By:  Michael R. Burke, Esq.

In August 2009, the Office of Inspector General for the Department of Health & Human Services (“OIG”) issued a report entitled “Prevalence and Qualifications of Non-Physicians Who Performed Medicare Physician Services.”  In its report, the OIG studied services provided by certain physicians during the first quarter of 2007.  In its findings, the OIG noted that unqualified non-physicians performed 21% of the services that physicians did not perform personally.  Among other things, the OIG found these non-physicians did not possess the necessary licenses or certifications, had no verifiable credentials, and/or lacked the training to perform to perform this service. In its recommendations, the OIG noted that services performed by unqualified non-physicians represented risks to Medicare beneficiaries, and the OIG noted that it was concerned about the potential scale of this problem.  As such, the OIG recommended to CMS that:

1. The “incident to” rule be changed to require that physicians who do not personally perform the services they bill to Medicare ensure that no persons except licensed physicians personally perform the services or that non-physicians who have the necessary training, certification and/or license pursuant to state law and Medicare regulations personally perform the services under the direct supervision of a licensed physician.

1. Require physicians who bill services to Medicare that they do not personally perform to identify the services on their Medicare claims by using a service code modifier, which would allow CMS to monitor claims to ensure that physicians are billing for services performed by non-physicians with appropriate qualifications.

1. CMS should take appropriate action to address claims for services that are billed by physicians and performed by non-physicians that do not meet the “incident to” standards or were for rehabilitation therapy services performed by non-physicians who do not have the training of a therapist.

CMS agreed with two of the three recommendations made by the OIG (items 1 and 3 above):  CMS did not agree with the establishment of a service code modifier to identify “incident to” services, stating that these services are often shared by physicians and staff, making the definition of a service not personally performed by a physician operationally difficult. In light of the increased attention being given to “incident to” services, it makes sense to revisit Medicare’s “incident to” billing rules so that physicians have a clear understanding of what is required and permitted by Medicare in this regard.  Please note that the discussion in this article will not apply to: (i) private payors that may have different rules and policies with regard to “incident to” services (physicians need to check the policies of the payors with which they contract in this regard); and (ii) “incident to” services billed by hospitals or other facilities (i.e. this article and the physician “incident to” rules do not deal with the recent clarifications made by CMS with regard to the instances in which a hospital bills on an “incident to” basis for therapeutic services provided in a hospital). The basic Medicare “incident to” rule provides that Medicare pays for services and supplies (including drugs and biologicals which are not usually self-administered) that are furnished “incident to” a physician’s or other practitioner’s services, are commonly included in the physician’s or practitioner’s bills, and for which payment is not made under a separate benefit category under the Social Security Act (“Act”) (i.e., diagnostic imaging services; pneumococcal, influenza and hepatitis B vaccines).  For purposes of the “incident to” rule, “physician” means physicians or other practitioners (physician assistants, nurse practitioners, clinical nurse specialists, nurse midwives or clinical psychologists) authorized by the Act to receive payment for services “incident to” his or her own services. In order to be covered as services or supplies “incident to” the services of a physician or other practioner, the services or supplies must be:

