Many physician practices insist on using incident-to billing for services rendered by non-physician providers (NPPs) in order to avoid the 15 percent reduction of Medicare’s allowed amount (though often they know little about the required guidelines).

Incident-to billing brings with it confusion to practice operations, risks and liabilities associated with audits, as well as a hidden negative financial impact. Incident-to guidelines include specific guidance on what services may be billed under these provisions, plus information on reimbursement issues, carrier allowance variations, scheduling issues, and the controversy over which providers are permitted to bill incident-to.

Remember that “incident-to” is a term that relates mostly to Medicare services. Most other payers choose not to follow the same protocols when NPP services are reported.  

Oh, but wait! There is even more confusion when we add in the concept of split/shared services along with incident-to services. Split/shared services indicate when the physician needs to personally see the same patient the NPP is seeing. Add to this the fact that incident-to services continue to be targeted by payer audits and the question becomes this: is the risk really worth the reward of that extra 15 percent in reimbursement?

In order to perform a financial risk analysis properly, let’s make sure we have a clear understanding of incident-to services by summarizing some key aspects of these services:

  • Incident-to services are a Centers for Medicare & Medicaid Services (CMS) benefit definition, but they are not relevant to many other payers.
  • A service is considered to be incident-to when a non-physician provider (NPP) bills for his or her rendered services under their supervising provider’s name and National Provider Identifier (NPI).
  • There is a listing of “acceptable” NPPs who can perform incident-to services, with the listing generally including nurse practitioners, physician’s assistants, licensed clinical social workers, certified nurse midwives, clinical psychologists, and clinical nurse specialists.
  • Each practice performing incident-to services must have an employment arrangement with any NPP who bills for services under incident-to rules.
  • One physician may not bill for service under another physician’s name and NPI and then claim it is an incident-to service.
  • An NPP may be credentialed by Medicare to bill directly for services rendered under his or her own name and NPI, but the reimbursement drops from 100 percent of the allowed amount to 85 percent of the allowed amount.

In addition to the overall rules for incident-to services, there are these rules for each specific patient encounter:

  • Services billed as incident-to must be furnished under direct supervision, meaning the supervising physician must be in the office in the same general working area as the NPP at the time of the service and must remain available to offer immediate assistance.
  • New patient visits cannot be billed as incident-to and therefore fall under the split/shared services rule. The split/shared services rule requires that with a new patient encounter, the supervising physician must document his or her review of the history, perform key portions of the exam, and create a plan of care for the patient. This requires the physician to also see the patient face-to-face, making the visit a split or shared service when the NPP sees the patient during the same encounter. The only other option to collect 100 percent of the allowed charge is for all new patient encounters to be handled solely by the physician.
  • Established patients who present with new problems also must have a face-to-face encounter with the supervising physician, along with the creation of a plan of care for at least the new problem.
  • The documentation must indicate the involvement in the encounter for the NPP as well as the supervising physician for all split/shared services.

Despite all of the rules and regulations for incident-to services, there are two major reasons practices push to bill them as often as possible:

  • Doing so eliminates the need to have NPPs credentialed by Medicare to directly bill for services.
  • Performing incident-to services enables the practice to be paid 100 percent of the allowed amount (versus 85 percent for services billed by the NPPs directly).

Practices rarely consider the additional costs associated with incident-to services, but some are consumed by how much it would cost to not perform such services. However, full compliance with the rules for incident-to billing creates additional work for the providers. The risk of not following these rules very precisely could lead to the services being billed incorrectly, leaving the practice liable.

Let’s use some conservative examples to analyze the hidden costs involved in performing services incident-to.

The two biggest risk areas for added costs are new patient encounters and established patients who present with new problems. It is not unusual for an established patient to present with a new problem during a visit with an NPP, meaning the NPP has to bring the physician into the encounter in order to be able to bill for 100 percent of the Medicare allowed charge. When considering a practice’s volume of new patients and the volume of established patients with new problems, this could add up to a large number of patients who require an encounter with both providers.

These visits represent significant overhead expenses as well as increased work involved with each patient encounter, all yielding a minimal amount of extra payment.

For the best analysis, let’s consider the most commonly billed office visit codes for new and established patients, 99203 and 99213.The average payment for a new patient visit billed as a 99203 is $108, while an established patient billed with 99213 pays $73. These reimbursement are based on 100 percent of the Medicare allowed amount.

If these patients were seen by the NPP only and not billed as incident-to, the reimbursement would be 15 percent less, resulting in decreased reimbursement as noted in the following:

Service Code

Average Reimbursement

NPP Reduced Reimbursement

NPP Reduced Rate











When you look at these per-patient payments, it appears that not billing incident-to could be quite costly for most practices. What is not factored into this analysis, however, is the cost of the increased work involved with many incident-to services and its impact on patient volume.

