Practice guide: Shared services, incident-to and direct billing
Medicare provides three options for billing services that nonphysician clinicians (NPCs) provide.
NPCs, such as nurse practitioners, physician assistants and clinical nurse specialists, play a growing role in delivering patient care.
Why it matters for physician practices
Choosing the appropriate Medicare billing pathway for services delivered by NPCs can significantly affect payment, compliance and care team efficiency. Each billing method—split/shared services, incident-to or direct—has its own requirements, benefits and limitations.
Understanding the distinctions can help practices:
Maximize payment, when applicable, by ensuring the service is billed under the appropriate clinician based on the method used
Support team-based care models, allowing NPCs to manage aspects of patient visits within their scope while physicians remain actively involved
Maintain compliance with CMS rules, including documentation, supervision and time-tracking requirements
CMS rules are detailed and evolving. Practices must ensure accurate documentation and clear role delineation for each service billed. Failing to follow billing guidelines can result in denials or audits.
Medicare billing options for NPs and PAs
There are three Medicare billing options for NPCs: Split/shared services, incident-to and direct. Learn more below and read the FPM article “Incident-to and shared services: Demystifying billing for care provided by multiple professionals" for comparison tables and case-based questions and answers.
Split/shared services billing
In institutional settings, when both a physician and an NPC contribute to a visit, the visit may be billed under the clinician who performed the substantive portion of the service. As of 2024, Medicare defines the substantive portion as more than half of the total time spent on the encounter.
Split/shared billing (also referred to as shared services billing) applies when both a physician and an NPC (e.g., nurse practitioner, physician assistant) jointly manage an evaluation and management (E/M) service for the same patient on the same date of service in an institutional setting.
Key points
These visits may be billed under the NPI of the clinician who performed the substantive portion of the visit.
The physician and NPC must be part of the same group.
Split/shared billing is allowed for new patients, new problems and initial visits, unlike incident-to billing.
Permitted settings: Institutional only
Hospital inpatient (Place of Service code 21)
Hospital outpatient departments (Place of Service codes 19 and 22)
Emergency department (Place of Service code 23)
Skilled nursing facility (Place of Service codes 31 and 32)
Requirements for eligibility
To qualify for split/shared billing, all of the following must apply:
The service must be E/M only (does not apply to procedures).
The physician and NPC must each contribute meaningfully to the E/M service, not just be present.
The visit must occur in an institutional setting.
Performance of the substantive portion determines which clinician bills.
- As of 2024, the clinician who spends more than 50% of the total visit time bills the service.
- Total time includes both face‑to‑face and non‑face‑to‑face work performed on the same date of service, but only the distinct time by each clinician may be counted.Documentation must identify both clinicians, and the billing provider must sign and date the note.
Limitations and exclusions
Split/shared billing does not apply when:
The service occurs in a noninstitutional setting (e.g., physician's office).
Only one clinician (either physician or NPC) participated in the E/M service.
The service involves a procedure or diagnostic test rather than an E/M service.
The physician and NPC are not in the same group practice.
Documentation does not clearly support the distribution of time between the clinicians or identify which clinician performed the substantive portion.
Split/shared billing is less common in family medicine but may occur in inpatient or emergency department settings where collaborative care occurs.
Common examples
A hospital inpatient visit in which the NPC conducts the initial evaluation and the physician reviews findings and finalizes the management plan later that day
An emergency department case in which both the NPC and physician see the patient sequentially and contribute meaningfully to the diagnosis and treatment plan
Not permitted under split/shared services
Office visitsor services innoninstitutional settings (These may be eligible for incident-to or direct billing instead.)
Procedures or diagnostic tests (Split/shared billing applies to E/M services only.)
Visits involving only one clinician, even if another clinician reviewed the chart
CMS clarified and updated split/shared billing rules in the 2024 Medicare PFS final rule, following earlier rulemaking in 2022 and 2023. Key changes, including time-based attribution requirements and use of the FS modifier, were implemented in 2024 and enforced throughout 2025.
Key elements
Transition from prior rules: Prior to 2024, clinicians could determine the substantive portion based on either time or medical decision-making. Beginning in 2024, CMS finalized a transition to time-based attribution only. Unless future rulemaking changes this policy, all split/shared visits must now be billed according to which clinician spent the greater share of total time.
Institutional setting requirement: Split/shared billing applies only in institutional settings (e.g., hospitals, skilled nursing facilities), not in physician offices or other noninstitutional environments.
Same group requirement: The physician and NPC must belong to the same group, and both must be authorized to bill Medicare for their services.
E/M services only: Split/shared billing applies only to E/M services, not procedures or diagnostic tests.
Use of modifier -FS: All split/shared service claims must include the FS modifier, which identifies them as shared visits for Medicare tracking and compliance purposes.
