Medicare Part B pays for services and supplies that are furnished “incident to” a physician’s or nonphysician practitioner’s (“NPP”) services by auxiliary personnel. Because incident to services and supplies are considered so integral to the physician’s/NPP’s services, they can be billed to Medicare as if the physician/NPP personally performed the service and the claim will be paid under the applicable Medicare fee schedule. On May 2, 2008, the Centers for Medicare and Medicaid Services (“CMS”) issued new clarifications for “incident to” billing by a physician or NPP in a physician owned or operated clinic. The new provisions, which will be effective June 2, 2008, were published in Transmittal 87, Change Request 5288, and can be accessed at
http://www.cms.hhs.gov/Transmittals/downloads/R87BP.pdf.

Under the Medicare program, physicians and NPPs, which include nurse practitioners, clinical nurse specialists, physician assistants, and certified nurse midwives, are allowed to: (1) bill directly for services they personally perform, (2) have their services billed incident to the services of another physician/NPP, or (3) bill for the services of auxiliary staff provided incident to their own services. However, physical therapists, occupational therapists, and clinical social workers may only bill for services they personally perform, or have their services billed incident to the services of a physician/NPP.
Medicare guidelines do not allow these practitioners to bill for the services of auxiliary staff, such as physical therapy assistants or occupational therapy assistants, as incident to their own services.

In the Transmittal, CMS states that billing incident to is not permissible for services having their own Medicare Part B benefit category, unless allowed by statute. For example, diagnostic tests are subject to their own coverage requirements and are not eligible for incident to billing by a physician/NPP.
This clarification is significant because under Phase III of the Stark Law, CMS clarified that only revenue from designated health services personally performed by a physician or performed incident to the services of a physician can be allocated directly to the physician. Accordingly, Medicare and Medicaid diagnostic imaging revenue must be divided between physicians in the group practice in a manner unrelated to who ordered the service.

In order for a physician/NPP to bill incident to, the service or supply must satisfy the following seven (7) requirements:

1. The service or supply must be covered and payable by the Medicare program.
2. The service or supply must be an “integral, although incidental” part of the physician’s/NPP’s professional service. This requires that:

• The service or supply is preceded by a related physician/NPP service. CMS has clarified that a physician/NPP must provide an evaluation or initial covered service to which the subsequent incident to service is integral, but incidental (i.e., essential to, and connected to, that service). Therefore, each incident to service or supply must be preceded by a physician’s/NPP’s service related to the same problem. This does not mean, however, that each occasion of service by auxiliary personnel need also be the occasion of the actual rendition of a service by the physician/NPP. If a patient presents with a new problem, the physician/NPP must first see the patient before service by auxiliary personnel can be considered incident to the physician’s/NPP’s service. Unfortunately, CMS does not define the term “new problem” and allows each Medicare contractor to develop its own definition.

• The service or supply is authorized by a physician/NPP. An authorization for the incident to service must be included in the medical record by a physician/NPP who provided the initial and related service. The authorization is not required to be in any specific form, but must convey the intention of the physician/NPP that a subsequent service is requested.

• The service or supply is furnished under the care of a physician/NPP during the course of diagnosis and treatment of the patient’s illness or injury.  During any course of treatment rendered by auxiliary personnel incident to, a physician/NPP must personally see the patient sufficiently often to assess the course of treatment and the patient’s progress and, where necessary, to change the treatment regimen. In the Transmittal, CMS clarified that a service or supply would not be considered incident to a physician’s/NPP’s service if the physician/NPP merely wrote an order authorizing the service or supply without being involved in the management of that course of treatment. Further, review of a medical record without seeing the patient and performing some “face-to-face” assessment of the patient would not qualify for an E/M service.  Thus, if a patient is referred to a group practice solely for a non-physician service, such as physical therapy, it would not be appropriate for the service to be billed incident to unless a physician/NPP in the group first evaluates the patient and is involved in the patient’s treatment and care.

3. The  service or supply is commonly rendered without charge or included in the physician’s/NPP’s bill. Many incidental services and supplies are relatively insignificant and are not separately payable. A nurse’s assistance in dressing the patient after the physician/NPP performs a service is an example. However, there are specific services billed incident to the services of a physician/NPP that are payable by the Medicare program. For example, the services of a nurse practitioner could be independently billed by the enrolled nurse practitioner, or alternately could be included in the physician’s bill as services incident to a physician.

4. The service or supply is of a type that is commonly furnished in a physician’s/NPP’s office or clinic. Services and supplies commonly furnished in physician’s/NPP’s offices are covered under the incident to benefit provision when they meet the requirements for coverage (including medical necessity) and the other requirements for billing incident to. Where supplies are clearly of a type a physician/NPP 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 provisions.
Next month, in part two of this series, we will discuss the last three requirements.



Howard E. Bogard is Chair of the Health Care Practice Group at Burr & Forman LLP and exclusively represents healthcare providers in regulatory and corporate matters.




June 2008