A Primary Care Exception (PCE) clinic is a CMS-authorized care delivery model that allows resident-led primary care encounters to be billed to Medicare without continuous teaching physician presence, provided that defined supervision, service-level, and documentation requirements are met.(1,2)
The PCE model is beneficial because it supports medical education, encourages patient and community access, and supports financial sustainability — but only when governed by regulatory guidelines reinforced with structural safeguards, supervision discipline, and continuous oversight.(3)
Ensure Strict Attestation Documentation
A strict attestation policy strengthens compliance with Medicare requirements, supports accurate billing, reduces financial and audit risk, and promotes consistent documentation practices. Collectively, these benefits help protect the organization while ensuring appropriate reimbursement for services provided under the Primary Care Exception.
Clear attestation policies establish defined expectations and provide assurance that:(4)
Appropriate supervision is provided for any services conducted by residents in the PCE setting, reducing the risk of negative audit findings;
Reimbursement and claims processing requirements are met through proper documentation;
Consistent documentation in the PCE model strengthens the medical record and reduces risk for penalties related to insufficient teaching physician involvement;
Clarity and accountability are improved, facilitating accurate interpretation of the medical record by coders, compliance personnel, and external reviewers; and
Ongoing education is reinforced regarding supervision requirements and documentation standards.
Use Appropriate Modifiers
In a PCE clinic, modifiers indicate how a service was rendered. It is critical that the appropriate modifier is applied to accurately reflect the circumstances under which the service was performed and to support appropriate reimbursement when documentation meets the requirements of the PCE guidelines. Incorrect application of these modifiers may result in an increased risk of improper payments or overpayments:
Modifier GC is applied when a service has been performed in part by a resident under the direction of a teaching physician.
Modifier GE indicates a service that has been performed by a resident without the presence of a teaching physician under the primary care exception.(1)
Pay Attention to Yearly Coding Updates and Potential Code List Eligibility Changes
Consider how the COVID-19 pandemic influenced coding guidance for telemedicine services and supervision requirements. Ongoing regulatory changes and technological advancements require the medical field to remain vigilant and well informed. Each year, codes are created, revised, or retired to reflect the evolving healthcare landscape. It is considered best practice to stay current with these updates, with particular attention to any changes affecting PCE code list eligibility.
Training, Education, and Auditing Resident and Attending Coding Patterns
Residents must be appropriately trained in the application of evaluation and management (E/M) levels, based on either time or medical decision-making (MDM). However, when residents furnish services, billing must be based exclusively on MDM, in accordance with applicable teaching physician and PCE requirements.
While residents are refining their skills and learning the intricacies of medical billing, their code selection for E/M level services is often lower than that of attending physicians, which may result in systematic under-coding and associated revenue loss.(4) Attending physicians retain ultimate responsibility for the level of service reported on the claim, emphasizing the importance of consistent oversight and education.
Within PCE clinics, it is essential to tailor training and education to the distinct roles of both attendings and residents. Though the residents perform the bulk of the patient interaction work in the PCE model, the attendings are crucial to the model’s success and critical to the overall success of the residents themselves. Engaged leadership has been established as one of the core building blocks of a high-performing practice, ultimately leading to higher resident satisfaction and improved performance.(5)
Attending physicians must maintain a clear understanding of which services residents may independently perform in the attending’s absence and which services require the attending’s physical presence. Meanwhile, residents must learn to understand and identify the intent of each visit, the potential billing needs, and the documentation necessary to support the services rendered.
Because residents may independently furnish both E/M and preventive services under the PCE, proficiency in differentiating between templates is critical. One example to note is the annual physical visits for commercial patients and Medicare Annual Wellness Visits. Accurate capture of all required elements is essential to ensure correct coding, billing integrity, and appropriate reimbursement.
Potential Compliance Risks
PCE clinics face several compliance risks that can jeopardize Medicare billing if not carefully managed. Key risks include attending physicians supervising more than the permitted four residents at one time, which invalidates the use of the PCE for affected encounters. Additional risk arises when clinics bill services that are not allowed under the exception, such as non-qualifying visit types or levels of service.
Compliance is compromised when the teaching physician is not immediately available in the clinic or when documentation fails to demonstrate their availability clearly. Insufficient or non-compliant documentation further increases exposure, particularly when medical records do not clearly reflect the teaching physician’s participation or include the required PCE attestation language. Finally, improper coding and billing practices — such as incorrect E/M level selection or misuse of modifiers for resident-provided services — can result in overpayments, audit findings, and potential repayment obligations.
References
Centers for Medicare & Medicaid Services. Guidelines for Teaching Physicians, Interns, & Residents (MLN006347). 2024. https://www.cms.gov/files/document/guidelines-teaching-physicians-interns-residents.pdf .
Code of Federal Regulations. “42 C.F.R. § 415.174—Primary Care Exception.” 2024. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-415/subpart-D/section-415.174 .
Cummings A, Chiu N, Evans DV, Andrilla CHA, Cawse-Lucas J. Impact of primary care exception expansion on family medicine resident billing during the COVID-19 pandemic. Fam Med. 2023;55(10):680-683.
Gallagher BD, Vohra-Khullar PD, Fuest S, et al. The primary care exception rule in Internal Medicine Residency Clinic: Benefits, Disadvantages, Best Practices, and Recommendations for Reform. J Gen Intern Med. 2025;40(6):1419-1423.
Fortuna RJ, Tobin DG, Sobel HG, et al. Perspectives of internal medicine residency clinics: a national survey of US medical directors. Education for Health. 2022;35(2):58-66.