Survival Guide: How to Stay Compliant with the “Incident

Survival Guide:

How to Stay Compliant with the “Incident To” Rule.

Exploratory Paper

Pamela S. Setufe, MHA, FACMPE, CPCO, CPCS

July 30, 2019

This paper is being submitted in partial fulfillments of the requirements of Fellowship in

the American College of Medical Practice Executives.

Survival Guide: How to Stay Compliant with the “Incident To” Rule.

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ABSTRACT

Incident To billing provides both an opportunity and a level of risk for medical practices as they

incorporate the use of Non-Physician Practitioners. Understanding the guidelines and how best

to ensure appropriate use, documentation, and billing is critical. This paper provides an

explanation of “Incident To” regulatory guidelines and a practical method of implementation to

ensure compliance with the rule.

INTRODUCTION

The era of uncertainty in healthcare today presents a challenge for medical practices

throughout the country. The current trend in declining reimbursements and rising costs limit access

to care as medical practices scramble to find physicians to meet the volume of services demanded.

To run a cost-effective, efficient practice and to be successful in this paradigm shift, the need to

use Non-Physician Practitioners (NPP) is greater than ever before. NPPs include Physician

Assistants (PA), Nurse Practitioners (NP), Certified Registered Nurse Anesthetics (CRNA),

Clinical Nurse Specialists (CNS), Certified Nurse Midwives (CNM) and those of similar training

who practice in collaboration with physicians or under a physician’s supervision.

The services provided by NPPs are often “incident-to” or shared services. Per the Medicare

Benefit Policy Manual, Chapter 15, Section 60, “incident-to a physician’s professional services

means that the services or supplies are furnished as an integral, although incidental, part of the

physician’s personal professional services in the course of diagnosis or treatment of an injury or

illness.” (See §60.1). These services, even though not performed by the physician, are billed under

the physician’s National Practitioner Identification (NPI) number to Medicare as if it was the

physician who performed them, and paid accordingly. While the primary role of most NPPs is to

assist physicians with patients, they also see patients in the absence of the physician and bill for

these services under their own NPI. Furthermore, “the advent of managed care, with a shift to


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capitation, spurred much of this development by creating incentives to save costs by using the least

expensive, best-trained person to meet the patient’s needs, while saving the physician for his or her

highest and best use.” (Gosfield, 2001).

By employing NPPs to provide services “incident to” a physician’s services, medical

practices are able to increase access to care and the number of patients for which they can receive

100% reimbursement of the Medicare Physician Fee Schedule (MPFS), instead of 85% of the

MPFS if billed under the NPP’s NPI. “Failing to bill for ‘incident to’ services can cost a practice

thousands of dollars” (Gosfield, 2001) over time. The challenges of accurately billing for the

services provided by NPPs under the “Incident to” rule are concerns faced by many medical

practices who accept Medicare as a form of payment.

Since “Incident to” billing was developed by the Centers of Medicare and Medicaid

Services (CMS), not all payors follow these guidelines. Guidelines vary by payors and by states;

therefore, knowing your state and payor regulations regarding “incident-to” billing is vital. In

addition, the Health and Human Services (HHS) Office of Inspector General (OIG) has made

proper billing of NPP services a top priority over the past several years, making a greater

understanding of this rule crucial.

The purpose of this paper is to deliver a better understanding of Medicare coverage

guidelines as they relate to “Incident to” billing for NPP services and the implications of not

following these guidelines to ensure accurate billing and compliance. As part of this goal, the paper

will inform medical practice executives on the advantages and disadvantages of billing “incident

to” and its role in a practice’s overall compliance plan.

Extensive research concerning the “Incident To” Rule was conducted utilizing state and

federal government resources. Information from CMS and the OIG websites was a particular focus,

since both entities are charged with enforcing laws that pertain to federal health care program

business, including fraud prevention.


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In addition, a thorough review of professional journal articles and internet-based resources

and personal insight and opinions were used as information sources for the paper. A particularly

useful resource was the literature of professional associations and advocacy groups. Materials were

reviewed from organizations such as the Medical Group Management Association (MGMA); the

American Medical Association (AMA); the American Academy of Family Physicians (AAFP); the

Texas Medical Board (TMB); the American College of Surgeons; the Association of American

Medical Colleges (AAMC) and the American Association of Professional Coders (AAPC).

BACKGROUND

The perception of physician shortage in the United States is widespread. Since the 1960s,

the United States recognized that there was a shortage of primary care physicians, and therefore,

opportunities such as the Physician Assistant professions were created to improve and expand

access to health care all over the nation. Based on new data published on April 11, 2018 by the

Association of American Medical Colleges, “the United States could see a shortage of over 120,000

physicians by 2030, impacting patient care across the nation.”

Physician shortages (primary and specialty care), especially in rural America, pose a risk

to patients who desperately need access to care. Many people would have to wait longer to see a

doctor due to limited access, therefore compromising their health. The United States does not have

enough physicians to keep up with the growing demand. More physicians or other practitioners are

needed because, the nation is growing at a fast and consistent rate, both through new births and

through immigration; people of all ages are seeking more physician services, and as they live

longer, they require more health care. In addition, the increasing prevalence of chronic health

conditions such as diabetes, high blood pressure, obesity and regular succession of groundbreaking

innovations in medical science have resulted in a proliferation of new treatments and specialty care

services that require more health care.


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Some schools of thought say the solution is to train more physicians or hire additional

physicians, including Foreign Medical Graduates (FMG). However, due to lack of funding for

medical students and Graduate Medical Education (GME) programs, the limited capacity of these

programs has put the United States at a distinct disadvantage in growing its own physician supply.

FMGs have been at the core of mitigating this problem, especially where rural and medically

underserved areas are concerned. This leaves the country in a vulnerable position of depending on

other countries to produce the physicians needed.

To meet the demand and increased accessibility of health care created by the Affordable

Care Act (ACA) of 2010 and expansion of the senior population (baby boomers who are getting

older and sicker) while this debate continues, many medical practices have found that “using NPPs

to extend the therapeutic reach of physicians, increase patient satisfaction and add clinical revenue

to the bottom line” (MGMA Research & Analysis Report, 2014) is inevitable. A review of The

2004 MGMA Cost Survey Report also showed that for over a decade, the number of Fulltime-

Equivalent (FTE) NPPs per FTE physician increased in virtually every type of single-specialty

group, and that more practices altogether were using more and more NPPs to increase access to

care. NPPs are becoming the answer to the question, “Who will provide care to the millions of

newly insured Americans under the healthcare reform?” “NPPs offer one way to accommodate the

demand, as they can handle many types of routine primary care visits on their own.” (MGMA

Research & Analysis Report, 2014).

Furthermore, Becker’s Hospital Review in March 2010 also showed that “over the last 30

years, roles of midlevel providers have expanded well beyond the primary care environment”

(O’Hare, 2010), allowing for more services including specialty care to be provided by NPPs. By

allowing NPPs to fill in the gap created by physician shortage throughout the country, patient

experience and patient health improves, as access to care improves.


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The 2018 MGMA DataDive Provider Compensation Report further revealed that “primary

care physicians’ compensation rose by more than 10 percent over the past five years. This increase,

which is nearly double that of specialty physicians’ compensation over the same period, is further

evidence of the worsening primary care physician shortage in the American healthcare system.”

The President and Chief Executive Officer at MGMA, Dr. Halee Fischer-Wright, also said that,

“MGMA's latest survey has put strong data behind a concerning trend we’ve seen in the American

healthcare system for some time - we are experiencing a real shortage of primary care physicians.”

(PRNewswire, 2018).

