Incident-to Billing: The Precise Rules for Non-Physician Services in Your Small Practice (42 CFR § 410.26)

Incident-to billing under 42 CFR 410.26 allows a small practice to bill certain non-physician services under a supervising physician’s National Provider Identifier at one hundred percent of the physician fee schedule, instead of the lower rate that would apply if billed directly by the non-physician practitioner. That financial benefit comes with precise conditions, including supervision, relationship to an established plan of care, and proper use of auxiliary personnel. If those conditions are not met, claims can be found noncompliant, resulting in overpayments that must be refunded and, in some cases, civil or administrative sanctions.

For small practices with limited staffing, incident-to can support access and productivity, especially when nurse practitioners, physician assistants, or clinical staff handle follow-up visits. But misunderstanding of the rules is widespread, and recent OIG work plan updates show that incident-to billing will be under heightened scrutiny through at least 2026.

This article explains the legal framework in 42 CFR 410.26, shows how CMS manuals interpret that framework in practical terms, and provides a survival guide tailored to small practices that rely on non-physician personnel. By aligning your workflows to the regulation, you can preserve appropriate revenue while reducing the risk of costly repayments or allegations that your claims misrepresented who actually performed the service.

If your practice uses nurse practitioners, physician assistants, clinical nurse specialists, or other auxiliary personnel, you are almost certainly touching incident-to billing even if you never use that label. Medicare’s incident-to rules determine when those services can be billed as though the physician personally performed them and when they must be billed under the non-physician’s own NPI at a reduced rate.

For a small clinic, the difference is significant. Billing appropriately incident-to preserves legitimate revenue and helps keep access strong for patients, while billing noncompliant incident-to claims can create systemic overpayments that auditors may view as high risk. OIG has signaled that it will review whether Part B payments for incident-to services comply with Medicare requirements, which makes it essential that every practice understand what 42 CFR 410.26 actually requires.

At the same time, CMS has updated supervision flexibilities for some settings and services, including the ability in certain circumstances to meet direct supervision requirements through real time audio and video technology, and a general supervision standard for specified care management services. Small practices must sort out which flexibilities apply and which do not, so that they do not accidentally rely on telehealth or off site supervision in situations where 42 CFR 410.26 still expects the supervising practitioner to be immediately available in the office suite.

Understanding Legal Framework and Scope Under 42 CFR 410.26

42 CFR 410.26 defines services and supplies incident to a physician’s professional services. At its core, the regulation requires that:

• The services or supplies are furnished as an integral, although incidental, part of the physician’s personal professional services in the course of diagnosis or treatment of an injury or illness.

• The services are commonly furnished without charge or included in the physician’s bills.

• The services are of a type that are commonly rendered in a physician’s office or clinic.

• The services are furnished under the appropriate level of supervision of a physician or certain other practitioners, as specified in the regulation and implementing guidance.

The regulation defines “auxiliary personnel” to include employees, leased employees, and independent contractors, as long as they meet the other conditions for incident-to billing. Incident-to services are typically billed under the physician’s NPI even though they may be performed by non-physician practitioners or other staff. Under CMS policy, when a non-physician practitioner’s services do not meet incident-to standards, those services are usually paid at eighty-five percent of the physician fee schedule if billed under the practitioner’s own billing number instead.

It is critical to distinguish incident-to from services that have their own benefit category and specific coverage rules, such as clinical diagnostic tests or certain therapy services. CMS guidance implementing 42 CFR 410.26 makes clear that incident-to criteria do not override service-specific benefit rules and that tests with their own benefit category cannot simply be recharacterized as incident-to to obtain different supervision or billing treatment.

Finally, incident-to is primarily an office and clinic concept. For hospital and skilled nursing facility settings, different statutory and regulatory frameworks apply, and many incident-to provisions simply do not extend to institutional billing. Understanding this boundary helps small practices avoid wrongly applying office rules to hospital based encounters.

When you align your policies and documentation with these core elements of 42 CFR 410.26, you reduce denials, make it easier to respond to audit questions, and prevent the kind of systemic billing issues that lead to refund obligations and enforcement action.

CMS administers Medicare Part B and is responsible for enforcing 42 CFR 410.26 through its Medicare Administrative Contractors, who process claims and apply incident-to rules in routine payment operations. These contractors interpret and apply 42 CFR 410.26 through local coverage and education, and they may conduct focused reviews when billing patterns appear inconsistent with incident-to criteria.

The HHS Office of Inspector General has elevated incident-to billing to a specific work plan item, stating that it will review whether Medicare Part B payments for incident-to services complied with requirements. OIG and, in some circumstances, the Department of Justice can pursue overpayment recovery and civil monetary penalties if claims are found to misrepresent who performed the service or to ignore incident-to supervision conditions.

