Cost of Care: NPs vs Physicians

Tom G. Bartol, NP


March 30, 2016

Comparing the Cost of Care Provided to Medicare Beneficiaries Assigned to Primary Care Nurse Practitioners and Physicians

Perloff J, DesRoches CM, Buerhaus P
Health Serv Res. 2015 Dec 27. [Epub ahead of print]

Medicare Claims Paid and Provider Type

This study used a retrospective cohort design to compare the amount Medicare paid on claims submitted by nurse practitioners (NPs) billing under their own National Provider Identification numbers with the amount paid to primary care physicians (PCPs) in inpatient and ambulatory settings over a 12-month period. Propensity-score regression was used to adjust for clinical and socioeconomic differences among beneficiaries, which equalized the clinical complexity, age, and other demographic factors of patients. Significant effort was put into attribution of the primary care clinician to ensure that the NP or PCP had a meaningful clinical relationship with the beneficiary. Dollar-adjusted relative value units were calculated to account for the difference in Medicare reimbursement rates for PCPs and NPs.

The findings indicate that across all payment categories, Medicare paid amounts are consistently lower for NP-assigned beneficiaries than for PCP-assigned beneficiaries (Table).

Table. Payments to PCPs vs NPs

Payment Type PCP NP Difference
Inpatient services $22,898 $20,380 -11%
Part B services $2955 $2433 -18%
Outpatient E & M $705 $498 -29%
Adjusted work RVU $1911 $1629 -15%
E & M RVU $713 $585 -18%

E&M = evaluation and management; NP = nurse practitioner; PCP = primary care physician; RVU = relative value unit

This study suggests that increasing the use of NPs to meet the demand for primary care services for Medicare beneficiaries is unlikely to cost more and may actually reduce costs.


Many studies have demonstrated that with respect to clinical outcomes and patient satisfaction levels, NPs are similar to physicians.[1,2] This study shows that the cost of NP care, at least for Medicare beneficiaries, is not higher than physician care, and is probably lower.

Some might argue that NP care is cheaper because the care is not as good, that NPs have fewer years of education than physicians, and that the extra cost of physician care means better care. However, more years of education does not inherently equate to better care.[3] What this study indicates is that NPs may be providing excellent care at a better price, or more efficient care.

The average number of Medicare beneficiaries seen by each PCP was double that seen by each NP (367 vs 183). Some would say that PCPs work more quickly, but the reason may be that NPs choose to spend more time with their patients to give more in-depth care. Our fee-for-service reimbursement system rewards those who see more patients and spend less time with them, but it may not enhance quality and efficiency of care, and can result in the patient feeling rushed. Shorter visits may result in more medications prescribed, more diagnostic tests ordered, and more referrals requested because the clinician has not spent enough time with the patient to elicit other causes for the patient's symptoms that can be managed without medications or diagnostic tests.

Three years ago in my family practice setting, I changed from 15-minute appointments to 30-minute appointments. This gave me time to get to know my patients better, and to have time to understand whether chest pain might be caused by anxiety or cardiac issues, or whether rising blood sugar levels meant that the patient needed more medications for diabetes or was experiencing issues at home that were resulting in poorer eating habits, stress, or unhealthy coping behaviors. Since increasing visit length, the number of prescriptions, diagnostic tests and referrals attributed to me for all of my patients has declined significantly. Using electronic health record data, I have found I write about one half as many prescriptions as the average clinician in our multiclinic practice (with 57 total clinicians), order less than one third the number of diagnostic tests, and make less than one half as many referrals.

The goal in healthcare must not be to give cheaper care, but to give more efficient care. Better patient-centered care, where the patient is involved and feels heard and understood, will result in the "side effect" of lower-cost care. NPs are not cheaper. They have been trained to go beyond the medical condition or symptoms to the biological and psychosocial factors that may be affecting each person. This is the heart of nursing. Investing more time in patient care is a key to achieving the triple aim of quality, cost, and patient experience.


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