Department of Health and Human Services
 

OFFICE OF 

INSPECTOR GENERAL 

PREVALENCE AND QUALIFICATIONS 


OF NONPHYSICIANS 


WHO PERFORMED 


MEDICARE PHYSICIAN SERVICES
 

Daniel R. Levinson
 

Inspector General 


August 2009
 

OEI-09-06-00430
 
 

 

 

 

 

 

 

Office of Inspector General
 http://oig.hhs.gov 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services 

(HHS) programs, as well as the health and welfare of beneficiaries served by those 

programs. This statutory mission is carried out through a nationwide network of audits, 

investigations, and inspections conducted by the following operating components: 

Office of Audit Services 

The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 

audits with its own audit resources or by overseeing audit work done by others. Audits 

examine the performance of HHS programs and/or its grantees and contractors in carrying 

out their respective responsibilities and are intended to provide independent assessments of 

HHS programs and operations. These assessments help reduce waste, abuse, and 

mismanagement and promote economy and efficiency throughout HHS. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on significant 

issues. These evaluations focus on preventing fraud, waste, or abuse and promoting 

economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI 

reports also present practical recommendations for improving program operations. 

Office of Investigations 

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 

of fraud and misconduct related to HHS programs, operations, and beneficiaries. With 

investigators working in all 50 States and the District of Columbia, OI utilizes its resources 

by actively coordinating with the Department of Justice and other Federal, State, and local 

law enforcement authorities. The investigative efforts of OI often lead to criminal 

convictions, administrative sanctions, and/or civil monetary penalties. 

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support for OIG’s internal operations. OCIG represents OIG in all civil and 

administrative fraud and abuse cases involving HHS programs, including False Claims Act, 

program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG 

also negotiates and monitors corporate integrity agreements. OCIG renders advisory 

opinions, issues compliance program guidance, publishes fraud alerts, and provides other 

guidance to the health care industry concerning the anti-kickback statute and other OIG 

enforcement authorities. 
 

 

 

Δ EXECUTIVE SUMMARY 

OBJECTIVES 

For days that Medicare allows more than 24 hours of services billed by 

a single physician: 

1. Identify the services physicians bill to Medicare but do not perform 

personally. 

2. Assess the qualifications of nonphysicians who perform these 

services. 

BACKGROUND 

Medicare Part B pays for services that are billed by physicians but are 

performed by nonphysicians. These services often are called “incident 

to” services, or services provided under the “incident to” rule. “Incident 

to” services may be vulnerable to overutilization and may put 

beneficiaries at risk of receiving services that do not meet professionally 

recognized standards of care. Little is known about Medicare services 

performed “incident to” the professional services of a physician. 

Using Part B Medicare National Claims History data for the first 

quarter of 2007, we identified all days during which Medicare allowed 

services for physicians in a single day that exceeded 24 hours of 

physician worktime. We randomly selected 250 of these “physician-day” 

combinations and requested that the physicians identify who performed 

each service that Medicare allowed on the selected day(s). We asked the 

physicians to submit all relevant credentials for the nonphysicians they 

identified. Our contractor’s nurse-reviewers determined whether the 

nonphysicians were qualified to render the particular services. In 

making these determinations, the nurse-reviewers considered any 

relevant Medicare requirements, State laws and regulations, and the 

nurses’ own professional judgment as to whether the particular service 

generally falls within the standard competencies of the particular type 

of nonphysician provider who rendered the service. 

FINDINGS 

When Medicare allowed physicians more than 24 hours of services 

in a day, half of the services were not performed personally by a 

physician. In the first quarter of 2007, physicians who were allowed 

services that exceeded 24 hours of physician worktime in a day 

personally performed approximately half of these services. 

Nonphysicians performed the remaining services, which physicians may 
 

 

 

EXECUTIVE SUMMARY 

have billed as “incident to” services. Medicare allowed $105 million for 

approximately 934,000 services that the physicians personally 

performed and approximately $85 million for approximately 

990,000 services that nonphysicians personally performed during this 

3-month period. 

Nonphysicians performed almost two-thirds of the invasive services that 

Medicare allowed the physicians. An invasive procedure involves entry 

into the living body (as by incision or by insertion of an instrument). 

Nonphysicians performed almost half of the noninvasive services that 

Medicare allowed the physicians. 

Unqualified nonphysicians performed 21 percent of the services 

that physicians did not perform personally. In the first 3 months of 

2007, Medicare allowed $12.6 million for approximately 

210,000 services performed by unqualified nonphysicians. These 

nonphysicians did not possess the necessary licenses or certifications, 

had no verifiable credentials, or lacked the training to perform the 

service. Nonphysicians with inappropriate qualifications performed 

7 percent of the invasive services that physicians did not perform. 

RECOMMENDATIONS 

Services performed by unqualified nonphysicians represent a risk to 

Medicare beneficiaries. State laws that require training, certification, 

and licensure of nonphysicians help to ensure that patients receive safe 

and quality care. However, among the physicians who billed Medicare 

for more than 24 hours of services in a day, nonphysicians performed 

half of the services billed, and unqualified nonphysicians performed one 

in every five services not performed by a physician. These 

nonphysicians were not practicing pursuant to State laws, State 

regulations, or Medicare regulations; had no verifiable credentials; 

and/or had not received the appropriate training to perform the services 

(according to our reviewers’ professional judgment). 

We are concerned about the potential scale of this problem. We cannot 

report the extent to which all physicians who bill Medicare bill for 

services performed by unqualified nonphysicians because our sample 

included only those physicians who billed for more than 24 hours of 

services in a day. The sample was a proxy for physicians who billed 

“incident to.” Medicare claims data do not identify “incident to” services 

as such. However, we have no reason to believe that the issues 

identified in this review are unique to these physicians. For example, 

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EXECUTIVE SUMMARY 

physicians who bill Medicare for fewer than 24 hours of services in a 

day might also bill for “incident to” services performed by unqualified 

nonphysicians. Although our sample represents relatively few 

physicians (3,165 of the 805,401 physicians who billed Medicare in the 

first 3 months of 2007), the potential exists that this problem is more 

widespread than we can report at this time. 

Therefore, we recommend that the Centers for Medicare & Medicaid 

Services (CMS): 

1.	 Seek revisions to the “incident to” rule. The rule should require 

that physicians who do not personally perform the services they 

bill to Medicare ensure that no persons except: 

a.	 licensed physicians personally perform the services or 

b.	 nonphysicians who have the necessary training, 

certification, and/or licensure, pursuant to State laws, 

State regulations, and Medicare regulations personally 

perform the services under the direct supervision of a 

licensed physician. 

2.	 Require physicians who bill services to Medicare that they do not 

personally perform to identify the services on their Medicare 

claims by using a service code modifier. The modifier would allow 

CMS to monitor claims to ensure that physicians are billing for 

services performed by nonphysicians with appropriate 

qualifications. 

3.	 Take appropriate action to address the claims for services that we 

detected that: 

a.	 were billed by physicians and performed by nonphysicians 

that were, by definition, not “incident to” services and 

b.	 were for rehabilitation therapy services performed by 

nonphysicians who did not have the training of a therapist. 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with two of our three recommendations. CMS did not 

concur with our recommendation to create a service code modifier to 

identify physicians’ claims for services that physicians do not personally 

perform. CMS stated that “incidental services are often shared by 

physicians and staff, making definition of a service not ‘personally 

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EXECUTIVE SUMMARY 

performed’ operationally difficult.” However, CMS stated it agrees with 

our “underlying objective of increasing the available data on services 

provided “incident to.” 

We continue to believe that CMS should have the ability to identify and 

monitor physicians’ claims for services that physicians bill, but do not 

personally perform. This review identified unqualified nonphysicians 

who furnished services to Medicare beneficiaries. We believe that the 

lack of a service code modifier to identify physicians’ “incident to” claims 

represents a significant vulnerability to the Medicare program. CMS 

stated it would study the operational issues involved in implementing 

the recommendation. We look forward to learning the specific steps 

CMS plans to take with respect to this issue. 

CMS provided technical comments in addition to its response to our 

recommendations. If appropriate, we incorporated the technical 

comments into the final report. 

