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Physician and Nurse Reimbursement

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Carolyn Melby, DNSc, CNS


This purpose of this article is to provide an argument for why advanced practice nurses should be reimbursed for the full value of their services as primary care providers, and why it should result in economic parity with physicians who are primary care providers.

Citation: Melby, C., CNS (June 10, 1998). "Physician and Nurse Reimbursement." Online Journal of Issues in Nursing. Vol. 3, No. 1 Manuscript 3. Available:


Since obtaining the promise of direct reimbursement as primary care providers at 85% of the physician rate in the Balanced Budget Act of 1997, nurse practitioners (NP) have already begun asking, how soon will we be reimbursed at 100% instead of 85% by Medicare? I have a sense that we are working backward instead of forward when I realize that we have only obtained the promise and not the reality of 85% direct reimbursement, and that promise won't become reality until July 1, 1998, if then. It is extremely important that advanced practice nurses examine their own thinking about reimbursement and understand what is at stake.

In order to understand where we are and why, and where to go next, let us review the authority of medicine in the past, changes in the nature and values of today's marketplace, and the differences between the work of medicine and that of nursing.

Authority and Economic Power

To understand why advanced practice nurses who are over 40 (which is still the majority of us) have difficulty thinking they should be reimbursed the same as physicians it is important to understand the cultural and social authority of the medical establishment. Starr (1982, p.13) defines cultural authority as that which "entails the construction of reality through definitions of fact and value" while social authority "involves the control of action through the giving of commands." When physicians fill our sick slips, commit persons to mental hospitals, state who is disabled, and pronounce people dead, they define the reality of what is health, illness, death or disability, and are exercising enormous cultural power.

Nurses have had to establish their worth in the face of enormous cultural and social pressure to acknowledge physicians as the authorities and hence those who should be highly reimbursed.

When physicians give orders which are recognized as legitimate according to the prevailing rules of society they exercise an equally enormous social authority. Historically, both types of authority were enjoyed by physicians over nurses and other health care workers, as well as over society at large. The medical establishment thus established their value in the marketplace and easily maintained control of licensure requirements and prescriptive authority and established a virtual monopoly on the knowledge, skills, and authority to deliver health care.

Facing the established and received world view of medicine as authorities over the practice of health care, advanced practice nurses have had a difficult time establishing who they are and what their value should be in the marketplace. Nurses have had to establish their worth in the face of enormous cultural and social pressure to acknowledge physicians as the authorities and hence those who should be highly reimbursed.

The infancy of the role of advanced practice nurses coincided with the women's liberation movement. The expansion of nursing had to contend with women, who as declared feminists, derided nursing as a traditional occupation for women with little or no power and a career that young women should not aspire to if they were serious and intelligent about their future. Nurses themselves were not exempt from the feminist thinking of the late 70s and 80s which viewed traditional male professions such as medicine and law as the only worthy goals for ambitious and intelligent women and spurned nursing as a second class profession, or not a profession at all. Intelligent young women bent on achievement had a difficult decision in selecting nursing as a career. For those who did choose nursing as a career, the rise of the nurse practitioner role was a career that promised greater autonomy, self-determination, and career satisfaction.

Nurses have long felt that they had a great deal to offer that was of value, but in the recent past have not been convinced that their value was equal to that of physicians. This is because the wrong yardstick has been used to measure our value.

Nurses understood what Claire Fagin (1990) meant when she declared, "The [nursing] profession has the largest critical mass of women leaders in the world active in public life whose vantage point is that of a traditional profession which prides itself on skillfully using knowledge and compassion to care for sick peoples and to promote health." Nurses were thrilled at the opportunity to expand their vantage point without leaving the profession of nursing.

Nurses have long felt that they had a great deal to offer that was of value, but in the recent past have not been convinced that their value was equal to that of physicians. This is because the wrong yardstick has been used to measure our value. A new paradigm of health care delivery is being realized and our reimbursement should not be compared to physicians, but should be based on our distinct value based on what we contribute to health, wellness, and the prevention and cure of illness as primary care providers.