Common audit and review triggers related to incident-to include:

• High volumes of non-physician services billed under a single physician NPI, especially when that physician’s personal visit volumes appear low.

• Apparent use of incident-to in settings where hospital or institutional billing rules should apply instead of office rules.

• Documentation that does not show an initiating physician service, an ongoing plan of care, or active physician involvement in the course of treatment.

• Evidence that supervising physicians were not present in the office suite or otherwise able to meet the required level of supervision when services were provided.

Recognizing these triggers allows a small practice to prioritize controls that will stand up under both MAC review and OIG scrutiny, especially as virtual supervision and telehealth continue to evolve under CMS rules.

Even though incident-to is a Medicare billing rule rather than a HIPAA rule, the same disciplined audit mindset applies. The following controls are structured so that each is clearly anchored to specific aspects of 42 CFR 410.26 and related CMS guidance.

1. Map which services in your practice can legitimately be billed incident-to
   For a survival baseline, you need to know which visit types and staff roles even qualify for incident-to treatment under 42 CFR 410.26. Focus on office and clinic visits, follow-up care in an established plan of treatment, and tasks that are integral to the physician’s professional services.

• Implementation: Create a brief matrix listing your common visit types, the performing personnel (for example, nurse practitioner, registered nurse, medical assistant), and whether each scenario can ever meet incident-to rules.

• Evidence: Saved matrix approved by the medical director or lead physician, with references to 42 CFR 410.26 and any relevant MAC guidance.

• Low cost approach: Build the matrix in a simple spreadsheet and review it annually.

2. Document the initiating physician service and plan of care for incident-to courses of treatment
   Incident-to services must occur during a course of treatment where a physician personally performed the initial service and remains actively involved.

• Implementation: Require that the initiating physician visit explicitly identifies the diagnosis, goals, and follow-up parameters that auxiliary personnel or non-physician practitioners will carry out.

• Evidence: Chart examples showing an initiating visit with a clearly documented plan and subsequent incident-to encounters referencing that plan.

• Low cost approach: Add a standard “Plan for team based follow up” paragraph template that physicians can complete in their documentation.

3. Hardwire supervision level into scheduling and rooming workflows
   42 CFR 410.26 requires appropriate supervision, often direct supervision in an office setting, meaning the physician or other qualified practitioner is present in the office suite and immediately available.

• Implementation: Configure your schedule so that any session containing incident-to visits clearly shows which supervising physician is present. Train staff that if the scheduled supervisor is not on site, visits revert to being billed under the non-physician practitioner’s NPI.

• Evidence: Sample daily schedules showing assigned supervising physicians and documented changes when supervision is not available.

• Low cost approach: Use color coding or a simple label in your scheduling system indicating “incident-to supervision available” for each half day block.

4. Separate incident-to eligible services from services with their own benefit category
   CMS has clarified that some services, such as certain diagnostic tests, cannot be reclassified as incident-to when they already have their own statutory benefit category and supervision rules.

• Implementation: Build a short “do not bill incident-to” list of codes and service types that must always follow their own benefit rules.

• Evidence: Written list maintained with coding policies, plus spot checks on claims to confirm those codes are never billed incident-to.

• Low cost approach: Ask your billing vendor or clearinghouse to add a simple edit that flags any attempt to bill those codes incident-to.

5. Monitor evolving supervision flexibilities without outpacing CMS rules
   CMS has allowed virtual direct supervision in certain time limited periods and has adopted general supervision for specific care management services, but those flexibilities are not universal.

• Implementation: Assign one person to track CMS updates relevant to 42 CFR 410.26 and to maintain a one-page summary of which visits may rely on virtual or general supervision and which still require in office direct supervision.

• Evidence: Dated supervision summary with citations, plus meeting notes showing that leadership reviewed and adopted the rules.

• Low cost approach: Subscribe to your MAC’s email updates and CMS incident-to pages and update your summary when changes occur.

These controls turn incident-to from a vague concept into a set of enforceable steps. If you are ever audited, being able to show this structure, with clear ties back to 42 CFR 410.26, will help demonstrate that your practice took reasonable steps to comply.

Case Study

A two physician family medicine clinic employs a full-time nurse practitioner and two registered nurses. To keep appointment slots open, the physicians encourage the nurse practitioner to handle most follow-up visits, while the physicians focus on new patients and complex cases. For years, the practice bills nearly all nurse practitioner office visits incident-to under one physician’s NPI.

When OIG announces its focus on incident-to services, the clinic’s new practice manager decides to perform an internal review. Pulling three months of claims and matching them to documentation, the manager discovers multiple problems. Many “incident-to” visits are actually first time visits for new complaints, with the nurse practitioner establishing diagnoses and treatment plans. Some visits take place on days when no physician was in the office suite. In other cases, the documentation does not show that any physician has seen the patient for the same problem within the past year.