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Δ TABLE OF CONTENTS 

EXECUTIVE SUMMARY ..................................... i 
 

INTRODUCTION ........................................... 1 
 

FINDINGS ................................................. 8 
 

When Medicare allowed physicians more than 24 hours 

of services in a day, half of the services were not

performed personally by a physician ........................ 8 
 

Unqualified nonphysicians performed 21 percent

of the services that physicians did not perform personally ...... 12 
 

RECOMMENDATIONS ..................................... 18 
 

Agency Comments and Office of Inspector General Response . . . 19 

APPENDIXES ............................................. 20 
 

A: Detailed Methodology ................................ 20 
 

B: Confidence Intervals ................................. 26 
 

C: Selected Features of the Sampled “Physician-Days” ........ 27

 D: Categories of Services That Medicare Allowed 

 by Physicians/Nonphysicians .......................... 29

 E: Services Performed by Nonphysicians by Service Category 

 and Nonphysician Qualifications ....................... 30 
 

F: Agency Comments ................................... 31 
 

ACKNOWLEDGMENTS .................................... 33 
 

 OEI-09-06-00430 N ONPHYSICIANS WHO P ERFORMED MEDICARE P HYSICIAN S ERVICES vi 
 

 

 

Δ INTRODUCTION 

OBJECTIVES 

For days that Medicare allows more than 24 hours of services billed by 

a single physician: 

1. Identify the services physicians bill to Medicare but do not perform 

personally. 

2. Assess the qualifications of nonphysicians who perform these 

services. 

BACKGROUND 

“Incident to” Services 

Medicare Part B pays for services that are billed by physicians but are 

performed by nonphysician practitioners (hereinafter referred to as 

“nonphysicians”). These services often are called “incident to” services, 

or services provided under the “incident to” rule. Section 1861(s)(2)(A) 

of the Social Security Act (the Act) defines Medicare coverage of services 

and supplies performed “incident to” the professional services of a 

physician.1 2 

“Incident to” services typically are performed by nonphysicians in a 

physician’s office (whether it is located in a separate office suite or 

institution). The Act defines these services as “. . . services and supplies 

(including drugs and biologicals which are not usually self-administered 

by the patient) furnished as incident to a physician’s professional 

service, of kinds which are commonly furnished in physicians’ offices 

and are commonly either rendered without charge or included in the 

physicians’ bills.” Section 1861(s)(2) of the Act does not permit services 

and supplies listed in their own benefit categories (except outpatient 

rehabilitation therapy) to be billed “incident to.”3 

The “incident to” rule allows physicians to bill for services performed by 

any personnel (licensed or unlicensed). Examples of nonphysicians 

include physician assistants, nurses, medical technicians, and medical 

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1 42 U.S.C. § 1395x(s)(2)(A). 

2 In this context, “physicians” include medical doctors, doctors of osteopathy, doctors of
 

dental surgery, podiatrists, optometrists, and chiropractors. The Act, § 1861(r), 

42 U.S.C § 1395x(r). 

3 42 U.S.C. § 1395x(s)(2)(A). 

1 
 

 

 

 

INTRODUCTION 

assistants.4 The implementing regulations allow physicians’ 

reimbursement for services at the full physician fee schedule amount for 

services provided by their staff if the services are: 

•	 furnished to beneficiaries who are not inpatients of a hospital or 

skilled nursing facility; 

•	 commonly furnished in a physician’s office and are “an integral, 

although incidental, part of the service of a physician or other 

practitioner in the course of diagnosis or treatment of an injury or 

illness;” 

•	 included in a treatment plan for an injury or illness, where the 

physician personally performs the initial service and is involved 

actively in the course of treatment; 

•	 “commonly furnished without charge or included in the bill of a 

physician (or other practitioner);” and 

•	 furnished under the direct supervision5 of a physician 

(42 CFR § 410.26(b)). 

“Incident to” services must meet Medicare’s general criteria for medical 

necessity, documentation, and quality of care. Section 1862(a)(1)(A) of 

the Act states that no payment may be made for services that “are not 

reasonable and necessary for the diagnosis or treatment of illness or 

injury or to improve the functioning of a malformed body member.”6 

Section 1833(e) of the Act requires that providers furnish “such 

information as may be necessary . . . to determine the amounts due” to 

receive Medicare payment.7 

Medicare does not require identifiers on claims indicating that the 

service was furnished “incident to.” Therefore, based on claims data 

analysis, it is not possible to determine the extent to which physicians 

are billing their services under “incident to.” In 1996, Medicare began a 

2-year demonstration project in five States (Illinois, Maryland, 

4 Some nonphysicians, such as physician assistants, are permitted to be paid 

independently for services provided to patients at a lower rate than a physician. These are 

not “incident to” types of services. 

5 Direct supervision in the office setting means that the physician must be present in the 

office suite and immediately available to furnish assistance and direction throughout the 

performance of the procedure. It does not mean that the physician must be present in the 

room when the procedure is performed (42 CFR § 410.32(b)(3)(ii)). 

6 42 U.S.C. § 1395y(1)(A). 

7 42 U.S.C. § 1935l(e). 

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INTRODUCTION 

Michigan, Pennsylvania, and Texas) to identify “incident to” claims by 

adding a “YR” modifier. Provider participation was voluntary, and the 

Centers for Medicare & Medicaid Services (CMS) did not implement the 

modifier nationwide. However, claims data from 1998 indicate that a 

minimum of $75 million was allowed for “incident to” services in the five 

States. In 2006, Medicare allowed $58.4 billion8 for physician fee 

schedule services under Part B. It is uncertain how much of this 

amount was for “incident to” services. 

Previous Work 

The Office of Inspector General (OIG) has not conducted specific 

reviews of “incident to” services. From 2002 to 2006, OIG issued a 

series of reports on cardiac rehabilitation services, which addressed 

physician supervision requirements when the services were furnished 

as “incident to.” In 2006, OIG issued a memorandum report to CMS 

that summarized OIG’s medical review of Medicare claims for 

physical therapy billed by physicians.9 We found that Medicare 

should not have paid for approximately 90 percent of the services we 

reviewed. In addition, our reviewers could not determine the skill 

levels for most of the staff who rendered the services that physicians 

had billed because of poor medical record documentation. However, 

20 of the 32 physicians10 we interviewed reported that someone other 

than themselves performed the services they billed. 

Scope 

This review is limited to identifying services that physicians11 bill to 

Medicare but do not perform personally and assessing the 

appropriateness of the qualifications of nonphysicians who perform 

them. The physicians in our sample identified the nonphysicians who 

personally performed the services and supplied the nonphysicians’ 

credentials. We determined whether the nonphysicians had all the 

training, certifications, and licenses required by State laws, State 

regulations, and/or Medicare regulations. We did not review patients’ 

8 “2007 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and 

Federal Supplementary Medical Insurance Trust Funds,” Boards of Trustees of the Federal 

Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, 

April 23, 2007. 

9 “Physical Therapy Billed by Physicians,” OEI-09-02-00200, May 2006. 

10 We interviewed 32 of the 54 physicians in our sample. 

11 Our sample population is limited to physicians for whom Medicare allowed more than 

24 hours of services in a day. Medicare does not limit the services that physicians can bill 

to Medicare in a single day based on the total time of the services. 

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INTROD U C T I O N 

medical records. Therefore, we did not assess the medical necessity of 

the services or the completeness of the medical record documentation. 

METHODOLOGY 

Using Part B Medicare National Claims History (NCH) data for the first 

quarter of 2007, we identified all days during which Medicare allowed 

services for physicians12 in a single day that exceeded 24 hours of 

physician worktime. We randomly selected 250 of these “physician-day” 

combinations and requested that the physicians identify who performed 

each service that Medicare allowed on the selected day(s). We asked the 

physicians to submit all relevant credentials for the nonphysicians 

whom they identified. Our contractor’s nurse-reviewers determined 

whether the nonphysicians had all the training, certifications, and 

licenses required by State laws, State regulations, and/or Medicare 

regulations to perform the services billed. The following is a summary 

of our methodology. For additional details, see Appendix A. 

Sample 

Sample definition. From NCH data for services rendered January 

through March 2007, we created a population of “physician-days.” We 

defined a “physician-day” as a single day (24 hours), per physician, 

wherein Medicare allowed services that apparently exceeded 24 hours 

of physician worktime. In the first quarter of 2007, Medicare allowed 

claims for services from 3,165 physicians for a total of 18,403 

“physician-days.” Medicare allowed $204,415,178 for these physicians’ 

claims. We selected our sample from this population. 

