CMS Pub. 100-03, ch. 1, § 70.3

and Supplies Incident to a Physician’s Services

(Rev. 173, Issued: 09-04-14, Effective: Upon Implementation: of ICD-10, Implementation: Upon Implementation of ICD-10)

Coverage of Services and Supplies Incident to a Physician’s Services

Where a physician establishes an office within a nursing home or other institution,

coverage of services and supplies furnished in the office must be determined in

accordance with the “incident to a physician’s professional service” provision (see the

Medicare Benefit Policy Manual, Chapter 6, “Hospital Services Covered Under Part B,”

§20.4.1 or the Medicare Benefit Policy Manual, Chapter 15, “Covered Medical and Other

Health Services,” §60.1) as in any physician’s office. A physician’s office within an

institution must be confined to a separately identified part of the facility which is used

solely as the physician’s office and cannot be construed to extend throughout the entire

institution. Thus, services performed outside the “office” area would be subject to the

coverage rules applicable to services furnished outside the office setting.

In order to accurately apply the criteria in the Medicare Benefit Policy Manual, Chapters

6, §20.4.1, or Chapter 15, “Covered Medical and Other Health Services,” §60.1, the A/B

MAC gives consideration to the physical proximity of the institution and physician’s

office. When his office is located within a facility, a physician may not be reimbursed for

services, supplies, and use of equipment which fall outside the scope of services

“commonly furnished” in physician’s offices generally, even though such services may

be furnished in his institutional office. Additionally, make a distinction between the

physician’s office practice and the institution, especially when the physician is

administrator or owner of the facility. Thus, for their services to be covered under the

criteria in the Medicare Benefit Policy Manual, Chapter 6, §20.4.1, or the Medicare

Benefit Policy Manual, Chapter 15, “Covered Medical and Other Health Services,”

§60.1, the auxiliary medical personnel must be members of the office staff rather than of

the institution’s staff, and the cost of supplies must represent an expense to the

physician’s office practice. Finally, services performed by the employees of the

physician outside the “office” area must be directly supervised by the physician; his

presence in the facility as a whole would not suffice to meet this requirement. (In any

setting, of course, supervision of auxiliary personnel in and of itself is not considered a

“physician’s professional service” to which the services of the auxiliary personnel could

be an incidental part, i.e., in addition to supervision, the physician must perform or have

performed a personal professional service to the patient to which the services of the

auxiliary personnel could be considered an incidental part.) Denials for failure to meet

any of these requirements would be based on §1861(s)(2)(A) of the Social Security Act.

Establishment of an office within an institution would not modify rules otherwise

applicable for determining coverage of the physician’s personal professional services

within the institution. However, in view of the opportunity afforded to a physician who

maintains such an office for rendering services to a sizable number of patients in a short

period of time or for performing frequent services for the same patient, claims for

physicians’ services rendered under such circumstances would require careful evaluation

by the A/B MAC to assure that payment is made only for services that are reasonable and

necessary.

Cross-reference:

The Medicare Benefit Policy Manual, Chapter 15, “Covered Medical and Other Health

Services.”

The Medicare Benefit Policy Manual, Chapter 6, “Hospital Services Covered Under Part

B,” §20.4.1.