The Changing Marketplace

Although the public is seeking and obtains health care from alternative health care providers to the reported tune of $41 billion per year, the medical establishment is not going to give up their authority and hence their economic advantage without a protracted struggle. Medicine is being challenged on every side, and physicians are angry and bitter about the their loss of economic clout. They understand that their monopoly on health care is lost when others gain prescriptive and admitting privileges. Hence this struggle is not about professional competency (although these points will be made in an effort to control prescriptive authority) but about loss of economic power. Medicine will assert professionalism as a basis of solidarity for resisting forces that threaten their social and economic position.

The information era has exploded and health care information is available through all the media outlets as well as the internet, and consumers have now been given many new alternatives in health care. Charles Longino (1997) states, "the biomedical model is cracking under the strains of social change. The model was successful at alleviating most causes of acute disease such as infections. But it does poorly in handling chronic disease.... The high growth sector of the broad healthcare economy is no longer limited to orthodox Western medicine."

The media is replete with articles and television programs on herbal medicine, over the counter medicine use, aromatherapy, massage, acupuncture and a plethora of cures. Medical literature is agape at this phenomena. Medical doctors are huddled in groups across the country trying to figure out what to do about this. Americans are saying, through their use of alternative medicine, that they are not finding wellness with modern medicine, they are not finding cures for what ails them, hence they are not rewarding traditional medicine with their business. They are looking elsewhere.

Advanced practice nurses must look to the marketplace and decide their value based on what do people now value in health care and what advanced practice nurses offer.

Value in the Marketplace

Markets do not obey the organized judgment of any group of sellers. A market is a system of exchange in which goods and services are bought and sold at going prices. Powerful sellers do not enjoy losing control of the market. Power abhors competition. Professional organization is one form resistance to the market can take. Medicine established market power by organizing and controlling market forces rather than being controlled by them (Fuchs, 1990). But medicine is no longer able to control the market, because buyers have found Western medicine wanting and are looking elsewhere to buy what they need to fix their problems.

Cultural influences have a powerful effect on people's sense of social order and the way things should be.

But medicine is no longer able to control the market, because buyers have found Western medicine wanting and are looking elsewhere to buy what they need to fix their problems.

As the culture has changed to allow women a fairer chance at competition in the market place the culture has began to shift in their attitudes about what people in general should be paid, what is fair, and a reevaluation of what a certain job is worth to society has ensued. In the new age of information, traditional jobs of such as cleaning and garbage pickup have come to be valued slightly more, and the wages of the highest paid have been called into question. A movement of equal pay for equal work has arisen. Salaries have changed, the minimum wage has risen and the doctors salaries have fallen. Ideas about relative worth and value are in flux.

Health Care Competition and Regulation

Health care is produced like other goods and services with resources that are scarce relative to human wants. Most people believe that the changes in finance and reimbursement over the last few years have moved health care markets toward a more competitive structure., Whether this is good for health care delivery or not, this seems to be the case. Fuchs (1990) states that perfect competition constitutes an ideal in the sense that if it prevailed in every market, resources would be allocated in a socially optimal way. A known consequence of competition is a reduction in profit.

Regulation is essentially a political process. It constitutes the impositions of influence and power by those with a political majority on those who have customarily exercised power in a given sector of economic activity. Regulation deals poorly with qualitative issues and tends to penalize the very best or most efficient institutions while focusing on the worst. The market on the other hand tends to focus on efficiency, economy and consumer choice. Regulators tend to focus on access, equity, and governmental budget (Fuchs, 1990). Basic value choices are at issue.

In 1986 the Office of Technology Assessment did a study of two decades of research on nurse practitioners which concluded "within their areas of competence nurse practitioners provide care whose quality is equivalent to that of care provided by physicians", further, nurse practitioners are "more adept at providing services that depend on communication with patients and preventive action" (U.S. Congress, Office of Technology Assessment, 1986). Despite what amounts to a ringing declaration of the worth and value of nurse practitioners that validates the focus of advanced nurse practice, advanced practice nurses have been reluctant to defend their value in terms of reimbursement.

What Are We Being Reimbursed For?