Final sample. Our sample of 250 “physician-days” included 

30,822 line-item claims for services that Medicare allowed for 

221 physicians. Because our sample-unit was the unique combination 

of physician and day, some physicians had more than 1 day of services 

in our sample. Four of the two-hundred twenty-one physicians in our 

sample were part of an active OIG investigation, so we removed them 

from the final sample. Fifteen physicians did not respond to our 

request for information prior to the deadline. We removed them from 

the sample, and they are not included in our analyses.13 Therefore, our 

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12 We excluded claims from doctors of dental surgery, podiatrists, optometrists, and 

chiropractors. 

13 Our review of these physicians’ reasons for not complying with our request for 

information is ongoing. We will take appropriate action that may include referring the 

physicians to CMS or to OIG’s Office of Investigations. 

4 
 

INTRODUCTION 

final review sample consisted of 27,379 line-item claims allowed by 

Medicare for 202 physicians on 228 “physician-days.” 

Review Protocol 

Data collection. We requested that each sampled physician logon to our 

secure Web site and list who personally furnished each of the services 

that Medicare allowed on the sampled day(s). We asked the physicians 

to list all relevant licenses, certifications, and training (relevant to the 

service performed by the nonphysician) for each nonphysician they 

reported personally having performed the sampled services. 

We requested that the physicians mail to us documentation to support 

the information that they provided on the Web site. Our Web site 

allowed the physicians to print and sign attestation forms that we 

required the physicians to sign, attesting to the accuracy and 

completeness of the information that they provided on the Web site. We 

requested copies of all licenses, certifications, diplomas, and proof of 

training for each nonphysician, physicians’ schedules of patient 

appointments, and nonphysician hours for the sampled day(s). 

Nonphysician-appropriateness determinations. We provided the 

information submitted by the physicians to our contractor. Registered 

nurses served as the reviewers and determined whether the 

qualifications of the nonphysicians who performed the sampled services 

were appropriate vis-à-vis the services that the nonphysicians 

performed. 

Nonphysicians in 29 States performed Medicare services for the 

physicians in our sample. The nonphysicians included technicians, 

nurses, licensed or certified assistants, and therapists. In addition, 

some nonphysicians in our sample were not licensed or certified but 

instead had received other formal medical training, on-the-job training, 

or no formal medical training at all. 

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INTRODUCTION 

In addition to Medicare regulation,14 the reviewers based their decisions 

on State laws and regulations. For each State, the reviewers researched 

the State laws and regulations applicable to each nonphysician in our 

sample who performed services in that State. For the services 

performed by nonphysicians that are not addressed by State laws and 

regulations, the reviewers researched the training that the 

nonphysicians received and used their professional judgment to 

determine whether the training addressed the nonphysician’s 

competency to perform the service. 

The reviewers deemed a nonphysician’s qualifications appropriate if the 

nonphysician who performed the services had all training, certifications, 

and licenses required by State laws, State regulations, and/or Medicare 

regulations. The reviewers deemed the nonphysician’s qualifications 

inappropriate if: 

•	 the nonphysician performed the service without the licenses, 

certifications, or training required by Medicare regulation;15 

•	 the nonphysician performed the service outside of his or her 

profession’s scope of practice as defined by State laws and/or 

regulations and the nonphysician lacked additional training 

conferring competency to perform the service; and/or 

•	 the physician did not provide adequate documentation to confirm 

that the nonphysician’s credentials were valid. 

Adverse actions. We determined whether the physicians in our sample 

and the nonphysicians who personally furnished the sampled services 

had been reprimanded (e.g., suspended license, revoked license, or 

official reprimand) from a State licensing agency and/or had been 

excluded from Federal health care programs. No physicians or 

nonphysicians in our sample had active adverse actions that would have 

precluded them from providing the services we reviewed. No physicians 

14 The “incident to” rule allows physicians to bill for services performed by any personnel 

(licensed or unlicensed). However, when a physician bills rehabilitation therapy services as 

“incident to,” Medicare requires that the service and the person who furnishes the service 

must meet the standards and conditions that apply to physical therapy and physical 

therapists, except that a license to practice physical therapy in the State is not required 

(42 CFR § 410.60(a)(3)(iii)). In addition, the “incident to” rule requires physicians (or other 

authorized practitioners) to personally perform the initial services. Initial services billed by 

physicians (or other authorized practitioners) but performed by nonphysicians are not 

“incident to” services (42 CFR § 410.26(b)). 

15 42 CFR §§ 410.60(a)(3)(iii), 410.26(b)). 

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INTRODUCTION 

or nonphysicians in our sample were excluded from Federal health care 

programs on the dates of service we reviewed. 

Patient and nonphysician schedules. We requested that the physicians 

submit their patient and nonphysician-staff schedules on the sampled 

date(s) of service. We reviewed these schedules to determine how many 

patients and staff the physicians had scheduled on the dates of service. 

Analysis. We stored the information that we gathered from our secure 

Web site in a database. The reviewers input their review decisions into 

the same database. Using SAS software, we converted the database 

into SAS-format datasets, reviewed the data for completeness and logic, 

and analyzed the data. We used SUDAAN software to produce 

confidence intervals for the projectable statistics. 

Projectable statistics. All statistics in the findings section of this report 

are projections to the total population of “physician-days” in the first 

3 months of 2007. (See Appendix B for the confidence intervals for 

selected statistics.) Appendix C describes features of the sample that 

we did not project to the population and, therefore, these features 

should not be extrapolated to any population other than the 

202 physicians and 27,379 line-item claims for the sampled services. 

Limitations. Our findings are limited to the physician population for 

whom Medicare allowed services on “physician-days” in the first quarter 

of 2007. The findings in this report should not be projected to all 

physicians for whom Medicare allows services. Nor should our findings 

be projected to all nonphysicians who perform services under the 

auspices of physicians for whom Medicare allowed claims. 

Standards 

This study was conducted in accordance with the “Quality Standards for 

Inspections” issued by the President’s Council on Integrity and 

Efficiency and Executive Council on Integrity and Efficiency (now 

Council of the Inspectors General on Integrity and Efficiency). 

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Δ FINDINGS 

When Medicare allowed physicians more than 

24 hours of services in a day, half of the services 

were not performed personally by a physician 

In the first 3 months of 2007, 

physicians for whom Medicare 

allowed services that exceeded 

24 hours of physician worktime in a 

day personally performed approximately half of these services 

(49 percent). Nonphysicians performed the remaining services 

(51 percent), which may have been “incident to” services, if the services 

met the requirements of section 1861(s)(2)(A) of the Act. Medicare 

allowed approximately $105 million for approximately 934,000 services 

that the physicians personally performed and approximately $85 million 

for approximately 990,000 services that the nonphysicians performed 

during these months. See Chart 1. 

CHART 1

 Who Performed 

the Services 

When Medicare 

Allowed 

Physicians More 

Than 24 Hours of 

Services in a Day 

Source: OIG analysis of 2007 Medicare NCH data and document review results, 2008. 

Physicians’ Claims for Services 

Medicare Allowed in the First Quarter of 2007 

$-

$20 

$40 

$60 

$80 

$100 

$120 

Physicians Nonphysicians 

Personally Performed By 

Millions 

934,000 

Services 

990,000 

Services 

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FINDING 
 

TABLE 1 

Categories of 

Services and Who 

Performed the 

Services When 

Medicare Allowed 

Physicians More 

Than 24 Hours of 

Services in a Day

S 

The services that Medicare allowed for this population fall into the 

10 categories listed in Table 1.16 The percentage of services that the 

physicians did not perform personally ranged from 12 percent to 

96 percent among 10 medical categories. With the exception of invasive 

services, these 10 categories correspond to the categories found in the 

American Medical Association’s (AMA) Current Procedural Terminology 

(CPT), 2007 edition. For purposes of this report, we removed the 

invasive services from their respective CPT categories and analyzed 

them separately. 

