Risks Abound for Non-credentialed Physicians Using Incident-to Rule

Don’t crack under pressure to get physicians paid immediately; stay compliant if incident-to is a must.

There is a common compliance problem associated with integrating new physicians into existing group practices. In the usual scenario, when a new physician is hired, his or her information is provided to the billing staff, who must scramble to complete and submit an 855 application for the Centers for Medicare & Medicaid Services’ (CMS) approval. Until CMS indicates the application is complete, any services rendered by the new provider are non-compensable.

Pressure Builds to Get Non-credentialed Physicians Paid

Because the practice is paying the physician, there is often considerable pressure to get that physician generating reimbursements immediately. A common strategy is to report the new physician’s services under the name and National Provider Identifier (NPI) of an existing practice physician. This is not a good idea. Because the identity of the provider (in this case) would affect CMS’ decision to make payment on the claim, such a misrepresentation could result in significant post-payment recovery liability, or worse, a False Claims Act liability.

Recently, the question was asked, “Why couldn’t the services of the new (non-credentialed physician) be reported under the name of a credentialed physician under the incident-to rule?”

Before addressing the question, it’s important to understand the premise and requirements of the incident-to reporting rule.

Understand Incident-to Rules

Without question, and as a general rule, services should always be reported under the name and NPI of the provider who actually performed the service. The incident-to rule, however, provides an exception for non-institutional services performed on non-institutional patients and permits reporting of services performed by auxiliary personnel under the name of a credentialed physician, if requirements are met. This rule is most commonly used to report the services of non-physician practitioners (NPPs), such as nurse practitioners and physician assistants, under the name of a licensed and credentialed Medicare physician to avoid the 15 percent payment penalty that applies to services reported directly by the NPP. Although this is the most common use of incident-to services, it’s not the only scenario where they may be applicable.

The regulations contain elements that can be distilled to five basic requirements:

1.  A credentialed physician must initiate the care of the problem that is to be managed by auxiliary personnel. This includes performing the initial evaluation and management (E/M) service for that problem, and establishing the diagnosis and plan of care.

2.  The credentialed Medicare physician must provide direct on-premise supervision of the auxiliary personnel providing the incident-to services. The physician providing supervision of incident-to services does not need to be the physician who performed the initial service, and does not need to know that auxiliary personnel is providing incident-to services.

3.  A credentialed physician must be actively involved in the ongoing care of the patient. When subsequent services are rendered by NPPs, satisfying this requirement is usually defined by the state licensure rules applicable to physician supervision of NPPs. It may mean the physician must see the patient every third visit (as an example), or simply reviewing the charts for non-complicated encounters.

4.  Both the credentialed physician and the auxiliary person providing the actual service must be employed by the group entity billing for the service. When the physician is a sole practitioner, the extender must be employed by the physician.

5.  The services performed by auxiliary personnel must be those usually performed in the office setting.

As indicated above, there is a consistent reference to “auxiliary personnel” throughout the requirements. The question that we must answer is whether a physician who is awaiting acceptance of an 855 application by CMS can qualify as auxiliary personnel. Although a physician is not usually considered as auxiliary, you may note that the regulations expressly define auxiliary personnel as follows:

(1) Auxiliary personnel means any individual who is acting under the supervision of a physician (or other practitioner), regardless of whether the individual is an employee, leased employee, or independent contractor of the physician (or other practitioner) or of the same entity that employs or contracts with the physician (or other practitioner).

— 42 C.F.R. §410.26(a)(1)

Looking to official comments for this regulation, which were published in the Federal Register with the final rule, the following excerpt demonstrates how expansive the U.S. Department of Health & Human Services’ (HHS) definition of auxiliary personnel is:

Comment: Many commenters wanted us to restrict the definition of auxiliary personnel so that only certain individuals may perform a given incident to service. For example, they want us to mandate that only audiologists may perform cochlear implant rehabilitation services as incident to services. Likewise, they want us to permit only physical or occupational therapists to perform physical or occupational therapy as incident to services. In support, they noted that section 4541(b) of the BBA amended section 1862(a)(20) of the Act and required that physical or occupational therapy furnished as an incident to service meet the same requirements outlined in the physical or occupational therapy benefit set forth in sections 1861(g) and (p) of the Act.

Response: We have not further clarified who may serve as auxiliary personnel for a particular incident to service because the scope of practice of the auxiliary personnel and the supervising physician (or other practitioner) is determined by State law. We deliberately used the term any individual so that the physician (or other practitioner), under his or her discretion and license, may use the service of anyone ranging from another physician to a medical assistant. In addition, it is impossible to exhaustively list all incident to services and those specific auxiliary personnel who may perform each service.