The passage of the Balanced Budget Act (BBA) of 1997 also expanded the scope of

practice for NPPs to take care of more patients; thereby freeing physicians to provide the more

complex medical care that only they are licensed to perform. The BBA changed the way the

Medicare program pays for the services provided by NPPs. According to the Office of Inspector

General’s (OIG) Report on Medicare Coverage of Non-Physician Practitioner Services, “prior to

January 1, 1998, their services were reimbursed by Medicare only in rural areas and certain health

care settings.” (OIG Report, 2001)

Today, payments for NPP services are allowed in every geographic area and healthcare

setting, if permitted under State licensing laws. Certain NPPs such as nurse practitioners and

clinical nurse specialists are allowed to bill Medicare directly for their services under their own

NPI number, even though this is not the case for physician assistants. Their employers must

continue to bill for all their services, regardless of whether the services were performed “incident

to” or independently.

OVERVIEW OF THE INCIDENT TO RULE

The benefit category for “Incident to” services was established by Section 1861(s)(2)(A)

of the Social Security Act. The Act defines the “incident to” benefit category as “services and

supplies (including drugs and biologicals which are not usually self-administered by the patient)


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furnished as an incident to a physician’s professional service, of kinds which are commonly

furnished in physicians’ offices and are commonly either rendered without charge or included in

the physicians’ bills (or would have been so included but for the application of section 1847B).”

When all the requirements are met, these services are usually provided by NPPs but billed

to Medicare as if the physician provided them. For services to qualify as incident-to, the physician

must be actively involved in treating the patient, they must establish the plan of care or care plan

to be followed by the NPP, and the services provided by the NPP must be part of the normal course

of treatment for that patient. The Medicare Benefit Policy Manual, Chapter 15, Section 60, also

outlines the Services and Supplies Furnished “Incident to” a Physician’s or NPP’s Professional

Services.

Since its passage, CMS has made several changes to the rule to help clarify the intricate

requirements under the regulation. Despite these revisions, the rule is still misunderstood by many

providers, leading to incorrect billing and cost to the Medicare and Medicaid programs. In the

government’s attempt to clear some of the confusion in 2002, the rule was expanded to read:

“Medicare Part B pays for services and supplies incident to the service of a physician or other

practitioner…Services and supplies must be furnished under the direct supervision of the physician

(or other practitioner). The physician (or other practitioner) directly supervising the auxiliary

personnel need not be the same physician (or other practitioner) upon whose professional service

the incident to service is based.” (Ihnen, 2017).

In 2015, more than a decade later, the rule was revised again. The following changes were

made to further clarify the direct supervision requirement under the regulation: “In general, services

and supplies must be furnished under the direct supervision of the physician (or other

practitioner)… The physician (or other practitioner) supervising the auxiliary personnel need not

be the same physician (or other practitioner) upon whose professional service the incident to service

is based.” (Ihnen, 2017). Despite CMS’ efforts to give clarity to the rule, many healthcare


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professionals are still confused about the supervision requirement, and it is possible that as this

confusion remains, some practices may continue to bill “incident to” claims incorrectly.

As such, in 2016, CMS revised the rule again. The following changes further clarified the

rule: “In general, services and supplies must be furnished under the direct supervision of the

physician (or other practitioner)… The physician (or other practitioner) supervising the auxiliary

personnel need not be the same physician (or other practitioner) who is treating the patient more

broadly. However, only the supervising physician (or other practitioner) may bill Medicare for

incident to services.” (Ihnen, 2017). In essence, only the onsite physician providing direct

supervision to the NPP may bill Medicare “incident to” for the NPP’s services for that particular

date of service.

State regulations also impact compliance with the “incident to” rule. The rules and

regulations within the state in which an individual practices guide the scope of their medical

practice. “State scopes of practice are broad and as a result provide little guidance that carriers can

use to process claims.” (OIG, 2001). A majority of the state scopes of practice now calls for NPP

collaboration with a physician or physicians to either limit or expand the services that an NPP can

or cannot perform under the physician’s supervision. For example, if a physician assistant is asked

by a physician to make a complex diagnosis, there is no specification in the state scopes preventing

such a practice, since states do not provide a list of allowed duties and do not clearly identify the

services that are complex or beyond the NPP’s scope. It is the joint responsibility of the physician

and NPP to be in compliance with state regulations, especially those promulgated by the state

nursing board or medical boards and licensing requirements.

CRITERIA FOR BILLING “INCIDENT TO” SERVICES

For an NPP’s services to be covered incident to the services of a physician under the

Medicare Benefit Policy Manual, Chapter 15, Section 60, the following criteria must be met to

ensure accurate billing. The services and supplies must be:


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1. An integral, although incidental, part of the physician’s professional service (see §60.1);

2. Commonly rendered without charge or included in the physician’s bill (see §60.1A);

3. Of a type that are commonly furnished in physician’s offices or clinics (see §60.1A);

4. Furnished by the physician or by auxiliary personnel under the physician’s direct

supervision (see §60.1B).

Secondly, medical practices can bill “incident to” services for established patients only.

Services cannot be billed incident to if it is the first time the patient is being seen. Example of

services that NPPs or auxiliary personnel can furnish “incident to” if all requirements are met

include; evaluation and management services (E/M), minor surgery, chemotherapy administration,

setting casts or treating minor fractures, reading X-Rays, taking blood pressure, temperatures,

giving injections, changing dressings etc. It is important to note that Incident to billing also applies

to services supervised by NPPs. The same requirements as in the case of services supervised by a

physician also apply to these services and are reimbursed at 85% of the MPFS, even if services are

performed by auxiliary personnel such as Medical Assistants (MA).

Thirdly, certain services may not be billed “incident to” a physician’s services. These

services include:

• New patient visits. A new patient by CMS’ definition is considered an individual who has not

received any professional services, Evaluation and Management (E/M) services or other face-

to-face services from the physician or physician group practice (same specialty and

subspecialty) within the past three (3) years. The physician must perform the initial E&M

service, make the diagnosis and document a plan-of-care (POC) for the patient.

• Established patient visit, but new problem. “If an established patient is treated for a new

problem different from the reason for the patient’s initial visit, the service may not be billed as

“incident to” and must be billed under the NPI of the NPP providing the service.” (Ihnen, 2017).

Alternatively, the supervising physician on site may be asked to evaluate and develop a POC


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for the patient, prior to the NPP continuing the care. If this occurs, the visit could be billed

under the NPI of the supervising physician (this may or may not be the patient’s primary care

physician) incident to or as a shared visit (billed listing both the physician and NPP as the

service providers).

• Services that have their own Medicare benefit category. Some services such as pneumococcal,

influenza, and hepatitis B vaccines, labs tests, EKGs exams, X-rays etc. have their own

statutory benefit categories and subject to the rules applicable to their specific category, as

such, they should not be billed as “incident to” services. The MLN Matters Number: SE0441

elaborates: “Must a supervising physician be physically present when flu shots, EKGs,

Laboratory tests, or X-rays are performed in an office setting in order to be billed as “incident

to” services?” The answer is, certainly not.

• Non-Physician Practitioner changes to the Plan of Care. Any changes made by the NPP to the

Plan of Care established without the physician’s input should not be billed “incident to”. The

services provided when the change occurred must be billed under the NPP’s NPI in order to

ensure compliance with the rule.

• Services provided when direct supervision is not met. Direct supervision as defined by CMS

in the Medicare Benefit Policy Manual, Chapter 15, Section 60 means, “The physician must be

present in the office suite and immediately available to furnish assistance and direction

throughout the performance of the procedure or service. It does not mean that the physician

must be present in the room when the procedure or service is performed.” (See §60.2). If no

supervising physician was present on site when the NPP provided the services, the practice

must bill for the services under the NPI number of the NPP who provided the care.

