Medicare pay for services by nonphysicians comes under scrutiny

OIG finds the "incident to" rule is allowing care to be provided by nonphysicians who lack the necessary qualifications.

By — Posted Aug. 24, 2009

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Medicare is paying millions of dollars for claims on services that are performed by nonphysicians who are not properly trained or qualified, according to a report released Aug. 5 by Dept. of Health and Human Services investigators.

The HHS Office of Inspector General examined Medicare Part B data for the first quarter of 2007 to determine how often the program paid for services billed by physicians but performed by nonphysicians, through a provision known as "incident to" services. Under this rule, physicians are allowed to bill for a treatment performed by a nonphysician, as long as that worker has the appropriate training, certification and licensure. Physician assistants, nurses, medical technicians and medical assistants are included in the nonphysician category.

For this study, OIG only looked at cases where a physician used the "incident to" rule to bill more than 24 hours worth of services in a single day.

Nonphysicians who were not appropriately qualified performed 21% of the services that physicians billed but did not perform personally, OIG found. Medicare paid $12.6 million for approximately 210,000 of these inappropriate services during the first three months of 2007. These nonphysicians did not possess the necessary licenses or certifications, had no verifiable credentials, or lacked the training to perform the service, the agency said. OIG also found that nonphysicians with inappropriate qualifications performed 7% of invasive services billed by physicians who did not perform them.

The "incident to" rule is a useful tool for busy physicians and "a billing mechanism that is widely used," said Abby Pendleton, a partner with Health Law Partners in Southfield, Mich. But it could place patients at risk for receiving care from someone who is not qualified.

Billing for nonphysician-provided services at the full physician fee schedule amount is allowed if those services are directly supervised by a physician. This means that the doctor must be present in the office suite and available to provide assistance, though it does not always mean he or she must be present in the room while the procedure is being performed.

The Medicare fee schedule often prompts physicians to bill under their own name rather than having a nonphysician bill for a service, Pendleton said. "They try to accomplish 'incident to' billing if they can because of the additional revenue."

American Medical Association policy supports Medicare payment to physicians for all services provided by supervised physician assistants and nurse practitioners, in accordance with applicable state laws. AMA policy adds that "the ultimate responsibility for these services rests with the physician."

For physicians who billed more than 24 hours of services in a day, half of the procedures billed were not personally performed by the physician, OIG discovered. During the three-month period in 2007, Medicare paid $105 million for approximately 934,000 services that physicians personally performed, and about $85 million for 990,000 services that nonphysicians conducted. Nonphysicians performed almost two-thirds of the invasive treatments that physicians billed to Medicare.

Although OIG's sample represents a small percentage of physicians -- 3,165 of the 805,401 physicians who billed Medicare in the first three months of 2007 -- the agency said it is concerned about the potential widespread scale of the practice.

"Services performed by unqualified nonphysicians represent a risk to Medicare beneficiaries," OIG wrote.

Suggestions for CMS

The physical therapy industry also expressed concern about how big the "incident to" problem might be. OIG reported that nearly half of all rehabilitation therapy services it surveyed was performed by unqualified therapists.

The American Physical Therapy Assn. said it is alarmed by the findings. "To ensure high-quality care, physical therapy services should be furnished by licensed physical therapists and physical therapist assistants under the direction and supervision of a physical therapist," said R. Scott Ward, PhD, APTA president and a PT in Salt Lake City.

Because the problem might be more widespread, OIG made three recommendations to the Centers for Medicare & Medicaid Services. The advice includes changing the "incident to" rule to ensure that when physicians do not personally perform services for which they are billing Medicare, those services must be performed by another licensed physician or a nonphysician with the appropriate training.

CMS agreed with this recommendation, saying in a response letter to OIG that it is "currently in the process of clarifying the manual policies." The Medicare agency did not agree, however, with an OIG recommendation that physicians who bill for services they did not perform should use a code modifier on Medicare claims.

While it did not object to the underlying objective, CMS cited the difficulty of crafting a definition of what is "personally performed," because incidental services often are shared by physicians and staff.

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Tighter rules for use of nonphysicians

Under the "incident to" rule, Medicare Part B pays for some services that are billed by physicians but performed by nonphysicians. The Dept. of Health and Human Services Office of Inspector General says these services might be used improperly. The agency recommends the Centers for Medicare & Medicaid Services:

  • Revise the "incident to" rule to require that physicians who bill Medicare but don't perform the services themselves ensure that the services are provided by a licensed physician or a nonphysician with the necessary training, certification or licensure.
  • Require that physicians who use nonphysician services identify this with a service code modifier on bills.
  • Take appropriate action to detect when physicians bill for "incident to" services that are not covered under the rule.

Source: HHS Office of Inspector General (link)

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