— 66 FR 55246-01 (Nov. 1, 2001).

As a result, HHS has made it clear that another physician can function as an extender under the direct on-premise supervision of another physician. As a result, it would be permissible to report services performed by a non-credentialed physician under the name of a credentialed physician PROVIDED THAT ALL OF THE INCIDENT-TO REQUIREMENTS ARE SATISFIED.

Satisfy All Incident-to Physician Restrictions

It’s critical for the credentialed physicians providing supervision and the non-credentialed physicians performing services to remember that the non-credentialed physician must follow the rules. A non-credentialed physician cannot initiate care for a new problem (i.e., he or she cannot establish the diagnosis or plan of care and they cannot modify care for an existing problem). Everyone must remember:

  • A credentialed physician must diagnose and establish the plan of care to which the non-credentialed physician will provide integral although incidental services.
  • There must be direct, on-premise supervision by a credentialed physician.
  • A credentialed physician must remain actively involved in the care of the patient.
  • This allowance applies only to services performed in a non-institutional setting for non-institutional patients (i.e. no incident-to billing of services provided in an ambulatory surgical center, nursing home, or hospital).
  • The employment criteria must be satisfied.

Under the incident-to rule, it’s important to recognize that the non-credentialed physician acting in an auxiliary capacity essentially becomes an NPP. He or she may follow through on care of a problem originally ordered by a credentialed physician (just like an NPP). If a change is needed, the non-credentialed physician must go to the supervising, credentialed physician for an amendment to the plan of care, which should be given only after the supervising physician has performed the appropriate evaluation personally. This also helps to establish the “active involvement” requirement.

Because most physicians are not use to operating under such restrictions, potential compliance problems can be anticipated if the practice decides to take advantage of the incident-to rule under these circumstances. If the practice decides to proceed despite these risks, it’s critical to ensure documentation demonstrates strict compliance with the mandates of the rule to avoid any post-payment recoupment or False Claims Act liability.

CAUTION! The services of a physician that has been excluded from Medicare by the HHS Office of Inspector General cannot be reported under the name of a credentialed physician using the incident-to rule provision discussed above. Federal regulations prohibit any provider or entity that submits claims to the federal government from employing an excluded provider and reporting services performed by an excluded provider for payment.

The bottom line: Although the incident-to rule provides a mechanism for reporting the services of a non-credentialed physician pending acceptance of that physician’s 855 application, those taking advantage of the rule in this circumstance must be aware of the compliance risks and must strictly adhere to the rule’s requirements to avoid liability.

Disclaimer: Incident-to billing is a concept established in federal regulations, applicable only to Medicare billings. As such, the concepts and suggestions contained within this article are applicable only to Medicare. Extension of these concepts to commercial insurance or other payers is not recommended without diligent research into the medical policies of each specific payer for confirmation of applicability.



Bio: Michael D. Miscoe JD, CPC, CASCC, CUC, CPCO, CCPC, CHCC, has a Bachelor of Science degree from the U.S. Military Academy, a juris doctorate degree from Concord Law School, is president of Practice Masters, Inc., and founding partner of Miscoe Health Law, LLC. He has served on AAPC’s NAB, is a current member of the Legal Advisory Board, and is chair of the Legal Ethics Committee. Miscoe is admitted to the Bar in California and to practice law before the U.S. Supreme Court and the U.S. District Courts in the Southern District of California and the Western District of Pennsylvania. He has 20 years of experience in healthcare coding and over 16 years as a compliance expert, forensic coding expert, and consultant. Miscoe has provided expert analysis and testimony in civil and criminal cases, and represents healthcare providers in post-payment audits and HIPAA OCR matters. He is a national speaker and a published author. Miscoe is a member of the Johnstown, Pa., local chapter.

John Verhovshek

John Verhovshek

John Verhovshek, MA, CPC, is Managing Editor at AAPC. He has covered medical coding and billing, healthcare policy, and the business of medicine since 1999. He is an alumnus of York College of Pennsylvania and Clemson University, and a member of the Asheville-Hendersonville AAPC Local Chapter.
John Verhovshek

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John Verhovshek, MA, CPC, is Managing Editor at AAPC. He has covered medical coding and billing, healthcare policy, and the business of medicine since 1999. He is an alumnus of York College of Pennsylvania and Clemson University, and a member of the Asheville-Hendersonville AAPC Local Chapter.

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