• Services performed in the Hospital or Skilled Nursing Facility (SNF) Setting. “Incident to”

services are considered Medicare Part B covered services. As such, services provided in a


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hospital or SNF do not qualify. Services provided in the hospital or SNF are considered

Medicare Part A covered services.

SETTINGS WHERE INCIDENT TO SERVICES MAY BE PROVIDED

According to CMS, incident to services may only be provided in a non-institutional setting,

which they defined as “all settings other than a hospital or skilled nursing facility” (See §60A).

Also, per the Medicare Benefit Policy Manual, Chapter 15, Section 60, “hospital services incident

to a physician’s or other practitioner’s services rendered to outpatients (including drugs and

biologicals which are not usually self-administered by the patient), and partial hospitalization

services incident to such services may also be covered.” (See §60B).

Office Setting (See §60.3): Services provided in the office setting must be provided by a

qualified individual. These services must be a direct financial expense to the practice and direct

supervision by the physician is required. The supervising physician must be present in the office

suite to render assistance to the NPP, if needed.

Physician Directed Clinic (See §60.3): In a Physician Directed Clinic according to Section

60.3 of the Medicare Benefit Manual, Chapter 15, a physician or physicians in the clinic perform

medical services rather than an administrative service at all times the clinic is open. Each patient

seen at the clinic is under the care of a clinic physician. Services performed by NPPs are under

medical supervision. Furthermore, direct supervision is a responsibility of several physicians in the

clinic, which means medical management of all the services provided at the clinic is assured. In

addition, supplies provided by the clinic to patients during the course of treatment are also covered.

Any services provided outside the clinic also require direct supervision, and may be billed as

“incident to” if this requirement is met. However, if the clinic refers a patient for services performed

by NPPs who are not supervised by clinic physicians, such services are not “incident to” a

physician’s services, and may not be billed as such.


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Patient’s Home and /or Patient’s Home in Underserved Area (see §60.4): NPP or Auxiliary

staff may perform services in a patient’s home “incident to” only if there is direct supervision by a

physician. For example, incident to requirements are met in a patient’s home when a nurse working

with a physician administers an injection to the patient while the physician is present in the patient’s

home with the nurse. On the other hand, assuming the physician is not present in the patient’s home

(direct supervision), incident to requirements are not met, as such, the practice cannot bill incident

to for the RN’s services.

The only exception to direct supervision in this case is when services are performed in a

patient’s home located in a medically underserved area where there are no available home health

agencies (HHA); this is the only time the services provided without direct supervision could be

billed “incident to”. This is because; “in some medically underserved areas there are only a few

physicians available to provide services over broad geographic areas or to a large patient

population. The lack of medical personnel (and, in many instances, a home health agency servicing

the area) significantly reduces the availability of certain medical services to homebound patients.”

(§60.4).

As an acceptable method of service delivery in these areas, some physicians or physician

directed clinics have become obligated to call upon NPPs or auxiliary personnel such as nurses and

paramedics to provide these much needed services under general (rather than direct) supervision.

They have become the extended arm of the physician to provide care to patients who would

otherwise have no access to health care.

Assuming the requirements in §60.4.A are met, then direct supervision as outlined in §60.2

does not apply to the following services listed in the Medicare Benefit Policy Manual, Chapter 15,

Section 60;

1. Injections;

2. Venipuncture;


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3. EKGs;

4. Therapeutic exercises;

5. Insertion and sterile irrigation of a catheter;

6. Changing of catheters and collection of catheterized specimen for urinalysis and culture;

7. Dressing changes, e.g., the most common chronic conditions that may need dressing

changes are decubitus care and gangrene;

8. Replacement and/or insertion of nasogastric tubes;

9. Removal of fecal impaction, including enemas;

10. Sputum collection for gram stain and culture, and possible acid-fast and/or fungal stain and

culture;

11. Paraffin bath therapy for hands and/or feet in rheumatoid arthritis or osteoarthritis;

12. Teaching and training the patient for:

a. The care of colostomy and ileostomy;

b. The care of permanent tracheostomy;

c. Testing urine and care of the feet (diabetic patients only); and

d. Blood pressure monitoring.

The above teaching and training services may be covered by Medicare only if the information

provided is vital for the chronically ill patient’s involvement in his or her own treatment. In

addition, the training and education must be reasonably related to the treatment or diagnosis of the

patient to whom the knowledge is being provided. Education that is elaborate is not covered.

Minimum necessary is key to getting paid. Once the patient has been provided the necessary

information, they should be trusted to obtain additional information on their own.

Offices in Institutions: It is possible for a Physician to have an office located in a nursing

home or institution, even though services provided typically in a SNF or institutional setting are

usually excluded under the “incident to” rule. For an office to be located in a SNF or institution,


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the space in which the services are provided must be positioned in an area that is a separately

identifiable space in the building, and cannot be perceived to be as part of the facility. “Incident to”

services provided are only covered if services are considered outpatient and not services provided

in covered stay or Medicare certified part of a Skilled Nursing Facility. Any service outside of the

“office area” may not be considered “incident to”.

A physician who establishes an office in an institution or nursing home must follow the

same “incident to” guidelines to determine coverage for services and supplies furnished in the

office, just as they would in any physician's office outside the institution.

To accurately apply the criteria set forth in the Medicare Benefit Policy Manual, Chapter

6, §20.4.1 or Chapter 15, §60.1, Medicare Contractors take into account the physical proximity of

the institution and physician’s office. According to the National Coverage Determination (NCD)

manual, “when a physician’s office is located within a facility, a physician may not be reimbursed

for services, supplies, and use of equipment which fall outside the scope of services “commonly

furnished” in physician’s offices generally, even though such services may be furnished in his

institutional office.” (NCD, 70.3). In addition, it is important that there is a distinction between the

institution and the physician’s office space. This is mostly important in instances where the

physician is also an owner or administrator of the institution or facility. Therefore, in order for the

physician’s services to be covered, the NPP or auxiliary personnel supervised in this setting is an

employee of, rather than a staff member of the institution or facility.

Further still, direct supervision is required for any services performed outside the “office”

area by employees of the physician. By merely being present in the facility as a whole would not

be sufficient, and would not meet this requirement. Supervision by itself is not regarded as a

professional service provided by a physician, as such, it is important that the physician provides a

professional service to the patient (e.g. E&M etc.), in order for the services provided by NPP or


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auxiliary personnel to be considered an incidental part of that service. §l861(s) (2) (A) of the Act

would be used as the basis of denials for failure to meet any of these requirements.

“Establishment of an office within an institution would not modify rules otherwise

applicable for determining coverage of the physician's personal professional services within the

institution.” (NCD, 70.3). As such, due to the opportunity afforded to physicians who maintain

these types of offices for providing services to a substantial volume of patients in a short period of

time or for providing frequent services for the same patient, their claims would require careful

review by Medicare and insurance carriers to assure that payments are made only for services and

supplies that are reasonable and necessary.

PROFESSIONALS WHO ARE ELIGIBLE TO PROVIDE INCIDENT TO SERVICES

NPPs who may provide medical services “incident to” or without direct supervision include

Nurse Practitioners (NP), Physician Assistants (PA), Clinical Nurse Specialists (CNS), Certified

Nurse Midwifes (CNM), Clinical Psychologist (CP), Clinical Social Worker (CSW), Speech

Language Therapist (SLT), Physical Therapist (PT), and Occupational Therapist (OT).

Under the Centers for Medicare and Medicaid Services (CMS) billing guidelines, NPPs

have their own benefit categories for covered services and may provide services and bill for them

directly under their own NPI number without direct supervision, provided the services are within

their scope of practice and medically necessary. Services are paid at a percentage of the Medicare

physician fee schedule amount (85% of the MPFS).

