What Is Incident-to Billing?
The term “incident-to billing” is a confusing shorthand for “services and supplies furnished as an incident to a physician’s professional service.”[2] In plain language, the term refers to the idea that Medicare permits coverage of a variety of services provided by professionals other than a physician (as long as they occur under a physician’s supervision and direction), compensating the physician as if the services had been personally provided by the physician. Services billed as incident-to receive a higher rate than services billed independently by nonphysician professionals, such as nurse practitioners and physician assistants. Here’s an example of an incident-to service: a nurse might take a patient’s vitals when the patient visits a clinic and administer an injection or treat a wound at the doctor’s direction. Under Medicare, the nurse’s actions are bundled into the physician’s encounter as an incidental part of the doctor’s work, or incident-to expense.
Similarly, certain services furnished by a variety of medical professionals, such as physician assistants (PA), nurse practitioners (NP), and clinical nurse specialists (CNS), can be considered incident-to if the physician initiates the course of diagnosis and treatment and remains periodically involved throughout the course of care and if a few additional conditions are satisfied. For example, if a patient sees a physician and is diagnosed with pneumonia and returns for a follow-up visit a few weeks later with one of the clinic’s NPs or PAs rather than the physician, the incident-to benefit allows the service to be billed by the physician even though the physician was seeing other patients while the NP or PA examined the patient. Similarly, physical, occupational, and speech therapy services can, but need not, be billed as incident-to. In addition, a variety of common procedures such as fitting a patient with a brace or delivering an injection can be billed as incident-to a physician’s service as long as they meet the following conditions.
Generally speaking, a service by an auxiliary professional can be billed under the name and number of a physician as incident -to their work if:
-
The service is not in a facility such as a hospital or skilled nursing facility. (Medicare’s position is that the incident-to benefit cannot be used in a hospital-based clinic. Medicare does, however, permit “shared visits” in the hospital, as discussed later in this article.)
-
The clinic is paying for the expense of the auxiliary professional providing the service.
-
The clinic is the sole provider of medical direction.
-
The physician has initiated the “course of diagnosis and treatment” for the patient and remains involved in the care, periodically seeing the patient during the course of treatment.[3] Once the physician initiates treatment, subsequent visits can be conducted solely by the nonphysician practitioner, but the physician is expected to see the patient during the initial encounter and again periodically (though no regulation specifies the frequency of follow-up). The Centers for Medicare & Medicaid Services (CMS) manuals refer to “active management and participation.”[4]
-
The service is something that is typically done in an office setting.
-
The auxiliary professional is acting within the scope of that person’s license.
-
A supervising physician is present in the office suite, and the claim is submitted under the name of the supervising physician. Note that the physician supervising the service need not be the physician who initiated the course of treatment. However, the name on the claim should be the physician who was in the office suite even if that physician has never seen the patient.[5]
CMS has determined that when a service has a separate specified benefit under the Medicare program, the service may not be billed as incident-to. For example, since the Social Security Act includes a provision covering diagnostic tests, CMS asserts that diagnostic tests may not be billed incident-to a physician. Similarly, vaccines are specifically covered by a separate statutory provision.[6][7] Therefore, Medicare does not treat vaccine administration as a service incident-to a physician’s services.
In many circumstances, services that are eligible to be billed incident-to a physician could also be billed independently by the professional providing the service. For example, imagine that a nurse practitioner is seeing a patient for a follow-up encounter during a patient’s chemotherapy. It would be possible for the service to be billed under the nurse practitioner’s name and billing number, but the reimbursement would be 85% of the amount paid if the physician bills for the service.
If services meet the incident-to requirements, the physician may bill the service and receive the full physician fee schedule reimbursement. That higher reimbursement is the primary advantage of billing incident-to the physician. Another possible benefit of billing incident-to is that under the Stark Law, a physician in a group practice may receive compensation credit for designated health services that are provided incident-to the physician’s work. Stark generally prohibits physicians from receiving credit for designated health services provided by others. But in a group practice, there is an exception for designated health services that are incident-to.
