This step-by-step guide breaks down Medicare’s guidelines and shows you what to look for in every audit.
Article Reference Code: NAMAS.11.21.2025
Written by: Scott Kraft, CPC, CPMA, CEMA
Whenever I’m auditing services billed under Medicare’s Incident to billing guidelines, I know I have two components to the audit. The first step is part of just about every audit – validating that the documentation supports the code billed by the provider.
The second challenge is to validate that the documentation created by the rendering Advance Practice Provider (APP) has addressed each diagnosis under a plan of care created at a previous visit by a practice physician.
Getting started
Medicare addresses its Incident to policy for services rendered by APPs in the Medicare Program Integrity Manual, Ch. 15, section 60. The component of APP services is mostly addressed in Section 60.3, located at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/bp102c15.pdf.
Next I’ll usually see what the appropriate Medicare Administrative Contractor (MAC) has to say about the topic. As an example, here is a CGS fact sheet: https://cgsmedicare.com/partb/mr/pdf/incident_to_provision_factsheet.pdf. This fact sheet notes that “Incident to” MUST be based on a previously identified problem and a Plan of Care previously established by the treating/primary provider.”
As an auditor, I’m auditing these services according to Medicare policy as written in the Program Integrity Manual and by the written policies of the appropriate MAC. There is a school of thought that these Medicare policies are an overreach of the law as written – this is not the place for that debate.
Validation of the appropriate codes
I’ll do an initial review of the note to determine what I believe the appropriate E/M code value is and whether the diagnosis coding is applied correctly per the note. I’ll make a notation of the findings.
I do it this way for a reason – even if I ultimately determine the service was not documented correctly under Medicare’s Incident to guidelines, typically the service is still billable under the rendering APP, so I want to make sure to provide guidance on the documentation as it exists.
Validation of incident to
The second review may be easy or it may be hard, depending on the note. But I need to validate that each condition assessed by the provider:
• Has previously been addressed in a visit with a physician of the same specialty/tax ID
• That the APP is performing this service under the parameters of that plan of care
As noted above, sometimes it’s easy – if the patient is a new patient to the practice, then it cannot be an incident to visit under Medicare policy.
If the patient has a complaint that is new to this visit – whether it is the only complaint or one of many – the assessment and plan created for this condition by the APP invalidates the ability to bill this visit as an incident to visit per the Medicare guidelines.
When every complaint is established, the next thing I review is whether the APP is making a change to the plan of care. Such changes could include the addition or subtraction of a prescription or over-the-counter medication, a decision for a minor procedure or the decision to order new imaging. Such decisions would all invalidate the service under incident to rules, unless there is a physician plan of care spelling out the timing of these things.
The last step is to toggle backward through the patient’s medical record to review the visits the patient had with physicians. We do this to source the location of the physician-created plan of care for each condition addressed in the visit with the APP.
As these plans are located, if the APP note follows the plan of the physician for each condition, then the visit supports incident to billing under Medicare rules. If not, then I go back to my initial review and the code I recommended, but note that it should be billed by the APP.
The complete validation of a service being appropriately performed as an incident to service contains a number of milestones to clear – this is one of the reasons why incident to billing is complicated and has a high error rate. Proceed carefully.
Other things to consider
Most payer guidance is clear that the plan of care created by the physician must be at a prior visit. Medicare tweaked the guidelines to make clear that split or shared billing – where two providers see the patient together – is a facility billing process. Incident to billing typically involves one provider and is appropriate predominantly for the office setting, or places such as a home visit.
As a result, absent clear guidance to the contrary from your MAC, the physician cannot come into an incident to visit with a new problem or need for plan revision, document those revisions and turn the service back over to the APP.
Medicare’s Incident to Guidelines also require that “there must be subsequent services by the physician of a frequency that reflects the physician’s continuing active participation in and management of the course of treatment.”
This is a wonderfully vague phrase and I recommend every practice set an internal policy that defines this frequency and active participation.
Also note that a provider-based clinic (such as place of service 22) is a facility setting and split or shared billing applies. Make sure incident to audits are taking place for services in place of service 11.
Lastly, incident to services require the direct supervision of a physician from the group, defined as in the office suite and immediately available to assist. This does not mean in the exam room, but typically within the same defined medical office where the service takes place. A separate medical suite – even in the same building – typically would not apply.
Practice schedules, as well as badging in and out or other means should validate the presence of a physician in the office suite. If the physician has stepped out, it cannot be an incident to service. The supervising physician does not need to be the one who created the plan of care.
If you have questions about this article or it’s content- Click here to connect with Scott on LinkedIn
Scott Kraft, CPC, CPMA, CEMA
I have more than 19 years of business-to-business content creation experience and strategic placement and management, focused on detailed policy and business analysis. I’ve also successfully development, managed and executed complex projects involving internal and external stakeholders to ensure delivery of strategic guidance and planning for diverse business markets, including attorneys, consultants, business owners and health care providers.
Disclaimer:
The NAMAS Blog features content written by both NAMAS staff and guest contributors. Guest contributors may present opinions or perspectives that differ from those officially instructed or encouraged by NAMAS. We believe in providing space for a range of informed viewpoints to foster dialogue, reflection, and deeper understanding within the auditing and compliance community.
Some contributors may use artificial intelligence (AI) tools in the development of their content. The decision to incorporate AI is left to the discretion of the author and does not reflect an endorsement or directive from NAMAS.
If you have questions, comments, or concerns about a specific blog post, we encourage you to contact the individual author directly. Their name and contact information are provided at the end of each post.