Under 42 CFR 410.26, these encounters fail key incident-to requirements: the absence of an initiating physician service in the course of treatment, inadequate direct supervision on the date of service, and failure to maintain active physician involvement in ongoing care. When the clinic’s accountant estimates the overpayment amount by recalculating the claims at the nurse practitioner rate and excluding days where no supervision was present, the total reaches tens of thousands of dollars.

The partners consult counsel and decide to self disclose and refund the differential where required. They then implement a revised incident-to policy based on 42 CFR 410.26, including a clear definition of which visits can be billed incident-to, a requirement that new problems be billed under the provider who evaluates them, and a schedule design that guarantees direct supervision when incident-to is used. Six months later, a follow-up internal audit shows that nearly all non-physician visits are now correctly billed, either incident-to with clear support or directly under the non-physician’s NPI.

This scenario illustrates the practical consequences of misunderstanding incident-to and shows how aligning with the regulation can both correct past issues and stabilize future revenue.

This table keeps your self-audit efforts tightly focused on the elements that matter most for incident-to compliance, while creating a documentation trail that shows ongoing attention to 42 CFR 410.26.

Common Audit Pitfalls to Avoid Under 42 CFR 410.26

Because incident-to is complex, auditors repeatedly find the same mistakes in small practices. Knowing them in advance makes it easier to avoid them.

• Billing new patient visits or new problems as incident-to even though the physician has not personally seen the patient for that issue, contrary to the requirement that incident-to services be in the course of a physician’s diagnosis or treatment.

• Treating non-physician practitioners as interchangeable auxiliary personnel and billing nearly all their work incident-to, rather than recognizing that many visits must be billed under their own NPIs at the appropriate rate.

• Assuming incident-to can be used in hospital or skilled nursing facility settings where other statutes and regulations apply and incident-to principles do not govern the claim.

• Failing to ensure that supervising physicians are actually present and immediately available in the office suite when incident-to services are rendered, or misapplying virtual supervision flexibilities to settings or time periods where they do not apply.

• Ignoring OIG work plan signals and not auditing incident-to claims until an external review finds problems, which increases financial and reputational damage if systemic errors are discovered.

By steering clear of these pitfalls, a small practice can substantially reduce the risk that incident-to billing will be labeled noncompliant. Each fix brings your documentation and workflows closer to the specific expectations articulated in 42 CFR 410.26 and related CMS guidance.

Incident-to compliance should be treated as a governance issue, not just a billing detail. Leadership should assign formal responsibility for incident-to policy to a physician champion and a practice manager or compliance lead, who together understand both the clinical and regulatory dimensions of 42 CFR 410.26.

Training should be brief, focused, and regular. New clinicians and staff need an orientation to the basics of incident-to, especially when non-physician practitioners join the team. Annual refreshers can use real claims from your practice to illustrate compliant and noncompliant scenarios. Short job aids and checklists work better for busy staff than lengthy narratives.

Key metrics should be reviewed in leadership meetings. These can include the percentage of non-physician visits billed incident-to, the number of incident-to claims adjusted after internal review, and any feedback from your MAC or external auditors regarding incident-to documentation. Over time, these metrics help leadership see whether policies are actually working and whether further refinements are needed in light of changing CMS rules or OIG priorities.

Incident-to billing can be a powerful tool for small practices that rely on non-physician staff, but it is tightly constrained by 42 CFR 410.26 and by CMS interpretations in manuals and education. Misuse of incident-to does not just create technical claim errors; it can generate systemic overpayments that regulators are increasingly interested in reviewing.

In the near term, a small clinic can take a few concrete steps. First, identify all visit types where non-physician staff see patients and determine which can legitimately be billed incident-to and which should be billed under the practitioner’s own NPI. Second, build or refine a simple checklist that must be met before any visit is billed incident-to, including physician involvement, supervision level, and connection to an established plan of care. Third, run a focused internal audit on a recent time period to identify any patterns of noncompliance and correct them proactively. Finally, assign a single leader to track CMS and OIG updates to incident-to rules, so your practice stays aligned with the current interpretation of 42 CFR 410.26.

Recommended compliance tool: 

Integrated incident-to decision support prompts in your EHR or billing system, triggered whenever a non-physician visit is billed under a physician NPI.

Advice: Pick one recent week of non-physician office visits today, verify every incident-to claim against 42 CFR 410.26, and fix any patterns you discover before an external auditor does.

• 42 CFR § 410.26 – Services and supplies incident to a physician’s professional services: Conditions
  

• 42 CFR Part 410 – Supplementary Medical Insurance (SMI) Benefits
  

• CMS Transmittal 1764 – Services and Supplies Incident to a Physician’s Services (Medicare Manual)
  

• “New CMS incident-to telehealth rules for 2026” – Article on regulation updates involving § 410.26