Categories of Services That Medicare Allowed 

Service Category 

(Service Description) 

Percentage of All Services That 

Medicare Allowed 

for the Physicians 

 (Percentage of Service Category) 

Percentage 

Performed by 

Physicians 

Percentage 

Performed by 

Nonphysicians 

Invasive 34% 38% 62%

 -Routine Venipuncture 37% 4% 96% 

 -Surgical Procedures 31% 88% 12% 

 -Non-oral Drug Administration 

 and Chemotherapy 29% 27% 73% 

 -Other Services 3% 63% 37% 

Noninvasive 66% 54% 46%

 -Evaluation and Management (E&M) 23% 81% 19% 

 -Ophthalmology 20% 67% 33% 

-Rehabilitation Therapy 18% 13% 87% 

-Cardiovascular 10% 52% 48% 

 -Diagnostic Radiology 6% 60% 40% 

 -Other Noninvasive 23% 47% 53% 

 Total 100% 49% 51% 

Source: OIG analysis of document review results, 2008. 

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16 For a listing of the categories of services with subcategories, see Appendix D. 

9 
 

 

FINDINGS 

Nonphysicians performed almost two-thirds of the invasive services that 

Medicare allowed the physicians 

A service is “invasive” if it involves “entry into the living body (as by 

incision or by insertion of an instrument).”17 Invasive services 

account for 34 percent of all services that Medicare allowed the 

physicians, and nonphysicians performed 62 percent of them. These 

invasive services ranged in complexity from routine venipuncture and 

drug injections to cataract surgery and extensive foot surgery. 

Nonphysicians performed almost all routine venipuncture and almost 

three-quarters of the non-oral drug administration services and 

chemotherapy. Nonphysicians performed 12 percent of the surgical 

procedures. 

Nonphysicians performed almost half of the noninvasive services that 

Medicare allowed the physicians 

Two-thirds of all the services that Medicare allowed the physicians were 

noninvasive services, and nonphysicians performed 46 percent of them. 

This includes evaluation and management (E&M), ophthalmology, 

rehabilitation therapy, cardiovascular, diagnostic radiology, and other 

noninvasive services such as diagnostic ultrasound and application of 

splints or casts. 

E&M services account for 23 percent of the services that Medicare allowed for 

the physicians. Medicare allowed physicians the following types of E&M 

services: office visits, inpatient services, consultations, and home visits. 

These services typically involve at least one of three key components— 

patient history, physical examination, and medical decisionmaking. E&M 

services can vary based on these three key components, and 

reimbursement is based on one of five levels.18 E&M services also are 

classified by the setting in which they occur (e.g., office, nursing facility, or 

hospital) and by whether they are initial services or a repeat visit.19 

Finally, a consultation is a service provided by a physician whose opinion 

or advice about a specific problem is requested by another physician or 

other appropriate source.20 

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17 MedlinePlus, a service of the U.S. National Library of Medicine and National 

Institutes of Health. Available online at 

http://www.nlm.nih.gov/medlineplus/mplusdictionary.html. Accessed on June 30, 2008. 

18 AMA, “Current Procedural Terminology, Professional Edition,” 2007, pp. 6–8. 

19 Ibid, pp. 9–33. 

20 Ibid, p. 14. 

10 
 

 

FINDINGS 

Ophthalmology services account for 20 percent of the services that 

Medicare allowed for the physicians. Ophthalmology is the branch of 

medicine dealing with the eye, including its anatomy, physiology, and 

pathology. The service categories for ophthalmology include: eye 

examinations, diagnostic imaging and eye photography, and other 

services, such as ophthalmoscopy. 

Rehabilitation therapy services account for 18 percent of the services that 

Medicare allowed for the physicians. Rehabilitation therapy is the 

treatment of functional limitations to prevent the onset and/or slow the 

progression of physical impairments after an illness or injury.21 These 

services typically are included in a plan of care and performed by 

physical therapists, occupational therapists, or speech-language 

pathologists. The plan of care can include multiple treatment 

modalities. Nonphysicians performed 87 percent of these services. 

Most of the rehabilitation therapy services that Medicare allowed for 

physicians were therapeutic exercises, massage therapy, ultrasound 

therapy, therapeutic activities, and electrical stimulation. Other 

services included neuromuscular reeducation and manual therapy. The 

physicians were allowed relatively few physical and occupational 

therapy evaluations. 

Cardiovascular, diagnostic radiology, and other services account for the 

remaining 39 percent of the services that Medicare allowed for the physicians. 

Cardiovascular services account for 10 percent of the services that 

Medicare allowed for the physicians and include cardiography and cardiac 

catheterization. Diagnostic radiology services account for 6 percent of the 

services that Medicare allowed for the physicians and include x-rays of the 

chest, lower extremities, spine, and pelvis. Other noninvasive services 

account for 23 percent of the services that Medicare allowed for the 

physicians. Examples of these services include radiation oncology services, 

diagnostic nuclear medicine services, and vascular studies. 

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21 For a more complete definition of physical therapy, see American Physical Therapy 

Association, “Model Definition of Physical Therapy for State Practice Acts in the Guide to 

Physical Therapy Practice,” 1997, chapter 1, p. 2. 

11 
 

 

 

 

 

 

F I NDING S 

Unqualified nonphysicians performed 

21 percent of the services that physicians 

did not perform personally 

In the first 3 months of 

2007, Medicare allowed 

$12.6 million for approximately 

210,000 services performed by 

unqualified nonphysicians. These 

nonphysicians’ qualifications were not appropriate vis-à-vis the services 

they performed. (See Table 2 on the following page.)22 

Our primary criteria for determining whether nonphysicians were 

qualified to perform the services were State laws and regulations. In 

addition, for rehabilitation therapy services and initial patient services, 

we used the Medicare regulation that requires nonphysicians who 

perform the services “incident to” to have received the training of a 

therapist.23 

Because the “incident to” rule allows physicians to bill for services 

performed by any personnel (licensed or unlicensed), we cannot report 

that the services were paid in error by Medicare solely because they 

were performed by unqualified nonphysicians. In addition, we did not 

request physicians’ medical records and the reviewers did not review 

them. The reviewers’ determinations are not based on medical 

necessity, proper coding, or medical record documentation. The 

reviewers’ determinations are not based on Medicare rules and 

regulations, except the services that were (1) by definition not “incident 

to” services24 or (2) rehabilitation therapy performed by nonphysicians 

who had not been trained as therapists.25 

Almost half of the services that were performed by unqualified 

nonphysicians were performed by nonphysicians who did not possess 

the required licenses or certifications according to State laws, 

regulations, and/or Medicare rules. Nonphysicians with no verifiable 

qualifications performed 25 percent of the services. We could not verify 

the nonphysicians’ qualifications because the physicians did not provide 

adequate documentation. Nonphysicians who lacked the necessary 

training performed another 25 percent of the services. Based on our 

reviewers’ professional judgment, the training program(s) did not 

address the nonphysician’s competency to perform the service. Less 

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22 See Appendix E for a listing of nonphysician types and the services they performed.
 

23 42 CFR §§ 410.60(a)(3)(iii), 410.26(b). 

24 42 CFR § 410.26. 

25 42 CFR § 410.60(a)(3)(iii). 

12 
 

 

FINDINGS 

than 1 percent of the services were in violation of the “incident to” rule; 

they were initial patient visits, which by definition cannot be “incident 

to” a physician’s initial service.26 

TABLE 2 

Services Performed 

by Nonphysicians 

When Medicare 

Allowed Physicians 

More Than 24 

Hours of Services 

in a Day 

Services Performed by Unqualified Nonphysicians 

Reason the Nonphysicians Were Unqualified Percentage of Services 

Did not possess the required licenses and/or certifications 

No verifiable qualifications 

Lacked training necessary for the service 

“Incident to” violations 

49% 

25% 

25% 

1% 

 Total 100% 

Source: OIG document review results, 2008. 

Unqualified nonphysicians performed 7 percent of the invasive services that 

physicians did not perform 

Unqualified nonphysicians performed fewer than 1 in 10 invasive services. 

See Chart 2 on the following page. Invasive services could pose more risk 

to patients, especially complex procedures performed by unqualified 

nonphysicians. The unqualified nonphysicians who performed invasive 

services fall into three categories (items do not total 100 percent because of 

rounding): 

1. Nonphysicians who lacked the necessary training performed 

54 percent of the services. 

2. For 37 percent of the services, physicians did not submit 

documentation to confirm that the nonphysicians’ qualifications were 

valid. 

3. Nonphysicians who did not possess appropriate licenses or 

certification performed 8 percent of the services. 

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26 Ibid. 

