Medicare Compliance Basics: “Incident to” Billing

In this first article, we set forth the general “incident to” billing requirements, in order to set the groundwork for the series. Note that this article reviews requirements to bill “incident to” a physician’s professional services in an office setting.

What are Incident To Services?

Medicare Part B allows a physician (or certain other non-physician practitioners) to maximize their productivity by receiving reimbursement for certain services furnished by “auxiliary personnel” on an “incident to” basis.

Note that the ability to utilize “incident to” billing is subject to various requirements and limitations. The “incident to” requirements are set forth in (sometimes contradictory or at least hard to reconcile) federal regulations, Medicare billing policies, and subregulatory guidance issued by local Medical Administrative Contractors (MACs). Failure to comply with the “incident to” rules can lead to issues ranging from claims denials, overpayments, being placed on pre- and/or post-payment review or even false claims liability (with a lookback or statute of limitations of up to ten years).

Who Does This Apply To?

Physician assistants, nurse practitioners, clinical nurse specialists, certified nurse midwives, clinical psychologists, clinical social workers, physical therapists and occupational therapists, also known as Non-Physician Practitioners (NPPs) have their own Medicare coverage categories, and can bill and provide professional services independently, subject to state law. For example, NPPs may provide professional services without direct physician supervision (subject to state law) and bill directly for these services. Services performed and billed directly by NPPs are reimbursed at a lower rate (85% of the Physician Fee Schedule rate for those services when performed by physicians). However, when an NPP’s services are provided as “auxiliary personnel”, they may be covered as “incident to” services, in which case the “incident to” requirements would apply. Services provided “incident to” a physician’s professional services are reimbursed at 100% of the Physician Fee Schedule rate for the identified physician service.

For purposes of the physician “incident to” regulations, “auxiliary personnel” means any individual who is acting under the supervision of a physician (or other eligible practitioner), regardless of whether the individual is an employee, leased employee, or independent contractor of the physician (or other practitioner) or of the same entity that employs or contracts with the physician (or other practitioner), has not been excluded from the Medicare, Medicaid and all other federally funded health care programs by the Office of Inspector General or had his or her Medicare enrollment revoked, and meets any applicable requirements to provide “incident to” services, including licensure, imposed by the State in which the services are being furnished.

In later articles, we will be addressing the conditions under which an NPP may provide services “incident to” another NPP.

“Incident To” Requirements

“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. The services must relate to an existing course of treatment; the “incident to” rules do not apply to a new patient or when treating an existing patient for a new illness or injury.

To be covered “incident to” the services of a physician, Chapter 15, Section 60 of the Medicare Benefit Policy Manual (Manual) and the “incident to” regulations set forth that the services and supplies must be:

  • An integral, although incidental, part of the physician’s professional service.
  • Commonly rendered without charge or included in the physician’s bill.
    • Meaning, the “incident to” services are not separately reimbursable by Medicare. Medicare pays for services and supplies (including drug and biologicals which are not usually self-administered) that are furnished “incident to” a physician’s services, commonly included in the physician’s bills, and for which payment is not made under a separate benefit category listed in Section 1861(s) of the Social Security Act (Act). If the service has its own benefit category, it would not be reimbursed on an “incident to” basis; instead, those services must meet the requirements of their own benefit category. For example, influenza vaccines are separately covered under Section 1861(s)(10) of the Act, and would not need to meet the “incident to” requirements.
  • Of a type that are commonly furnished in physician’s offices or clinics.
    • This applies the type of supplies that a physician is expected to have on hand in their office or the types of services that are considered medically appropriate to provide in the office setting.
    • Examples of qualifying “incident to” services include cardiac rehabilitation, providing non-self-administrable drugs and other biologicals, and supplies usually furnished by the physician in the course of performing his/her services (for example, gauze, ointments, bandages, and oxygen).
  • Furnished by the physician or by auxiliary personnel under the physician’s supervision.
    • Usually, the billing physician’s “direct supervision” is required, which means that the physician must be present in the office suite and immediately available to furnish assistance and direction throughout the performance of the procedure.
    • The 2023 Medicare Physician Fee Schedule (PFS) final rule revised this requirement to allow a lower level of physician supervision – “general supervision” – when delivering certain “behavioral health services”. General supervision means the service is furnished under the physician’s overall direction and control, but the physician’s presence is not required during the performance of the service.
    • Among the COVID-19 Public Health Emergency (PHE) waivers, CMS temporarily changed the direct supervision rules to allow the supervising professional to be remote and use real-time, interactive audio-video technology, instead of requiring the physician’s physical presence. The 2023 PFS extended this flexibility until December 31, 2023 – several months after the COVID-19 PHE is set to expire.
  • Furnished in a non-institutional setting to non-institutional patients.
    • A non-institutional setting is defined in the “incident to” regulations as “all settings other than a hospital or skilled nursing facility” (SNF). However, Section 60(B) of the Manual clarifies that “[h]ospital services incident to a physician’s services rendered to outpatients (including drugs and biologicals which are not usually self-administered by the patient), and partial hospitalization service incident to such services may also be covered.”
    • Issues related “incident to” billing in a hospital or SNF will be covered in subsequent articles.
  • Require the physician’s ongoing participation and management.
    • The physician cannot merely initiate treatment and allow the auxiliary personnel to continue to treat the patient unassisted; instead, the physician must be actively involved in the course of treatment.
  • Provided in accordance with applicable state law.
    • The ability to auxiliary personnel to perform services on an “incident to” basis is subject to state scope of practice requirements. For example, if the service is outside the auxiliary personnel’s scope of licensed practice as set forth in state law, the auxiliary personnel could not provide it directly or on an “incident to” basis.