Billing for NPs and PAs: The 85% Rule and How to Maximize Reimbursement
When a nurse practitioner or PA bills under their own NPI, Medicare pays 85% of the physician rate. Here is when that 15% haircut applies, when incident-to or split/shared can recover it, and how to stay compliant.
Nurse practitioners and physician assistants now deliver a huge share of care — but Medicare still pays their services at 85% of the physician rate when billed under their own NPI. Multiply that 15% gap across a full schedule and it is one of the most consequential billing decisions a practice makes. The goal isn't to dodge it recklessly; it's to know exactly when 100% is legitimately available.
The 85% rule in plain terms
Bill an NP or PA service under the NPP's NPI and Medicare pays 85% of the fee schedule. That is the default — clean, low-risk, and correct for new patients, new problems, and any time supervision conditions aren't met. The question is simply whether a compliant path to 100% exists for a given encounter.
Three billing paths
| Path | Pays | Where |
|---|---|---|
| NPP's own NPI | 85% | Anywhere — always allowed |
| Incident-to | 100% | Office, strict conditions |
| Split/shared | 100% | Facility, physician does substantive portion |
How to choose the right path
- New patient or new problem? Bill under the NPP at 85%. Incident-to is off the table.
- Established patient, established plan, physician supervising? Incident-to at 100% may apply in the office.
- Hospital or facility encounter shared with a physician? Split/shared can reach 100% when the physician performs the substantive portion.
The 15% isn't a loophole to chase — it's a compliance decision to document. Reach for 100% only when the conditions genuinely hold.
Staying compliant (and paid)
The practices that optimize NPP reimbursement without inviting audits do three things: they train providers on which encounters qualify, they document supervision and substantive-portion details in real time, and they default to 85% whenever there's doubt. That balance — capture the 100% you've earned, never the 100% you can't defend — is exactly what a disciplined revenue cycle delivers.
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The bottom line
The 85% rule is unavoidable, but it isn't the whole story. Know your three paths, match each encounter to the right one, document relentlessly, and default to 85% when unsure. Do that and you capture every compliant dollar without buying an audit. Start with a free billing audit.
Sources
Frequently asked questions
When services are billed under a nurse practitioner’s or physician assistant’s own NPI, Medicare reimburses at 85% of the physician fee schedule amount. It is a long-standing payment differential for non-physician practitioners.
Two compliant paths can reach 100%: incident-to billing in the office (when all conditions are met — established patient, established plan, proper supervision) and split/shared visits in a facility (when the physician performs the substantive portion). Neither works for a new patient or new problem under incident-to.
No. Incident-to is heavily audited, and billing at 100% when conditions were not met invites recoupment. Many practices intentionally bill under the NPP’s NPI at 85% to stay clean, treating the 15% as the cost of compliance.
Not always. Credentialing and reimbursement for NPs and PAs vary by commercial payer — some pay full rate, some apply their own differential, and some require the NPP be individually credentialed. Check each contract.
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