13 
 

FINDINGS 

Invasive and Noninvasive Services 

-

200,000 

400,000 

600,000 

800,000 

1,000,000 

1,200,000 

1,400,000 

Invasive Noninvasive 

Service Type 

Projected Number of Services 

Performed by 

Unqualified 

Nonphysicians 

Performed by 

Qualified 

Nonphysicians 

Performed by 

Physicians 

CHART 2 

Services 

Performed by 

Physicians, 

Qualified 

Nonphysicians, 

and 

Unqualified 

Nonphysicians 

Source: OIG document review results, 2008. 

Surgical procedures27 are among the more complex invasive services 

performed by unqualified nonphysicians. Surgical procedures 

(excluding routine venipuncture) comprise 31 percent of the invasive 

services performed by unqualified nonphysicians. These surgeries 

ranged from arterial injections to complex skin surgery. For example, 

medical assistants performed all of the micrographic surgical removal of 

tumors not performed by physicians. Our reviewers found that these 

types of procedures are “beyond the scope of usual medical assistant 

curricula,” and the physicians provided no documentation that 

confirmed the nonphysicians received additional training to qualify 

them to perform the service. These services represent more than 

9,000 surgeries that nonphysicians performed on Medicare beneficiaries 

in the first 3 months of 2007. 

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27 We used AMA’s CPT definitions to determine which services in our sample were 

surgeries. Surgeries range broadly in the CPT, from routine venipuncture to heart/lung 

transplantation. However, the most complex surgeries performed by the nonphysicians in 

our sample were skin grafts, skin tissue rearrangement, and removal of skin lesions. The 

nonphysicians in our sample did not perform more complex surgeries, such as neurosurgery, 

cardiovascular surgery, or orthopedic surgery. 

14 
 

 

 FINDINGS 

Nonphysicians were not trained adequately to perform several other 

skin surgeries. Unqualified nonphysicians performed 90 percent of 

three types of the skin surgeries not performed by physicians: skin 

grafts, skin tissue rearrangement, and complex skin wound repairs.28 

Nurses performing outside their scopes of practice performed the skin 

grafts. Nurses and medical assistants, also performing outside their 

scopes of practice, performed the tissue rearrangement and complex 

wound repairs. Our reviewers found that these surgeries are “beyond 

the usual training and education” of nurses and medical assistants, and 

the physicians provided no documentation that confirmed these 

nonphysicians received additional training to perform the services. 

Altogether, these three types of skin surgeries represent more than 

9,000 surgeries that nonphysicians performed on Medicare beneficiaries 

in the first 3 months of 2007. 

Unqualified nonphysicians performed 31 percent of the noninvasive 

services that physicians did not perform 

Among the categories of services (e.g., E&M, ophthalmology), the percent 

of services performed by unqualified nonphysicians ranged from 15 percent 

to 49 percent. (See Table 3 on the following page.) The unqualified 

nonphysicians who performed invasive services fall into four categories: 

1. Nonphysicians who did not possess appropriate licenses or 

certification performed 56 percent of the services. 

2. For 23 percent of the services, physicians did not submit 

documentation to confirm that the nonphysicians’ qualifications were 

valid. 

3. Nonphysicians who lacked the necessary training performed 

20 percent of the services. 

4. One percent of the services did not meet the “incident to” 

requirement because they were initial patient visits. 

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28 For a list of all surgeries that are included in these categories, see AMA, “Current 

Procedural Terminology, Professional Edition,” 2007, pp. 58–63. 

15 
 

 

 

 

FINDINGS 

TABLE 3 

Categories of 

Services That 

Medicare Allowed 

Physicians That 

Were Performed by 

Qualified Versus 

Unqualified 

Nonphysicians 

Percentage of Services Performed by Nonphysicians: 

Total, Qualified, and Unqualified 

Service Category 

Nonphysicians 

Total Qualified Unqualified 

Invasive 

Noninvasive 

-E&M 

 -Ophthalmology 

 -Rehabilitation Therapy 

-Cardiovascular 

 -Diagnostic Radiology 

 -Other Noninvasive 

62% 

46% 

19% 

33% 

87% 

48% 

40% 

53% 

93% 

69% 

74% 

63% 

51% 

85% 

84% 

84% 

7% 

31%

26% 

37% 

49% 

15% 

16% 

16% 

 Total 51% 79% 21% 

Source: OIG document review results, 2008. 

Unqualified nonphysicians performed 26 percent of the E&M services 

that physicians did not perform. These nonphysicians performed office 

visits, inpatient services, consultations, and home visits. Office visits 

represent 74 percent of all E&M services performed by unqualified 

nonphysicians. Inpatient services, consultations, and home visits 

represent 8 percent, 13 percent, and 5 percent, respectively. 

Unqualified nonphysicians performed 37 percent of the ophthalmology 

services that physicians did not perform. These nonphysicians 

performed eye examinations, diagnostic imaging, eye photography, and 

ophthalmoscopy. Diagnostic imaging represents 47 percent of the 

ophthalmology services performed by unqualified nonphysicians. Eye 

examinations represent 35 percent of all ophthalmology services 

performed by unqualified nonphysicians. The remaining 18 percent of 

services were eye photography and ophthalmoscopy services. 

Unqualified nonphysicians performed 49 percent of the rehabilitation 

therapy services that physicians did not perform. These nonphysicians 

performed therapeutic exercises, massage therapy, ultrasound therapy, 

therapeutic activities, and electrical stimulation. These five modalities 

represent 75 percent of all rehabilitation therapy modalities performed 

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FINDINGS 

by unqualified nonphysicians. Other rehabilitation therapy services 

performed by unqualified nonphysicians include neuromuscular 

reeducation, manual therapy, and evaluations. 

Generally, State laws allow only physicians and licensed physical 

therapists, occupational therapists, or speech-language pathologists and 

licensed assistants to perform rehabilitation therapy. However, when a 

physician bills the services as “incident to,” Medicare allows unlicensed 

nonphysicians to perform rehabilitation therapy if the service and the 

person who furnishes the service meet the standards and conditions 

that apply to physical therapy and physical therapists, except that a 

license to practice physical therapy in the State is not required.29 One 

nonphysician in our sample met this criterion. In addition to this 

nonphysician, massage therapists, medical assistants, and physical 

therapist assistants performed rehabilitation therapy services. 

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29 42 CFR § 410.60(a)(3)(iii). 

17 
 

 

 

 

 

Δ RECOMMENDATIONS 

Services performed by unqualified nonphysicians represent a risk to 

Medicare beneficiaries. State laws that require training, certification, 

and licensure of nonphysicians help to ensure that patients receive safe 

and quality care. However, among the physicians who billed Medicare 

for more than 24 hours of services in a day, nonphysicians performed 

half of the services billed, and unqualified nonphysicians performed one 

in every five services not performed by a physician. These 

nonphysicians were not practicing pursuant to State laws, State 

regulations, or Medicare regulations; had no verifiable credentials; 

and/or had not received the appropriate training to perform the services 

(according to our reviewers’ professional judgment). 

We are concerned about the potential scale of this problem. We cannot 

report the extent to which all physicians who bill Medicare bill for 

services performed by unqualified nonphysicians because our sample 

included only those physicians who billed for more than 24 hours of 

services in a day. The sample was a proxy for physicians who billed 

“incident to.” Medicare claims data do not identify “incident to” services 

as such. However, we have no reason to believe that the issues 

identified in this review are unique to these physicians. For example, 

physicians who bill Medicare for fewer than 24 hours of services in a 

day might also bill for “incident to” services performed by unqualified 

nonphysicians. Although our sample represents relatively few 

physicians (3,165 of the 805,401 physicians who billed Medicare in the 

first 3 months of 2007), the potential exists that this problem is more 

widespread than we can report at this time. 

Therefore, we recommend that CMS: 

1.	 Seek revisions to the “incident to” rule. The rule should require 

that physicians who do not personally perform the services they 

bill to Medicare ensure that no persons except: 

a.	 licensed physicians personally perform the services or 

b.	 nonphysicians who have the necessary training, 

certification, and/or licensure, pursuant to State laws, 

State regulations, and Medicare regulations personally 

perform the services under the direct supervision of a 

licensed physician. 

