Removing “Incident to” Billing: Recommendations from Policy Experts

Alesandra Hlaing

Associate Editor

Loyola University Chicago School of Law, JD 2020

Earlier this year, the Medicare Payment Advisory Commission (MedPAC) unanimously voted to recommend removing “incident to” Medicare billing for advanced practice registered nurses (APRNs) and physician assistants (PAs). MedPAC serves as an independent congressional agency that advises Congress on Medicare-related issues by analyzing access and quality of care. If this recommendation is adopted, APRNs and PAs would only be able to bill Medicare directly, thus reducing the amount paid by Medicare from 100% under services billed “incident to” to 85% directly. This recommendation could potentially save the Medicare program up to $250 million annually and would allow for better data collection into the amount of services performed by APRNs and PAs, whose services are often masked under “incident to” billing reports. Though there is still some debate on whether the financial loss of losing this option is too high for primary physicians who may hire APRNs and PAs for their practice, the benefits of billing directly likely outweigh the losses.

What is “Incident to” Billing?

“Incident to” is a form of billing that allows services to be furnished by non-physician, mid-level practitioners working in a physician’s office that are billed under the physician’s national provider identification (NPI) number. Billing “incident to” allows services to be reimbursed at 100% of the physician fee, despite not all services being performed by physicians. However, Medicare sets out requirements for “incident to” billing. In order to bill “incident to” services, the services performed must be integral to the physician’s overall services throughout the treatment of an injury or illness. Additionally, Medicare has strict supervision requirements regarding the presence of the physician who performed the initial service. Though Medicare has attempted to set out these rules as clear and concisely as they can, the various requirements are often misunderstood by providers and may lead to  noncompliance or fraud. However, the penalties for failing to adhere to these billing requirements are not cheap, with especially if left uncorrected over time. This creates heightened requirements for physicians and advanced care practitioners to ensure all communications and dealings with the patient are documented thoroughly and properly in the electronic medical record. With the pressures of failing to meet these sometimes ambiguous guidelines high, many healthcare professionals agree that “incident to” billing should be reformed.

Removing “Incident-to” Billing: A Solution?

The culmination of health policy experts’ growing concerns regarding incident-to billing came in the form of the MedPAC proposal to remove “incident to” billing for APRNs and PAs. Health policy experts estimate that roughly 30-40% of evaluation and management office visits were conducted by either nurse practitioners and physician assistants in 2016. With such high rates of services being furnished by APRNs and PAs, policy experts believe that this form of billing obscures the number of services provided by non-physicians, and grows more prevalent as the healthcare industry continues to expand beyond the traditional physician-centered form of care. However, despite many policy experts agreeing that there needs to be a change, there is some difference in opinion on how “incident to” billing should be reformed. Advocates on behalf of APRNs and PAs argue that PAs and nurse practitioners should still be getting 100% directly, since the services essentially do not change as they initially provided the same level of work under the “incident to” system.

These advocates are also concerned that by changing the CMS requirements, physicians may opt out of hiring PAs or nurse practitioners because they would rather receive 100% reimbursement by hiring a fellow physician. Similarly, some experts are concerned that this change may negatively impact the quality and access of care. By cutting 15% of the revenue being reimbursed by CMS, physicians and their practice will have to readjust their expenses, which may result in removing PAs and nurse practitioner’s where they are required for better access to care. Ultimately, this recommendation serves as a good first step in evaluating the “incident to” billing system and how to reform it to better reflect the changing dynamics of primary care.