Update: Decoding “Incident to” Services

Original story posted on: October 17, 2018

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This is the definition of “incident to” for supervision requirements in hospitals.

A recent RACmonitor article focused on the level of physician supervision required when services are provided “incident to” an encounter in the clinic setting. This article will focus on the level of supervision necessary in the hospital, where the rules are less restrictive in some ways, but more restrictive in others.

Imagine that an employee asserts that an organization owes millions of dollars because there was insufficient supervision of outpatient hospital services. You provided chemotherapy and other services, but there wasn’t a specific doctor of the day identified in the record. 

The hospital employee, convinced that you need to have a specific physician supervising each service, asserts that unless you refund the cost of all of the chemotherapy drugs provided, you will have committed fraud. Is the employee right? The answer is a resounding “no.” The answer is also complicated. When it comes to the supervision of outpatient hospital services, the Centers for Medicare & Medicaid Services (CMS) treats therapeutic services and diagnostic services differently. Many therapeutic services do require direct supervision by a physician (CMS has issued a list of services that can be provided under general supervision), but the way CMS defines “direct supervision” in the outpatient hospital context is different than the definition used in the clinic.

In fact, at times, CMS has defined the supervision requirement differently for services that occur in a hospital from those that occur in an off-campus, provider-based department. Now, the expectations are more comparable.

According to the Medicare Benefit Policy Manual, Chapter 6, 20.5.2, for therapeutic services, “direct supervision” means the physician or non-physician practitioner must be present on the same campus where the services are being furnished. The physician can be in an office building that is part of the campus, but not part of the hospital. The supervisor must be immediately available to furnish assistance and direction throughout the procedure. 

I would emphasize, however, that there is no need to identify the supervising physician in advance. As long as there is a supervisor physically present, it’s proper to bill the services. This Manual section is based on the regulation found at 42 CFR 410.27. It requires that the physician must be immediately available to furnish assistance and direction throughout the performance of the procedure. 

In a strange twist, the Manual also requires that the supervising physician be able to step in and take over the service. This provision does not appear in the regulation, and is more restrictive than the Manual instructions for clinic services. Since the requirement isn’t in the regulations, its validity is subject to challenge.

For most services, non-physician practitioners (including NPs, PAs, clinical nurse specialists, certified midwives, and clinical psychologists and licensed social workers) can supervise the service. However, for cardiac and pulmonary rehabilitation, only a physician may provide the direct supervision. 

The bottom line is that in the hospital, there is more leeway with respect to the geographic boundaries of supervision, with it being quite clear that the supervisor may be located anywhere on campus. But the Manual attempts to impose more restrictions on the expertise of the supervising physician. In the clinic, any physician can provide the supervision. According to the Manual, in the hospital, the supervisor must have the skill to step in and take over the delivery of care. To repeat, whether that Manual provision is enforceable is open to question.

Because the supervision requirements are so confusing, they often result in situations in which hospitals prepare to refund unnecessarily.


Program Note:

Listen to David Glaser every Monday on Monitor Mondays, 10-10:30 a.m. EDT.

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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