2.	 Require physicians who bill services to Medicare that they do not 

personally perform to identify the services on their Medicare 

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EXECUTIVE SUMMARY 

claims by using a service code modifier. The modifier would allow 

CMS to monitor claims to ensure that physicians are billing for 

services performed by nonphysicians with appropriate 

qualifications. 

3.	 Take appropriate action to address the claims for services that we 

detected that: 

a.	 were billed by physicians and performed by nonphysicians 

that were, by definition, not “incident to” services and 

b.	 were for rehabilitation therapy services performed by 

nonphysicians who did not have the training of a therapist. 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with two of our three recommendations. For the full 

text of CMS’s comments, see Appendix F. 

CMS did not concur with our recommendation to create a service code 

modifier to identify physicians’ claims for services that physicians do 

not personally perform. CMS stated that “incidental services are often 

shared by physicians and staff, making definition of a service not 

“personally performed” operationally difficult.” However, CMS stated it 

agrees with our “underlying objective of increasing the available data on 

services provided “incident to.” 

We continue to believe that CMS should have the ability to identify and 

monitor physicians’ claims for services that physicians bill, but do not 

personally perform. This review identified unqualified nonphysicians 

who furnished services to Medicare beneficiaries. We believe that the 

lack of a service code modifier to identify physicians’ “incident to” claims 

represents a significant vulnerability to the Medicare program. CMS 

stated it would study the operational issues involved in implementing 

the recommendation. We look forward to learning the specific steps 

CMS plans to take with respect to this issue. 

CMS provided technical comments in addition to its response to our 

recommendations. If appropriate, we incorporated the technical 

comments into the final report. 

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Δ APPENDIX~A 

Detailed Methodology 

Using Part B Medicare National Claims History (NCH) data for the first 

quarter of 2007, we identified all days during which Medicare allowed 

services for physicians30 in a single day that exceeded 24 hours of 

physician worktime. We randomly selected 250 of these “physician-day” 

combinations and requested that the physicians identify who performed 

each service that Medicare allowed on the selected day(s). We asked the 

physicians to submit all relevant credentials for the nonphysicians 

whom they identified. Our contractor’s nurse-reviewers determined 

whether the nonphysicians had all the training, certifications, and 

licenses as required by State laws, State regulations, and/or Medicare 

regulations to perform the services billed. The following is a summary 

of our methodology. 

Sample 

Sample definition. From NCH data for services rendered January 

through March 2007, we created a population of “physician-days.” We 

defined a “physician-day” as a single day (24 hours), per physician, 

wherein Medicare allowed services that apparently exceeded 24 hours of 

physician worktime.31 Our method to select “physician-days” was as 

follows: 

1. We extracted from the NCH all physician claims that Medicare 

allowed (excluding claims billed by all groups, institutions, or 

suppliers) in the first quarter of 2007. 

2. Using the 2007 Medicare Physician Fee Schedule, we assigned the 

“intra-time” (physician time) component to each line-item claim. 

3. We calculated the total time per physician, per day for each day that 

Medicare allowed claims for services (excluding pathology/laboratory 

services and major surgeries).32 

30 We excluded claims from doctors of dental surgery, podiatrists, optometrists, and 

chiropractors. 

31 We used the Medicare Physician Fee Schedule, which lists the average time associated 

with each service that physicians can bill to Medicare. The fee schedule is available online 

at http://www.cms.hhs.gov/PhysicianFeeSched/01_Overview.asp#TopOfPage. Accessed on 

June 9, 2008. 

32 Prior to our pretest of the review protocol (page 22), we excluded pathology and 

laboratory services. Following the pretest, we concluded that physicians were unlikely to 

bill major surgery services to Medicare as “incident to” services. The physicians in our 

pretest who performed major surgery billed few or no “incident to” services. 

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APPENDIX ~ A 

4. We created a database that included one observation for each unique 

combination of physician and day (“physician-day”) during which the 

physician’s total intra-time (the physician’s personal time) was equal 

to or exceeded 24 hours. 

5. We selected a stratified random sample33 of 250 “physician-days.” 

6. We created a database of all claims Medicare allowed for the 

physicians on the “physician-days.” 

Sample population. In the first quarter of 2007, Medicare allowed 

claims for services from 3,165 physicians for a total of 

18,403 “physician-days.” Medicare allowed $204,415,178 for these 

physicians’ claims. We selected our sample from this population. These 

3,165 physicians are 0.4 percent of the 805,401 physicians who 

submitted Medicare claims for services in the first 3 months of 2007. 

Final sample. Our sample of 250 “physician-days” included 

30,822 line-item claims for services that Medicare allowed for 

221 physicians. Because our sample unit was the unique combination 

of physician and day, some physicians had more than 1 day of services 

in our sample. (See Table 4 on the following page.) Four of the 

two-hundred twenty-one physicians in our sample were part of an 

active Office of Inspector General (OIG) investigation, so we removed 

them from the final sample. Fifteen physicians did not respond to our 

request for information prior to the deadline, and we removed them 

from the sample.34 Therefore, our final review sample consisted of 

27,379 line-item claims allowed by Medicare for 202 physicians on 

228 “physician-days.” 

33 Stratum 1 consisted of “physician-days” for which Medicare allowed a total of $10,000 

or more for claims on the day. Stratum 2 consisted of “physician-days” for which Medicare 

allowed a total of less than $10,000 for claims on the day. We selected 125 “physician-days” 

from each stratum. Stratifying the sample in this way increased our precision when we 

projected some statistics to the population, such as Medicare allowed amounts. 

34 Our review of these physicians’ reasons for not complying with our information request 

is ongoing. We will take appropriate action that may include referring the physicians to the 

Centers for Medicare & Medicaid Services or to OIG’s Office of Investigations. 

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APPENDIX ~ A 

Table 4 

Days When Medicare 

Allowed the Physician 

More Than 

24 Hours in Services 

Sample of “Physician-Days” for First Quarter of 2007 

“Physician-Days” 

(Per Physician) Total Physicians Total “Physician-Days” 

1 

2 

3 

4 

Selected Sample 

Physicians Under 

Investigation 

Removed 

Final Sample 

Non-Respondents 

Removed 

Final Review Sample 

197 

20 

3 

1 

221 

4 

217 

15 

202 

197 

40 

9 

4 

250 

4 

246 

18 

228 

Source: OIG analysis of 2007 Medicare NCH data, 2008. 

Review Protocol 

Data collection. We requested that each sampled physician logon to our 

secure Web site and list who personally furnished each of the services 

that Medicare allowed on the sampled day(s). We asked the physicians 

to list all relevant licenses, certifications, and training (relevant to the 

service performed by the nonphysician) for each nonphysician whom 

they reported as personally having performed the sampled services. 

We requested that the physicians mail to us documentation to support 

the information that they provided on the Web site. Our Web site 

allowed the physicians to print and sign attestation forms, attesting to 

the accuracy and completeness of the information they provided us via 

the Web site. We requested copies of all licenses, certifications, 

diplomas, and proof of training for each nonphysician. We requested 

copies of the physicians’ schedules of patient appointments and 

nonphysician hours for the sampled day(s). 

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APPENDIX ~ A 

Nonphysician-appropriateness determinations. We provided the 

information submitted by the physicians to our contractor. Registered 

nurses served as the reviewers and determined whether the 

qualifications of the nonphysicians who performed the sampled services 

were appropriate vis-à-vis the services that the nonphysicians 

performed. 

Nonphysicians in 29 States performed Medicare services for the 

physicians in our sample. The nonphysicians included technicians, 

nurses, licensed or certified assistants, and therapists. In addition, 

some nonphysicians in our sample were not licensed or certified but 

instead had received other formal medical training, on-the-job training, 

or no formal medical training at all. 

In addition to Medicare regulation,35 the reviewers based their decisions 

on State laws and regulations. For each State, the reviewers researched 

the State laws and regulations applicable to each nonphysician in our 

sample who performed services in that State. For the services 

performed by nonphysicians that are not addressed by State laws and 

regulations, the reviewers researched the training that the 

nonphysicians received and used their professional judgment to 

determine whether the training addressed the nonphysician’s 

competency to perform the service. 

