Kusserow on Compliance: DOJ “incident to” rule enforcement effort defeated in jury trial

For what may be the first time, the Department of Justice (DOJ) has tried to employ criminal prosecution to the “incident to” billing aspect of outpatient services. This effort led to a defeat for the government and is likely to have considerable impact on future DOJ actions that follow this avenue of prosecution in the future.

“Incident to”

Incident to” billing is a way of billing outpatient services (rendered in a physician’s office located in a separate office, an institution, or a patient’s home) provided by a non-physician practitioner (NPP) such as a nurse practitioner (NP), physician assistant (PA), or other non-physician provider. When and under what circumstances such billing may occur has been the subject of considerable confusion.

The case

After a five-week long criminal trial in the U.S. District Court for the Eastern District of Virginia, a prominent Washington, D.C. area physician was found not guilty of 41 counts of fraud, which alleged that the clinician created a fraud scheme to defraud Medicare and TRICARE programs, along with commercial insurers. During the trial, charges were also dropped. The final claims going to the jury alleged improper billing for: (1) unnecessary surgeries to remove skin cancer; (2) services performed by medical assistants “incident to” the surgeon’s services (see 42 C.F.R. § 410.26) and billed under the surgeon’s provider number rather than the supervising practitioner’s number; and (3) consultation services by an independent contractor physician, which were billed at amounts higher than permitted under laws related to diagnostic testing.

The jury unanimously acquitted the physician. The defense counsel noted that the trial was one of the DOJ first attempts to bring criminal charges in order to enforce its interpretations of Medicare’s “incident to” and “anti-markup” regulations. CMS recently issue clarifying guidance on the “incident to” rule that explained that, as a condition for Medicare Part B payment, all “incident to” services and supplies must be furnished in accordance with applicable state law. The definition of auxiliary personnel was also clarified to require that the individual furnishing “incident to” services must meet any applicable requirements to provide such services, including licensure, imposed by the state in which the services are furnished.

In some cases, the physician or practitioner supervising the service is not the same individual treating the patient in general. CMS is finalizing a proposal to specify that, in those cases, only the supervising physician or practitioner may bill Medicare for “incident to” services. Additionally, CMS is finalizing a proposal to require that auxiliary personnel providing “incident to” services and supplies cannot have been excluded from Medicare, Medicaid, or other federal health care programs, or have had their enrollment revoked for any reason at the time that they provide such services or supplies.

As with other enforcement actions by the government in the various areas of health care, it is advisable for anyone involved with “incident to” services to review their practices in light of CMS rules, regulations, and advisory guidance on the subject.

Rita Isnar, J.D., is a Senior Vice President at Strategic Management Services, LLC.

 Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2015 Strategic Management Services, LLC. Published with permission.