Out of the country, out of compliance: The hidden risk of incident to billing

Many physicians assume that as long as they’re available by phone, billing can continue as usual when they travel. Unfortunately, Medicare’s rules are far more stringent. The consequences of misunderstanding these requirements range from claim denials to False Claims Act liability.

I recently learned about a physician who was audited while traveling abroad. The Medicare Administrative Contractor requested documentation and discovered the physician was out of the country on dates when incident to services were billed under his name. All those claims were denied, and the practice faced significant recoupment. This scenario is more common than you might think.

The core requirement: You must be in your office suite

Under Medicare’s incident to billing rules (42 CFR § 410.26), you can bill for services provided by nurse practitioners, physician assistants and other nonphysician practitioners (NPPs) at the higher physician rate — but only when you’re physically present in your office suite and “immediately available.”

What does “immediately available” mean? According to the Medicare Benefit Policy Manual, Chapter 15, Section 60.1, it means you must be present in the office suite — not just the building — and able to respond within moments to provide assistance and direction.

This isn’t a suggestion or best practice. It’s a mandatory billing requirement. Whether you’re traveling internationally or simply running errands across town, any absence from your office suite makes an incident to billing impermissible during that time.

How Medicare detects violations

You might wonder how Medicare discovers these violations. Postpayment audits are routine, and auditors examine multiple data points: date and time stamps on medical records, physician schedules and calendars, staff schedules and billing patterns. For instance, if incident to claims appear on dates when you have no appointments scheduled, that raises a red flag.

Whistleblower reports from disgruntled employees or competitors also trigger investigations. Pattern analysis flags unusual billing. During comprehensive audits, Medicare may request calendars, travel receipts and other documentation that reveal your location on specific dates.

As Medical Economics has reported, Medicare audits are becoming increasingly sophisticated, and practices need to stay vigilant about compliance.

Compliant alternatives when you’re away

Fortunately, Medicare provides legitimate options for maintaining your practice when you travel.

Locum tenens arrangements: Under 42 CFR § 414.50, you can arrange for a substitute physician to see your established patients. The substitute must be a doctor of allopathic medicine or a doctor of osteopathic medicine, not a nurse practitioner or physician’s assistant. The substitute bills under your national provider identifier (NPI) using modifier Q6. Medicare pays according to the physician fee schedule as if you performed the service. This arrangement works for absences up to 60 continuous days for vacation, illness or continuing education.

Reciprocal billing: For shorter, irregular absences, you can establish a reciprocal arrangement with another physician. This doesn’t require you to be in the same group practice — independent practitioners can establish these arrangements. The covering physician sees your established patients (not new patients) and bills under your NPI with modifier Q5. The key limitation: This is for occasional absences, not routine arrangements to expand practice capacity.

NPP billing under their own credentials: Your nurse practitioners and physician assistants can always bill under their own NPIs. Medicare pays them at 85% of the physician fee schedule for most office services. While this reduces revenue compared with incident to billing, it’s completely compliant and avoids the risks of improper billing. For more on working effectively with nurse practitioners and physician assistants, proper billing structures are essential.

What NPPs cannot do

This is crucial: NPPs cannot serve as locum tenens substitutes. The locum tenens regulations specifically limit this option to physicians. Your nurse practitioner cannot step into the supervising physician role under Medicare rules, no matter how experienced or qualified.

The financial consequences

Submitting an incident to claims when you’re not present in the office suite constitutes a false claim under the False Claims Act (31 U.S.C. § 3729). Current penalties, adjusted annually for inflation, range from approximately $14,308 to $28,619 per false claim, plus treble damages. That’s per claim — multiply those numbers by every improper bill submitted during your absence.

Beyond financial penalties, practices face repayment of all improperly billed amounts, potential exclusion from federal health care programs and possible criminal prosecution for knowingly submitting false claims. As Medical Economics has covered extensively, compliance violations can devastate even well-established practices.

Practical steps for compliance

Before you travel: Review your schedule and identify all NPP appointments during your absence. Arrange a locum tenens physician if needed, or prepare for NPPs to bill under their own credentials. Most importantly, notify your billing staff that incident to billing is prohibited when you’re not in the office suite. Document any locum tenens or reciprocal arrangements in writing.

During your absence: Ensure all NPP services are billed either under the NPP’s own NPI or under your NPI with the appropriate modifier (Q5 for reciprocal, Q6 for locum tenens) if you’ve arranged physician coverage.

After you return: Audit claims submitted during your absence. If you discover any improper incident to billing, voluntarily refund those amounts. Maintain documentation demonstrating your compliance efforts.

State law matters too

While Medicare regulations govern federal billing, your state’s medical practice act may impose additional restrictions on NPP supervision, scope of practice and locum tenens arrangements. Some states require more stringent supervision than Medicare. Consult your state medical board and consider seeking legal counsel for complex arrangements.

COVID-19 flexibilities have expired

During the COVID-19 Public Health Emergency (PHE), CMS temporarily modified direct supervision requirements to allow virtual supervision via audio/video technology. However, the federal PHE ended May 11, 2023, and most flexibilities expired by the end of 2024. As of 2025, practices should operate under standard pre-PHE requirements. Verify current requirements with your Medicare Administrative Contractor, as some temporary provisions may remain in effect for specific services.

Be there or don’t bill

Medicare’s physical presence requirement for incident to billing is absolute. Whether you’re traveling internationally or stepping out for a few hours, any absence from your office suite makes an incident to billing impermissible during that time. The investment in proper locum tenens arrangements or accepting the standard NPP billing rate is minimal compared with potential penalties — which include per-claim fines currently ranging from $14,308 to $28,619, plus treble damages and possible program exclusion.

The rules are clear, enforcement is real, and the consequences are severe. Take the time to understand these requirements and implement compliant billing practices. Your practice’s financial health and reputation depend on it.

Olga Khabinskay is director of operations at WCH Service Bureau, a national health care practice management services company that provides billing, coding and credentialing as well as provider technology services. With more than 23 years of experience in health care revenue cycle management, she specializes in medical billing, revenue compliance and payer contract evaluations, helping provider organizations reduce denials, strengthen collections and make smarter network decisions. An advocate and educator on closed panels, payer negotiations and reinstatements, Olga designs practical workflows that shorten time to payment and improve audit readiness. She is currently developing a Trusted Biller Program to present to CMS and the New York State Medicaid Program, aimed at establishing standards that enhance billing accuracy, transparency and payer-provider trust. A member of AAPC, HBMA and RBMA, Olga also champions the idea that billers should be licensed to submit claims to government payers.