Incident-to billing presents one of the last remaining opportunities for physicians to multiply their services and increase their income without having to work harder. However, the regulations which govern this practice under both the federal Medicare program and the various state Medicaid programs can present pitfalls to unwary physicians and their staffs who fail to properly understand and apply them. These mistakes can lead to government intrusion, overpayment demands, audits and false claim allegations.

Both Medicare Part B and many state Medicaid programs include coverage of services that are rendered “incident-to” a physician’s services. Unraveling the requirements will help ensure that non-physician practitioner (NPP) billing is handled correctly. When such services are properly provided incident-to a physician’s services, an NPP’s services may be billed using the physician’s provider number and are allowed to be reimbursed at 100 percent of the Medicare and Medicaid physician fee schedules. Otherwise, NPP services must be billed at their Medicare or Medicaid program fee schedule which is typically 85 percent of the applicable physician fee schedule. Either way, the NPP must have his or her own active, valid Medicare or Medicaid provider number.

Key Criteria

In order to qualify as “incident-to” services for billing purposes, an NPP’s services must meet several criteria. These include: (1) the NPP must be licensed or certified to provide professional health care services in the state where the physician practice is located; (2) generally, the NPP must be a full-time, part-time or leased employee of the physician or physician group practice (although in limited cases, the NPP may be an independent contractor of the physician or physician group practice); (3) the NPP must provide services as an integral part of and incident-to the physician’s services; and (4) the NPP must provide such services under the direct supervision of the physician.

An Integral Part of the Physician’s Services

The foundation of proper incident-to billing is that the incident-to services must be an integral part of the physician’s services. The physician must have initially provided health care services to the patient whom the NPP is treating “incident-to” the physician’s services. This requirement does not mean that there must have been a service rendered by a physician for each visit by a patient. Rather, an ongoing course of treatment initiated by a physician with the physician seeing the patient at the first visit will qualify under the incident-to billing guidelines. In other words, a physician must see a patient at the first visit but would not necessarily have to see the patient for subsequent, related visits. However, if the same established patient reported a new chief complaint or problem, the physician would have to see that patient again for the new issue before an NPP saw the patient in order to be able to bill for the NPP’s services as incident-to the physician’s services.

Physicians and physician group practices often overlook this second point when treating patients for ongoing, related visits which also involve new chief complaints. This is an issue which both the Medicare and Medicaid programs focus on when auditing and reviewing claims. As a result, physicians and their group practices should develop policies and procedures for ensuring that they only bill incident-to services for those chief complaints and problems for which one of their physicians has seen a patient prior to services being rendered by an NPP.

Direct Physician Supervision

Perhaps one of the most misunderstood aspects of the incident-to billing rules is the requirement for direct physician supervision of an NPP providing incident-to services. Many state laws permit advanced registered nurse practitioners (ARNPs) and physician assistants (PAs) to furnish health care services to patients without a physician’s on-site presence or direct supervision. Many of these state laws permit “general” physician supervision.

However, incident-to services must be furnished under a physician’s direct supervision under both Medicare and many states’ Medicaid program regulations. Direct supervision means that a physician must be immediately available to provide assistance and direction while an NPP is providing services that the physician plans to bill as incident-to. While the physician does not have to be in the same room as the NPP, the physician must be in the same office suite. By far, this is the incident-to billing requirement which physicians and their group practices misunderstand and fail to comply with. Unfortunately, they often confuse the direct supervision requirements for incident-to billing with their state law supervision requirements. This is particularly true, for example, in Florida where ARNPs and PAs can practice under the general supervision of a physician. Thus, physicians and their office staff need to understand the difference between general supervision and direct supervision. They also must understand that the general supervision requirements for ARNPs or PAs under Florida law (and most likely in many other states as well) will not satisfy the direct supervision requirements for incident-to billing under either the Medicare program or perhaps the applicable state Medicaid program.

State Licensing Requirement

Another common misunderstanding physicians face when billing incident-to services is their misperception that an NPP may be licensed in another state and provide services to their patients in the state in which the physician’s practice is listed. However, both the Medicare and Medicaid program incident-to billing regulations require that the NPP be licensed or certified to practice in the applicable state before a physician can bill their services incident-to.

Failing to ensure that an NPP is properly licensed or certified to practice in the applicable state will result in an improper and potentially false claim for incident-to services. Moreover, allowing an NPP to perform services when the NPP is not licensed or certified to practice in the applicable state can result in allegations by the Department of Health that a physician is aiding and abetting the unlicensed practice of medicine or nursing. Physicians and their group practices need to ensure that their NPP’s are licensed or certified to practice in the applicable state before they permit them to render services to their patients and bill those services incident-to.

