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Medicare has modified its "incident to" rule to allow the use of leased employees when billing for the services of non-physician personnel. Under Medicare, services and supplies are covered as "incident to" a physician's services when they are: 1) an integral, although incidental, part of the physician's professional service; 2) commonly rendered without charge or included in the physician's bill; 3) of a type that are commonly furnished in physicians' offices or clinics; 4) furnished under the physician's direct personal supervision (meaning the physician is present in the office suite and immediately available to assist); and 5) furnished by an individual who qualifies as an employee of the physician. Until recently, the employment criterion could only be satisfied by a W-2 employee of the physician. Effective with services performed on or after October 1, 1996, however, a non-physician performing an "incident to" service may be a part-time, full-time, or leased employee of the supervising physician, physician group practice or legal entity that employs the supervising physician. There must be a written employee leasing agreement which provides that, although employed by the leasing company, the non-physician provides services as the leased employee of the physician/group or legal entity. The agreement must also provide that the physician/group or legal entity exercises control over all actions taken by the leased employee with regard to the rendering of medical services, and otherwise meets the common law test for an employer. The new policy will accommodate the increasing number of arrangements where ancillary personnel are not employed by the supervising physician. Claims previously adjudicated, however, are unaffected. Failure to meet the "incident to" standards when billing for the services of ancillary personnel could require a refund to the Medicare program and could subject the physician to false claims liability. (But note: services and supplies normally covered as "incident to" in an office setting generally are not billable to Medicare by a physician in a hospital setting.)

COURT RULES THAT ABSENT FOUNDATIONAL EXPERT TESTIMONY, THE PDR CANNOT BE USED AS EVIDENCE

The New Jersey Appellate Division upheld the dismissal of a parents' malpractice action against a physician who had prescribed Provera to induce the pregnant mother's menstrual period (after a false negative pregnancy test) finding that the parents failed to establish a causative link between their child's limb deformity and the use of Provera during early pregnancy. The court concluded that the current consensus of medical opinion is that there is no valid evidence of a cause and effect relationship between Provera and limb reduction abnormalities despite warnings in the 1991 Physicians Desk Reference, current at the time of treatment, of an association between Provera and congenital anomalies, including limb reduction defects. By 1993, however, the PDR omitted warning of such risks. In so ruling the court found that without foundational expert testimony, the plaintiffs could not use the PDR as evidence. This should provide good news to physicians who have long understood that drug labeling does not necessarily reflect current medical practice, and bad news to plaintiffs' counsel who wrongly seek to use deviations from the PDR to prove

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