Documentation and compliance essentials
Practices must ensure documentation supports all aspects of a split/shared service claim to remain compliant and audit-ready.
Essential documentation elements include:
Identification of both clinicians: The note should reflect contributions from both the physician and NPC involved in the service.
Time tracking: Document the total time spent on the visit and the distinct time contributed by each clinician. Time must include both face-to-face and non–face-to-face work performed on the same calendar day.
Attribution of substantive portion: As required by CMS in 2024, the clinician who contributed more than 50% of the total time is considered to have performed the substantive portion and is the appropriate billing provider. Clearly indicate this attribution in the documentation.
Setting verification: The documentation must confirm the institutional setting, which is a prerequisite for split/shared billing.
Use of correct modifiers and codes: Apply the FS modifier and use appropriate E/M codes that align with institutional care and the nature of the visit.
Group affiliation: Ensure both clinicians are part of the same billing group and that this relationship is reflected in practice records.
Because CMS has emphasized enforcement around split/shared services billing, especially as time-based rules take effect, robust documentation practices and billing oversight are essential to avoid payment denials or post-payment audits.
Incident-to billing
NPCs may report services as incident to a physician’s service in a noninstitutional setting, if specific requirements are met. These services are billed under the physician’s National Provider Identifier (NPI) and paid at 100% of the Medicare Physician Fee Schedule (PFS).
Incident-to billing allows services furnished by an NPC in a noninstitutional setting (e.g., physician’s office) to be billed under a supervising physician’s NPI at 100% of the Medicare PFS if the eligibility conditions are met.
Permitted settings: Noninstitutional only
Physician offices and outpatient clinics (Place of Service code 11)
Other noninstitutional settings where the supervising physician is available on site (or via virtual direct supervision, if permitted)
Practice-based settings outside institutional facilities
Note: Incident-to billing is not allowed in institutional settings, such as hospitals (inpatient or outpatient), emergency departments or skilled nursing facilities.
Requirements for eligibility
To qualify for incident-to billing, all of the following must apply:
The service must be an integral, though incidental, part of the physician’s professional service.
The service must be of a type commonly furnished in a physician’s office or clinic (i.e., not in an institutional setting).
The service must be furnished under the direct supervision of the physician or another qualified supervising practitioner (see supervision rules below).
The physician must have personally performed the initial service and established the diagnosis and plan of care, and they must remain actively involved in the patient’s course of treatment.
The NPC must follow the plan of care established by the physician.
There must be an employment, lease or contractual relationship between the supervising physician/practitioner, the NPC and the billing entity.
The patient encounter must be for an established patient and an existing condition (i.e., not a new patient or new problem).
Limitations and exclusions
Incident-to billing does not apply when:
The patient is new to the physician or practice.
The visit addresses a new problem or complaint (unless the physician is present face-to-face and initiates the treatment).
The physician is not on site or cannot provide direct supervision as required.
The service is provided in an institutional setting (e.g., hospital, skilled nursing facility).
The service is of a nature that does not require physician supervision (i.e., the service is beyond what is allowable under incident-to rules).
Incident-to billing is often used in family medicine to support team-based care in outpatient settings.
Common examples
Follow-up visits for chronic conditions (e.g., hypertension, diabetes, depression) for which the physician has already established a diagnosis and plan of care. The NPC conducts the follow-up visit and the supervising physician is on site (or, in 2025, available virtually).
Preventive services, such as routine blood pressure checks or medication refills, that are managed by a nurse or physician assistant under a physician’s care plan
Lab result reviews or care coordination visits when the encounter is part of the previously developed care plan and does not address new symptoms or conditions
Note: These examples assume the patient is established, the issue is not new and the physician has created the plan of care. New patients, new problems, institutional settings or lack of appropriate supervision would disqualify the encounter from incident-to billing.
CMS’s guidance for incident-to billing is primarily drawn from its “Incident to Services & Supplies” policy and related PFS rules. The core eligibility criteria remain consistent with long-standing definitions. However, the 2025 Medicare PFS final rule introduced or extended important modifications regarding virtual direct supervision.
Virtual direct supervision: 2025 changes and outlook
Extension through 2025
CMS has finalized a rule allowing supervising physicians (or qualified supervising practitioners) to provide direct supervision via real-time audio/video telecommunications through December 31, 2025. For services that require direct supervision, this means the supervising clinician does not need to be physically present in the office suite as long as they are immediately available through interactive audio/video technology during the time the service is performed.
Permanent flexibility for a subset of services
CMS also made virtual direct supervision permanently allowable for certain lower-risk services, specifically:
Incident-to services provided by auxiliary personnel employed by the billing provider, when the Healthcare Common Procedure Coding System or CPT code has a professional component/technical component indicator of “5”
CPT 99211, an E/M visit that may not require a physician’s presence, when furnished incident to a physician’s service
In these cases, virtual direct supervision will remain allowable beyond 2025 as long as all other incident-to billing criteria are met.
