Medicare's incident-to billing rules, codified at 42 CFR 410.26, let a physician bill for a nurse practitioner's or physician assistant's office visit at the full Medicare Physician Fee Schedule rate rather than the 85 percent rate that applies when the nonphysician practitioner bills under a separate National Provider Identifier. That gain depends on two conditions holding on every claim: the nonphysician practitioner must be working under the physician's direct supervision, and the service must fall within a plan of care the physician personally established. When either condition is missing, the claim was never properly payable as incident-to, and a single documentation gap can turn into a demand for repayment across every similar claim a Recovery Audit Contractor or Medicare Administrative Contractor pulls into its sample.
Direct Supervision Inside the Office Suite
Direct supervision, defined at 42 CFR 410.26(a)(2) and Medicare Benefit Policy Manual Chapter 15, Section 60.1B, requires the supervising physician to be present in the office suite and immediately available to furnish assistance and direction for the entire time the auxiliary personnel member is performing the service. The physician does not need to be in the exam room, but a physician who has left the building or is seeing patients at a hospital does not satisfy direct supervision, even if reachable by phone. Auxiliary personnel, defined at 410.26(a)(1), includes any individual acting under the physician's supervision, whether an employee, a leased employee, or an independent contractor, so long as that individual is not excluded from federal healthcare programs. Only the supervising physician may bill Medicare for the resulting service.
The Established Plan of Care Requirement
Beyond supervision, Medicare Benefit Policy Manual Chapter 15, Section 60.1B requires that an incident-to service be furnished during a course of treatment the physician personally initiated. The physician must have performed an initial evaluation, documented a diagnosis, and set the plan of care, and subsequent physician visits must occur with a frequency that reflects active management of that course of treatment. When an established patient presents with a new problem outside the existing plan of care, the nonphysician practitioner's visit does not qualify as incident-to until the physician personally evaluates the new complaint and documents a plan addressing it. The claim must also support medical necessity under the applicable local coverage determination, since a plan of care that does not match the diagnosis and service billed invites the same scrutiny as a missing supervision log.
RAC and MAC Scrutiny of Incident-To Claims
The financial gap between the 100 percent physician rate and the 85 percent nonphysician practitioner rate creates an incentive to bill incident-to more often than the supervision and plan-of-care rules allow, and Medicare's contractors know it. The Department of Health and Human Services Office of Inspector General opened a national audit of Medicare Part B incident-to payments in November 2024, project number OAS-25-01-003, to determine whether claims billed under a physician's National Provider Identifier met Medicare's coverage requirements. A Medicare Administrative Contractor typically opens the file with an additional documentation request, then compares the supervising physician's schedule, the nonphysician practitioner's visit notes, and the plan of care against the billed claims. A RAC review, or a targeted SMRC audit, follows the same documentation trail. Where the record does not support supervision or an established plan of care, the contractor does not stop at the sampled claims. It extrapolates the error rate across the full universe of similar claims and issues a recoupment demand for the projected total, often reaching far beyond what the sampled charts alone would show.
An incident-to claim without the physician's own initial visit and a documented plan of care was never a physician's service to bill in the first place.
Why Early Legal Counsel Is Critical
It is critical for a physician who receives an additional documentation request or an audit notice referencing incident-to claims to retain healthcare defense counsel before responding. Early counsel can organize supervision logs, physician schedules, and plan-of-care documentation into a record the contractor will credit, and distinguish an isolated documentation gap from a pattern the government might read as a knowing violation. A practice that waits until after a recoupment notice, or worse, a payment suspension tied to a credible allegation of fraud, has already lost the chance to shape how the government characterizes the claims at issue.
How Health Law Alliance Can Help
Health Law Alliance represents physicians and practices in Medicare Part B incident-to billing audits, additional documentation requests, and RAC and MAC appeals, as part of the firm's Medicare audit defense practice. If your practice has received an incident-to related audit finding and needs its supervision and plan-of-care documentation organized before a response is due, contact us for a free, confidential consultation.
