Updated on: February 22, 2018

The Pitfalls of Billing Incident-To Services Provided by Therapists Without Credentials

Original story posted on: February 21, 2018

A recent False Claims Act case highlighted a range of perils.

Scripps Hospital recently paid $1.5 million to resolve a False Claims Act (FCA) case. There are several lessons to be learned from the complaint and settlement.  

First, when an FCA case is first announced or settled, people typically turn to the complaint, which is the first document filed by the relator or whistleblower in court and contains the allegations of wrongdoing. It is easy to assume that when the case settles, the information in the complaint must have been at least a little bit true. That is a bad assumption. 

First, parties to a lawsuit sometimes settle for convenience, even when the allegations are false. But there is a second, less obvious point. If the government identifies another problem through its investigation, a settlement might involve the new problem while the issues identified in the complaint are found to be baseless. The closest you can come to finding out what really prompted a settlement is to find the settlement agreement and look for the paragraph describing the “covered conduct.” The money paid to the government is for the covered conduct, and only those actions will be released from any further claims. While the complaint in this case lists a wide range of topics, the settlement focuses on services provided by uncredentialed therapists.

Medicare allows you to use uncredentialed therapists when the services are provided “incident to” a physician, but apparently this did not occur in this case. There are a number of conditions you must meet to bill “incident to.” Among them, there must be a physician in the office suite able to provide direct supervision; the physician also must perform an initial service to the patient and periodic ongoing services to demonstrate involvement in the course of treatment.

Scripps apparently concluded that one or more of the incident-to requirements was not satisfied, and it had self-disclosed the situation and given a refund to the contractor, but a whistleblower had already filed a lawsuit. The publicly available documents do not make it clear how much of the settlement was a refund of the overpayment and how much of it was penalties. 

Scripps issued a statement indicating that a physician was always on-site, strongly suggesting that the issue was that physical therapists who were not credentialed were seeing new patients without physician involvement. Personally, I am not a big fan of billing physical therapy “incident to.” There is very little upside. The only benefit I see is that under Stark, a group practice may credit physicians in the compensation formula for “incident to” services. 

In my mind, that small benefit isn’t worth the risk. Given that the reimbursement is identical for therapy supervised by physicians or provided directly by therapists, billing under the therapists’ number is generally the way to go. 

A final point: while Medicare allows you to bill for uncredentialed therapists “incident to,” that does not mean that it is always permissible. Don’t forget your state licensure rules and Medicaid and private insurance billing rules. They may also vary from Medicare, and from one another.

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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