The reviewers deemed a nonphysician’s qualifications appropriate if the 

nonphysician who performed the services had all the training, 

certifications, and licenses, required by State laws, State regulations, 

and/or Medicare regulations. The reviewers deemed the nonphysician’s 

qualifications inappropriate if: 

•	 the nonphysician performed the service without the licenses, 

certifications, or training required by Medicare regulation;36 

•	 the nonphysician performed the service outside of his or her 

profession’s scope of practice as defined by State laws and/or 

regulations and additional training that the nonphysician attended 

35 The “incident to” rule allows physicians to bill for services performed by any personnel 

(licensed or unlicensed). However, when a physician bills rehabilitation therapy services as 

“incident to,” Medicare requires that unlicensed nonphysicians who perform the services 

have received the training of a licensed therapist (42 CFR § 410.60(a)(3)(iii)). In addition, 

the “incident to” rule requires the physician to personally perform the initial service. Initial 

services billed by physicians but performed by nonphysicians are not “incident to” services 

(42 CFR § 410.26(b)). 

36 42 CFR §§ 410.60(a)(3)(iii), 410.26(b)). 

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APPENDIX ~ A 

did not address the nonphysician’s competency to perform the 

service; and/or 

•	 the physician did not provide adequate documentation to confirm 

that the nonphysician’s credentials were valid. 

Adverse actions. We determined whether the physicians in our sample 

and the nonphysicians who personally furnished the sampled services 

had been reprimanded (e.g., suspended license, revoked license, or 

official reprimand) by a State licensing agency and/or had been excluded 

from Federal health care programs. We researched each physician and 

nonphysician using the Healthcare Integrity and Protection Data Bank 

and OIG’s Exclusions Database. We focused on the physicians’ and 

nonphysicians’ status on the date during which they furnished the 

sampled services. However, we reviewed all entries for the physicians 

and nonphysicians in both databases, regardless of the dates of the 

adverse action. To the extent that they are listed in either of these two 

databases, we noted all criminal convictions. 

No physicians or nonphysicians in our sample had active adverse 

actions that would have precluded them from providing the sampled 

services. No physicians or nonphysicians in our sample were excluded 

from Federal health care programs on the dates of service we reviewed. 

Patient and nonphysician schedules. We requested that the physicians 

submit their patient and nonphysician-staff schedules on the sampled 

date(s) of service. We reviewed these schedules to determine how many 

patients and staff the physicians had scheduled on the same day. 

Analysis. We stored the information that we gathered from our secure 

Web site in a database. The reviewers input their review decisions into 

the same database. Using SAS software, we converted the database 

into SAS-format datasets and reviewed the data for completeness and 

logic. We analyzed the data using SAS. Finally, we used SUDAAN 

software to produce confidence intervals for the projectable statistics. 

Projectable statistics. All statistics in the findings section of this report 

are projections to the total population of “physician-days” in the first 

3 months of 2007. Appendix B includes the confidence intervals for 

selected statistics. Appendix C describes features of the sample that we 

did not project to the population and, therefore, these features should 

not be extrapolated to any population other than the 202 physicians and 

27,379 line-item claims for the sampled services. 

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APPENDIX ~ A 

Limitations. The findings in this report about the physicians, 

nonphysicians, and the services that they performed are confined within 

the context of “physician-days” (the unique combination of physician 

and day in the first 3 months of 2007 during which Medicare allowed 

services for the physician who apparently exceeded 24 hours of 

physician worktime). We used “physician-days” to create a population 

of Medicare “incident to” services. 

Therefore, our findings are limited to the physician population for whom 

Medicare allowed services on “physician-days” in the first quarter of 

2007. The findings in this report should not be projected to all 

physicians for whom Medicare allows services. Nor should our findings 

be projected to all nonphysicians who perform services under the 

auspices of physicians for whom Medicare allowed claims. 

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Δ APPENDIX ~ B 

Confidence Intervals 

Statistic Point Estimate 

95-Percent 

Confidence Interval 

Physicians personally performed 49 percent of the Medicare services that they were 

allowed in the first quarter of 2007 

49% 43% to 54% 

Medicare allowed $105 million for services that the physicians personally performed $104,822,245 $91,570,910 to $118,073,580 

Medicare allowed approximately 934,000 services that the physicians personally performed 934,388 821,075 to 104,7702 

Medicare allowed $85 million for services that the nonphysicians personally performed $84,593,424 $62,110,148 to $107,076,700 

Medicare allowed approximately 990,000 services that the nonphysicians personally 

performed 990,457 835,268 to 1,145,646 

Nonphysicians performed almost two-thirds of the invasive services that Medicare allowed 

the physicians 

62% 52% to 72% 

Nonphysicians performed almost half of the noninvasive services 46% 40% to 52% 

Nonphysicians with inappropriate qualifications performed 21 percent of the services that 

physicians did not perform 

21% 15% to 27% 

In the first 3 months of 2007, Medicare allowed $12.6 million performed by nonphysicians 

with inappropriate qualifications 

$12,561,845 $8,768,913 to $ 16,354,777 

In the first 3 months of 2007, Medicare allowed approximately 210,000 services performed 

by nonphysicians with inappropriate qualifications 

209,773 146,337 to 273,210 

Nonphysicians with inappropriate qualifications performed 7 percent of the invasive services 

that physicians did not perform 

7% 4% to 11% 

Nonphysicians with inappropriate qualifications performed 31 percent of the noninvasive 

services that physicians did not perform 

31% 23% to 39% 

Reason the Qualifications Were Inappropriate 

Did not possess the required licenses and/or certifications 

No verifiable qualifications 

Lacked training necessary for the service 

“Incident to” violations 

49% 

25% 

25% 

1% 

34% to 64% 

14% to 36% 

14% to 35% 

0.1% to 2% 

Source: Office of Inspector General analysis of 2007 Medicare National Claims History data and document review results, 2008. 

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Δ APPENDIX~C

Selected Features of the Sampled “Physician-Days” 

All “Physician-Days” 

(228 “Physician-Days,” 202 Physicians) 

N Mean Median Minimum Maximum 

Services 27,379 120 111 9 583 

Hours 8,351 37 31 24 157 

 Nonphysicians 1,006 7 4 0 67 

Beneficiaries 10,115 44 35 4 282 

 Services Performed by Physicians 13,854 64 53 1 394 

 Services Performed by Nonphysicians 13,525 59 45 0 405 

 Percent of Services Performed by

 Nonphysicians 

43% 43% 0% 100% 

Medicare Allowed Amount $2,238,009 $9,816 $9,938 $276 $45,055 

“Physician-Days” During Which 

Nonphysicians and Physicians 

Performed the Services 

(166 “Physician-Days”, 145 Physicians) 

N Mean Median Minimum Maximum 

Services 22,088 133 120 9 583 

Hours 6,347 38 31 24 157 

 Nonphysicians 1,006 8 5 2 67 

Beneficiaries 8,145 49 37 4 282 

 Services Performed by Physicians 8,563 52 37 0 394 

 Services Performed by Nonphysicians 13,525 82 67 1 405 

 Percentage of Services Performed by

 Nonphysicians 

59% 61% 0.4% 100% 

Medicare Allowed Amount $1,601,106 $9,645.22 $9,412 $276 $45,055 

All “Physician-Days” During Which 

Physicians Performed All Services 

(62 “Physician-Days”, 58 Physicians*) 

N Mean Median Minimum Maximum 

Services 5,291 85 82 10 250 

Hours 2,003 32 29 24 73 

Beneficiaries 1,970 32 28 5 111 

Medicare Allowed Amount $636,903 $10,273 $10,032 $4,272 $29,543 

*One physician in our sample personally performed all of the services that Medicare allowed on 2 days. On the third day, the physician and 

nonphysicians performed the services that Medicare allowed. 

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APPENDIX ~ C 

Selected Features of the Sampled “Physician-Days” (continued) 

All “Physician-Days” 

(228 “Physician-Days,” 202 Physicians) 

N Mean Median Maximum Minimum 

Patients on “Physician-Days” 

(according to the physicians’ schedules) 17,171 87 46 3,706 3 

Staff of “Physician-Days” 

(according to the physicians’ schedules) 

204 10 7 66 1 

Top Five Physician Specialties Percentage of 

“Physician-Days” 

Ophthalmology 24% 

Cardiology 15% 

Dermatology 13% 

Internal Medicine 7% 

Radiation Oncology 6% 

Source: Office of Inspector General analysis of 2007 Medicare National Claims History data and document review results, 2008. 