Institutional Settings

Finally, it is important to note that neither Medicare nor Medicaid incident-to billing regulations apply in institutional settings (i.e., hospitals or skilled nursing facilities). Physicians cannot bill Medicare Part B or many state Medicaid programs for services furnished by NPPs in an institutional setting even if they meet all of the other requirements such as direct supervision. Thus, physicians and their group practices must be very careful not to bill NPP services as incident-to when they are rendered in these settings.

Policies, Procedures & Compliance Plans

In order to prevent billing mistakes and problems with regard to incident-to services, physicians and physician group practices should develop specific policies and procedures for billing these services and make them part of their compliance plans. While the incident-to billing requirements appear to be simple and easy to comply with, many of the recent overpayment, audit, civil false claims act and even criminal cases instituted by the federal and state health care regulatory agencies tasked with overseeing the Medicare and Medicaid programs involve allegations of improper billing for incident-to services.

Health care providers are quickly moving toward electronic medical records (EMR). 
While estimated total market penetration is still less than 20 percent, many more providers are considering or transitioning to EMR. Physicians and physician group practices should understand the potential risks and pitfalls as well as the important considerations for assessing and negotiating EMR purchase and service contracts. For the unwary, the risks of poorly negotiated EMR contracts and the implementation of inefficient or even non-functioning EMR platforms can be devastating.

Understand the Risks
Some of the risks associated with the use of EMR include:

  • the loss of patient medical records due to computer system failures, computer viruses and other technical problems
  • increased difficulty in controlling access to medical records and limiting such access to only authorized personnel
  • controlling the ease with which patient medical records can be copied, communicated and/or disseminated to unauthorized users or by authorized users for improper purposes
  • countering the perception by patients that their medical records will not remain confidential and will be viewed or used improperly

Develop a Solid Security Plan
Computer hacking crimes and identity theft are two of the fastest growing crimes in the United States, and patient medical records present attractive targets for hackers and identity thieves because they usually contain the three essential pieces of information that hackers and identity thieves need:

1. a patient’s name
2. date of birth
3. social security number

As a result, any physician or physician group practice either using or considering the use of EMR should establish a solid and effective security plan as well as policies and procedures designed to protect your computer systems and EMR. You should not only ensure that you are compliant with the HIPAA Security Regulations, but also take the necessary steps to ensure that your systems and EMR are as secure as possible from outside intrusion. Hiring an outside vendor that specializes in systems and computer security, and has expertise in the HIPAA Security Regulations to conduct penetration testing, monitoring and auditing of your computer and EMR systems is an excellent first step.

 Additionally, physicians and physician group practices should develop written policies and procedures pertaining to the access of patient medical records, including EMR, as well as the dissemination and communication of patient medical record information and EMR. The use of simple tools such as password and encryption protection, and education and training which focuses on instructing employees not to discuss patient medical record information or give out or share their system passwords can provide an inexpensive and effective means for protecting the security of your EMR.

Five Keys to Negotiating EMR Contracts
When evaluating and negotiating EMR contracts, physicians and physician group practices should initially focus on at least five basic issues:

  1. Ascertain what support is available from the EMR vendor, and ask about response time, after-hours support, and whether local support personnel certified to work on the operating system are available.
  2. Inquire as to whether there is a charge for developing software updates and special reports for the particular EMR system.
  3. Ask whether the EMR system includes error correction features that can help prevent users from entering wrong data such as patient ages and medications. In fact, the ability of an EMR system to recognize medication errors both by the type of medication and the dosage of the medication is a critical function which you should negotiate into your EMR contracts and platforms.
  4. Ensure that the EMR system can maintain an audit trail so that unauthorized access attempts can be tracked, monitored and ultimately prevented.
  5. Check that the EMR system can import and export data. For example, EMR systems must be able to integrate and function with billing and patient scheduling software, as well as with outside vendors’ software for claims submission, billing and clearinghouse functions.

Additional Issues to Consider
When reviewing and negotiating potential EMR contracts, here are a few additional issues physicians and physician groups should consider:

  • Ensure that that your hardware and computer systems can support and be fully integrated with the EMR software you are purchasing.
  • Consider structuring your contracts so that they pay in stages after the completion of certain phases of the development, implementation and testing of the EMR system.
  • Review installation requirements, training, warranty and maintenance, vendor staffing, and data conversion and data transfer requirements.
  • Determine whether the contract contains an assignment provision which would allow the EMR vendor to assign the contract without your written consent.

