The Basics of Incident-To Billing

Employing non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, etc.) is an effective way to increase productivity in a physician office. However, under Medicare rules, covered services provided by non-physician practitioners (NPPs) are reimbursed at a reduced rate (85 percent of the fee schedule amount).

The “incident-to” billing rules provide an exception, allowing 100 percent reimbursement for non-physician services that meet the requirements detailed in the Medicare Benefit Policy Manual, Chapter 15, Section 60.

To qualify as incident-to, services must be part of your patient’s normal course of treatment, during which a physician personally performed an initial service and remains actively involved in the course of treatment. You do not have to be physically present in the patient’s treatment room while these services are provided, but you must provide direct supervision, that is, you must be present in the office suite to render assistance, if necessary. The patient record should document the essential requirements for incident- to service.

  • More specifically, these services must be all of the following:
    • An integral part of the patient’s treatment course;
    • Commonly rendered without charge (included in your physician’s bills)
    • Of a type commonly furnished in a physician’s office or clinic (not in an institutional setting); and
    • An expense to you.

There are six basic requirements to meet the incident-to guidelines for Medicare payment:

  1. The service must take place in a “non-institutional setting,” which the Centers for Medicare & Medicaid Services (CMS) defines as “all settings other than a hospital or skilled nursing facility”. In your office, qualifying incident- to services must be provided by a caregiver whom you directly supervise, and who represents a direct financial expense to you (such as a “W-2” or leased employee, or an independent contractor). You do not have to be physically present in the treatment room while the service is being provided, but you must be present in the immediate office suite to render assistance if needed. If you are a solo practitioner, you must directly supervise the care. If you are in a group, any physician member of the group may be present in the office to supervise.
  2. A Medicare credentialed physician must initiate a patient’s care. If the patient has a new or worsened complaint, a physician must conduct an initial evaluation and management (E&M) for that complaint, and must establish the diagnosis and plan of care. Incident-to-services cannot be rendered on the patient’s first visit, or if a change to the plan of care (e.g., medication adjustment) is required.
  3. Subsequent to the initial encounter (during which the physician arrives at a diagnosis and plan of care), an NPP may provide follow-up care. This care must occur under the “direct supervision” of a qualified provider.
    • Per the Benefit Policy Manual: 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 NPP is performing services.
    • The supervising physician does not have to be the physician who performed the initial patient evaluation. Any physician member of the group may be present in the office to supervise.
  4. A physician must actively participate in and manage the patient’s course of treatment. The exact requirement is usually defined by the state licensure rules for physician supervision of NPPs (e.g., the physician must see the patient every third visit).
  5. Both the credentialed physician and the qualified NPP providing the incident-to service must be employed by the group entity billing for the service (if the physician is a sole practitioner, the physician must employ the NPP).
  6. The incident-to service must be the type of service usually performed in the office setting, and must be part of the normal course of treatment of a diagnosis or illness. 
    • The Benefit Policy Manual elaborates: Where supplies are clearly of a type 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 provision.

Services meeting all of the above requirements may be billed under the supervising physician’s NPI, as if the physician personally performed the service. Documentation should detail who performed the service, and that a supervising physician was in the office suite (although not necessarily the same room), at the time of the service.

Remember: Incident-to applies only to Medicare. Further, the requirements do not apply to services with their own benefit category. Diagnostic tests, for example, are subject to their own coverage requirements. “Depending on the particular tests,” the Benefit Policy Manual explains, “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 physician’s or other practitioner’s services.”

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