Note that the incident-to benefit is created by the Medicare statute. While many state Medicaid programs and private insurers have chosen to adopt some analogous coverage, the requirements may differ from Medicare. Some payors have refused to extend any coverage for incident-to services.
Risk Area Governance
Incident-to billing is authorized by Social Security Act § 1861(s)(2)(A), which states that the program covers “services and supplies (including drugs and biologicals which are not usually self-administered by the patient) 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.”[8]
Most information about incident-to billing appears in the Code of Federal Regulations. In 42 C.F.R. § 410.26 are the requirements that a service must meet to qualify for coverage under Medicare (summarized in the previous section).[9] For the supervision requirements, CMS incorporates the definition of direct supervision found in the diagnostic test regulation, 42 C.F.R. § 410.32(b)(3)(ii):
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.[10]
Perhaps the most important regulatory text indicates that “[s]ervices and supplies must be an integral, though incidental, part of the service of a physician (or other practitioner) in the course of diagnosis or treatment of an injury or illness.”[11]Diagnosis is emphasized because many people, and even many Medicare Administrative Contractors (MACs), assert that it is impermissible for a new problem to be addressed in a visit that is billed incident-to a physician. The regulatory text, however, explicitly permits diagnosis or problems. This text establishes the principle that over the course of a patient’s care, auxiliary personnel can diagnose or treat conditions without direct physician involvement.
Under the Medicare program, only statutes (United States Code), regulations (Code of Federal Regulations), and national coverage decisions are allowed to limit Medicare coverage: “No rule, requirement, or other statement of policy (other than a national coverage determination) that establishes or changes a substantive legal standard governing the scope of benefits, the payment for services, or the eligibility of individuals, entities, or organizations to furnish or receive services or benefits under this title shall take effect unless it is promulgated by the Secretary by regulation under paragraph.”[12] The U.S. Supreme Court elaborated on this principle in a 2019 decision.[13] The so-called Brand memo, authored by the associated attorney general on January 25, 2018, lays out the Department of Justice’s policy that Medicare manuals should not form the basis of any overpayment or False Claims Act recovery.[14] Only statutes and regulations are treated as binding.
Although the manuals are not binding in the way that a statute or regulation is, the Medicare Benefit Policy Manual, Chapter 15 § 60.1.B, offers insight into how CMS has instructed its contractors to implement their incident-to policy.[15] Two paragraphs are particularly enlightening, which inexplicably omit the reference to diagnosis, but confirm that care in the “course of treatment” is covered:
Thus, where a physician supervises auxiliary personnel to assist him/her in rendering services to patients and includes the charges for their services in his/her own bills, the services of such personnel are considered incident to the physician’s service [if there is a physician’s service rendered to which the services of such personnel are an incidental part and there is direct supervision by the physician].
This does not mean, however, that to be considered incident to, each occasion of service by auxiliary personnel (or the furnishing of a supply) need also always be the occasion of the actual rendition of a personal professional service by the physician. Such a service or supply could be considered to be incident to when furnished during a course of treatment where the physician performs an initial service and subsequent services of a frequency which reflect his/her active participation in and management of the course of treatment.[16]
Common Compliance Risks
The incident-to rules set out a number of potential traps; some are relatively obvious, and others much subtler. They include the following.
