Untangle Tricky ‘Incident To’ Guidelines for Physicians and Hospitals

Physicians incident to services

“Incident to billing” is perhaps one of the most confusing aspects of healthcare compliance, given the complex requirements and the evolving rules regarding direct supervision. Insufficient understanding of what services are “incident to,” as well as who is qualified to provide them, adds to the confusion. Even after regular requirement updates by the Centers for Medicare & Medicaid Services (CMS), it can still be unclear what exactly constitutes proper billing.

To be fully compliant, you need to understand the interplay between incident to billing and incident to services, healthcare consultant Duane C. Abbey stresses in an audio conference for ProfEdOnDemand. In his presentation, Abbey outlines how all hospitals—including critical access hospitals (CAH) and rural health clinics (RHC)—and physicians can correctly comply with both incident to services and billing rules.

Incident To: Not for New Patients or Treatment Plans

At the most basic, incident to services can be defined as services that form an integral part of an established patient’s Plan of Care (POC), and are the type of service that would typically be performed in a physician’s office.

Where you might get tripped up is when these services are provided by certain non-physician practitioners (NPPs) under the direct supervision of a physician. Remembering that an NPP would ordinarily be reimbursed at around 85% for services rendered makes it worth fully untangling this issue, as properly billed “incident to” services are reimbursed at 100%, even though the supervising physician was not the one providing the service.

Incident to services include (but certainly aren’t limited to):

  • Injections
  • EKGs
  • Changing of catheters
  • Paraffin bath therapy as treatment for rheumatoid arthritis or osteoarthritis

A Closer Look at Medicare’s Requirements

When trying to wrap your head around all things “incident to,” start with a solid understanding of what constitutes an incident to service. The term “incident to” itself comes from Section 1861(s)(2) of the Social Security Act (SSA), which states:

“(2)(A) services and supplies (including drugs and biologicals which are not usually self-administered by the patient) furnished as an incident to a physician’s professional service, of kinds which are commonly furnished in physicians’ offices and are commonly either rendered without charge or included in the physicians’ bills (or would have been so included but for the application of section 1847B);

(B) hospital services (including drugs and biologicals which are not usually self-administered by the patient) incident to physicians’ services rendered to outpatients and partial hospitalization services incident to such services”

Beware: This explanation leaves out important aspects of what Medicare would consider as an incident to service. When determining proper billing, Medicare will also ask:

  • Is this a new or established patient?
  • Was there direct supervision by a physician?
  • Does this service constitute an integral part of a patient’s POC, or was it due to a new problem presented by an established patient?


Example: If an established patient presents a new problem, any services rendered for the treatment of that new issue would not count as an incident to service, even if all the other requirements are met. Instead, the NPP would bill for the service using his or her own national provider identification (NPI) number. The patient would then be referred back to the treating physician, who would create a new POC and provide services in an initial visit, after which the NPP would be able to bill for incident to services under the patient’s new POC.

Direct Supervision: Who Gets the Credit?

Before going any further, it’s important to define the terms “non-physician practitioner” and “direct supervision,” as these are often sticking points in a full understanding of “incident to” billing.

  • Non-physician practitioner or NPP: According to CMS, NPPs can include certified nurse midwives, nurse practitioners, clinical nurse specialists and physician assistants, among others. The language defining who can be considered an NPP (also sometimes referred to as “auxiliary personnel”) is deliberately left vague to allow the physician to use full discretion.
  • Direct supervision: For settings outside hospitals, “direct supervision” is more of a concern regarding reimbursement. In these outpatient settings, “direct supervision” means that the supervising patient must be in the same office suite but not necessarily in the same room. For hospitals themselves, the rule is a bit trickier, as hospital benefit categories under the Social Securities Act (SSA) come into play. In other words, payment for these services can go only to the hospital itself.


When billing for an incident to service, the NPP will use the supervising physician’s NPI.

Important: The supervising physician may not always be the treating physician.

If the patient’s treating physician is not present at the time of service, then the NPP would use the NPI of whichever supervising physician is present. To use the treating physician’s NPI in this case would be a definite case of incorrect billing.

Consistent Training to Keep You Compliant

Remember: The rules outlined here apply to Medicare. (For your patients with Medicaid and private insurance, check up on each payer’s rules so you can be sure you’re billing correctly.)

Although the rules and regulations related to—and the differences between— incident to billing and services may be tricky, it is possible to understand them fully with proper training. Resolve your confusion and get your compliance ducks in a row by seeking expert guidance, such as Abbey offers in his compliance webinar. Taking a few extra hours for training and research is well worth it to avoid audit fines and compliance headaches.

To join the conference or see a replay, order a DVD or transcript, or read more

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