In addition, NPPs can work as auxiliary personnel. When this happens, the “incident to”

rule applies. The NPP working as auxiliary personnel must be supervised by a physician. They can

also bill in the name of physician if “incident to” requirements are met. In addition, they must be

an employee (W-2 or leased) or an independent contractor of the physician or group practice that

employs/contracts with the physician. The services and/or supplies provided by the NPP must

represent expenses made by the physician or billing entity.


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It is important to note that state laws dictate the scope of practice of NPPs. Federal

requirements like those under CMS may differ from state law. For example, supervision of NPP

services may only require that the physician is readily available when needed by the NPP, they do

not have to be present in the office suite; however, the CMS incident to rule requires direct

supervision if services are to be billed “incident to”. In this case, if a practice relies on state law

only and bills for services provided by NPPs “incident to”, under the assumption that the

supervision requirements are met, they may be out of compliance with the “incident to” rule. As

such, the government may levy false claims allegations against the physician or the practice if found

to be submitting claims that do not meet the “incident to” requirements and getting reimbursed for

them at the higher rate.

As a rule of thumb, whenever differences exist between state and federal laws, the stricter

law prevails. More information about applicable state laws can be gleaned from Medical Practice

Acts or State Medical Boards, Advisory Boards, the Occupation Code, and the Rules for

Prescriptive Authority Delegation. Reliance on both state and federal law is therefore imperative.

SUPERVISION REQUIREMENTS UNDER THE INCIDENT TO RULE

There are two types of supervision for services provided by NPPs under the Incident to

rule. Physicians may supervise NPPs work directly or indirectly as allowed by CMS and the state

licensing boards of the NPPs. However, to bill “incident to” the services of a physician, direct

supervision is required. “Availability by phone does not meet the definition of direct supervision.”

(ISMA, 2014)

In addition, the physician supervising the NPP does not have to be the one who saw the

patient during the initial visit. Supervision can be done by any physician in the group who is present

in the office and available to assist when the patient is seen, even if that physician is not the patient’s

primary care physician (PCP) or of the same specialty as the PCP. Physicians who contract with a


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group practice as independent contractors who reassign their right to payment to the group can also

supervise NPPs services as the on-premises supervisor.

On the other hand, hiring a physician or resident who is moonlighting to do nothing but

supervise NPPs will not meet the “incident to” standard; the physician must also be treating patients

on site. Furthermore, residents/fellows may not supervise or bill for NPP’s services under the

“incident to” rule.

• Direct Supervision: Per the Medicare Benefit Policy Manual Chapter 15:

“Direct supervision in the office setting does not mean that the physician must be present

in the same room with his or her aide. However, the physician must be present in the office

suite and immediately available to provide assistance and direction throughout the time the

aide is performing services.” (§60.1B).

• Indirect Supervision: This type of supervision occurs when the physician is not present

in the office suite but readily available via phone or other means.

Physician involvement with the NPP’s practice is key to ensuring compliance with this rule. To bill

for an NPP’s services “incident to”, a physician credentialed with Medicare must always initiate

the patient’s POC. For example, if a patient, who is being treated by an NPP under the physician’s

POC presents with a new or worsened medical problem or complaint, the physician must perform

another initial evaluation and management (E&M) of the problem or complaint presented, and the

diagnosis and POC must be established by the physician. After which the NPP can carry out the

plan of care or see the patient for subsequent visits for the same problem, and then bill “incident

to” for the services provided.

Furthermore, services provided to a patient on their first visit, or if a change to the POC is

required (e.g. medication adjustment), cannot be billed incident-to. In addition, a physician must

actively be involved with the ongoing treatment of the patient. It is not necessary for the physician

to see the patient every time, but they must see the patient at a frequency that indicates their active


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involvement in the care of the patient. CMS does not have a set frequency that the physician is

required to see the patient to demonstrate active participation in the patients care; however, some

patient conditions or medical problems such as congestive heart failure would require more

frequent visits and involvement of the physician than conditions such as allergies. The medical

documentation should support the frequency required for each condition.

DIRECT BILLING BY NON-PHYSICIAN PRACTITIONERS

With the passage of the Balanced Budget Act of 1997, Congress acknowledged the role of

NPPs and the part they play in physician practices throughout the country. They did this by

loosening the conditions under which NPPs can bill for the services they provided under their own

NPI numbers. NPPs that choose to bill under their own NPI number are also able to bill incident-

to a physician’s service, depending on the type of supervision available. For example, if an NPP

works in a physician’s office, where the physician is available onsite to provide supervision at the

office until 3pm, but then leaves the office at 3pm to go do rounds at the hospital, the services

provided by the NPP may be billed incident-to the physician until 3pm and then under their own

provider number from 3pm to 5pm or when the office closes.

Medicare will reimburse NPPs for any service they perform and bill under their own

provider number, provided the services are within the scope of their state license. Claims submitted

for NPP services billed under their own NPI are generally paid by Medicare at 85% of the MPFS

directly to the physician or entity employing the NPP. Per CMS, NPPs may bill for the following

services under their own NPI number:

a. Services provided in the physician’s office without any supervision

b. Services provided in the inpatient setting without physician involvement

c. Nursing-Home visits (except resident assessments - performed only by physicians)

d. House calls

e. Consultations


Page 19 of 41

f. Ordering and provision of diagnostic tests

g. Time-based E&M services where more than 50 percent of the service is counseling or

coordination of care.

In addition to the above NPP services, services performed by auxiliary personnel such as Medical

Assistants etc. incident-to the NPPs’ services are also covered by Medicare, assuming these

services would be covered had they been incident-to a physician’s services.

It is important for Nurse practitioners and Clinical Nurse Specialists to have a collaborative

agreement with their supervising physician, even if it is not a requirement under their state law.

The Billing rules for NPs and CNS’ are the same, as such, in order for their services to be billed

“incident to”, they must enroll with Medicare and re-assign their benefits to their employer. They

are also allowed to have independent contractor relationships (not W-2) with the practice. In

addition, they can establish independent group practices where their services are billed under their

own numbers, however, with this independence of having their own practice comes the limitation

where their services cannot be billed incident-to a physician’s services in this setting. It is important

to know that only employed or leased NPs and CNS’ have the option to bill either “incident to” or

under their own NPI.

“Physician Assistants must comply with state laws about physician supervision and the

protocol by which they collaborate with a physician. They cannot establish independent practice

groups, but they can have independent contractor relationships when their services are billed under

their own provider numbers and payment is reassigned to a physician or physician group.”

(Gosfield, 2001). According to reports by the Office of the Inspector General, the passage of the

BBA has led to significant increases in Medicare charges for NPP services over the past two

decades. The multiplication of NPP services has therefore led to the OIG being prompted to

reconsider ways to verify and control Medicare payments to NPPs.


Page 20 of 41

DIAGNOSTIC TESTS SUPERVISION

Even though NPPs are allowed to perform diagnostic tests and be supervised by physicians

while doing so, they cannot bill incident-to for diagnostic tests. “Supervision requirements for

diagnostic tests are different than those for office visits.” (Gosfield, 2001). There are three levels

of supervision requirements established by CMS for diagnostic tests supervision. These are

General, Direct and Personal supervision. The CPT code for the test being performed is used to

determine the appropriate level of supervision required. Example, when an electrocardiogram test

(CPT 93000) is performed, only general supervision is required; however, when a stress test (CPT

93015) is performed, direct supervision by the physician is required. On the other hand, when a

transesophageal echocardiogram (CPT 93312) is performed, personal supervision is required.

