“Incident to” billing is widely practiced, and its regulations are generally well-known. But one Arizona physician recently found himself pleading guilty in federal court on April 3, 2024, to a criminal healthcare fraud charge over improperly billing Medicare and private payors for healthcare services that failed to abide by the rules over “incident to” billing. This blog post explores how this lack of compliance resulted in such a serious criminal consequence.

“Incident To” Billing in a Nutshell

In general, physicians are paid at 100% of the Physician Fee Schedule rate for medical services, while non-physician providers (NPPs) are paid at 85% that amount. An exception to this difference is when NPPs in a non-institutional setting are furthering some course of treatment previously determined by a physician after an examination under the theory that those NPP services are “incident to” the physician’s overall care for the patient. For those NPP services to qualify for the higher payment amount, however, the physician must supervise the NPP’s services, must remain involved in the patient’s care, and must be “immediately available” to provide medical assistance to the patient being treated.

That last requirement—being immediately available—is important. Under Medicare rules, being immediately available for the purposes of “incident to” medical services does not necessarily mean being in the examination room, but it does mean that the physician is present in the same “office suite.” If the physician is not physically present in the same “office suite,” then NPP services are not eligible to be billed at the physician amount and must instead be billed at the reduced amount. Outside of the office setting, like in a home visit or care at a non-SNF long-term care facility, a physician must be physically present to be deemed as having the proper supervision to cover NPP care as “incident to” the physician’s services. So, for example, if a nurse administers an injection during home care, the physician would need to be physically present for the injection to be covered under an “incident to” framework.

Being immediately available is often the subject of enforcement efforts when it comes to “incident to” billing because it is less subjective than other requirements. For example, the “remaining involved in the patient’s care” concept is not one easily prone to questioning. How could government enforcers prove that the physician did not review a NPP’s notes or give thought to a patient’s care? Being immediately available, on the other hand, is something enforcers can objectively prove: the physician is either there or not.

How An Arizona Physician Ran Afoul of “Incident To” Billing Rules

Dr. Linh Cao Nguyen owned and operated what the Justice Department has described as a “mobile multi-specialty medical practice” that treated patients in their homes and living facilities in the Phoenix and Tucson areas. According to the Justice Department, Dr. Nguyen routinely sent out NPPs to care for patients in their homes but billed those services as “incident to” his and other physicians’ medical services and received the physician rate from Medicare and other payors. The Justice Department alleged that these NPP home visits were not attended by physicians and that, therefore, billing these visits as “incident to” a physician’s services were improper for lack of proper supervision.

The Criminal Kicker: Willfulness and “Intent to Defraud”

Most physicians who improperly bill for “incident to” services find difficulties in an audit, or perhaps a civil Justice Department investigation under the False Claims Act. But criminal prosecutions for healthcare fraud require a unanimous finding by a jury that a defendant acted knowingly and willfully and intended to defraud a healthcare program—and must find this beyond a reasonable doubt. How did the prosecution claim that Dr. Nguyen acted knowingly and willfully, with the intent to defraud Medicare and private payors, rather than just being mistaken as to the rigors of “incident to” billing?

According to the Justice Department’s indictment, Dr. Nguyen had been previously told by auditors that he was improperly billing for NPP services at the physician level. One specific allegation was that a third-party biller told Dr. Nguyen that he needed to be physically present to bill under the “incident to” framework, but that Dr. Nguyen’s response was, allegedly, “what Medicare doesn’t know won’t hurt them.” It was also alleged that Dr. Nguyen referred to “incident to” billing as his “secret sauce” and that by merely signing his NPP’s records he could make money.

Furthermore, at one point, according to the indictment, Dr. Nguyen employed staff from Vietnam to sign his name to medical records to make it appear as though Dr. Nguyen had personally rendered the service. The indictment states that Dr. Nguyen referred to his staff in Vietnam as his “secret weapon.”

Evidence of knowledge of wrongdoing and a willful mindset is the difference between an overpayment case and a criminal case. Dr. Nguyen’s case is not unlike the recent criminal conviction of a Louisiana hospice owner, in which a failed audit was ignored and later used as evidence of knowledge of wrongdoing in a criminal trial.

