“Physician services” is a foundational concept describing the professional work provided to a patient, though it often causes confusion when reviewing medical bills or insurance documents. This phrase focuses on the expertise utilized for a patient’s diagnosis and treatment, rather than the setting where care occurs. Clarifying this definition is important because it dictates how services are coded, billed, and reimbursed by insurance companies and government payers.
Defining Physician Services
Physician services are formally defined as the services provided personally by a licensed medical doctor (MD) or doctor of osteopathy (DO), or those services performed under their direct supervision and billed under their authority. This definition centers on the professional component of care: the specialized knowledge, skill, and judgment of the medical practitioner. This professional work, such as interpreting a diagnostic test or performing a physical exam, is what the physician is paid for.
This service is distinct from the physical resources used during the patient encounter. For example, physician services cover the medical decision-making for treating an infection, but not the cost of the office space, supplies, or staff salaries. Professional billing uses standardized Current Procedural Terminology (CPT) codes to categorize the specific work performed. The professional bill, submitted on a CMS-1500 claim form, represents the physician’s fee for their expertise.
The definition also includes services provided by qualified health professionals, such as nurse practitioners (NPs) or physician assistants (PAs). These mid-level practitioners can have their services billed as physician services through “incident to” billing. This allows the practice to be reimbursed for the non-physician provider’s work, provided supervision requirements are met. The service must be related to an established diagnosis or treatment plan, and the physician must remain actively involved in the patient’s care.
Scope of Clinical Activities
The scope of activities covered by physician services is broad, encompassing nearly all direct patient care related to diagnosis and treatment.
Evaluation and Management (E&M) Services
A major category is Evaluation and Management (E&M) services, which include office visits, hospital rounds, and consultations. E&M services are classified based on the complexity of the medical decision-making, the extent of the patient history taken, and the physical examination performed. For instance, an initial consultation for a complex, undiagnosed condition is a higher-level E&M service than a routine annual physical.
Diagnostic Interpretation
Another core activity is the interpretation of diagnostic studies, which requires specialized knowledge to translate data into a clinical assessment. When a patient undergoes an X-ray, MRI, or laboratory test, the physician’s service covers the intellectual work of reviewing the results and generating a formal report. This professional review is separate from the technical component that covers machine operation and supply costs. Physician services also include managing chronic diseases, requiring ongoing analysis of medication efficacy and adjustments to treatment plans.
Therapeutic and Procedural Services
Therapeutic and procedural services also fall under physician services. This includes procedures ranging from minor office-based procedures, such as suturing a laceration or removing a skin lesion, to complex surgical operations. For a surgical procedure, the physician service covers the surgeon’s time, skill, and pre- and post-operative care, typically bundled into a single global fee.
Distinguishing Services Based on Location and Provider
A common point of confusion in billing is the distinction between the professional fee and the facility fee, which relates to where the service is delivered. When a physician performs a service in an independent office setting, the physician service fee generally covers both the professional work and the practice expenses. However, when the same service occurs in a hospital outpatient department or a surgery center, the bill is split into two components.
The physician receives the professional fee for their expertise, which is the physician service itself. The facility generates a separate bill, known as the facility fee or technical component, which covers the use of the room, equipment, supplies, and non-physician staff. For example, if a cardiologist performs a stress test at a hospital, the cardiologist bills for the physician service of supervising and interpreting the results, while the hospital bills separately for the use of the equipment and nursing staff. This separation explains why a patient may receive two distinct bills for a single hospital visit.
The provider performing the service also impacts billing, particularly with mid-level practitioners. Services provided by NPs or PAs can be billed under the supervising physician’s National Provider Identifier (NPI) when “incident to” requirements are strictly met. This rule applies only in the non-facility setting, such as a private office. It requires the physician to be physically present in the office suite and immediately available for assistance. If the mid-level practitioner sees a patient for a new problem or a new patient entirely, the service must be billed under the practitioner’s own NPI at a lower reimbursement rate.