Decoding “Incident to” Physician Services

Original story posted on: October 3, 2018

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The definition of “incident to” for physician services remains confusing.

Medicare uses the term “incident to” as shorthand for services that are “incident to a physician’s services.” The term would be confusing enough if its meaning was always the same, because conceptualizing what sorts of services are “incident to a physician’s services” isn’t easy. But the term is not used consistently. This article will describe the level of physician supervision required for services “incident to” in the clinic, and a follow-up will discuss the supervision requirements in the hospital.

The supervision requirements for services “incident to” in a clinic and in a hospital are different, despite the identical phraseology. The supervision requirements for services in the clinic are contained in two regulations: 42 CFR 410.26, plus the diagnostic test rule at 42 CFR 410.32(b)(3), to define “direct supervision.”

According to the rule, direct supervision in the office setting means the physician must be present in the office suite and immediately available to furnish assistance and direction throughout the performance of the procedure. It does not mean that the physician must be present in the room when the procedure is performed. Amazingly, the rule tells us more about what direct supervision is not than what it is. We know it does not require presence in the room, but what is the boundary of the office suite?

No regulation or even manual provision answers that question, so the bottom line is that we don’t know. I’ve often said that the physician should be able to reach the patient within about 30 seconds. I can’t point to legal authority for this assertion; I am relying on common sense. The only logical reasoning behind the supervision requirement is a patient safety issue. If the physician can be at the patient’s side within 30 seconds, it’s difficult to see how anyone could find fault with the level of supervision. 

To the best of my knowledge, the only other guidance from the Centers for Medicare & Medicaid Services (CMS) on the definition of “office suite” is found in a Federal Register entry issued Jan. 9, 1998. This text was in the preamble to a proposed rule that was never adopted. In other words, its regulatory significance would seem to be zero. But it at least offers some insight into what CMS thought “office suite” meant in 1998:

“We are not proposing that there must be any particular configuration of rooms for an office to qualify as an office ‘suite.’ However, direct supervision means that a physician must be in the office suite and immediately available to provide assistance and direction. Thus, a group of contiguous rooms should in most cases satisfy this requirement. We have been asked whether it would be possible for a physician to directly supervise a service furnished on a different floor. We think the answer would depend upon individual . . . circumstances that demonstrate that the physician is close at hand. The question of physician proximity for physician referral purposes, as well as for incident to purposes, is a decision that only the local carrier could make based on the layout of each group of offices. For example, a carrier might decide that in certain circumstances it is appropriate for one room of an office suite to be located on a different floor, such as when a physician practices on two floors of a townhouse.”

Based on that language, it is quite clear that there is no definitive definition of “office suite.” Until there is, I plan to stick by my 30-second test. I wouldn’t say that is etched in stone; 40 seconds may work too, but I would only feel comfortable defending situations in which the physician can reach the patient quickly. Some contractors have issued interpretations excluding any skyway or situations in which the physician is in an adjacent building. While the support for those positions is not entirely clear, I would not advocate for it, because it would be more difficult to argue that a different building is part of the same “office suite” than it would be to argue about a room on another floor of the same building.

When the postal address of the space is different, there is a heightened risk that the judge could conclude that the space isn’t part of the same “suite.” The lack of any more guidance from CMS, however, means that it is possible to defend many configurations.

Given the lack of detail, I would certainly be hesitant to refund money for any service if the physician was able to reach the patient in a short amount of time.


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David M. Glaser, Esq.

David M. Glaser, Esq., is a shareholder in Fredrikson & Byron’s Health Law Group. David helps clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and a member of the RACmonitor editorial board.


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