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Δ APPENDIX~D 

Categories of Services That Medicare Allowed by Physicians/Nonphysicians 

Service Category 

(Service Description) 

Percentage of All Services That 

Medicare Allowed for the Physicians

 (Percentage of Service Category) 

Percentage 

Performed by 

Physicians 

Percentage 

Performed by 

Nonphysicians 

Invasive 34% 38% 62%

 -Routine Venipuncture 37% 4% 96% 

 -Surgical Procedures 31% 88% 12% 

 -Non-Oral Drug Administration 

 and Chemotherapy 29% 27% 73% 

 -Other Services 3% 63% 37% 

Noninvasive 66% 54% 46%

 -Evaluation and Management 23% 81% 19%

 -Office Visits 73% 82% 18% 

-Inpatient 18% 76% 24% 

 -Consultations 8% 90% 10% 

 -Home Visits 1% 64% 36% 

 -Ophthalmology* 20% 67% 33%

 -Eye Examinations 69% 73% 27% 

 -Diagnostic Imagining and Eye Photography 26% 54% 46% 

 -Other Services 4% 65% 35% 

 -Rehabilitation Therapy 18% 13% 87%

 -Therapeutic Exercises, Massage Therapy, 

 Ultrasound Therapy, Therapeutic Activities, 

 and Electrical Stimulation. 73% 10% 90% 

-Physical and Occupational 

 Therapy Evaluations 1% 19% 81% 

 -Other Services 26% 22% 78% 

 -Cardiovascular 10% 52% 48%

 -Diagnostic Radiology 6% 60% 40%

 -Other Noninvasive 23% 47% 53%

 Total 100% 49% 51% 

Source: Office of Inspector General analysis of 2007 Medicare National Claims History data and document review results, 2008. 

*Row does not total 100 percent because of rounding. 

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APPENDIX ~ A 

 

Δ APPENDIX~E 

Services Performed by Nonphysicians by Service Category and Nonphysician Qualifications 

Formal Medical Training* No Formal Medical Training 

Service Category Technicians Nurses 

Licensed or 

Certified 

Assistants Therapists 

Other 

Medical 

Training 

On-The-Job 

Training 

No Relevant 

Qualifications** 

Invasive 40% 30% 15% <1% <1% 11% 4% 

Noninvasive 39% 8% 17% 25% 2% 2% 9% 

-Evaluation and

 Management 10% 46% 39% 2% <1% 3% <1% 

 -Ophthalmology 43% <1% 15% 0% 5% <1% 35% 

-Rehabilitation 

 Therapy 14% 4% 21% 62% 0% 0% 2% 

-Cardiovascular 61% 11% 15% 2% 5% 4% 6% 

-Diagnostic 

 Radiology 87% 0% 8% 0% 3% 0% 2% 

 -Other 

Noninvasive 62% 5% 6% 13% 1% 5% 9% 

 Total 39% 17% 16% 15% 1% 6% 7% 

*Technicians include phlebotomists and medical sonographers. Nurses include registered nurses and nurse practitioners. Licensed or certified assistants 

include physician assistants and medical assistants. Therapists include physical therapists or massage therapists. Nonphysicians with other medical training 

include paramedics. 

**Includes nonphysicians for whom physicians did not submit documentation to confirm their qualifications. 

Rows do not total 100 percent because of rounding and/or some services were performed by two nonphysicians simultaneously. 

Source: Office of Inspector General analysis of 2007 Medicare National Claims History data and document review results, 2008. 

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A P PEN 0 x F

AGENCY COMMENTS

.sI"'",s\tItVlCf'.r0t<t, ( tit. DEPARTMENT OF HEALTH & HUMAN SERVICES

:5~ MAY '21 2009

Centers for Medicare & Medicaid Services

200 IndependencaAvenue SW

Washington; PC 20201

DATE:

TO:

FROM:

Daniel R. Levinson

Inspector General

~X~t- Charlene Frizze~ Acting Administrator

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SUBJECT: Office of Inspector General's Draft Report: "Prevalence and Qualifications of

Nonphysicians Who Performed Medicare Physician Serviccs" (OEI-09-06-00430)

Thank you for the opportunity to review and commenlon the Office oflnspector General's

(OIG) draft report entitled, "Prevalence and Quaiificatlons'ofNonphysiGians Who Performed

Medicare Physician Services."

The Centers foJ' Medicare & Medicaid Services CCMS)appreciatesihe tlmeartd resour.ees OIG

has invested to' research and report on this issue. Medlcarehas covered services "incident to" the

services of physicians sinc-e the beginning ofthe Medicare program in 1965, under section

186 I(s)(2)(A) ofthe Social Security Act (the Acf).

Using Part B Medicare claims data for the first quarter of2007, the OIG identifi,ed all di\ys

during which Medicare allowed services for physioians in a single day exceeded 24hol\l's of

physician work time. These seJyices represented about $190 million in allowed charges. About

one half of these services were not personally performed by a physiDian. Ofthe allowed serVices

that were not performed by physicians, 21 percent were performed by staff the OIG detined tobe

unqualified. orG found that such unqualified nonphysicia.ns performed 37 percent ofthe

ophthalmology sei"Vices (primarily diagnostic imaging and eye examinations)that were furnished

by nonphysicians. Also, 49 percent ofrehabilitation therapy services performed by

nonphysicians were furnished by staff (including primarily therapeutic exercise, massage

therapy, ultrasound therapy, therapeutic activities, and electrical stimulation) thatthe OlG found

to be unqualified.

The OlG made the following recommendations:

om Recommendation

Seek revisions to the "incident to" rule. The nile should require that physicians who do not

personally perform the.services they bill to Medicare ensure that no persons except:

• licensed physicians personally perform the services or

oE1·09·0 6·0 0430 NONPHYSICIANS WHO PERFORMED MEDICARE PHYSICIAN SERVICES 31
Page 2 - Daniel R. Levinson

• nonphysicians who have the necessary training, certification, andfor licensun:, pursuant

to State laws, State regulations. and Medicare regulations personally perform the services

under the direct supervision of a licensed physician.

CMS Response

We concur with the recommendation. CMS is currently in the process of clarifying the manual

policies relative to services incident to physicians' services. We will provide improved guidance

for documenting the qualifications ofthe person performing services billed to Medicare by

physicians and those nonphysician practitioners who may bill services "incident to" their

services.

OIG Recommendation

Require physicians who bill for services that they do not personally perform to identify the

services on their Medicare claims by using a service code modifier. The modifier would allow

CMS to monitor claims to ensure that physicians are billing for services performed by

nonphysicians with appropriate qualifications.

CMS Response

We non-concur with this recommendation as it is currently structurcd, not because we disagree

with its undcrlying objectivc of increasing the available data on services provided "incident to".

but because incidental services are ollcn shared by physicians and staff, making definition of a

service not "personally pCrfOffiled" operationally difficult. CMS will study the operational

issues involved in adding code modifiers to services furnished exclusively by stafTother than the

physician identified as the rendering provider.

OIG Recommendation

Take appropriate action to address the claims that we detected that were bilkd by pbysicians:

a. and performed by nonphysieians who were, by definition, nOI "incident to" services and

b. for rehabilitation therapy services performed by nonphysieians who did not have the tmining

of a therapist.

CMS Response

We concur with tbis recommendation. eMS will sbare tbc OIG report and any additional claim

infonTlation received from the OIG with the Medicare AdminiSlnllive Contractors (MACs).

CMS will instruct the MACs to consider the issues identified in this report and the additional

claim information when prioritizing their medical review strategies or other interventions.

Thank you again for the opportunity to review tbis report. We appreciate tbe OIG's efforts on

this study and look forward to working with them on other issues in the futllre.

A P P E N D I X ~ F 

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APPENDIX ~ F 

 

 

Δ ACKNOWLEDGMENTS 

This report was prepared under the direction of Timothy S. Brady, 

Regional Inspector General for Evaluation and Inspections in the 

San Francisco regional office, and Deborah W. Harvey, Deputy Regional 

Inspector General.
 

Steven Zerebecki served as the team leader for this study. Other 

principal Office of Evaluation and Inspections staff from the
 

San Francisco regional office who contributed to the report include 

Veronica Gonzalez, Scott Hutchison, and Marcia Wong; central office 

staff who contributed include Robert Gibbons, Doris Jackson, and Rita 

Wurm. 

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