Page 84 - Medicare Benefit Policy Manual

Services and supplies commonly furnished in physicians’ offices are covered under the
incident to provision. Where supplies are clearly of a type a physician is not expected to
have on hand in his/her office or where services are of a type not considered medically
appropriate to provide in the office setting, they would not be covered under the incident
to provision.

Supplies usually furnished by the physician in the course of performing his/her services,
e.g., gauze, ointments, bandages, and oxygen, are also covered. Charges for such
services and supplies must be included in the physicians’ bills. (See §50 regarding
coverage of drugs and biologicals under this provision.) To be covered, supplies,
including drugs and biologicals, must represent an expense to the physician or legal entity
billing fir he services or supplies. For example, where a patient purchases a drug and the
physician administers it, the cost of the drug is not covered. However, the administration
of the drug, regardless of the source, is a service that represents an expense to the
physician. Therefore, administration of the drug is payable if the drug would have been
covered if the physician purchased it.

B - Direct Personal Supervision

Coverage of services and supplies incident to the professional services of a physician in
private practice is limited to situations in which there is direct physician supervision of
auxiliary personnel.

Auxiliary personnel means any individual who is acting under the supervision of a
physician, regardless of whether the individual is an employee, leased employee, or
independent contractor of the physician, or of the legal entity that employs or contracts
with the physician. Likewise, the supervising physician may be an employee, leased
employee or independent contractor of the legal entity billing and receiving payment for
the services or supplies.

However, the physician personally furnishing the services or supplies or supervising the
auxiliary personnel furnishing the services or supplies must have a relationship with the
legal entity billing and receiving payment for the services or supplies that satisfies the
requirements for valid reassignment. As with the physician’s personal professional
services, the patient’s financial liability for the incident to services or supplies is to the
physician or other legal entity billing and receiving payment for the services or supplies.
Therefore, the incident to services or supplies must represent an expense incurred by the
physician or legal entity billing for the services or supplies.

Thus, where a physician supervises auxiliary personnel to assist him/her in rendering
services to patients and includes the charges for their services in his/her own bills, the
services of such personnel are considered incident to the physician’s service if there is a
physician’s service rendered to which the services of such personnel are an incidental
part and there is direct supervision by the physician.