Limitations for other services
For all other services that require direct supervision, CMS has extended virtual supervision only through 2025. Unless further rulemaking occurs, those services will once again require on-site, in-person supervision beginning January 1, 2026.
Looking ahead to 2026 and beyond
CMS has proposed further expansion of the scope of virtual supervision in future rulemaking. For example, the calendar year 2026 Medicare PFS proposed rule includes provisions to allow virtual supervision more broadly across most incident-to services while retaining in-person requirements for higher-risk procedures, such as those with global surgical codes (e.g., 010- or 090-day periods).
Other clarifications and enforcement points
Supervision attribution: Only the supervising physician or other qualified supervising practitioner who is directly providing oversight (whether physically or virtually) may bill the incident-to service. CMS insists that the physician billing must be the one supervising that encounter, not a different physician who is merely associated with the plan.
General vs. direct supervision: Medicare may require general supervision instead of direct supervision for certain services (e.g., some behavioral health, transitional care management, chronic care management services provided by auxiliary personnel). In such cases, the physician does not need to be immediately available on site.
State/payer variation: Be aware that some states or commercial payers may not adopt or allow the virtual supervision flexibilities or the same interpretation of incident-to rules.
Documentation and compliance essentials
To remain compliant and support audit defensibility, practices should maintain clear and robust documentation showing:
Initial physician involvement
Evidence that the physician personally saw the patient, established the diagnosis and set the treatment plan for the condition being managedOngoing physician oversight
Notes or records showing that the physician continues to review and participate in the patient’s care (e.g., periodic direct physician visits, plan modifications, supervisory involvement)Supervision method and presence
If virtual direct supervision is used, documentation should note that supervision was provided via real-time audio/video. It should also note that the supervising physician was “immediately available” and through what means. This is especially important given the temporary nature of the flexibility.
If physical supervision is required (or returned), the record should show the physician was on site in the office suite during the NPC’s service.Nature of service and office setting
The service must align with what is “commonly” provided in a physician’s office, be integrally tied to the physician’s plan and be consistent with standard practice.
Documentation must show that the NPC’s work was part of the planned physician service, not a stand-alone or new problem.Billing and staff policies
Internal billing protocols should ensure that only authorized incident-to encounters are billed that way.
Staff and NPCs must be educated on the rules, including what is allowable and what disqualifies incident-to billing (e.g., new patients, new problems, off-site supervision, institutional setting).
Audits or periodic internal checks can help catch misclassification prior to payer scrutiny.Group affiliation: Ensure both clinicians are part of the same billing group and that this relationship is reflected in practice records.
Direct billing
NPCs may enroll and bill under their own NPI, or they can reassign their billing rights to an employer or contractor, who then bills using the NPC’s NPI. Medicare pays 85% of the PFS for services billed under an NPC’s NPI.
Direct billing applies when an NPC furnishes services independently and bills under their own NPI. Medicare pays these services at 85% of the PFS rate.
This billing model does not require physician supervision and is commonly used for new patient visits, independent follow-up care, or any encounter that does not meet the criteria for incident-to or split/shared billing.
To qualify for direct billing, all of the following must apply:
The NPC must be enrolled as a Medicare provider.
The service must be medically necessary and fall within the NPC’s state-defined scope of practice.
The service must be furnished independently, without physician involvement during the encounter.
Documentation must show that the NPC provided the full service and support the level of coding selected.
Modifier FS is not required.
NPCs may reassign billing rights to a group practice or employer. In this case, services are still billed under the NPC’s NPI, but payments go to the reassigned entity.
Limitations and exclusions
Payment is limited to 85% of the Medicare PFS rate.
The service must be of a type commonly furnished in a physician’s office or clinic (i.e., not in an institutional setting).
State laws may restrict what services NPCs can furnish independently. Review your state’s scope of practice.
Direct billing is often used when:
An NPC conducts a new patient visit.
The physician is not present or involved in the service.
The service does not qualify for split/shared or incident-to billing.
The NPC manages ongoing care independently within their scope.
Free CME: NPC supervision
Related links
- Incident-to and shared services: Demystifying billing for care provided by multiple professionals (FPM)
- Medicare compliance basics: “Incident to” billing (Foley and Larnder LLP)
- Incident to services (Noridian)
- E/M services furnished by a non-physician practitioner incident to a physician's service (Novitas)
- Billing for NPC services to support the delivery of physician care (FPM)
- Medicare Benefit Policy Manual – Chapter 15 (CMS)
- Medicare Claims Processing Manual – Chapter 12 (CMS)
- Split or shared E/M guidelines (Novitas)