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For physicians, “incident-to billing” is a special situation in which a physician or other qualified non-physician practitioner can bill for the services of subordinate staff as if the physician actually performed the service.

Of course, certain conditions must be met in order for a physician to perform this type of billing. First, this type of billing can only occur in a freestanding clinic, that is, a clinic that is not provider-based or part of a facility. Also, the subordinate personnel must be employed by the physician or practice, and proper supervision must be maintained.

Even looking at incident-to billing on a conceptual basis, the potential for compliance issues is fairly obvious.

There are two loosely related changes that have occurred recently:

  1. The phrase “qualified healthcare professional” starting appearing in CPT® starting 2013; and
  2. For CY2014 Medicare updates to OPPS and MPFS, an additional requirement for Medicare is that the subordinate personnel providing services must meet any state laws, rules, or regulations.

Let us first consider the CPT change. CPT is written by and for physicians. Thus, with certain exceptions, the language in CPT presumes that a physician is providing the given service. Certainly in areas such as physical medicine, laboratory, and radiology, qualified non-physician personnel can perform the services for which billing made using CPT codes. However, for the E/M and surgical chapters of CPT, the presumption is that a physician is providing the service. For E/M coding this is an interesting exception with the Level 1 established patient visit, that is, CPT 99211, which is not used by physicians. CPT 99211 is for nursing and/or services of other medical personnel.

What are the implications of this new CPT terminology? Does this terminology address billing issues? Does this apply to all CPT codes? Who is able to determine who is qualified? Here is a quotation from the 2013 CPT Changes: An Insider’s View, page 3:

A physician or other qualified healthcare professional is an individual who is qualified by education, training, licensure/regulation (when applicable), and facility privileging (when applicable) who performs a professional service within his/her scope of practice and independently reports that professional service. A clinical staff member is a person who works under the supervision of a physician or other qualified healthcare professional and who is allowed by law, regulation, and facility policy to perform or assist in the performance of a specified professional service, but who does not individually report that professional service. Other polices may also affect who may report specific services.

Note that CPT is differentiating between those who can independently report versus those who work under the supervision of a physician, but who do not independently report their services. Presumably, separately reporting is equivalent to separately billing. Note that supervision is required, but the term “supervision” is not defined. Also, CPT addresses the term “qualified,” to some extent. Supervised personnel should be allowed by law, regulation, and facility policy in order to qualify. While this liberalization in language is noteworthy, the question of how these concepts fit into various CMS rules and regulations is certainly worth consideration.

The second change appeared in both the update to MPFS and the OPPS for CY2014. The primary discussion is in the December 10, 2103, Medicare Physician Fee Schedule update, pages 74410–74414. Thus five pages of rather fine print are devoted to making incident-to billing of services subject to state laws. While there are certainly some ancillary considerations, such as for clinical psychologists, the main discussion is directed toward physicians and qualified non-physician practitioners providing medical services.

On page 74412, there is a nice but somewhat extended summary from CMS. Here is a parsed version and comments.

After consideration of the comments, we are finalizing our proposal to adopt a new condition of payment imposing a requirement to comply with state laws for services furnished incident to a physician’s or other practitioner’s professional services

Note that CMS refers to this change as part of the Conditions of Payment. The Conditions of Payment are typically found at 42 CF §414.  However, this specific change is to 42 CFR §410.26, ‘Services and supplies incident to a physician’s professional services’.

We believe this requirement will protect the health and safety of Medicare beneficiaries and enhance our ability to recover federal dollars when care is not delivered in accordance with state laws.

Notice that a part of this change involves CMS’ ability to recover federal dollars. Clearly, CMS is viewing this as a compliance issue and thus under the purview of recovery auditors.

In response to concerns that the proposal should be limited to state laws relating to who could perform the services, such as scope of practice or licensure laws, we believe that there are many and varied state laws that would protect the safety and health of Medicare beneficiaries. As such, we do not believe it would be prudent to limit the applicability as suggested.


Virtually every state has different rules and regulations for non-physician healthcare personnel. While most states have entities such as a “Board of Nursing,” there can be great variability relative to practitioners and other healthcare providers. For instance, in your state what sort of state rules and regulations apply to personnel classified as Certified Medical Assistant or Suture Technician? There are many different healthcare personnel titles. Some are recognized at the national level with certifications and/or state licensure while others are more localized titles.