Billing under the Name and Number of a Physician that is Not in the Office Suite
Medicare requires that services be provided under the “direct supervision” of a physician who must be “present in the office suite” and immediately available.[17] (During a federally declared public health emergency, “immediate availability” can be met via real-time audio-visual communication.) Yet, Medicare has never defined the term “office suite.” Rather than defining “office suite,” the regulation merely states that any physician need not be present in the room without detailing exactly where the physician must be located. While discussing a proposed rule, CMS offered some sense of how it views the term “office suite:”
We are not proposing that there must be any particular configuration of rooms for an office to qualify as an office “suite.” However, direct supervision means that a physician must be in the office suite and immediately available to provide assistance and direction. Thus, a group of contiguous rooms should in most cases satisfy this requirement. We have been asked whether it would be possible for a physician to directly supervise a service furnished on a different floor. We think the answer would depend upon individual circumstances that demonstrate that the physician is close at hand. The question of physician proximity for physician referral purposes, as well as for incident to purposes, is a decision that only the local carrier could make based on the layout of each group of offices. For example, a carrier might decide that in certain circumstances it is appropriate for one room of an office suite to be located on a different floor, such as when a physician practices on two floors of a townhouse.[18]
Presuming that the policy behind this requirement is a desire for the physician to be able to assist in the event of a medical emergency, it seems reasonable to assume that if the physician could reach the patient in 30 seconds to a minute, the supervision requirement has been met. Unfortunately, there is no clear authoritative source overtly confirming this advice. Moreover, various MACs have issued guidance asserting that if the physician is moving from one building to another by crossing a street or using a skyway or tunnel, they are not in the office suite. Guidance from a MAC is even less authoritative than the Medicare manuals, which are nonbinding. However, there have been instances when contractors have denied claims when a supervising physician is on a different floor of the building or across a skyway or tunnel. In those cases, it is necessary to appeal to an administrative law judge and assert that the MAC lacks authority to impose the requirement. If the skyway or tunnel is connecting different buildings, there is a much higher risk that a court might conclude that the physician is not in the office suite.
Billing under the Incorrect Physician
Note that Medicare specifically instructs clinics to bill under the name and number of the supervising physician. If one physician is generally overseeing the patient’s care, but a different physician is physically present when the incident-to service is provided, the service should be billed under the supervising physician.[19]
Billing for Treatment Not Initiated by a Physician
Under the regulation, a physician has to be overseeing “the course of diagnosis or treatment of an injury or illness.”[20] That means that there must be an initial service by the physician before other professionals can provide incident-to services. This requirement is widely misunderstood. (It is commonly understood that as long as the physician sees the patient during the initial encounter, ancillary staff may begin care before the physician enters the room.) Most people believe that if the patient has a new problem, the physician must see the patient. Contractor bulletins and articles about incident-to frequently state that the physician must address new problems. In fact, neither the regulation nor the manual contains the words “new problem.” Instead, they both refer to covering anything within “the course of treatment.” It is possible for a new problem to be part of a course of treatment. For example, a patient undergoing chemotherapy may develop a new infection or experience a reaction to the drug. Either event would constitute a “new problem.” However, under the regulation, it is still part of the course of treatment. It is important to educate staff about the difference between a “new problem” and a new “course of treatment.”
Services Provided in a Facility
Incident-to services must be provided outside a hospital or skilled nursing facility. Although Medicare has adopted a policy of permitting “shared visits” for hospital encounters, the incident-to benefit excludes services in an institution.[21][22] Because a hospital-based clinic can seem so similar to a freestanding clinic, it can be easy to forget that the incident-to benefit is inapplicable. The “shared visit” policy is intended to help address this problem. Under the CMS shared visit policy, if a physician and a nonphysician practitioner both have an encounter with the patient on the same day, their work may be combined and billed under the physician at the full physician fee schedule rate.[23]
Addressing Compliance Risks
There are a few concrete steps that can materially lower the risk of violating the incident-to rules.
