When CMS updated the substantive portion definition for split/shared visits in 2024, most organizations adjusted their documentation templates and moved on. A year later, those same organizations are discovering that template changes alone didn’t solve the problem. Split/shared services billing now sits on published audit target lists for 2026 and 2027, external audits rose 30% per customer in 2025, and 25% of audit findings cite coding errors in hospital settings. The gap between knowing the rules exist and operationalizing them across every qualifying encounter is where audit exposure accumulates.
The financial stakes are straightforward. When split/shared services are billed correctly under the physician’s National Provider Identifier (NPI), Medicare reimburses at 100% of the physician fee schedule. When billed under the nonphysician practitioner (NPP), reimbursement drops to 85%. Research shows Medicare would have saved $194 million in 2018 if certain visits had been billed directly rather than under split/shared arrangements. That 15% differential creates both a legitimate revenue opportunity when physicians perform the substantive portion and a significant audit target when documentation doesn’t support the billing decision.
Substantive Portion Rules Changed in 2024 and Remain Current Through 2025
Split/shared visits involve a physician and NPP from the same group both providing parts of an evaluation and management (E/M) service to the same patient on the same day in a facility setting. The practitioner who performs the substantive portion bills the service under their NPI with modifier FS attached. These visits are permitted only in facility settings including hospitals, skilled nursing facilities, and emergency departments. They cannot be billed for office visits.
The 2024 rule changes, which remain current through 2025, provide two options for determining who performed the substantive portion.
The first option is time-based. The billing practitioner must spend more than 50% of the total time on the visit. Total time means all time both practitioners spend combined. If the physician spends 15 minutes and the NPP spends 20 minutes, total time is 35 minutes, the NPP performed more than half, and the NPP bills. When code selection is based on time, the substantive portion determination must also use time.
The second option is medical decision making (MDM). Under this approach, the billing practitioner doesn’t need to spend the majority of time. They need to perform the substantive elements of decision making as defined in CPT guidelines: determining the number and complexity of problems addressed, the amount and complexity of data reviewed, and the risk of complications and morbidity. CMS explicitly states that whoever performs the MDM and bills the visit must appropriately document that decision making in the medical record.
Critical care visits operate differently. Because critical care doesn’t use MDM for code selection, the substantive portion for these services must be based on time. The practitioner who spends more than half the critical care time bills the service. Prolonged services follow the same time-based requirement.
Both practitioners must be enrolled in Medicare with E/M in their scope of practice. They must be in the same group practice. The general principle is that the physician and NPP must work jointly to furnish the service.
Six Error Patterns Drive Most Split/Shared Audit Findings
Understanding where organizations make mistakes matters more than memorizing rules, because the same errors appear repeatedly across audit findings.
The first and most common error is applying pre-2024 logic. Organizations still operating under the old key component approach (history, examination, MDM) are billing incorrectly. History and examination no longer determine the substantive portion because they no longer drive E/M code selection under current CPT guidelines. Auditors reviewing pre-2024 approaches find systematic overbilling where physicians claimed substantive portions based on documentation elements that no longer qualify.
Documentation failures create the second major pattern. The medical record must identify both practitioners who performed the visit, show which one performed the substantive portion, and include the billing practitioner’s signature and date. When any of these elements are missing, the entire claim becomes vulnerable regardless of whether the service was actually performed correctly. MDaudit’s billing risk analytics flag these documentation gaps systematically rather than relying on manual chart review to catch missing elements.
Inadequate time tracking is the third pattern. When the substantive portion is determined by time, documentation must show how long each practitioner spent. “Physician rounded” or “NPP saw patient” is insufficient. Without specific time documentation, auditors default to assuming the claim was billed incorrectly, and the burden of proof shifts to the provider organization.
Missing modifier FS is the fourth pattern. Every split/shared visit must include this modifier regardless of whether the physician or NPP performed the substantive portion. CMS implemented FS specifically to create visibility into split/shared billing practices. Missing modifiers trigger both payment issues and audit flags.
Same-day separate services confusion is the fifth pattern. If a physician and NPP each see the same patient on the same day but perform completely separate services, those are not split/shared visits. Each practitioner bills for what they individually performed. Split/shared applies only when both practitioners contribute to a single billable service.
Setting violations are the sixth pattern. Split/shared billing is prohibited in office settings. If an NPP sees a patient in an office and the physician documents involvement, that’s incident-to billing with entirely different rules. Billing it as split/shared with modifier FS violates the setting requirement and renders the claim noncompliant.
Published Audit Targets Make Split/Shared Scrutiny Predictable
Federal auditors are targeting split/shared services because the billing approach creates significant revenue differences with relatively straightforward documentation requirements that many organizations violate. With external audits rising 30% and average at-risk amounts of $17,000 per audit, financial exposure from systematic split/shared errors compounds quickly.