In response to the commenter’s concern regarding technical and unintended violations of state laws, it is important that CMS only pays for services furnished in accordance with state law. In an effort to ensure that services are furnished in accordance with state law, it is expected that practitioners are cognizant of the qualifications of any individuals who provide services incident to the physician (or other practitioner).

This statement places the burden of proof on physicians and practitioners, who can bill on an incident-to basis, for the responsibility of knowing who is providing the services and that only qualified individuals provide these services. Absent any state or federal rules, who determines when an individual is qualified?

With regard to the comment stating that this regulation is unnecessary based on section 1156 of the Act, we note that compliance with section 1156 is a condition of eligibility and not an explicit basis for CMS to deny or recover payments for services furnished incident to services of a physician (or other practitioner) where services are not furnished in accordance with state law.

Again, CMS wants this type of requirement relative to payments so that recoupments can be effected as possible and appropriate.

After reviewing the comments we conclude that it is beneficial to make explicit as a condition of payment for ‘‘incident-to’’ services the requirement to comply with state law. The fact that another provision of the law might also be relevant to the situation does not mean that both are not appropriate or beneficial to the program.

What impact occurs with this change requiring services meeting state laws? For many, this change will really have little impact. These are the physicians and practitioners who are already using personnel that meet any applicable state laws, rules, and regulations. For others, operational changes may need careful consideration.

Another interesting point is that CMS is requiring adherence to state law. What if the individual performing the services is not subject to any state laws? What standards are in place for this type of situation?

On the hospital side, CMS’ statement is straightforward, as found in the OPPS update Federal Register that was also issued on December 10, 2013.

We believe it is appropriate to similarly require as a condition of payment for individual services that all hospital outpatient services furnished incident to a physician’s or non-physician practitioner’s services be furnished in accordance with State law requirements.  (78 FR 75060)

Note that for hospitals and facilities there is no incident-to billing. The reference to “services furnished incident to a physician’s or non-physician practitioner’s services” comes from another part of the Social Security Act relating to CMS making hospital payments. (See §1861(s)(2)(A) for physicians and §1861(s)(2)(B) for hospitals).

The really fundamental question raised relates to conformance with state laws, is whether or not it is the physicians, practitioners, and providers, who bear the medical legal liability for services, should be making the decisions as to who is qualified or not.

Bottom-Line:  Physicians, practitioners, and various healthcare providers will need to assess whether this change for requiring adherence to state laws necessitates any operational changes. The language used by CMS clearly indicates that recovery auditors will eventually be addressing this area for any possible recoupments. A closely related area is that of the requirement for direct physician supervision.

About the Author

Duane C. Abbey, Ph.D., CFP, is an educator, author and management consultant working in the healthcare field. He is President of Abbey & Abbey Consultants, Inc., which specializes in healthcare consulting and related areas. His firm is based in Ames, Iowa. Dr. Abbey earned his graduate degrees at the University of Notre Dame and Iowa State University.

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To comment on this article please go to editor@racmonitor.com


  1. For those of you who routinely work with non-physician practitioners and other types of qualified healthcare professionals, be certain to review the changes in the CFR for sections involving non-physician practitioners. The sections of interest are generally in the 42 CFR §§410.70-410.77.
  2. For those of you who really like to read the Federal Register entries, note how often the word “believe” is invoked by CMS. The use of this word in the Federal Register, that is, official federal regulations, is disconcerting, at best. What are you allowed to “believe”? The answer is that you can “believe” anything! Thus, CMS is telling us it believes its actions are appropriate, but apparently there is no concrete basis (e.g., studies, research, statistical analyses, statutory citations, etc.) for its actions.

CPT® is a registered trademark of the American Medical Association.


Duane C. Abbey, PhD, CFP

Duane C. Abbey, PhD, CFP, is an educator, author, and management consultant working in the healthcare field. He is president of Abbey & Abbey Consultants, Inc., which specializes in healthcare consulting and related areas. His firm is based in Ames, Iowa. Dr. Abbey earned his graduate degrees at the University of Notre Dame and Iowa State University. Dr. Abbey is a member of the RACmonitor editorial board and is a frequent guest on Monitor Mondays.

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