Incident-To Billing for a PA in a Provider-Based RHC
A Rural Health Clinic is owned by a small independent hospital and operates as a provider-based department. The clinic employs one physician (the medical director), one physician assistant, and two medical assistants. The PA sees 60% of the clinic's patients. The physician is physically present in the clinic about 30% of the time; when absent, the PA sees patients independently and documents her own encounters. The billing office has been submitting all PA encounters under the physician's NPI as 'incident-to' services, reasoning that the PA is supervised by the physician and the clinic is a single entity. A Medicare Administrative Contractor audit letter arrives requesting records for 30 PA encounters. The clinic's charges are modest, but the audit could result in a significant overpayment demand. The clinic's Medicare reimbursement is currently based on the all-inclusive rate per visit.
1. Is the 'incident-to' billing logic correct for this RHC? Explain the RHC-specific rules that govern how PA services are paid and billed.
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The 'incident-to' logic is incorrect for RHC billing. RHCs are paid an all-inclusive rate (AIR) per qualifying visit, not fee-for-service based on the physician fee schedule. Under RHC rules:
- Services furnished by a PA, NP, or CNM are covered RHC services and are billed as RHC visits at the AIR, subject to the RHC's per-visit payment limit and any applicable coinsurance.
- The 'incident-to' concept from the physician fee schedule (where auxiliary services are billed under the physician's NPI) does not map onto the RHC AIR structure in the way the billing office assumes.
- The RHC must bill the visit under the RHC's own provider number, not under the physician's NPI as a stand-alone incident-to claim.
- The PA's services must be furnished within the PA's scope of practice and consistent with state law and the RHC's organizational policies.
Key point: the billing office's error is conceptual - it is applying a physician-office incident-to model to an RHC. The audit risk is real because the claims may be misidentified as physician services when they are PA services, which affects the AIR calculation and potentially the visit count.
2. The physician is present only 30% of the time. Does this create a staffing compliance problem independent of the billing error? What should the clinic do before responding to the audit?
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Yes, it may. RHC Conditions for Coverage require that a physician, PA, or NP be available to furnish services at least 50% of the time the clinic is open. The 30% physician presence is not automatically disqualifying if the PA is present and available during the remaining hours - the requirement is that a physician, PA, or NP be available, not specifically the physician. However, the clinic must be able to document who was available and when.
Before responding to the audit, the clinic should:
- Reconstruct the staffing log for the audit period: who was on-site, what hours, and whether a physician, PA, or NP was available at least 50% of open hours.
- Verify PA scope and supervision under state law and the clinic's policies - some states require physician supervision for PA practice, which could affect both compliance and billing.
- Self-audit the claims to determine whether the PA encounters were billed correctly as RHC visits under the RHC provider number, and quantify any overpayment.
- Prepare a voluntary disclosure if overpayments are identified, and consider whether the Stark/AKS implications of the arrangement require review.
- Correct the billing process going forward so PA services are billed as RHC visits, not incident-to physician claims.
The clinic should not respond to the audit letter until it has a defensible reconstruction of staffing and a corrected billing analysis.