Nurse practitioners, physician assistants, and other advanced practice providers now deliver a growing share of patient care in the United States, driven by physician shortages and rising patient demand. For practices, that shift is good news operationally and a minefield financially if the billing side isn’t handled correctly.
Non-physician provider (NPP) billing sits at the intersection of three different Medicare payment pathways, each with its own documentation rules, supervision requirements, and reimbursement rate. Get it right, and a practice captures every dollar it’s owed. Get it wrong, and it’s one of the fastest ways to draw a payer audit. The OIG has an incident-to billing report due out in 2026, and several major commercial payers have already tightened or eliminated incident-to reimbursement altogether.
This guide breaks down exactly how NPPs’ billing works, what changed under the 2026 Medicare Physician Fee Schedule, and how practices can stay compliant while still maximizing legitimate reimbursement.
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What Is a Non-Physician Provider?
CMS uses the term “non-physician practitioner” (NPP) to describe licensed clinicians who are not MDs or DOs but are authorized to diagnose, treat, and bill for patient care within their state scope of practice. Common NPP types include:
- Nurse Practitioners (NPs) — advanced practice registered nurses with a master’s or doctoral-level nursing degree
- Physician Assistants (PAs) — mid-level practitioners who work under physician collaboration or supervision agreements
- Clinical Nurse Specialists (CNSs) — advanced practice nurses with specialized graduate training
- Certified Registered Nurse Anesthetists (CRNAs)—advanced practice nurses who administer anesthesia
- Certified Nurse-Midwives (CNMs) — advanced practice nurses specializing in midwifery and women’s health
- Clinical psychologists and clinical social workers — behavioral health providers with distinct Medicare billing rules
You’ll also hear NPPs referred to as “mid-level providers,” “advanced practice providers (APPs),” or “physician extenders.” All of these terms describe the same core billing category, though scope of practice—and therefore what an NPP is legally permitted to bill for—varies significantly by state. Some states grant NPs full independent practice authority; others require a collaborating or supervising physician relationship. Verifying state-specific scope of practice is a prerequisite to correct billing, not an afterthought.
The Three Ways NPP Services Get Billed
There is no single “NPP billing method.” Depending on the setting and the level of physician involvement, an NPP encounter can be billed one of three ways—and each pays differently.
| Billing Method | Setting | Billed Under | Reimbursement |
| Direct billing | Any setting | NPP’s own NPI | 85% of the Medicare Physician Fee Schedule (generally) |
| Incident-to billing | Physician office (POS 11) only | Supervising physician’s NPI | 100% of the Physician Fee Schedule |
| Split/shared billing | Facility settings (hospital, SNF) | Whoever performed the “substantive portion” | 100% (if physician) or 85% (if NPP) |
1. Direct Billing
An NPP bills Medicare using their own NPI for services performed independently. This is the most straightforward and lowest-risk approach — but it pays less. Medicare generally reimburses NPP-billed services at 85% of what a physician would receive for the identical CPT code. Medicaid programs often pay NPPs a higher percentage (frequently around 92%, though this varies by state).
2. Incident-To Billing
Incident-to is a Medicare doctrine that allows a physician to bill—and get paid 100% of the fee schedule—for services actually performed by an NPP, as long as strict conditions are met:
- The physician must have personally performed the initial evaluation and established the diagnosis and treatment plan
- The patient must be an established patient with an established problem—new patients and new problems can’t be billed incident-to
- The NPP’s service must directly follow the physician’s plan of care
- The supervising physician must provide direct supervision—traditionally meaning physically present in the office suite and immediately available
- The service must occur in a non-institutional setting, specifically place of service 11 (office)
That last requirement got a significant update for 2026 — see below.
3. Split/Shared Billing
Split/shared billing applies only in facility settings—hospitals, emergency departments, and skilled nursing facilities—where incident-to is not available. When a physician and an NPP from the same group jointly manage a patient’s visit, the service is billed by whichever practitioner performed the substantive portion of the visit, defined as either
- More than half of the total time spent on the visit, or
- The key portion of the medical decision-making (MDM)
Claims must carry the modifier FS (Split or Shared E/M Visit), and documentation must clearly identify both practitioners involved, signed by whoever bills the service. Office visits and nursing facility E/M visits are not eligible for split/shared billing — those fall under incident-to rules instead.