1. An integral, although incidental, part of the physician’s professional service;

1. Commonly rendered without charge in the physician’s bill;

1. Of a type that are commonly furnished in physician’s offices or clinics; and

1. Furnished by the physician or by auxiliary personnel under the physician’s direct supervision.

Physicians are interested in billing services as “incident to” because such services are paid at 100% of the Medicare Physician Fee Schedule amount.  If services are instead billed in the name of certain licensed non-physician practitioners providing the service (such as a physician assistant or nurse practitioner), services would be reimbursed at 85% of the Medicare Physician Fee Schedule amount. In order for the service to be an “integral, although incidental” part of the physician’s service, the course of treatment must be initiated by a physician.  Please note that for services of auxiliary personnel to be considered “incident to”, each occasion of a service by auxiliary personnel (or the furnishing of a supply) does not also need to be accompanied by the actual rendition of a personal professional service by a physician.  The “incident to” services or supplies can be furnished during a course of treatment where the physician performs initial services and subsequent services of a frequency which reflect his or her active participation in and management of the course of treatment. If a non-physician provider such as a physician assistant or nurse practitioner begins a course of treatment, that service should not be billed as “incident to” but rather should be billed directly in the non-physician practitioner’s name. CMS defines “commonly rendered without charge or included in the physician’s bill” to include items or services that represent an expense of the physician or legal entity billing for the services or supplies.  For example, where the physician purchases a drug and administers it to a patient, the cost of the drug is a covered supply furnished by the physician.  As such, the services of non-physician personnel which represent an expense to a physician will also be covered as “incident to” services if the other criteria set forth above are met. “Incident to” services that are billable by physicians must be commonly furnished in physician’s offices or clinics.  This means that the services must be furnished in the physician’s office, and as such, services furnished to hospital inpatients or outpatients are not covered under the “incident to” benefit. The “incident to” services must be furnished by the physician or by auxiliary personnel under the physician’s direct supervision.  Auxiliary personnel means any individuals acting under the supervision of a physician, regardless of whether the individuals is an employee, leased employee or independent contractor of the physician or of the legal entity that employs or contracts with the physician.  In addition, the supervising physician may be an employee, leased employee or independent contractor of the legal entity that bills and receives payment for the “incident to” services and supplies. The definition of “direct supervision” may not be the definition that you would anticipate.  Direct supervision in the office setting does not mean that the physician must be present in the same room with his or her aide. The physician must be present in the office suite and immediately available to provide assistance and direction throughout the time that the aide is performing services in order for the “incident to” service or supply to be billable. Please remember that if the services of a non-physician practitioner who is able to bill Medicare in his or her own provider number when employed or engaged by a physician (such as a physician assistant or a nurse practitioner) do not meet the “incident to” requirements, the services may be billed under the name of the individual non-physician practitioner where applicable. Please also remember that several years ago, CMS changed the “incident to” requirements as they relate to the provision of physical therapy, occupational therapy and speech-language pathology services.  Therapy services that are appropriately billed “incident to” the services of a physician or non-physician practitioner shall be subject to the same requirements as therapy services furnished by a physical therapist, occupational therapist or speech language pathologist in any other outpatient setting and cannot be performed by auxiliary personnel who do not meet such qualifications.  The services of physical therapy assistants and occupational therapy assistants may not be billed “incident to” the services of a physician or non-physician practitioner, but may be billed where appropriate as “incident to” the services of a physical therapist or occupational therapist when the services are billed by the physical therapist or occupational therapist in his or her name.  Please also note that the Medicare therapy payment caps that apply to the provision of outpatient physical therapy, occupational therapy and speech pathology services do apply to such services when they are furnished on an “incident to” basis. In a webinar sponsored by Highmark Medicare Services (the Pennsylvania Medicare Carrier) that took place on August 26, 2009 on “incident to and shared/split services”, Highmark Medicare Services noted that the following standards should be met with regard to the documentation of “incident to” services: the documentation must identify who rendered the service; the documentation  must indicate that the direct supervision requirement is met; the documentation must show the physician’s initiation and continued involvement in treatment; the documentation must show that the services are reasonable and necessary; and the documentation must show that the services are within the scope of practice for the non-physician practitioner. The provision of “incident to” services by a physician is an opportunity for physicians to generate additional revenue from the services of non-physician practioners or auxiliary personnel while leaving the physician able to do other things at the same time.  However, before doing so, physicians must be careful that they strictly comply with the foregoing “incident to” rules and that they document their compliance with these rules. If you have any questions with regard to “incident to” billing or whether or not you are satisfying the requirements of such billing, you should contact a health care attorney who is knowledgeable on Medicare billing requirements. Michael R. Burke is a shareholder with the health care law firm of Kalogredis, Sansweet, Dearden and Burke, Ltd., located in Wayne, PA.  He can be reached at 610.687.8314 or mburke@ksdbhealthlaw.com.