Recovery Audit Contractors (RACs) have a clear advantage with these claims. They can easily identify split/shared visits through modifier FS, select samples, request records, and check for the specific documentation elements CMS requires. When records fail to identify both practitioners, fail to show who performed the substantive portion, or lack appropriate signatures, the auditor disallows the claim.
The percentage difference between physician and NPP rates makes these findings expensive. A typical hospital E/M visit might reimburse $150 under the physician rate and $127.50 under the NPP rate. When an auditor reviews 30 split/shared claims and finds half improperly documented, the recoupment calculation starts at the rate differential per claim and scales from there, with potential extrapolation if the error rate is high enough.
Commercial payers increasingly follow Medicare rules for split/shared billing. They credential NPPs, recognize the 85% rate, and audit for compliance with split/shared requirements. With denial rates exceeding 10% at a growing share of organizations, split/shared errors contribute directly to deteriorating revenue cycle performance.
In 2025, HHS reported $16.61 billion in recoupments from provider enforcement actions. Split/shared billing sits on the published audit target list for 2026 and 2027 alongside critical care, observation services, and the Two-Midnight Rule. Organizations that haven’t tightened their split/shared processes should treat this as a direct signal.
Compliant Documentation Requires Time Tracking, Decision-Making Attribution, and Modifier FS
Fixing split/shared billing starts with education that goes beyond a single training session. Physicians and NPPs need to understand that history and examination no longer determine the substantive portion. They need to know both options (time and MDM) and which applies to their encounters. This education must be reinforced continuously because the rules apply to every qualifying encounter.
Time tracking deserves specific operational attention. Document start and stop times for each practitioner. “Patient seen 14:00 to 14:25” shows the NPP spent 25 minutes. “Physician rounded 14:10 to 14:20” shows 10 minutes. Combined time is 35 minutes. The NPP spent more than half and bills the service. Without this level of specificity, the documentation doesn’t support the billing decision.
MDM documentation requires capturing who made or approved the management plan, who took responsibility for that plan with its inherent risks, and who addressed the complexity of problems. When using this approach, the billing practitioner’s documentation must reflect substantive decision-making components, not just that they “reviewed” what the NPP documented. MDaudit’s compliance audit workflows structure this review process so auditors can systematically evaluate whether MDM documentation supports the practitioner who billed the service.
Billing systems need configuration to support compliant workflows. The practice management system should flag split/shared visits during charge entry, require modifier FS, and prompt for verification that documentation elements are present before the claim submits. Automated checks catch errors before they become denials or audit findings.
Internal auditing of split/shared claims provides early warning. Pull a sample monthly, review documentation against CMS requirements, and look for missing elements, inadequate time documentation, or substantive portion determinations that don’t match what’s in the record. When errors surface, correct prospectively and evaluate whether historical claims need review.
Correct Split/Shared Billing Protects Both Revenue and Audit Position
Organizations billing split/shared services correctly capture the full physician rate when documentation supports it while maintaining a defensible position when audits arrive. A hospitalist group seeing 50 split/shared patients daily generates roughly 18,000 encounters annually. If half appropriately bill under the physician based on who performed substantive portions, proper billing captures that 15% differential where legitimately earned.
Organizations that overclaim physician rates when NPPs performed the substantive portion create audit exposure that costs more than the incremental revenue ever generated. A six-figure extrapolated recoupment eliminates years of incremental billing gains.
MDaudit’s revenue integrity suite helps revenue integrity teams track split/shared billing patterns: what percentage bills under physicians versus NPPs, whether that distribution aligns with actual practice patterns, and whether denial rates on split/shared claims signal documentation problems requiring intervention rather than just appeals.
Compliance risk scoring should weight split/shared billing appropriately given published audit targets. With audits increasing year-over-year and coding errors cited in a quarter of findings, split/shared services deserve proactive oversight proportional to their audit risk profile.
CMS Will Continue Auditing Split/Shared Services Through Modifier FS Visibility
CMS will continue monitoring split/shared billing through modifier FS. They will audit these services. They will expect documentation demonstrating compliance with substantive portion rules. The 2024 changes remaining current through 2025 are not transitional guidance. They are the operating standard.
Organizations that haven’t operationalized these requirements carry compliance exposure that increases with every split/shared claim submitted. The guidance exists, the audit targets are published, and modifier FS gives CMS the data visibility to identify high-volume split/shared billers for targeted review.
Split/shared billing remains both a legitimate revenue opportunity and an active audit risk. Organizations that build compliant documentation workflows, train their providers on current rules, and audit their own claims proactively capture appropriate reimbursement while defending their billing when reviews arrive. MDaudit’s billing compliance programs provide the audit infrastructure, documentation tracking, and risk analytics that make split/shared compliance operationally sustainable rather than a recurring source of audit findings.