What Changed for NPP Billing in 2026
A few regulatory shifts this year are directly reshaping how practices should approach NPP billing:
Virtual direct supervision is now permanent. Under the CY 2026 Medicare Physician Fee Schedule final rule, CMS permanently redefined “direct supervision” to allow a supervising physician to be “immediately available” through real-time, two-way audio-video communication—rather than requiring physical presence in the office suite. This applies to incident-to-services, diagnostic tests, and cardiac/pulmonary rehab services. The one carve-out: procedures with a 10-day or 90-day global surgery period still require in-person physical supervision. For practices running NPP-heavy clinics, this materially expands scheduling flexibility for incident-to-billing—but it also raises the documentation bar since practices now need to prove the virtual supervision actually occurred in real time.
The OIG is actively auditing incident-to claims. The OIG added incident-to-billing to its national work plan, with a formal report expected in 2026. Because incident-to claims are submitted under the physician’s NPI, auditors can’t distinguish physician-performed services from NPP-performed services through claims data alone—which means chart-level review is where violations surface. The most common audit trigger is the “impossible day”: a physician’s schedule showing more encounters than they could plausibly have supervised.
Commercial payers are moving away from incident-to. Several major payers have restricted or eliminated incident-to reimbursement in recent policy updates, citing the lack of billing transparency (a claim under a physician’s NPI doesn’t reveal who actually performed the service) and high noncompliance rates found in audits. Some now require NPP-identifying modifiers (like SA or SB) on every claim regardless of who bills it. Payer-specific policy checks are now essential before defaulting to incident to any non-Medicare claim.
The 2026 conversion factor rose 2.5%, a welcome bump after several years of cuts — though offsetting adjustments to certain non-time-based RVUs mean the net effect varies by specialty and code mix.
Credentialing and Enrollment: The Foundation of Compliant NPP Billing
No NPP billing pathway works without proper enrollment. Before an NPP can bill Medicare — directly, incident-to, or split/shared—the practice needs to complete several credentialing steps:
- Register the NPP in the Identity & Access Management (I&A) System
- Obtain an NPI through the National Plan & Provider Enumeration System
- Enroll the NPP in Medicare via PECOS or a paper CMS-855 application
- Confirm state licensure and any required collaborating/supervising physician agreements
- Complete payer-specific credentialing, including CAQH profile maintenance (now transitioning to the DataSpring platform) for commercial payers
Credentialing delays are one of the most common — and most preventable — sources of denied or delayed NPP reimbursement. An NPP who sees patients before enrollment is finalized creates claims that can’t be billed under any pathway until the enrollment effective date catches up, often forcing practices to hold or resubmit weeks of claims.
Telehealth Billing for NPPs
Telehealth has become a permanent fixture of NPP-delivered care, and the billing mechanics matter as much as the clinical delivery. For 2026:
- Medicare fee-for-service claims use place of service codes, not modifiers, to flag telehealth. POS 10 for a patient at home (paid at the non-facility rate) and POS 02 for a patient elsewhere (facility rate)
- Modifier 95 (audio-video) is typically required by commercial and Medicare Advantage payers, even though traditional Medicare relies primarily on POS coding
- Modifier 93 identifies audio-only encounters, which remain permanently available for behavioral health services and, under defined circumstances, for patients unable or unwilling to use video
- Medicare telehealth flexibilities—including the elimination of geographic restrictions and home-based originating sites—were extended through December 31, 2027, under the Consolidated Appropriations Act, 2026
- Incident-to billing rules still apply on top of telehealth rules: an NPP’s virtual visit can still qualify for incident-to reimbursement if the underlying supervision and treatment-plan requirements are met
Common Compliance Pitfalls in NPP Billing
Most NPP billing denials and audit findings trace back to a small set of recurring errors:
- Billing new patients or new problems as incident-to. This is disallowed under any circumstance and is one of the OIG’s top findings.