Have a Supervising Doctor of the Day
Because Medicare requires the bill to be submitted under the name of the supervising physician, it is a good risk management strategy to develop a mechanism to guarantee that the physician who appears on the bill was in the clinic when the service occurred. Because physicians may leave to perform procedures in the hospital, get lunch, or attend to administrative duties, it is advisable to have a designated physician who will be present and instruct everyone providing incident-to services to bill the service under that supervising physician. At a minimum, the professional seeing the patient should be certain that a supervising physician is present in the office suite during the encounter. Ideally, the physician’s presence is documented someplace, though in a “highly organized” physician clinic, CMS has acknowledged that the presence of a supervising physician can be assumed.[24]
Understand That Billing under the Wrong Physician Does Not Require a Refund
The Medicare Claims Processing Manual has language indicating that an otherwise correct Medicare payment made to the wrong professional “does not constitute a program overpayment.”[25] In other words, if you inadvertently bill under the wrong physician’s name, you are not required to refund the payment. Under this policy, if you mistakenly bill under the physician who established the course of treatment rather than the physician present in the suite, no refund is required. It is important to try to bill under the supervising physician because Medicare can revoke your ability to reassign claims as a penalty for billing under the wrong physician, but there is no obligation to return the payment.
Ensure the Auxiliary Professional Is Paid by the Clinic
Medicare allows a physician either to employ or lease the professionals providing services incident-to. However, the physician must bear the expense of that professional. If another organization, such as a hospital, provides the professional to the physician without charge, the physician may not bill for services provided that individual. Of course, if a hospital provides free staff to a clinic, there is a high risk of violating either Stark or the Medicare Anti-Kickback Statute as well. The bottom line is that the auxiliary person must represent an expense to the physician group.
Possible Penalties
By far the most serious potential consequences of making a billing mistake are penalties under the False Claims Act (FCA). Under the FCA, reckless disregard for a Medicare billing rule allows penalties of three times the amount billed on the claim plus a civil monetary penalty ranging from more than $11,000 to about $22,000 per claim.
The more common consequence is the assessment of an overpayment. Medicare is permitted to recoup funds for services that do not qualify for coverage. In many instances, a failure to follow the incident-to rules effectively lowers the reimbursement by 15%. For example, if the service is by an NP, a PA, or a CNS, that individual could bill independently and receive 85% of the fee schedule. In those situations, Medicare should only recoup the difference between the amount paid to the physician and the amount that was properly billable.
Compliance Resources
Centers for Medicare & Medicaid Services
Medicare Benefit Policy Manual
Chapter 15: Covered Medical and Other Health Services, § 60, Services and Supplies Furnished Incident to a Physician’s/NPP’s Professional Service
This section of the Medicare Benefit Policy Manual covers information important to incident-to billing.
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/bp102c15.pdf
Medicare Learning Network
“Incident to” Services
This MLN Matters article includes provider resources on incident-to billing.
https://www.cms.gov/Medicare/Medicare-Contracting/ContractorLearningResources/Downloads/JA0441.pdf
Fredrikson & Byron
“Incident To,” Shared Visits and Other Encounters with Non-Physician Professionals
This free webinar by David M. Glaser discusses incident-to billing.
Risk Takeaways
Main points of interest:
-
Incident-to billing is done for “services and supplies furnished as an incident to a physician’s professional service.”
-
A variety of common procedures can be billed as incident to a physician’s service as long as they meet certain conditions.
-
If services meet the incident-to requirements, the physician may bill the service at the higher reimbursement afforded to physician care.
-
Another possible benefit of billing incident-to is that under the Stark Law, a physician in a group practice may receive compensation credit for designated health services that are provided incident to the physician’s work.
Areas to watch:
-
Billing for a physician that is not in the office suite
-
Billing under the incorrect physician
-
Billing for treatment not initiated by the physician
-
Incorrect facilities
Laws that apply:
-
Services and Supplies Incident to a Physician's Professional Services: Conditions, 42 C.F.R. § 410.26
-
Diagnostic X-ray Tests, Diagnostic Laboratory Tests, and Other Diagnostic Tests: Conditions, 42 C.F.R. § 410.32(b)(3)(ii)
-
False Claims Act, 31 U.S.C. §§ 3729-3733
Addressing compliance risks:
-
Have a supervising doctor of the day.
-
Understand that billing under the wrong physician does not require a refund.
-
Ensure the auxiliary professional is paid by the clinic.