A fair way to judge what NPs should be reimbursed against what physicians are reimbursed is to look closely at what work both groups of wage earners actually do. Since the medical model of illness care is presently reimbursed at higher wages than the nursing model of wellness and preventive care we need to look closely at the differences between the models, and at what is currently valued by society.

Both models begin their work with an assessment of the presenting problem in a context of a review of systems. Medicine concentrates on reported symptoms from a review of the body's anatomy and physiology. Nursing focuses on this same report but looks through different lenses, the lenses of the individual's culture, community, family, and work, and what the client's illness means to them. Medicine and nursing both then proceed to an objective examination of the patient looking for signs of illness through a disciplined procedure of physical examination. Both carefully look for indications of physical disease, but again the nurse, with her holistic approach, looks for other connections, between job, family, community, and culture that invest the presenting problem with a meaning that can only be known to the patient, and cannot be found with physical examination only. Next medicine and nursing proceed to the diagnosis. Using only the medical model presents great limitation to this process. The diagnosis can only be made in terms of the presenting physical evidence, such as abdominal pain, or seizure. The nursing model would describe the physical evidence but place it in the context of the person's work, family, community and culture. The plan of care for medicine involves laboratory work, medical procedures, and pharmaceuticals. The nursing plan of care involves all of those as well as the individual's mind, family, community and culture support and cure.

What is Valued by Today's Consumer

What then is valued by today's health care consumer? Healthcare consumers are speaking up in articles, TV news stories, and on the internet and asking for increased conversation about prevention and treatment of their healthcare needs. The idea of healthcare consumers accepting traditional Western medicine as the only solution to their ills is past. Millions of consumers are seeking out health care providers who are willing to talk to them and use alternative methods of treatment. Pharmaceuticals have begun marketing prescription drugs directly to the consumer through television and newspapers with the caveat of "ask your doctor."

Advanced practice nurses have defined our niche in the market and what we have to offer is what consumers are desperately seeking and paying for out of their pocket. We deliver primary care that responds to the needs of consumers for discussion, information sharing, and the use of holistic health remedies.


As a new generation of advanced practice nurses enters the workplace new thinking is being generated. Indeed, a new paradigm regarding our value is being built as advanced practice nurses take full possession of their future. We are thinking "out of the box". Healthcare has become a competitive industry and the key to survival is the ability to sustain a competitive advantage by understanding our value in the market. We offer enormous value for the dollar, and we must assert that and expect to be reimbursed for it. This clearly means that we must demand to be reimbursed equally with all other providers of primary care.


Carolyn S. Melby, DNSc, CNS

Carolyn S. Melby, DNSc, CNS, is in private practice with Preventive Health Care Network Services and has an office on Capital Hill in Washington, DC. She is a clinical preceptor for nurse practitioner students in the DC metropolitan area and is active in advancing the role of Nurse Practitioners in managed care and speaks and writes on the subject. Before assuming her present position she was an Assistant Professor and Director of the Nurse Practitioner Program at Howard University, Washington, DC, and has also taught at several other universities. She has been active in politics and worked in senior positions in four presidential campaigns


Aiken, L. & Fagin, C. (Eds.) (1992). Charting Nursing's Future: Agenda for the 1990's. New York: J.B. Lippincott.

Fagin, C. M. (1990). The visible problems of an "invisible" profession: The crisis and challenge for nursing. In P. R. Lee & C. L. Estes (Eds.), The Nation's Health (pp. 190-200). Boston, MA: Jones and Bartlett.

Fuchs, V. (1990). Competition vs. regulation in The Nation's Health. Boston: Jones and Bartlett.

Longino, C. F., (1997). Beyond the body: An emerging medical paradigm. American Demographics, 19(12), 14-19.

Starr, P. (1982). The social transformation of American medicine. New York: Basis Books, Inc.

U.S. Congress, Office of Technology Assessment (1986, December). Nurse practitioners, physician's assistants, and certified nurse midwives: A policy analysis (Health Technology Case Study 37), OTA-HCS-37 (p.5). Washington, DC: U.S. Government Printing Office.

© 1998 Online Journal of Issues in Nursing
Article published June 10, 1998.