- The “impossible day.” Physician schedules showing more supervised encounters than are physically feasible are a leading audit trigger.
- Missing or incorrect modifiers. Forgetting modifier FS on split/shared claims, or omitting payer-required NPP identifiers like SA, leads to denials or, worse, claims that look like misrepresented physician-performed services.
- Multiple same-specialty NPP visits on the same day. Medicare generally allows only one E/M service per beneficiary, per provider specialty, per day—additional visits require documentation of a distinct, medically necessary condition and often specialty information in the claim notes.
- Cloned or copy-forwarded documentation. Notes that don’t reflect the specifics of the supervising physician’s involvement won’t hold up under audit, even when the underlying care was appropriate.
- Defaulting to incident-to as the automatic workflow. The safer compliance posture is the reverse: bill under the NPP’s own NPI by default and only apply incident-to when every requirement is verified and documented for that specific encounter.
Best Practices for Revenue-Optimized, Compliant NPP Billing
- Build documentation templates that explicitly capture supervision, treatment-plan linkage, and (for split/shared visits) time or MDM attribution for each encounter
- Audit incident-to and split/shared claims quarterly, not just annually, given the current OIG and commercial payer scrutiny
- Verify payer-specific policies before billing—Medicare, Medicaid, and commercial payers each treat incident-to and NPP modifiers differently, and policies are actively shifting in 2026
- Track physician and NPP schedules together to catch impossible-day patterns before an auditor does
- Keep credentialing current across Medicare PECOS, state licensure boards, and commercial payer platforms like DataSpring, so NPP claims never stall on enrollment gaps
- Train front-office and billing staff on the difference between direct, incident-to, and split/shared billing, since the wrong default costs either revenue (under-billing) or compliance exposure (over-billing)
How Revantage Healthcare Helps
NPP billing is one of the more nuanced corners of revenue cycle management—the reimbursement rules reward precision and punish shortcuts. At Revantage Healthcare, our billing and credentialing teams help practices:
- Determine the right billing pathway for every NPP encounter, visit by visit
- Keep NPP credentialing and payer enrollment current across Medicare, Medicaid, and commercial plans
- Build audit-ready documentation workflows for incident-to and split/shared claims
- Monitor evolving payer policies so your practice isn’t caught off guard by a commercial payer’s next incident-to restriction
- Reduce denials tied to modifier errors, same-day NPP visit conflicts, and supervision documentation gaps
If your practice works with NPs, PAs, or other advanced practice providers, a billing process built around outdated or overly cautious defaults is likely leaving revenue on the table or quietly building audit risk. Our team can review your current NPP billing workflow and identify where you stand on both fronts.
Frequently Asked Questions
What percentage does Medicare pay for NPP-billed services?
Generally 85% of the Medicare Physician Fee Schedule rate when billed under the NPP’s own NPI, versus 100% when billed correctly as incident-to under a supervising physician’s NPI.
Can incident-to billing be used in a hospital setting?
No. Incident-to billing only applies in the physician office setting (place of service 11). Facility-based encounters involving both a physician and an NPP fall under split/shared billing rules instead.
Does the 2026 virtual supervision rule eliminate the need for a physician to be on-site?
For most incident-to services, yes—a physician can now satisfy the “immediate availability” requirement through real-time audio-video communication rather than being physically present in the office suite. Procedures with a 10-day or 90-day global surgery period are the exception and still require in-person supervision.
Is incident-to billing worth the compliance risk?
That depends on the practice. The reimbursement gap between incident-to (100%) and direct NPP billing (85%) is real, but so is the documentation burden and audit exposure—particularly with the OIG’s 2026 incident-to review underway. Practices with consistent, verifiable physician supervision are generally well-positioned to use incident-to; those with unpredictable physician availability may find direct billing the more defensible choice.
What modifier is required for split/shared visits?
Modifier FS must be appended to the E/M code to identify the visit as split or shared between a physician and an NPP.
Ready to make sure your NPP billing is both compliant and fully optimized for revenue? Contact Revantage Healthcare for a free billing assessment.
