Incident-to Billing Investigation Ends in $118,000 Fine

A blue door with two small holes in it.

A physician in Texarkana, Texas recently agreed to pay $118,000 to settle allegations he engaged in improper billing practices for his Medicare patients at three of his clinics.

According to the allegations, Dr. Donald S. Douglas’ advanced practice nurses (APNs) were hired to assist him with seeing patients in his clinics. By law, if the services are provided with proper physician supervision, they may be billed to Medicare at the full physician rate. Without direct supervision, APNs may bill Medicare, under their own national provider identifiers (NPIs) at a reduced rate. 

It was alleged that Dr. Douglas billed Medicare for services provided by his APNs at the full physician rate, even when a physician was not available to supervise the APNs’ services.

This is in violation of what is known as the “incident-to†rule. That rule allows physicians to bill Medicare at the full physician fee schedule amount for the services that are performed by a non-physician practitioner, if the services are:

  • Provided under the “direct supervision†of the physician. It is important to note that the physician must be present in the office suite while the services are being provided and immediately available to provide assistance if needed.
  • Included in a treatment plan for an injury or illness where the physician performs an initial service and is involved actively in the course of treatment.
  • The Medicare-credentialed physician must initiate the patient’s care. If the patient has a new or worsened complaint, a physician must conduct an initial evaluation and management (E/M) service for that complaint, and must establish the diagnosis and plan of care.
  • The physician must see the patient at a frequency that reflects his/her active involvement in the patient’s case.
  • The incident-to service must usually be performed in the office setting, and must be part of the normal course of treatment of a diagnosis or illness.

Under the terms of the settlement agreement, Dr. Douglas did not admit liability. The government does not allege that the services were not provided, or that Dr. Douglas’ APNs provided inferior care. It is unclear why the government chose to investigate or how it came to its conclusion. However, audits and whistleblowers are two ways such a case might come to the attention of investigators.

Incident-to investigations happen all of the time because some practices simply do not realize that a physician must be on site when those under their charge deliver care. In some instances, physicians get into trouble because notes in a patient’s record are copied and pasted each time a patient comes in, even if that patient has a new complaint.

Incident-to guidelines do not allow a non-physician practitioner to bill incident-to a physician’s when a new problem is addressed. In such instances, the patient either must see the physician or the non-physician practitioner must bill under his or her own name.

Earlier this year, the Medicare Payment Advisory Commission (MedPAC), recommended that incident-to billing for ARNPs and PAs be scrapped, requiring them instead to bill directly for services they provide. Medicare pays 85 percent of the fee schedule amount when they bill directly, compared to 100 percent when they bill under the incident-to option. MedPAC argues that such a move not only would save Medicare approximately $50 million to $250 million a year, but also would improve transparency and provide Medicare with more accurate data on who is providing care.

“Requiring direct billing and eliminating ‘incident to’ billing for NP and PA services could enable Medicare to set payment rates for PFS services more accurately and allow policymakers to evaluate the cost and quality of care delivered by NPs and PAs. In addition, because Medicare pays for services at 85 percent of the PFS rate for care billed by NPs and PAs, eliminating ‘incident to’ billing would produce program savings and reduce beneficiary cost-sharing,†MedPAC noted.

The Health Law Offices of Anthony C. Vitale provides consulting and compliance advice on Medicare’s Incident-To Rule.  Give us a call at 305-358-4500, or send an email to and let’s discuss how we might be able to assist you.

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The Health Law Offices of Anthony C. Vitale