Understanding Incident-to Billing

Incident-to Billing for Mid-level Providers

The concept of incident-to billing is not new to the industry. Services and treatments are reimbursed at a tiered fee schedule depending on what level of healthcare professional billed for the service. If a physician bills for the service, it would be paid at 100 percent of the fee schedule as opposed to a nurse practitioner where it would be paid at 85 percent of the fee schedule. In order to assure full reimbursement, other clinical personnel could deliver the service as long as a physician supervised it.

This pay structure has existed for some time but was always a bit vague on if the physician who ordered the treatment had to be the one that supervised it and which physician had the ability to bill for the service (the supervising physician or the ordering physician). With the continuing shortage of physicians and increase usage of nurse practitioners it was apparent that clarity on this topic was going to be crucial.

2016 Clarifications to Incident Billing

CMS took the opportunity to provide clarity on the topic at the beginning of the year. First, the only physician that can bill for incident-to service is the individual that supervised the treatment being provided.

In addition, CMS also clarified that the physician supervising the treatment does not have the be the one that ordered, referred or initiated treatment.

Not only was clarification provided on the known questions, but there was much more detail provided on several other aspects of how to complete procedures and services under supervision.

Technical definitions

The exact location of the procedure being performed and what exact location of the observing physician are important. First, the service has to be completed in a non-institutional setting which really means any things that is not a hospital or a SNF facility.

Type of service is also required to be specific. CMS requires it to be services that would normally be ordered by the observing physician as part of the course of treatment. For example, if the physician’s specialty was internal medicine, they would not normally order a cast to be set. Because the service does not align appropriately, it should not be billed by the observing physician. To further help explain, the type of service should be something that the physician would normally stock supplies for in their office. One would not expect an ENT practice to have the supplies to splint a patient’s arm.

It is important to note that these specific guidelines only apply to Medicare. It is recommended that every practice should know all the regulations for the major payers served as they may allow nurse practitioners to complete services without a decrease in reimbursement.

The final and largest category of detailed clarification appears to be the piece that will cause the largest pain point and that is the requirements for the physician that is observing the treatment being delivered.

Physician Requirements

While the physician that orders the treatment does not have to be the one that observes the delivery, it is required that the initial E&M is completed by a physician. From this initial meeting, a plan of care would be defined as well as the original diagnosis.  A common example of why this would be difficult in a clinical setting would be when a patient comes in for a follow-up visit and reports new symptoms that appear to be unrelated to the original diagnosis. While it may seem instinctual for the nurse practitioner to begin care for the new problem, if it appears that the diagnosis might need to be changed, then a credentialed physician will need to be who does the E&M for the patient.

Another clarifying point is that the service has to be completed under direct supervision. This means that the physician needs to be physically in the office so that they can be available at a moment’s notice if needed. Another example of why this may be more difficult are scenarios of when the physician may be out of the office because they are completing rounds. If they are not physically present, then the claim should be billed without incident-to included.

Finally, the physician that provided the direct supervision now has to be involved in the patient’s course of treatment. This means that when the patient comes in for a follow-up, that same physician has to be physically present in the office for incident-to be allowed. Examples of when this would be inconvenient would be during the holidays or if it is an office that does rotations or on-call schedules. Especially for larger practices that may have several physicians involved, this becomes a difficult issue to appropriately manage.


The best recommendation is for a practice to put in a process to audit incident-to billing scenarios to ensure that every step is being followed appropriately especially around the specifics of observing the treatment being observed. If it is discovered that the physician was on rounds or was not involved in the follow-up care of the patient (and is not specifically documented throughout the patient’s medical record) the claim should be billed without the incident-to notated and under the nurse practitioners Medicare ID. This would mean that reimbursement would only be at 85%, but missing the 15% is better than the entire claim being denied or a noncompliance issue being discovered. When in doubt, take the lower reimbursement rate and use the opportunity to educate the practice on how incident-to billing should occur.

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