A Medical Practice's Guide to Incident-To Billing

Under CMS guidelines, a physician or other qualified practitioner may receive complete payment (based on the Medicare fee schedule) for services provided to patients by auxiliary personnel or nonphysician practitioners. To successfully report such services, which are “incident to” a physician’s care, you must follow the guidelines set forth in the Medicare Benefit Policy Manual, Chapter 15, Section 60 (Services and Supplies Furnished Incident To a Physician’s/NPP’s Professional Service).

The basic requirements are:

Setting
• The service must take place in a “noninstitutional setting,” which the Benefit Policy Manual defines as “all settings other than a hospital or skilled nursing facility.”
• CMS may also cover services provided to hospital outpatients, “and partial hospitalization services incident to such services.”

Type/content of service
• The service must be an integral, although incidental, part of the physician’s professional service (e.g., services must be part of the normal course of treatment of a diagnosis or illness).
• The service or supply must be of a type “commonly furnished in physicians’ offices,” and “must represent an expense to the physician or legal entity billing for the services or supplies,” per the Benefit Policy Manual. For example, “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,” and “where a patient purchases a drug and the physician administers it, the cost of the drug is not covered.”
• The service must be of a type that is commonly furnished in physician’s offices or clinics (e.g., high volume, low acute services provided by physicians, including minor surgery, setting casts or simple fractures, reading X-rays, etc.).

Physician requirements
• A credentialed physician must initiate the care of the problem to be managed subsequently by auxiliary personnel (e.g., a physician must perform the initial evaluation and management (E/M) service for that problem, and establish the patient’s 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 is necessary (e.g., medication adjustment).
• The physician must remain actively involved in the patient’s course of treatment.
• The service must be furnished under the physician’s direct supervision (e.g., the supervising physician must be present in the office suite and immediately available to provide assistance and direction at the time of service).
• The supervising physician need not be the physician who performed the initial service.

Employment requirements
• Both the credentialed physician and the auxiliary personnel 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 auxiliary personnel).

Payer requirements
• Incident to billing applies only to Medicare

Examples:
1. A general practitioner diagnoses a Medicare patient with hypertension and diabetes in February, and creates a plan of care. The patient returns for follow-up, in June, with the nurse practitioner. At the follow-up visit, the patient complains of knee pain. Although the physician is in the office, the nurse practitioner evaluates and treats the patient for the new problem.

In this case, if the nurse practitioner had evaluated only the hypertension and diabetes, for which there were an established diagnosis and plan of care, the service would meet incident to requirements. But because the physician did not personally perform the initial service for the patient’s new complaint of knee pain, the service may not be reported as incident to. Instead, the NP (if properly credentialed) would report the service to Medicare under his own provider ID.

2. Similarly, if a physician assistant sees Medicare patients in the office, while the physician is at the hospital making rounds, you may not bill incident to because the requirement for direct supervision hasn’t been met (the physician must be physically present in the office suite).

3. In another example, a non-credentialed nurse performs a urinalysis for a Medicare patient with symptoms of urinary tract infection, relays the results to the physician, and gives the patient a prescription. Because the incident-to requirements aren’t met, you may charge for the urinalysis, only. Only if the physician sees the patient may you report an E/M service.

4. Finally, consider when a patient is admitted to the hospital on Monday for treatment of pneumonia. The physician assistant evaluates the patient on Tuesday and notes the patient is stable. This service can’t be incident to because incident to does not apply in the hospital setting.

Services delivered by auxiliary personnel incident to a physician’s services are coded normally, using standard CPT, ICD, and HCPCS codes, without additional modifiers, and are billed under the supervising physician’s provider ID. Although certain nonphysician practitioners may bill Medicare independently for their services, those services generally are paid at a lesser rate (typically 85 percent of fee schedule); whereas, Medicare reimburses for services properly reported incident to at 100 percent of the fee schedule amount.