The Medicare Benefit Policy Manual, Chapter 15, §80 define the three levels of supervision

required for furnishing diagnostic tests for Medicare Beneficiaries as:

1. General Supervision – “means the procedure is furnished under the physician’s overall

direction and control, but the physician’s presence is not required during the performance

of the procedure. Under general supervision, the training of the NPP who actually performs

the diagnostic procedure and the maintenance of the necessary equipment and supplies are

the continuing responsibility of the physician.”

2. Direct Supervision – “in the office setting means the physician must be present in the office

suite and immediately available to furnish assistance and direction throughout the

performance of the procedure. It does not mean that the physician must be present in the

room when the procedure is performed.”

3. Personal Supervision – “means a physician must be in attendance in the room during the

performance of the procedure.”

It is important to note that the on-premises supervision requirement cannot be met even if the

physician’s location is somewhere on the sky bridges or walkways between the office building and


Page 21 of 41

the hospital. Depending on the test being performed, “the supervision requirement for diagnostic

tests or other services may be more or less stringent than supervision requirements for services and

supplies furnished incident to physicians or other practitioner’s services.” (§80). More information

can be obtained about the different tests and the level of supervision required on the Medicare

website (www.cms.gov).

BILLING SCENARIOS UNDER THE INCIDENT TO RULE

The following scenarios and examples can be used by practice administrators and billing

personnel to guide them in billing for services under the incident to rule. For established patients

with no new problem seen by the NPP, “incident to” criteria is met, as such, practices must bill

under the supervising physician’s NPI or as dictated by their payor contracts or guidelines.

On the other hand, services provided to an established patient presenting with a new

problem seen by the NPP must always be billed under the NPP’s NPI, as incident to criteria is not

met in this case. The NPP must sign the entry. However, if the established patient with new problem

is seen by both the physician and the NPP, then the services provided could be billed under

supervising physician’s NPI. It is important that the physician signs his or her entry.

Common Scenario

Incident To?

A physician assistant (PA) sees new patient

in the office setting. The PA requests the

supervising physician briefly see the patient.

PA dictates notes. Who can bill?

In the situation described, this service is

appropriately billed under the PA only. This is

a new patient. This does not meet the incident

to requirement that the PA’s service was

incidental to the supervising physician.

A physician sees a patient and determines the

patient needs a joint injection. The physician

Yes, since the physician and PA are in the same

group, Medicare looks to the tax ID to

http://www.cms.gov/


Page 22 of 41

instructs a PA to perform the injection

procedure on the same day. Can the physician

bill the E/M and the PA submits the injection?

determine the group entitled to the payment.

Members of the same group should bill as the

same person.

A treating physician refers a patient to a

Coumadin Clinic for follow-up services. The

treating physician determines the POC and is

treating the disease for which the patient is on

Coumadin. Can the supervising physician at

the Coumadin Clinic bill for E/M services for

testing and providing the results?

No, the supervising physician at the clinic is

not treating the patient for the individual

disease. Therefore, he/she can only submit the

services they personally provided.

A patient saw the NPP at a physician’s office

for an existing problem. The charges were

billed under the supervising physician. The

patient contacts Medicare to make a possible

complaint alleging fraud stating, “I did not

see this doctor on this date.”

Medicare’s response to this would be to request

documentation from the provider office. The

documentation provided must show the service

was provided by the NPP. The documentation

should also include information indicating this

was incident to the physician’s treatment plan.

If this is a situation where the billing physician

is not the patient’s physician, but the physician

in the group setting on that date, include that

information as well.

Dr. Doe is currently treating a patient for

diabetes. The patient presents to the office

with an upper respiratory infection and sees a

PA in the same group. Can this be billed as an

incident to service?

This is not an incident to situation and cannot

be billed under the physician. The PA would

bill under their NPI since this is a new

condition. It is neither an integral nor an


Page 23 of 41

incidental part of the physician’s treatment

plan.

The physician orders a drug at a certain

dosage for a patient. The NPP sees the patient

at a follow-up visit and determines the drug is

not working. The drug and dosage are

changed. Can the service be billed as an

incident to service?

No, because the NPP is now determining the

plan of care for the patient. The service no

longer meets the incident to requirements.

Source: Indiana State Medical Association – See Reference.

ENROLLMENT AND REASSIGNMENT OF BENEFITS

To bill “incident to” for an NPP’s services, the NPP must first be enrolled in Medicare, and

“must reassign their right to receive payment to the physician or group that is employing or

contracting with him or her” (Shay, 2015). The entity employing or contracting with the NPP is

also required to keep its own enrollment information up to date, since any changes to their Medicare

enrollment must be reported to Medicare within 90 days. It is important to note that, not all auxiliary

personnel are eligible to enroll in Medicare. For example, Medical Assistants who support

Physicians or NPPs are not licensed to practice medicine, and are not recognized by the State

Medical Boards or Medicare as practitioners or NPP type, but their services can be billed “incident-

to” by a physician or group practice.

Other payors may also require their own procedure for credentialing NPPs, and just like

Medicare; they may also reimburse the services provided by NPPs at a lower rate as compared to

physicians’ fee schedule or rates. Some payors on the other hand will cover or reimburse medical

practices for the services provided by NPPs even though they do not require NPPs to be enrolled

in their network. Payor guidelines in these cases are usually based on state laws and the NPPs scope

of practice. It is important to note that all payors are not the same. They may reimburse for NPP


Page 24 of 41

services differently. To ensure compliance with payor regulations, medical practices need to review

their Payor agreements with other managed care companies as well as their state laws. By making

this review, practices would be able to determine what is allowed by each payor. For example, they

can find out if physicians in their group practice can delegate their services to NPPs and if the

services are within the scope of practice of the NPPs. If this approach is documented in the Payor

agreement and allowed, then the services provided by the NPP should be billed as if rendered

“incident-to”. In this case, the restrictions under the “incident-to” rule do not apply, unless the payer

specifically states in the agreement that they apply.

Furthermore, to ensure accurate reimbursement if the approach above is not clearly

documented in the agreement, modifiers may be required to accurately identify who provided the

care. “Many state laws allow a general delegation of authority with responsibility retained by the

physician without requiring on-premises supervision. In situations where you are not a participating

provider, the safest course is to follow the Medicare rules, because the rules can vary from payer

to payer.” (Gosfield, 2001).

DOCUMENATION

Accurate documentation is key to staying compliant under the “incident to” rule. With all

the attempts made by Medicare to clarify the rule, it still remains daunting and confusing. “When

it comes to submitting the incident-to claim, many physicians are unsure whose physician number

to indicate on the HCFA-1500 claim form.” (Gosfield, 2001). Should it be the supervising physician

onsite that day’s number or the patient’s primary physician’s number? If the services being

provided by the NPP are incident to a particular physician’s services, reason would dictate that the

number of that physician should be used on the claim form. However, some payors have

specifically stated in their provider agreements or billing guidelines that the NPI of the supervising

physician be used on the claim form instead of the primary physician’s NPI. Following

“these payor guidelines can produce some odd profiling data, especially when the supervising


Page 25 of 41

physician is a specialist of the type that never orders the service for which the claim is being

submitted.” (Gosfield, 2001). For example, assuming the supervising physician on site that day was

an Oncologist when a cardiac stress test was being performed, billing for the test incident-to the

oncologist’s services would be quite unusual. Nevertheless, for expedience of claims submission

and payment, it is important that the number required by the payor is used on the claim form, even

if it’s the number of the supervising physician.

Furthermore, it is vital that the physician meets the requirements of the incident-to rules,

especially when it comes to supervision and documentation. For example, the documentation

should indicate (1) who performed the services; (2) the location where the services were performed;

(3) be able to substantiate the physician’s presence in the office suite during the service or procedure

and; (4) whether the patient or problem seen was established or new.

