HI 00610.100 Services and Supplies

Services and supplies (including drugs and biologicals which cannot be self-administered) are those furnished “incident to a physician's professional service,” of kinds which are commonly furnished in physicians' offices (or physician-directed clinics) and are commonly either rendered without charge or included in physicians' bills. (Certain hospital services are also covered as “incident to” physicians' services when rendered to outpatients. Payment for these services is made under Part B to the hospital by the Part A intermediary on the basis of whichever is lower; the hospital's customary charge or the reasonable cost of the covered services.)

A. Incident to a physician's professional services

“Incident to a physician's professional services” means 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. In addition, the services of non-physicians must be rendered under the physician's direct supervision by employees of the physician (see B. below). This does not mean, however, that to be considered “incident to” each occasion of service by a non-physician (or the furnishing of a supply) need also always be the occasion of the actual rendition of a personal professional service by the physician. Such a service or supply could be considered to be “incident to” when furnished during a course of treatment where the physician performs an initial service and subsequent services of a frequency which reflect his active participation in, and management of, the course of treatment. (However, the direct supervision requirement must still be met with respect to every nonphysician service.)

“Commonly furnished” services and supplies are those customarily considered incident to physicians' personal services in the office or physician-directed clinic setting. The requirement could not be considered to be met where supplies are clearly of a type a physician would not be expected to have on hand in his office or where services are of a type not considered medically appropriate to provide in the office setting.

B. Commonly furnished in physicians' offices

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. This applies to services of auxiliary personnel employed by the physician and working under his supervision, such as nurses, nonphysician anesthetists, psychologists, technicians, therapists, including physical therapists, and other aides. Thus, where a physician employs auxiliary personnel to assist him in rendering services to his patients and includes the charges for their services in his own bills, the services of such personnel are considered to be “incident to” the physician's services if there is a physician's service rendered to which the services of such personnel are an incidental part and there is direct personal supervision by the physician.

Direct personal supervision in the office setting does not mean that the physician must be present in the same room with his aide. However, the physician must be present in the office suite and immediately available to provide assistance and direction throughout the time the aide is performing services.

The services of a nonphysician anesthetist are covered under medical insurance when the anesthetist is the employee of an anesthesiologist who provides direct, personal, and continuous supervision of her services. Direct, personal, and continuous supervision does not require the anesthesiologist to be in the operating room at all times. However, he must be close by and available to provide immediate and personal assistance and direction. Availability of the anesthesiologist by telephone does not constitute direct, personal, and continuous supervision. The services of a non-physician anesthetist are also covered when she is an employee (either on a part- or full-time basis) of any surgeon (or other physician) who is rendering professional services during the operative procedure and directing her services.

In both cases, the physician must include the charges for the anesthetist's services in his bill and these charges will be taken into account in determining the physician's reasonable charge.

Where auxiliary personnel perform services outside the office setting, e.g., in the patient's home or in an institution, their services are likewise covered only if there is direct personal supervision by the physician. For example, if a nurse accompanied the physician on house calls and administered an injection, the services are not covered (even when billed by the physician) since the physician would not be providing direct personal supervision. Services provided by auxiliary personnel in an institution (e.g., hospital, SNF, nursing or convalescent home) present a special problem in determining whether direct physician supervision exists. The availability of the physician by telephone, and the presence of the physician somewhere in the institution would not constitute direct personal supervision.

Services provided by auxiliary personnel not in the employ of the physician even if provided on the physician's order or included in the physician's bill (e.g., an independently practicing therapist who forwards his bill to the referring physician for inclusion in the physician's statement of services) are not covered as incident to a physician's service since the law requires that the services be of kinds commonly furnished in physicians' offices and commonly either rendered without charge or included in physicians' bills. As with the physician's personal professional service, the patient's financial liability for the incidental services is to the physician; therefore, the incidental services must represent an expense incurred by the physician in his professional practice.

Supplies usually furnished by the physician in the course of performing his services, such as gauze, ointments, bandages (including ace bandages), oxygen, etc., are also covered. Charges for such services and supplies must be included in the physicians' bills. To be covered, supplies, including drugs and biologicals, must represent an expense to the physician. For example, where a patient purchases a drug and the physician administers it, the cost of the drug is not covered. See HI 00610.304 regarding the coverage of antigens.

C. Services of physician's assistants

A new category of allied health personnel known by various identifying titles, e.g., physician's assistant, medical speciality assistant, medical services assistant, MEDEX, clinical associate, Flexner (surgical assistant), nurse practitioner, etc., are being trained under various programs to assist or act in the place of the physician. Services performed by these physician's assistants in physicians' offices or in satellite offices include not only services ordinarily performed by the physician's nurse or other office assistant, e.g., taking blood pressures and temperatures, giving injections, changing dressings, but also services heretofore ordinarily performed by the physician himself, such as: routine physical examination, minor surgery, assistance in major surgery, setting casts on simple fractures, reading X-rays, and other activities that involve an independent evaluation or treatment of the patient's condition.

Since there is no provision under Part B which authorizes coverage of services of physician's assistants as independent practitioners, the only basis for covering their services under Part B is as services furnished “incident to” a physician's professional service or in a rural health clinic. One of the requirements that must be met for services to be covered under this provision is that they must be of kinds that are “commonly furnished” in physicians' offices. This limitation limits coverage to the services of nurses and other assistants that are commonly furnished as a necessary adjunct to the physician's personal in-office services. Thus, the performance by a physician's assistant of services which traditionally have been reserved to physicians cannot be covered under Part B even though all the other “incident-to” requirements are met.

The physician might render a personal identifiable “physician's service” which is covered even through payment could not be made for the service rendered by the physician's assistant. For example, an office visit charge by the physician for a visit in which noncovered services were rendered by a physician's assistant may be reimbursed if the physician himself sees the patient at the time of the visit and at that time also make an independent evaluation of the patient's condition and of the course of treatment initiated or recommended by the physician's assistant.

D. Incident to a physician's service in a clinic

Services and supplies incident to a physician's service in a physician-directed clinic or group association are generally the same as those described in A. above.

A physician-directed clinic is one where (1) a physician (or a number of physicians) is present to perform medical (rather than administrative) services at all times the clinic is open: (2) each patient is under the care of a clinic physician; and (3) the nonphysician services are under medical supervision. In highly organized clinics, particularly those which are departmentalized, “direct personal physician supervision” may be the responsibility of several physicians as opposed to an individual attending physician. In this situation, medical management of all services provided in the clinic is assured. The physician ordering a particular service need not be the physician who is supervising the service. Therefore, services performed by therapists and other aides are covered even though they are performed in another department of the clinic. Supplies provided by the clinic during the course of treatment are also covered.

When the auxiliary personnel perform services outside the clinic premises, the services are covered only if performed under the direct personal supervision of a clinic physician. If the clinic refers a patient for auxiliary services performed by personnel who are not employed by the clinic, such services would not be incident to a physician's service.

E. Coverage of services and supplies incident to the services of podiatrists

Supplies and services are covered as incident to a podiatrist's services in his office, a clinic, or a hospital outpatient department. However services and supplies are covered under this provision only if they are incident to covered professional services.


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HI 00610.100 - Services and Supplies - 05/09/2014
Batch run: 05/09/2014
Rev:05/09/2014