Moreover, the government’s indictment adequately alleges willful conduct because it has examples of Dr. Nguyen showing that he knew what he was doing was wrong. Acknowledging that he was keeping secrets from Medicare—and wanting to maintain those secrets—shows that Dr. Nguyen knew that what he was doing was wrong.

In other words, while we may love that our favorite restaurants have a “secret sauce,” the same cannot be said for “incident to” billing.

Acknowledging secrets from Medicare and faking medical records is ultimately what led to Dr. Nguyen’s prosecution because it shows a mindset of someone who knows that they are committing a crime.

Dr. Nguyen pled guilty to healthcare fraud in federal court on April 3, 2024. His lawyers negotiated favorable plea terms: a (c)(1)(C) plea to not more than 30 months when his stipulated Guidelines range was 46 to 57 months imprisonment, driven largely by a loss amount of more than $3.5 million. Dr. Nguyen will be sentenced at a later date.

What Can Healthcare Providers Learn from Dr. Nguyen’s Guilty Plea?

Healthcare is complex, and there is no shortage of questions as to what is proper and what is improper under Medicare’s various rules and regulations. But when you are told that what you are doing is wrong, and you keep doing it, allegedly telling people that “what Medicare doesn’t know won’t hurt them,” you have crossed a line into criminal conduct.

Dr. Nguyen’s prosecution and ultimate guilty plea do not signal any type of federal emphasis on finding “incident to” billing fraud; you are unlikely to see a DOJ takedown on “incident to” billing. Instead, the Justice Department will continue to learn of cases where healthcare providers are doing the wrong thing and know they are doing the wrong thing. Healthcare enforcers at OIG and DOJ know that Medicare rules are complex and that mistakes happen, but they will not turn a blind eye to accusations that physicians are knowingly flouting the rules or faking records.

And so, when healthcare providers learn that they might be doing something wrong, it is incumbent upon them to figure out the truth of the matter and act upon it. Doing nothing is a bad option, and talking about keeping secrets from Medicare is a worse option, as Dr. Nguyen learned.

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Photo of Jonathan Porter Jonathan Porter

Jonathan uses his years of experience as a federal prosecutor to guide clients through the challenges associated with government investigations and regulatory compliance.

Jonathan brings to clients a thorough working knowledge of how the U.S. government targets and pursues criminal and civil investigations,

Jonathan uses his years of experience as a federal prosecutor to guide clients through the challenges associated with government investigations and regulatory compliance.

Jonathan brings to clients a thorough working knowledge of how the U.S. government targets and pursues criminal and civil investigations, particularly those involving the healthcare industry. He is a former Assistant U.S. Attorney for the Southern District of Georgia, and in that capacity, he brought charges against numerous individuals and companies under federal law, including criminal charges of health care fraud, wire fraud, and violation of the Anti-Kickback Statute, and civil complaints alleging violations of the False Claims Act.

At the Department of Justice, Jonathan was a key member of multiple international health care fraud takedowns, in which Jonathan charged dozens of doctors, nurses, and other licensed medical professionals, along with marketers and health care executives for alleged participation in healthcare fraud schemes involving billions of dollars in false billings. In total, these charges resulted in more than 30 guilty pleas plus a conviction in the nation’s first trial of a medical professional charged as part of Operation Brace Yourself, which Jonathan first-chaired. Jonathan also was active in dozens of civil investigations brought under the False Claims Act. Jonathan resolved tens of millions of dollars in civil settlements and judgments for False Claims Act violations.

Jonathan also advises clients on a range of regulatory issues, along with the development and implementation of corporate compliance programs. He uses his unique perspective as a former AUSA, providing a prosecutor’s eye for detail in helping clients understand how DOJ and other agencies view compliance, particularly in light of the changing standards for compliance as outlined in the DOJ’s Evaluation of Corporate Compliance Programs (ECCP) and implemented in the Department’s white-collar crime enforcement initiative.