Under certain circumstances, Medicare allows physician practices to bill eligible non-physician practitioners (NPPs) under a supervising physician’s provider number and at 100 percent of the supervising physician’s allowable rate. This sort of arrangement is known as “incident to” billing in the Medicare world because the NPP’s services are “incidental” to the physician’s diagnosis and treatment plan for the patient. “Incident to” arrangements help promote productivity within a practice and reduce wait times for appointments. However, because “incident to” arrangements enable a higher reimbursement rate for NPPs, the arrangements can be fraught with compliance risks.

Generally, Medicare requires the following be met for compliant “incident to” billing:

• The physician must initiate treatment and diagnose a patient first.
• The physician must continue to participate and manage the patient being treated by the NPP.
• The NPP’s service 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.
• The NPP’s service must be commonly rendered without charge or included in the physician’s bill. For example, if a service has its own benefit category under Medicare, the service should be billed under that benefit category, not under an “incident to” arrangement.
• The NPP’s service must be the type commonly furnished in a physician’s office or clinic.
• Services must be furnished under the “direct supervision” of the physician. Direct supervision requires that the supervising physician be physically present in the same office suite as the NPP at the same time the services are being provided (i.e. the physician could immediately come assist if needed). Beyond immediate availability and physical presence, direct supervision also requires the physician to actively participate in and manage the course of treatment for the patient. As of 2023, certain behavioral health services may be provided under the “general supervision” of a physician, which does not require the physician’s physical presence while the behavioral health service is being provided by the NPP. This flexibility is limited to only a select number of behavioral health services.
• NPPs must provide services within the scope of their license under state law and the NPP must be employed or contracted.

When a practice believes it may have inadvertently violated “incident to” regulations, that practice should seek legal guidance and as appropriate, self-report the conduct to the Office of Inspector General (OIG). The OIG publishes its self-disclosure settlements online and several recent “incident to” cases stand out as examples of the potential penalties involved with “incident to” violations.

In February 2024, a gastroenterology and hepatology practice agreed to pay nearly $400,000 after the practice self-disclosed that it had billed services provided by advanced care practitioners as “incident to” the practice’s physician services, but those services failed to meet the requisite requirements. Specifically, the practice’s advanced care practitioners provided initial diagnostic and treatment services for new patients. Similarly, in November 2023, a primary care group in California agreed to pay over $1 million dollars after the OIG discovered the practice billed claims as “incident to” a physician’s services, but the physician did not remain actively involved in the course of treatment. In yet another example, a California gastroenterology practice agreed to pay nearly $1.8 million dollars in June 2023 because its NPPs billing under an “incident to” arrangement were not properly credentialed with Medicare, Medicaid, and Tricare.

On the other end of the spectrum, purposefully violating “incident to” requirements can lead to federal criminal charges. In early April 2024, an Arizona physician plead guilty in federal court to healthcare fraud. In this case, the physician operated a mobile medical practice that treated patients in their homes. The physician dispatched NPPs to the homes of his patients and billed those services as “incident to” his own. As the physician was not physically present or immediately available for the home-based services, the Department of Justice (DOJ) alleged the use of an “incident to” billing arrangement was inappropriate. The DOJ also determined that the physician had purposefully disregarded written advice from auditors and third-party commercial payors about his improper billing practices. 

The above cases and regulations center on Medicare-related billing issues, but physician practices must also be aware that “incident to” billing requirements may vary from payor-to-payor. Some payors do not allow “incident to” billing at all. Some payors allow “incident to” billing, but only for very limited NPPs. Assuming that every commercial plan follows Medicare guidelines is ill-advised. The best practice is to ask each payor for their “incident to” guidelines and craft billing policies (including clear policies on supervision documentation) accordingly.