In addition, the person who performs the services must sign the medical record entry. It is

important to note that “Medicare does not currently require the supervising/billing physician to sign

off on the services of the non-physician practitioner.” (ISMA, 2014). However, to ensure

compliance, medical practices should check with their payors and state regulations to verify

whether the signature of the billing/supervising physician is required or not.

When completing the CMS 1500 Claim Form, medical practices must adhere to the

following instructions in order to avoid denial of claims:

1. The NPI of the supervising physician is required in Item 24J.

2. The signature of the individual providing direct supervision is required in Item 31.

3. The NPI of the rendering group (if applicable) is required in Item 33a.

Claims could be denied by payors for lack of documentation of the initial visit and the plan of care

developed by the physician. The patient’s history, physical examination and an on-going treatment

plan must be clearly documented in the care plan. “Incident-to claims will be denied when a non-

physician practitioner performs the initial history and exam.” (Aubry, 2017). It is important that


Page 26 of 41

the NPP collaborates with the supervising physician whenever a new problem arises that could lead

to alteration of the care plan. This discussion or collaboration should be documented in the patient’s

medical record including any modifications to the plan of care. When this happens, the physician

must sign the record to acknowledge his involvement in the care of the patient. “A physician co-

signature is not required for “routine” incident-to visits but it is suggested since it shows the

physician’s continued involvement in the care of the patient. A co-signature alone is insufficient to

support incident-to; all of the above documentation criteria must be met.” (Aubry, 2017).

IMPLICATIONS OF NOT FOLLOWING THE INCIDENT TO BILLING GUIDELINES

In certain medical practices, incident-to billing is the only way NPP services can be billed,

even though this may only be an option for other practices. “The use of NPPs may increase

physicians’ revenues, promote quality of care, and improve practice efficiency in today’s

predominately fee-for-service environment as well as in emerging value-based payment models.”

(Shay, 2015). It is important to note that, “submitted incident-to claims that do not meet the rules

are considered to be potentially false claims.” (Gosfield, 2001). Individuals or practices who submit

false claims to the government are subject to repercussions that are severe and extensive. Though

unlikely, criminal punishment is also possible if intent can be proven and violation of the Anti-

Kickback Statute exists. The following repercussions may occur if an individual or practice fails to

comply with the incident-to rules:

1. Claims denials which could lead to loss of deserved reimbursement;

2. False Claims Violations, which could lead to significant fines including Civil Monitory

Penalties (CMP) - current penalties range from $11,181 to $22,363 per claim;

3. Treble damages - three times the damages sustained by the government. The treble damage

is added to the penalties if the government determines that the physician, NPP or practice

should have known the rules;


Page 27 of 41

4. Fraud and Abuse charges, which could be reaching back up to six (6) years. When this

happens, the practice could be required to pay back the 15 percent difference with interest;

5. Possible CMS and OIG Audits of claims, which could lead to a practice being placed on

the Medicare pre- and/or post-payment review;

6. Exclusion from participation in federal healthcare program business. Violators who are not

excluded may be required to sign a Corporate Integrity Agreement (CIA) with the

government, which typically lasts 5 years, with other conditions that the violator must meet

or adhere to.

7. Possible criminal prosecution if intent to defraud the government is established, or if

violation of the Anti-Kickback Statute occurs.

“Since the positive financial implications from using NPPs can be significant and the penalties for

using them the wrong way can be dire, practices should ensure that their employees understand

how to bill and be reimbursed for incident-to services.” (Gosfield, 2001).

RECOMMENDED BEST PRACTICES FOR MEDICAL PRACTICES

In light of the above review, what should medical practice executives do to ensure that they

comply with the requirements under the Incident to rule? As has been previously stated, medical

practices must ensure accurate billing for NPP services, as improper billing, or failure to comply

with any payor’s billing guidelines can be very costly. To ensure compliance, the following actions

can be taken as best practices in an attempt to comply with the rule:

1. Determine the types of services performed by NPPs in your practice and how to bill for

them (incident to vs. directly under the NPP’s NPI).

2. Determine the level of supervision required per CMS and state medical or nursing boards

for each NPP in your practice.


Page 28 of 41

3. Establish collaborative agreements between the physician and NPP. This agreement

specifies what the NPP can or cannot do under the physician’s supervision.

4. Location of care must meet the incident to requirements when billing for NPPs services.

5. Understanding Payor specific requirements is key to being compliant. Review and follow

your Payor contracts and billing guidelines to stay compliant.

Furthermore, medical practices who choose to assume the risks of billing “incident to” are

encouraged to look into developing a policy (see Sample Billing Medicare Incident to Services

Policy in Appendix C) and Decision Tree (see Appendix A & B) as billing guidelines for their staff.

This would help them determine under which provider to bill the services to mitigate the risks of

submitting false claims. The decision trees should list common scenarios that the NPPs would

encounter in order to bill their services “incident to” the physician’s services. The sample policy

and decision trees containing the above recommendations are only presented for consideration.

Medical practice executives are encouraged to consider adoption of such a policy or decision tree

for their organization and to apply it accordingly, as deemed fit.

The policy and decision tree should also include the level of physician supervision (direct

or indirect) necessary to satisfy both federal billing requirements and state scope of practice

requirements. Recognizing that this may be a very difficult decision for some medical practices and

may significantly impact the traditional way in which they operate, it is imperative that practice

executives review the approach that best fits their organization and stick with it. Assuming

strictly following a policy and decision tree to determine the appropriate way to bill for NPP

services is a change from past practice, an essential aspect of implementing this recommendation

is providing education, particularly for NPPs, Physicians, Practice Administrators, Revenue Cycle

leadership and Billing and Coding Staff, of the implication of the Rule, including failure to comply.

Several resources for training are available on the Medicare Learning Network (MLN) website.


Page 29 of 41

It is important that competent legal advice is always sort prior to any significant billing

practice change to ensure that the stipulations in the rule are clearly understood and applied

appropriately to meet the “incident to” guidelines. Further still, as the rule continues to evolve,

practices should engage legal counsel to monitor any new developments that may affect how they

use and bill for NPP services. There are many healthcare attorneys in the U.S. whose primary focus

is monitoring changes in health law and whose sole purpose is to keep health care professionals up-

to-date of the latest developments in the industry. But most importantly, legal counsel can also

work with practice executives to ensure compliance with other relevant state and federal laws, as

failure to understand the intricate details of the rule and to comply with it has serious implications.

Without a doubt, MGMA resources should be accessed regularly by medical practice

executives to stay abreast with current best practices concerning billing for physician and NPP

services. Other professional associations such as AAPC and Healthcare Compliance Association

(HCCA) should also be looked to for relevant guidance. The medical practice executive should also

keep in mind the resources made available by the federal government, especially CMS Bulletins,

the Medicare Learning Network, Fact Sheets and the OIG Advisory opinions that are often released

to provide guidance and clarity to the healthcare industry.

Finally, contrary to the above, to be financially prudent and as a precautionary measure,

many medical practices have stopped billing incident-to for services provided by NPPs. They have

determined that the billing hassles or compliance risks associated with this form of billing outweigh

the 15 percent difference in Medicare reimbursement. Services are billed under the NPP’s NPI for

the lower reimbursement, therefore mitigating their risks of an audit from the federal government.

