examination of the patient
• Counseling or educating the patient or a family member or caregiver of the patient
• Ordering medications, tests, or procedures, including entering the order into the patient’s record
• Consulting with other providers, as long as that consultation is not being billed separately as another service
• Documenting clinical information in the patient’s record
• Interpreting test results and communicating them to the patient, if not part of a separately billed service
• Coordinating care, if this is not something that is separately billed and paid as part of another service

There is no requirement that both providers performing a split/shared service see the patient face to face. However, the provider performing the substantive portion of the service, and therefore serving as the billing provider for the service, must authenticate the note via an approved signature.

Any consultations, care coordination, test interpretations and procedures that are part of a separately paid service do not count toward the evaluation and management service that constitutes the split/shared service. Also, time spent by physician staff other than the NPP does not count toward either provider’s time (only the personally performed time counts). Documentation should generally indicate that total time excludes time spent on other separately reportable services.

4. Why/how does the rule change create questions for future provider compensation?

Many physicians are compensated on the basis of work relative value units (wRVUs), which are the measures of productivity under Medicare billing rules. Providers who have historically been credited with significant wRVUs for split/shared services on the basis of something other than providing the majority of the time may see their recorded productivity measures change as a result of the rule change, and their compensation could change as a result. In some cases, physicians who are not credited the bulk of the time in split/shared services will see reductions in wRVUs credited to them, and that will mean a reduction in their compensation if they have a productivity-based compensation plan, and that compensation plan does not change. For NPPs who are paid on the basis of wRVUs, there may be an increase in compensation if more split/shared services are credited to them than under the old rule.

With respect to both physicians and NPPs, the questions are threefold:

a) Will compensation amounts change if compensation plans are not adjusted to account for the rule change?

b) Can adjustments to compensation plans normalize for any compensation changes that may result from the new rule?

c) If normalizing changes in compensation plans are possible, should those normalizing changes be made? Or is it more appropriate that compensation amounts change going forward?

5. What can or should organizations be considering in regard to the split/shared rule change and future provider compensation plans?

Medicare billing rule compliance and compensation compliance are closely related in a number of ways, but they are, in fact, separate concerns that can, and sometimes should be, addressed separately. Generally speaking, provider compensation should be of fair market value and commercially reasonable for the services that are personally performed by the provider. To the extent that employers can reasonably measure the extent of services personally performed in the context of a split/shared service, each employed provider can and reasonably should be paid for the services that they personally performed, even if the billed service in its entirety must be credited to only one or the other provider for purposes of Medicare billing.

As noted above, there are established guidelines for activities that can be credited to a visit for purposes of billing, and these may be helpful for allocating time and compensation in the context of split/shared services. Identifying who performed each of the allowed elements of a service and applying time studies or logs to establish relative time associated with each element may help parties to reasonably assign time, work, and compensation value for a split/shared service. In some cases, compensation value might be appropriately assigned for work that is not allowed to be counted for billing purposes, given that compensation compliance and billing compliance are separate.

The rule change regarding split/shared services may create an additional impetus and opportunity to test changes to compensation plans. Some parties may be developing methods to allocate wRVUs to reflect each provider’s actual portion of total work, as well as adjusting conversion factors (the dollar values assigned to each wRVU or other productivity unit) to account for changes in Medicare wRVU allocations that may otherwise result in disparate or unreasonable compensation from year to year. Given persisting shortages of providers in the market, and difficulties that many hospitals and health systems have had recruiting and retaining providers, parties may need to be very thoughtful at this time about how they are going to pay employed and contracted providers going forward.

Summary Points:
a) Starting in calendar year 2024, the new split/shared service billing rule may affect the crediting of wRVUs for providers who have historically provided split/shared services.

b) Changes in crediting of wRVUs could have significant impact on the measures of productivity that have historically been used to determine productivity-based compensation for providers, and therefore, could affect provider compensation amounts if compensation plans are not modified.

c) Because of 1 and 2, and in the context of the many other regulatory changes that are occurring and the general shift to value-based payment, the change in the rule regarding Medicare billing of split/shared services may be a reason and impetus to think carefully about changes to provider compensation plans in certain specialties, and specifically about how personally performed services can be appropriately measured, credited and paid in those specialties going forward.