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OIG Report Reveals Weakness in “Incident To” Rule

OIG recommends revision of the “incident to” rule. The Office of Inspector General (OIG) released a report, “Prevalence and Qualifications of Nonphysicians Who Performed Medicare Physician Services” analyzing services that nonphysicians perform for which physicians bill Medicare. The “incident to” rule involves physicians billing for nonphysician-rendered services that are compensated under Medicare Part B. Nonphysicians can include physician assistants, nurses, medical technicians, and medical assistants. According to the report, as the “incident to” services may be helpful for a busy physician, patients may be at risk for receiving medical care from a person who does not practice with the same standard of care or training as a physician or qualified nonphysician.

The study revealed that nonphysicians performed large percentages of procedures that “the physician did not perform personally.” For instance, “[i]n the first quarter of 2007, physicians who were allowed services that exceeded 24 hours of physician worktime in a day personally performed approximately half of these services. Nonphysicians performed the remaining services, which may have billed as ‘incident to’ services.” This provided for around $105 million for physician-rendered services and $85 million for nonphysician-rendered services. Put differently, physician-rendered services accounted for roughly 55% of the total services while nonphysician-rendered services accounted for roughly 45%. Furthermore, the OIG found that, in the same first three months in 2007,that Medicare allowed $12.6 million in unqualified nonphysician-rendered services (that is, roughly 14.5% of the nonphysician rendered services and roughly 7% of total billed services).

As a result of these findings, the OIG made three recommendations to the Centers for Medicare and Medicaid Services (CMS).
1. The OIG recommends that CMS revise the “incident to” rule to only allow physicians to bill Medicare under the “incident to” rule if another licensed physician performs the service or a nonphysician who has the necessary training to perform the procedure “under direct supervision of a licensed physician.”
2. The OIG recommends that CMS require physicians who utilize nonphysician services to bill under different service code modifiers “to ensure that physicians are billing for services performed by nonphysicians with appropriate qualifications.”
3. The OIG recommends CMS to take the necessary steps to address situations in which physicians bill for nonphysician-rendered services that were not “incident to” services.

CMS responded to the recommendations agreeing with the first and third, but stating the second recommendation would not be as easy to implement as the OIG suggests. “[I]ncidental services are often shared by physicians and staff, making definition of a service not ‘personally performed’ operationally difficult.” The OIG recognizes CMS’ concern, but maintains that it should continue to monitor and improve the “incident to” rule.

For more information, please contact Abby Pendleton, Esq., Jessica L. Gustafson, Esq., Adrienne Dresevic, Esq. or Carey F. Kalmowitz, Esq. at (248) 996-8510 or visit The HLP website.

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