CONCLUSION

This exploratory paper discusses how hiring NPPs can help ease physician workload and

increase access to care, thereby boosting patient satisfaction and the bottom line. While this trend

presents significant gains to the medical practice, not knowing the intricate rules for billing non-


Page 30 of 41

physician practitioner services accurately can lead to serious consequences. Incident-to guidelines

can be difficult to manage, and can increase compliance risks for a practice if steps are not taken to

meet the requirements under the rule. Billing for services provided by physicians and NPPs alike

is not an easy feat, especially when you have to comply with different Payor guidelines. Despite

several attempts made by CMS to clarify the “incident to” rule for billing Medicare services, the

rule still remains misunderstood by many providers. This is problematic, as inaccurate billing

practices and claims submitted to Medicare for payment may result in denials, overpayments and

potential False Claims Act violations. It is important to also note that not all incorrect claims

submitted for payment are considered false claims, as the errors on the claims can be corrected

upon denial and resubmitted for payment.

Key findings include the following:

• As patient volumes in both primary and specialty care practices climb and as the physician

shortage widens, NPPs will play an increasing role in expanding capacity for already-

burdened physicians to protect their quality of life and to help ensure the quality of care

they wish to provide.

• A thorough understanding of the “Incident to” Rule represents a critical strategic decision

for the physician(s) and medical practice executives in meeting both quality of care and

compliance requirements.

• Criteria for billing “Incident to” services appear on pages 8-10 of this paper.

• Supervision requirements (page 17) and Direct Billing under the NPP’s own provider

numbers (pages 18-21) are an essential part of the operational decisions required of medical

practices to ensure compliance.

• Documentation must determine the billing method to minimize risk to the physician and to

the medical practice.


Page 31 of 41

• Recommended best practices (page 27-29) can provide a general guide for a medical

practice to implement the use of NPPs.

In years past, the burden for ensuring that incident-to billing is done correctly was on the

physician, or whoever owns the medical practice and does the billing. However, recent cases have

shown that NPPs are no longer exempt from prosecution. The new argument is that information on

this rule has been around for a long time, and NPPs should know about it and how billing for the

services they provided is done.

To ensure compliance, proper billing of incident-to services vs. the services provided and

billed under the NPP’s NPI is an important distinction every practice must make. Through staff

education, proper documentation and implementation of effective checks and balances, medical

practices and their staff can stay compliant, while enjoying the great gains of using NPPs to promote

access to care.

Finally, this exploratory paper provides regulatory guidance around the use of ‘Incident to’

billing techniques, provides an alternative billing option, and concludes that ‘Incident to’ is a viable

billing mechanism as long as the medical practice has in place reasonable compliance standards

and monitors adherence.


Page 32 of 41

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http://imaging.ubmmedica.com/all/editorial/PracticeRx/NPPUtilizationinthefutureofushealthcare.pdf

https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R1244OTN.pdf

https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R1244OTN.pdf

https://www.3mhisinsideangle.com/blog-post/confused-incident-physician-coding-billing-compliance/

https://www.3mhisinsideangle.com/blog-post/confused-incident-physician-coding-billing-compliance/

https://www.aafp.org/fpm/2001/1100/p23.html

https://www.americanbar.org/groups/health_law/publications/aba_health_esource/2016-2017/april2017/incidentbilling/

https://www.americanbar.org/groups/health_law/publications/aba_health_esource/2016-2017/april2017/incidentbilling/

https://www.beckershospitalreview.com/compensation-issues/mid-level-providers-in-a-changing-healthcare-workforce.html

https://www.beckershospitalreview.com/compensation-issues/mid-level-providers-in-a-changing-healthcare-workforce.html

http://www.aafp.org/fpm/2015/0300/p15.html


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APPENDIX A

Incident to Fact Sheet / Criteria for Billing Incident to services/Decision Tree

Type of Encounter

Service Performed By

Billing

New Patient NPP (only) Bill under NPP’s NPI

New Patient NPP and Physician

(Plan of Care provided by physician

and carried out by NPP)

(Incident-to criteria met)

Bill under Supervising physician’s NPI

Physician signs his/her entry

Established patient with no

new problem

NPP (only)

(Incident-to requirement met)

Bill under supervising physician’s NPI

Established patient with

new problem

NPP (only) Bill under NPP’s NPI

Established patient with

new problem

NPP and Physician

(Documentation must support a face-

to-face occurred with physician

(during encounter) Plan of Care

provided by physician and carried out

by NPP)

(Incident-to criteria met)

Bill under Supervising physician’s NPI

Physician signs his/her entry

Source: Indiana State Medical Association

*This Table is for illustrative purposes only, and should not be used as a substitute for consulting

the rules and regulations of incident to billing.


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APPENDIX B

Sample Decision Tree/Incident to Self-Service Tool

“Use of this tool is not a guarantee of coverage nor meant to imply coverage, but rather is intended to be a

tool to assist providers in understanding coverage criteria and applying that criteria based on self-reported

circumstances of a given patient encounter. Medicare will continue to require that all documentation and

coverage requirements are met.” **Source: Novitas Solutions – www.novitas-solutions.com

http://www.novitas-solutions.com/


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APPENDIX C

Sample Medicare Incident-to Billing Policy and Procedure

INSERT COMPANY LOGO HERE

Policy Number: Insert Here Policy Name: Medicare Incident-To Billing

Effective Date: MM/DD/YYYY Target Audience: Insert Here

Reviewed By: Department Head Approved By: President / CEO

PURPOSE

This policy is intended to ensure that Medicare is billed for services/supplies furnished “incident

to” the services of a physician only as provided for under applicable Medicare law and regulations.

SCOPE

This policy applies only to services/supplies provided to Medicare beneficiaries. For non-Medicare

payors, any department of COMPANY wishing to bill such payors pursuant to the “incident to”

rules must verify whether or not the specific payor will pay for services provided by ancillary staff

or non-physician practitioners (“NPPs”) “incident to,” and the payor’s specific rules relating to

documentation of incident to services, prior to claim submission.

POLICY

A. Ancillary Staff Services:

Services/supplies furnished by ancillary staff will only be billed to Medicare “incident to”

when they meet the federal “incident to” requirements. Note: Any service provided by

ancillary staff (i.e. nurses) to a Medicare beneficiary must meet the “incident to” criteria in

order to bill a CPT code 99211.

B. Non-Physician Practitioners (NPPs) Services:

Services/supplies furnished by non-physician practitioners (NPPs) may be billed “incident

to” a physician’s services, provided all incident-to billing requirements are met. Within the

scope of their licensure, some services provided by certain NPPs, (i.e. nurse practitioners,

physician assistants, clinical nurse specialists, certified nurse midwives, therapists, clinical

psychologists, and certified registered nurse anesthetists) may be billed directly to

Medicare under the NPP’s provider number, as long as no other facility or provider bills,

or is reimbursed for, furnishing the same services.


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PROCEDURE

1. Medicare pays for services and supplies (including drugs and biologicals which are not

usually self-administered) that are furnished incident to a physician’s services, are

commonly included in the physician’s bill, and for which payment is not made under a

separate benefit category listed in §1861(s) of the Social Security Act.

2. The “incident to” requirements do not apply to services having their own benefit category.

For example, diagnostic tests are covered under §1861(s)(3) of the Social Security Act, are

subject to the coverage requirements in the Medicare Carriers’ Manual (MCM) Section

2070, and need not also meet the incident to requirements set forth herein. Likewise,

pneumococcal, influenza and hepatitis B vaccines are covered under 1861(s)(10) of the

Social Security Act and need not also meet incident to requirements.

3. Physician assistants, nurse practitioners, clinical nurse specialists, certified nurse

midwives, clinical psychologists, clinical social workers, physical therapists and

occupational therapists all have their own benefit categories and may provide services

without direct physician supervision and bill directly for these services. Alternatively,

when their services are provided as auxiliary personnel under direct physician supervision,

they may be covered as incident to services, in which case the incident to requirements

described herein would apply and must be satisfied.

