Incident-to vs. Supervisory billing in mental health

“One of these things is not like the other”

Much has been written about the current high demand for mental health services and clinician shortages.

In response, some (not all) private insurers have done what was once unthinkable. They now reimburse for services provided by provisionally-licensed therapists (associates) under supervision.

Medicaid generally has always reimbursed for supervisees, probably because of traditionally low reimbursement rates.

You’ll notice I didn’t mention Medicare: what about Medicare? As always, Medicare is confusing!

Medicare does NOT reimburse for services provided by provisionally-licensed clinicians.


You’ve probably heard that Medicare has this thing called “incident-to billing” (true).

And that it’s ok for you to bill Medicare for supervisees under “incident-to billing” rules (false).

Why does incident-to billing get confused with supervisory billing?

How are incident-to billing and supervisory billing different?

Supervisory billing is just what it sounds like: a licensed clinician is billing under their NPI number for services provided by a therapist who isn’t yet independently licensed.

Supervision is clinically necessary for the therapist’s training and to obtain licensure. However, billing for a clinician under supervision is administrative in that there is no clinical requirement that must be met. The payer either reimburses for supervisees, or it doesn’t.

“Incident-to” requires that clinical (and other) criteria be met.

Let’s look at what “incident-to” means in a medical setting, and the difference from supervisory billing will be clearer.

CMS defines incident-to as:

Incident to services and supplies are those provided as
an integral, although incidental, part of the physician’s or
nonphysician practioner’s personal professional services during
diagnosis and treatment.

For example, a patient is diagnosed by an MD with diabetes, is prescribed medication which is carefully monitored. The MD also sets up a plan of regular blood sugar evaluations by a nurse practitioner who is part of the physician’s practice. This NP’s services are billed “incident-to” the MD’s services.

How this differs from supervisory billing:

  • The NP could bill under their own license/NPI, if they were treating the patient independently, and their treatment plan was their own, rather than being developed and overseen by the MD.  (if permitted by state license law)
  • The referral to the NP is a critical component of the MD’s treatment plan for management of the patient’s diabetes.
  • The physician continues to monitor and directly treat the patient, in addition to overseeing the nurse’s monitoring plan/progress.

See the difference? Incident-to is meant to show coordinated care, or services associated with the “main” billable service, put together as a comprehensive plan of care. It’s much more than billing under a supervisor’s NPI so that the associate can be paid while obtaining the clinical hours required to achieve an independent license.

For those of us in mental health, the problem is that the clinical requirements for “incident-to” aren’t commonly met in office-based psychotherapy practices. Especially those that do not include prescribers in the group.


Even while being supervised, in psychotherapy the associate therapist IS the treating clinician. The supervisor is acting as a case consultant. And this is exactly why supervisory billing does not meet “incident-to” guidelines.

Incident-to and Medicare

Per CMS, Incident-to services must meet the following criteria to be covered by Medicare:

  • Incident-to services are an integral part of normal treatment when the billing practitioner personally performed an initial service and remains actively involved in the course of treatment.
  • Incident-to services are commonly provided without charge or included in the billing practitioner’s claim.
  • Incident-to services are provided under the direct supervision of the billing provider.
  • Incident-to services are an expense to the billing clinician.
  • Incident-to services are commonly provided in the billing practitioner’s office or clinic.
  • Billing practitioner provides direct supervision for the “incident to” services, and only the practitioner who supervises the incident-to services may bill them.

Be honest: are you satisfying these conditions in office or telehealth psychotherapy settings when services are provided by associate-level therapists?

(you don’t have to tell me…)

But, if you’re billing Medicare for supervisees, and calling it incident-to, then STOP. RIGHT. NOW.

Before you get into a whole lotta trouble! What kind of trouble?

Audits, clawbacks, increased scrutiny are bad enough. But with government programs, depending on the extent of the incorrect billing, there could be civil monetary penalties, OIG oversight, and/or exclusion. Even criminal charges, if extensive enough.

