In dermatology, non-physician providers play a growing role in patient care. As practices expand and patient demand increases, billing accurately and compliantly becomes more complex. One area that often raises questions is incident-to billing. The Office of Inspector General has added incident-to billing compliance to its 2025 Work Plan, with non-compliance penalties including 100% recoupment of overpayments plus interest and civil monetary penalties up to $50,000 per violation.
In dermatology, non-physician providers play a growing role in patient care. 11.51% of all dermatologic procedures are now performed by non-physician providers, with simple repairs being the most common procedure type at 25.73%. As practices expand and patient demand increases, billing accurately and compliantly becomes more complex. One area that often raises questions is incident-to billing.
This billing method has specific rules and only applies in certain situations. It is commonly used in practices that employ nurse practitioners or physician assistants, especially for follow-up visits.
Incident-to billing is a Medicare billing provision that allows services performed by non-physician providers (NPPs) to be billed under a supervising physician's National Provider Identifier (NPI) number. When billed this way, the service is reimbursed at 100% of the physician fee schedule, instead of the reduced rate of 85% typically paid when billed under the NPP's own NPI. For a dermatology practice performing 5,000 qualifying encounters annually at an average $120 reimbursement, incident-to billing represents $90,000 in recoverable revenue compared to standard NPP billing.
Incident-to billing is a Medicare billing provision that allows services performed by non-physician providers (NPPs) to be billed under a supervising physician's National Provider Identifier (NPI) number. When billed this way, the service is reimbursed at 100% of the physician fee schedule, instead of the reduced rate of 85% typically paid when billed under the NPP's own NPI.
In dermatology, incident-to billing applies when an NPP provides follow-up care for an established patient based on a treatment plan created by a physician. The physician must be present in the office suite and available to provide direct supervision during the visit.
For example, if a dermatologist initially evaluates a patient with eczema and sets up a treatment plan, the patient may return for a follow-up visit with a nurse practitioner. If the condition is stable and the treatment plan has not changed, the nurse practitioner's visit may qualify for incident-to billing.
Key terms to know:
Incident-to billing affects how dermatology practices are reimbursed for care provided by NPPs. When all requirements are met, services qualify for 100% of the physician fee schedule. Without incident-to billing, those same services are typically reimbursed at 85%.
This 15% difference directly impacts practice revenue. For example, if a follow-up visit is worth $100 under a physician's fee schedule, billing it directly under the NPP would result in $85. If billed incident-to, the practice would receive the full $100.
Benefits of proper incident-to billing include:
![Image: A dermatology practice workflow showing physician and NPP roles in patient care]
Medicare has specific requirements for incident-to billing that dermatology practices must follow. These guidelines determine when a service qualifies for the higher reimbursement rate.
For incident-to billing, Medicare requires direct supervision, which means the supervising physician must be physically present in the same office suite and immediately available to assist if needed. The physician doesn't need to be in the exam room but must be on-site.
During the COVID-19 Public Health Emergency, Medicare temporarily allowed direct supervision via audio and video technology. This policy has been extended through December 31, 2024. After that date, unless extended again, in-person supervision will be required.
Incident-to billing only applies to:
If a patient develops a new problem during an NPP visit, the physician must evaluate the new issue before it can be included in incident-to billing. For example, if a patient being treated for acne develops a suspicious mole, the physician needs to examine the mole and create a treatment plan before the NPP can provide follow-up care for that condition.
Medicare requires clear documentation to support incident-to billing. Each patient record should show:
Table: Medicare Incident-To vs. Direct NPP Billing
Requirement
Incident-To Billing
NPP Direct Billing
Supervision
Direct supervision required
General supervision only
Reimbursement
100% of physician fee schedule
85% of physician fee schedule
Patient Type
Established patients only
New or established patients
Problem Type
Established problems only
New or established problems
Documentation
Must reference physician's plan
Independent documentation
Medicare incident-to billing guidelines don't automatically apply to commercial insurance or Medicaid. Each payer sets its own rules, which may differ significantly from Medicare's requirements.
Some commercial payers follow Medicare's incident-to billing model, while others have different policies. For example, some payers:
State Medicaid programs also vary in their approach to incident-to billing. Some follow Medicare guidelines, while others have state-specific requirements.
To verify a payer's incident-to billing policy:
Remember that state scope of practice laws also affect what services NPPs can provide, regardless of billing rules. These laws vary by state and determine what procedures and treatments NPPs can legally perform.
Dermatology practices often make several common mistakes when implementing incident-to billing. Being aware of these pitfalls helps prevent claim denials and compliance issues.
One of the most frequent errors is billing incident-to for new patients or new problems. Medicare rules clearly state that incident-to billing only applies to established patients with established problems that the physician has already evaluated and treated.
In dermatology, this mistake often happens when:
When a new problem arises, the physician must evaluate it and create a treatment plan before the NPP can provide follow-up care under incident-to billing.
Another common error is failing to meet the direct supervision requirement. The supervising physician must be physically present in the office suite during the NPP's visit for incident-to billing to apply.
Supervision errors often occur when:
If the supervising physician isn't present, services must be billed under the NPP's own NPI at the lower reimbursement rate.
Proper documentation is essential for incident-to billing. Many claims are denied because the medical record doesn't clearly show:
Documentation should connect the NPP's service to the physician's plan and verify that supervision requirements were met.
Implementing effective incident-to billing processes helps dermatology practices maximize appropriate reimbursement while maintaining compliance.
Everyone involved in the billing process needs to understand incident-to requirements. This includes:
Training should cover:
Regular training updates keep staff informed about changes to payer policies and billing requirements.
Electronic health record (EHR) systems can help track incident-to billing requirements when properly configured. Consider:
These features help ensure that documentation supports the billing method used.
Internal audits help identify and correct incident-to billing errors before they become compliance issues. Quarterly reviews should examine:
When errors are found, use them as training opportunities to improve future compliance.
When implemented correctly, incident-to billing allows dermatology practices to receive appropriate reimbursement for services provided by NPPs. The key is balancing revenue opportunities with compliance requirements.
To maximize compliant revenue:
Dermatology practices that understand and properly implement incident-to billing can improve their financial performance while providing high-quality care through their entire provider team.
For practices seeking specialized support with dermatology billing, including incident-to billing implementation, Clarity RCM offers expertise in optimizing revenue cycle management specifically for dermatology. Visit clarityrcm.com/contact-us to learn more.
If the supervising physician becomes unavailable, the service must be billed under the NPP's own provider number at the lower reimbursement rate, as incident-to requirements cannot be met without direct supervision.
Incident-to billing applies only to medically necessary services covered by insurance; cosmetic services are typically cash-pay and not subject to incident-to billing rules.
Proper implementation of incident-to billing can increase reimbursement by approximately 15% for eligible services compared to direct NPP billing, potentially resulting in significant revenue enhancement.
Dermatology practices should bill under the NPP's own provider number when seeing new patients, addressing new problems, or when the supervising physician is not physically present in the office suite.
