Incident-to Supervision of Outpatient Therapeutic Services: Are You in Compliance?

On April 14, 2009, 12 health care organizations submitted a letter to the Centers for Medicare & Medicaid Services (CMS) requesting to withdraw or delay the implementation of CMS’ clarification regarding physician supervision of hospital outpatient therapeutic services as announced in the 2009 Outpatient Prospective Payment System (OPPS) final rule (73 Fed. Reg. 68, 702). This policy requires a physician to provide direct supervision for all incident‐to outpatient therapeutic services, regardless of whether the services are rendered in the hospital, on the hospital’s campus, or off‐campus. In the 2009 OPPS final rule, CMS describes the discussion of the direct supervision requirement as a “clarification” of existing rules. However, many health care organizations view the “clarification” as a policy change, which raises concerns regarding compliance. More specifically, health care organizations, including the Association of American Medical Colleges and the American Hospital Association, are concerned that the new policy negatively affects hospitals, physicians, and patients and that CMS did not allot sufficient time for hospitals to comment and adapt to the new policy.

Regardless the debate whether CMS clarified, expanded, or modified its interpretation of the direct supervision requirements, hospital providers are required to comply with the current regulations. Consequently, this article outlines the key points of CMS’ current policy regarding direct supervision of hospital outpatient therapeutic services as well as strategies for complying with CMS’ regulations.

Physician Supervision for Hospital Outpatient Therapeutic Services Under section 1861(s)(2)(B) of the Social Security Act, CMS reimburses hospitals for outpatient therapeutic services provided “incidentto” a physician’s service. In order to receive full reimbursement for outpatient therapeutic services, the following criteria must be met.

  • The outpatient therapeutic services are furnished by or under an arrangement made by a hospital.
  • The outpatient therapeutic services are an integral and incidental component of the physician’s service.