Ok – don’t panic. The severe consequences are for the serious offenders, people that know better and bill incorrectly anyway. Especially if they get greedy and submit questionable “incident-to” claims on a large scale.

What I typically encounter, is a therapist who tells me, “My colleague is doing it, and making a lot of money.” Because that therapist must know what they’re doing, right? And then one thing leads to another…

So, if you want to proceed down the path of billing Medicare incident-to, well, You’ve Been Warned.

Supervisory billing and private / commercial insurance

If a private insurance payer has publicly stated in writing (usually in the most recent provider manual), that they will reimburse for supervisees … feel free.

But this being insurance – there’s a catch. Or several.

You’ll have to determine if the payer will accept the standard supervisory protocol billing described in the video above. That can be easier said than done: getting a definitive, reliable answer from an insurance company is never easy!

Here’s another problem: Two of the major payers that currently allow supervisory billing, Aetna and Cigna, will deny a claim filed correctly, where the supervisee is listed in 24J as the rendering provider.

Because they don’t want to go to the expense and effort of “rostering” the NPI numbers of the associate therapist! (“rostering” = updating the provider database to reflect the associate’s affiliation with the group practice or supervisor). Without those NPI numbers in the database, an associate clinician won’t be linked to the in-network licensed supervisor. And the claim will deny since the provider (the associate) is unknown.

Then there are what seem like hidden traps:

1. What happens when an associate forms a therapeutic relationship with a client, and the client’s insurance changes to a plan that doesn’t allow supervisory billing?

Difficult choices: self-pay at a reduced rate, referral to the supervisor or another licensed clinician. Possibly harmful to the client, and stressful for the new therapist, having to navigate ethical dilemmas even before their career has truly begun.

2. What if it’s a situation with primary vs secondary insurance? One plan might allow associates while the other doesn’t – and coordination of benefits is frequently not clear or updated.

Same as above – plus more confusion. Clawbacks are likely. And care is disrupted.

3. Are Medicare “Advantage” plans to be treated like Medicare? Or should the therapist follow the guidelines of the commercial payer who offers the MA plan?

Answer: MA plans should be treated like Medicare, because the government uses money from the Medicare trust fund to pay for each beneficiary who enrolls in a Part C plan.

Even if that payer’s commercial plans allow supervisory billing, don’t try it with Medicare “Advantage.”

4. The numbers problem: Since the supervisor is billing “as if” they were directly providing the care, this will inflate the numbers of sessions billed under their NPI. Putting the supervisor at extremely high risk of extensive audits.

Example: the supervisor sees 3 clients per day with the same insurance payer. The supervisor has 3 associates, and each of them sees 3 clients per day with the same insurance payer. That’s 12 sessions per day billed to the same insurer under the supervisor’s NPI.

Think that might trigger an audit?

If you’re supervising an associate for whom you’re billing insurance, your documentation had better be impeccable.

And I recommend you keep the # of supervisees per licensed clinician very small.

5. What happens when the associate becomes licensed independently? Credentialing can take the better part of a year, sometimes.

It’s never ok for a licensed clinician to pretend to be supervised in order to bill under another therapist’s NPI number. Even though it’s for a good cause: so that the client might receive in-network benefits.

Quite simply: a licensed clinician pretending to be supervised is insurance fraud. You’re submitting a false claim by stating the provider of service was someone other than the person who actually performed the service.

This imposes undue burdens on the newly licensed clinician and the client: each client formerly receiving in-network benefits while the therapist was still an associate, will need to request a single case agreement for the duration of the credentialing/contracting period. Most of the time, insurers must provide single case agreements due to continuity of care, according to most state and federal laws. In practice, both the client and the therapist will be forced to argue and justify that care should continue to be reimbursed on an in-network basis. And the insurer wins if the client and/or therapist gives up out of sheer frustration.

While it’s great that therapists needing supervision hours now have more options for paid work – and more clients can receive care – insurance reimbursement of associates can be a tricky thing. If you supervise an associate and bill insurance for them: please, proceed with care.

Susan Frager | PsychBilling Coach

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