4. In order to be covered as “incident to,” services and supplies must be:

a. An integral, although incidental, part of the physician’s professional service.

i. The physician must personally perform an initial service for each new

patient and each new condition, make an initial diagnosis and establish a

treatment plan;

ii. The physician must personally perform subsequent services (i.e., face-to-

face service with the patient at a frequency which reflects his/her active

participation in and management of the course of the treatment for each

medical condition).

b. Commonly furnished without charge or included in the physician’s bill.


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i. Supplies usually furnished by the physician in the course of performing his/her

services, i.e. gauze, ointments, bandages, are also covered.

ii. To be covered, supplies, including drugs and biologicals, must represent an

expense to the physician.

c. Of a type that are commonly furnished in office or clinic of a physician.

i. Services and supplies commonly furnished in physicians’ offices are covered

under the incident to provisions.

ii. Where supplies are clearly of a type which a physician is not expected to have

on hand in his/her office or where services are of a type not considered

medically appropriate to provide in the office setting, they would not be

covered under the incident to provisions.

d. Furnished by the physician or by auxiliary personnel under a physician’s direct

personal supervision.

i. A physician must be present in the office suite and immediately available to

provide assistance and direction throughout the time the ancillary staff or NPP

is performing the “incident to” service.

ii. If COMPANY ancillary personnel provide services outside the physician’s

office setting (i.e. home visit) their services are billable as “incident to” only

if there is direct personal supervision by the physician or other practitioner (i.e.

the physician is present and immediately available).

iii. The supervising physician may be an employee, leased employee or

independent contractor of the physician, or of the legal entity that employs or

contracts with the physician.

e. Furnished by an individual who is acting under the supervision of a physician.

i. The individual furnishing the incident to service may be an employee, leased

employee, or independent contractor of the physician, or of the legal entity that

employs or contracts with the physician.

ii. Note: The physician performing the services or furnishing the supplies, or

supervising the auxiliary personnel furnishing such services or supplies, must

have a legal relationship with the legal entity billing and receiving payment

for the services or supplies that satisfies the requirements for valid

reassignment in the Medicare Carriers Manual, §3060. The incident to services

or supplies must represent an expense incurred by the physician or the legal

entity billing for the services or supplies.


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5. Billing for “Incident to” Services

a. In selecting the level of service to bill “incident to” a physician’s service, the service

must be:

i. Provided within the non-physician’s scope of licensure;

ii. Documented by the ancillary staff or NPP providing the service and

countersigned by the physician (or other practitioner) under whose number the

service will be billed, and;

iii. Provided while the physician is in the office suite and immediately available

to provide assistance and direction throughout the time the service is being

performed.

b. Services provided by ancillary staff (i.e. nurses) may be considered “incident to”

services, but their “incident to” services cannot be billed higher than a 99211

(established patient visit), the lowest possible level. Services of a certified diabetic

educator providing nutritional counseling cannot be billed “incident to.”

c. Evaluation and management (E/M) services furnished “incident to” a physician’s

service by a nurse practitioner (NP), certified midwife (CMN), or physician’s assistant

(PA) may be billed using the CPT code (established patient visit) that best describes

the E/M service furnished. Billing for time in counseling or coordination of care may

not be billed “incident to.”

d. Services “Incident to” a Physician’s Service to Homebound Patients under General

Supervision (See Sec. 2051.1 of Medicare Carrier’s Manual for definition of

“homebound patient”).

i. Medicare coverage: In very limited circumstances, COMPANY may bill for

individual or intermittent services provided by qualified COMPANY NPPs to

homebound patients “incident to” a physician’s services under general

physician supervision. “General physician supervision” means that the

physician need not be physically present, but the service must be performed

under the physician’s overall supervision and control. All other “incident to”

criteria, as outlined above, must also be met. “Incident to” services to

homebound patients shall not be billed where there is an available participating

home health agency (HHA) in the area which could provide the needed service

on a timely basis.

ii. Availability of home health agency services: When services can be performed

by an HHA in the local area, “incident to” services to a homebound patient

shall not be billed, except where the following conditions exist:

a. Where the patient has exhausted home health benefits, or


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b. Where the HHA could not respond on a timely basis; or

c. Where the physician could not have foreseen that intermittent services

would be needed, and more services are necessary.

iii. Covered Services: Section 14-3-2051.B of the Medicare Carriers Manual

identifies the “incident to” services that may be covered when provided to

homebound patients when the above criteria are met. Medicare will not

pay for E/M services provided to homebound patients by ancillary staff or

NPPs.

6. Supervision of “Incident to” Services

a. Once the initial physician plan of care (POC) has been established, incident-to services

can be billed even when there is not a physician in the room. The physician must,

however, be on the premises and immediately available to assist the non-physician

provider rendering the services.

b. The supervising physician does not need to be the physician who performed the initial

patient visit. Any physician in the group who is in the clinic or office seeing other

patients qualifies to provide the requisite supervision, even if he/she is not the patient’s

primary physician or even of the same specialty as the primary physician.

Independently contracting physicians who reassign their right to payment to the group

practice can also supervise non-physician services as the on-premises supervisor.

c. Supervision of Diagnostic Tests: Supervision requirements for diagnostic tests are

different than for office visits. The Centers for Medicare and Medicaid Services (CMS)

has developed three levels of supervision: general; direct; and personal. The CPT code

determines which level of supervision is required.

i. General supervision: Services are under the general quality control of

physicians; a physician does not need to be in the office (e.g.

electrocardiogram (CPT 93000).

ii. Direct supervision: Services require the physician to be on the premises in the

office suite (e.g. incident to services)

iii. Personal supervision: The physician must be in the room while the non-

physician provider/technician is performing the service (e.g. transesophageal

echocardiogram (CPT 93312)

7. Implementation

Each practice administrator shall assure that services provided by ancillary staff and

NPPs to Medicare beneficiaries which are billed “incident to” a physician’s services

meet the criteria set forth above.


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8. Administration and Interpretations

Questions regarding this policy must be addressed with your billing supervisor, practice

administrator, the COMPANY Coding Committee, or the COMPANY compliance

officer.

9. Amendments or Termination

This policy may be amended or terminated at any time.

10. References

▪ 42 U.S.C. §1395x(s)(2)(A)

▪ Medicare Carriers Manual, Chapter 14-3 - §§2049.3, 2050, 2050.1, 2050.2,

2050.3, 2051, 2051.1. 4147.1; 15501.G; Palmetto GBA “Incident To

Provision,” 2003.

▪ Medicare Carriers Manual, Program Memo AB-98-15 and Transmittal #1734,

12/13/2001 (Revisions to Sections 2156, 2160, 4112, 4112.1 and 4112.2)

▪ 42 C.F.R. 410.26 (“Services and supplies incident-to a physician’s

professional service: conditions”), 11/1/01, pp. 55328-29.

ENFORCEMENT

All officers, agents, and employees of COMPANY must adhere to this policy, and all supervisors

are responsible for enforcing this policy. COMPANY will not tolerate violations of this policy.

Violation of this policy is grounds for disciplinary action, up to and including termination of

employment and criminal or professional sanctions in accordance with the law.

LAST REVIEWED / REVISED

Revised on: MM/DD/YYYY & CHANGES MADE

Revised on:

Revised on:

***Source: Information in this policies and procedures was obtained from the “Policies

and Procedures: WVU Physicians of Charleston Medicare “Incident to” Rule” – www.wvupc.org

This Policy is for illustrative purposes only, and should not be used as a substitute for consulting

the rules and regulations of incident to billing.

http://www.wvupc.org/

Documents

Survival Guide: How to Stay Compliant with the “Incident