Beware of Assignment Provisions
There has been a tremendous amount of consolidation among EMR vendors within the last two years. Specifically, some estimates state that in 2003 there were approximately 325 EMR vendors in the national marketplace, and at the end of 2005, other estimates indicate there were less than 150. Many of the EMR vendors who are no longer around have either been bought out by or have merged with other EMR vendors, or have gone out of business or declared bankruptcy. In some of the buy-out and merger situations, vendors have been able to reassign their contracts with physicians and physician group practices without those physicians’ written consent. Often in these situations, the new EMR vendor will not honor old contract provisions or does not want to integrate the old EMR vendors’ software with their own which can cause functionality problems for the EMR platforms that have been purchased. In some cases, physicians and physician group practices are faced with having to purchase new software at very expensive prices or the alternative — a non-functioning EMR system.

In addition, when EMR vendors have gone out of business or bankrupt, the physicians and physician group practices that have purchased their EMR products are often left without any support or ability to maintain their systems. Therefore, it is essential that physicians and physician group practices perform the appropriate financial and business due diligence on EMR vendors with whom they are considering contracting.

Michael R. Lowe, Esq. is a Florida board-certified health law attorney and shareholder at Michael R. Lowe, P.A. Located in Longwood, Florida, Mr. Lowe specializes in health care law with an emphasis on the representation of physicians and physician group practices.

Florida Supreme Court Overturns Caps on Wrongful Death Medical Malpractice Awards. In March, the Florida Supreme Court declared the statutory caps placed on non-economic damages in medical malpractice cases unconstitutional in cases involving wrongful death claims. The Court did so in McCall v. United States of America which was a federal tort case involving medical malpractice claims against the federal government and Air Force medical personnel. Significantly, the federal trial judge who heard the case awarded Ms. McCall’s surviving family members $2 million in non-economic damages, but reduced the award to $1 million based on Florida’s caps on non-economic damages. On appeal, the U.S. Eleventh Circuit Court of Appeals upheld the ruling finding that the caps did not violate the U.S. Constitution, but stating that the Florida Supreme Court should consider Florida constitutional issues. Thus, the Court did so and overturned caps on non-economic damages awards in wrongful death medical malpractice cases.

The McCall decision may or may not be addressed in further litigation and/or by the Florida Legislature. Regardless, it is significant for physicians and health care providers and professionals of all types because of its possible impact on the medical malpractice and professional liability industry in Florida. One only need recall the medical malpractice insurance crisis which Florida experienced in the early to mid-2000s which caused many physicians to go bare due to skyrocketing premiums and a large number of insurance carriers leaving Florida and no longer offering medical malpractice or professional liability insurance policies. The decision is also significant as the Florida Supreme Court has not yet ruled on whether caps on non-economic damages are unconstitutional in medical malpractice cases that do not involve a wrongful death claim. There are still several cases making their way through litigation and the appellate process which could ultimately end up before the Court and result in a ruling either way.

For physicians, hospitals, ambulatory surgical centers, and all other types of licenses health care professionals, facilities and providers, it is important to take note of the McCall decision and how it could impact them. Health care providers, facilities and professionals should review their professional liability and medical malpractice policies to determine if they have sufficient limits and coverage to address large claims and potential excess verdicts which might exceed their coverage limits as many current policies were designed, purchased and implemented after the statutory caps were put in place in 2003-2004 and before the McCall decision. Health care providers and professionals should also consider whether the McCall decisions impacts them if they have any currently pending medical malpractice professional liability cases involving wrongful death claims and/or potential excess verdicts.

Furthermore, they should consider retaining personal counsel in cases involving wrongful death allegations or significantly large potential damages claims which could result in excess verdicts. Another recommendation would be for all licensed health care professionals, and in particular doctors and physicians, to review their employment contracts or independent contractor agreements with any employer, facility or health care provider to ensure that they have sufficient medical malpractice or professional liability insurance coverage, including tail coverage, addressed in their contracts if such coverage is provided by their employer or the entity with which the contract to provide professional medical or health care services. Finally, all licensed health care professionals and health care providers and businesses should review their liability and asset protection planning to account for the changes which may result from the McCall and the underlying decision and any future decisions on caps on non-economic damages.

Mr. Lowe and our law firm regularly represent physicians and other licensed health care professionals in the defense of medical malpractice cases, review of their medical malpractice professional liability insurance policies and coverages, and personal counsel matters as well as the review of employment contracts. To contact us regarding such matters please visit our website www.lowehealthlaw. com or call our office 407-332-6353. Michael R. Lowe, Esq. is a board-certified health law attorney and shareholder at Michael R. Lowe, P.A., 800-571-5208. Michael R. Lowe Board Certified Health Law Lawyer.