The extra work involved comes from the rules stated relevant to the split/shared encounters, which require that both providers, the supervising physician and the NPP, see the patient. This requirement causes a decrease in schedule availability because both physicians typically will not be seeing the same volume of patients per hour, which decreases the potential revenue those providers generate.  

Using the reimbursement figures above, if a physician conservatively sees four patients an hour (one patient every 15 minutes) and we have to lessen that to three patients per hour in order for the physician to share in these encounters with the NPP, then we have lost $108 per hour for new patients and $73 per hour for established patients. 

Even if we assume that the physician’s schedule is only reduced to 3.5 patients an hour, the decrease in reimbursement is $54/$37 per hour, respectively. The physician is losing money in this incident-to model because his or her schedule cannot be filled to its potential capacity. For physicians paid on an RVU contract arrangement, this could have a huge impact on their personal income as well as on that of the managing practices.

We still have not factored in another compounding financial impact for the practice: the increased expenses and lost productivity for the NPP. After the NPP sees the patient, he or she will spend time in the hall waiting for the supervising physician to come out of room.

The NPP then must explain what is going on with the patient, typically reentering the room with the physician, and then must come out of the room and spend time further discussing the patient. All of this is scheduling time wasted. Using the same formula for the NPP’s service as we did for the physician’s service, if the NPP conservatively sees four patients per hour, this additional waiting and extra encounter time with the patient also would decrease the volume of patients seen by the NPP. 

When we combine the lost reimbursement from the NPP and the supervising physician due to dual encounters, the negative financial impact is doubled. Now, the practices face a loss of $108/$74 when each provider sees 3.5 patients per hour, and $216/$146 if the rate slows to three patients per hour. 

All of this work and lost potential revenue represents an offsetting financial gain of just $16/$11 per patient for billing all services incident-to. Even at a rate of four patients per hour, the financial gain of $64/$44 pales in comparison to the potentially substantial financial losses under incident-to services.

So, how much is performing incident-to services costing your practice? In order to determine the negative impact on the bottom line you potentially face, figure out how many patients the supervising physicians and the NPPs are seeing on a given clinic day’s schedule and increase the patient volumes for each provider by one patient per hour (number subject to variances based on each individual provider’s characteristics). 

Then, calculate the cost of doing business in this manner using the models above and figure out the cost to your practice. It is well-understood that many providers prefer that new NPPs work with supervising physicians until there is a comfort level between supervising and the NPP – that is certainly understandable, but that is not what we are discussing here. The scenario we are describing is when practices elect that incident-to services will be part of their regular schedule.

Use the following charts to figure out for your practice which form of patient services represents the most financial sense while allowing you to maintain the highest integrity of medical care.

Service Code

Average Full Reimbursement

4 Patients per Hour Average Full Reimbursement

3 ½  Patients per Hour Average Full Reimbursement

3  Patients per Hour Average Full Reimbursement












Service Code

Average 85 percent Reimbursement

4 Patients per Hour Average 85 percent Reimbursement

3 ½   Patients per Hour Average 85 percent Reimbursement

3   Patients per Hour Average 85 percent Reimbursement













If your practice is able to maintain both providers at a full capacity of four patients per hour, with the NPP at the reduced reimbursement rate (85 percent), their combined revenue still would be $800/$540, as opposed to taking them both down to even 3.5 patients per hour for a combined revenue of $700/$473.

This chart represents combined reimbursements at the non-incident-to service level (100 percent for the physician’s service and 85 percent for the NPP’s service).

Service Code

Combined Average Reimbursement

4 Patients per Hour Average 85 percent + 100 percent Reimbursement

3 ½    per Hour Average 85 percent + 100 percent Reimbursement

3    per Hour Average 85 percent + 100 percent Reimbursement












This is only the financial side of analyzing the cost of doing business under incident-to services, but remember all of those rules we discussed in the beginning. When they are not always followed and encounters are not appropriately documented, the practice’s potential liability in terms of potential fines, penalties, and recoupments will be much higher. 

When discussing incident-to services with practices over the years, a common sentiment expressed is the practice’s belief that it cannot afford to take the reduced reimbursement rate of 15 percent from not billing services incident-to. Most have not taken the time to analyze the cost of doing business this way.

Take the time to evaluate your practice and see if modifying your current use of NPPs is in your best financial and productivity interests.

About the Author

Shannon DeConda is the founder and president of the National Alliance of Medical Auditing Specialists (NAMAS) as well as the President of Coding & Billing Services and a partner at DoctorsManagement, LLC. Ms. DeConda has more than 16 years of experience as a multi-specialty auditor and coder. She has helped coders, medical chart auditors, and medical practices optimize business processes and maximize reimbursement by identifying lost revenue. Since founding NAMAS in 2007, Ms. DeConda has developed the NAMAS CPMA® Certification Training, written the NAMAS CPMA® Study Guide, and launched a wide variety of educational products and web-based educational tools to help coders, auditors, and medical providers improve their efficiencies.

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