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Medicare Billing Guidelines For Physical Therapist in the US

Physical therapy practice owners in America have a lot going on from scheduling and treating clients, to running a profitable small business covering marketing, accounting, and much more. If you have to add keeping track of PT Medicare billing nuances to the list, it’s more than most therapists can handle.

Let’s take a step back for a moment and look at the bigger picture. You didn’t become a physical therapist to become a millionaire and retire early; you did it to help people. In fact, many physical therapists shy away from the financial side of running a practice because it seems at odds with your core values. But if you’re serious about helping people, your practice needs to be able to cover its costs (and yours), and that means billing and collecting payment for your services.

Billing is an inevitable part of owning a physical therapy practice, but it doesn’t need to be complicated or overwhelming. If a fair percentage of your clients have Medicare insurance, it’s important to understand Medicare billing guidelines for physical therapy and what you need to do in order to ensure that the highest possible number of claims are settled quickly and in full.

Having worked with physical therapy clients across the US, we know that there are seven important areas to understand. Once you have those under the belt, you’ll be able to bill Medicare more effectively and be reimbursed more successfully. Our guidelines focus on Medicare specifically, although many other third-party payers have similar policies.

If you are a physical therapist in Australia looking for Australian Medicare billing guidelines for physical therapy, please click here.

1. Get Credentialed

Credentialing by Medicare allows you to become an in-network provider. If you are not credentialed, you will not be allowed to treat or collect payment from Medicare patients, even if Medicare offers cover for those services.

To order to get credentialed, you will need malpractice insurance, an NPI (National Provider Identifier), a physical practice location, and a license to practice physical therapy in your state.

2. Get Your Codes Right: ICD-10 and CPT Codes

ICD-10 Codes

If you want to bill Medicare for your services, you need to diagnose your patients’ conditions in such a way as to demonstrate the medical necessity of your services. This is done with the latest version of the ICD-10 (International Statistical Classification of Diseases and Related Health Problems, revision 10). These are the most common ICD10 Codes for physical therapists.

If you’re not sure whether Medicare will reimburse you, you can give them a call before submitting your claim. You want your claims to be paid on the first submission and minimize the number of appeals you file.

CPT-4 Codes

Then you need to use the Current Procedural Terminology (CPT) 4 codes to describe the services. Most of the relevant codes for physical therapists are in the section “Physical Medicine and Rehabilitation” (97000); these include:

  • 97161: PT evaluation – low complexity;
  • 97162: PT evaluation – moderate complexity;
  • 97163: PT evaluation – high complexity;
  • 97164: PT reevaluations;
  • 97010–97028: Untimed modalities (supervised);
  • 97032–97039: One-on-one modalities (constant attendance billed in 15-minute increments);
  • 97110–97546: One-on-one procedures (therapeutic);
  • 97597–97606: Wound care management;
  • 97750–97755: Tests and measurements;
  • 97760–97762: Orthotic and prosthetic management.

Learn more about CPT codes for physical therapists here.

One-on-One vs. Group Therapy

You will also need to distinguish between one-on-one and group therapy services. For one-on-one services (individual therapy), there is direct, one-on-one contact with your clients. The CPT codes are cumulative, require you to be constantly in attendance, and are time-based (and therefore fall under the 8-minute rule).

If you work with more than one client simultaneously, it is still possible to bill for one-on-one services due to an allowance by the Centers for Medicare & Medicaid Services.

Group therapy also requires constant attendance, but there is no one-on-one contact with the client, and each client can only be billed for one unit of group therapy.

3. Keep Detailed Treatment Notes

Part of adhering to Medicare billing guidelines for physical therapy is the discipline of keeping detailed treatment notes. In addition to supporting your billing processes, defensible documentation will also offer additional protection if you are audited. Your notes should cover your patient’s history, your interventions, and your decision-making process. This will help you justify your requests for payment by demonstrating the medical necessity and improve your reimbursement success rate.

4. Understand the 8-Minute Rule

The 8-minute rule determines the number of units that a physical therapist can bill Medicare for a particular date. The rule stipulates that you need to provide direct treatment for a minimum of 8 minutes to be reimbursed by Medicare for a time-based code.

A medical billing unit is the number of times the service was performed, and your total time is dictated by how many total units of time-based services you provide:

  • 0 – 7 min = 0 units;
  • 8 – 22 min =1 units;
  • 23 – 37 min = 2 units (etc).

5. Monitor Your Client’s Payments

Collect Copayments at the Time of Service

Medicare has a copayment of 20% of the Medicare-approved amount under Medicare Part B (for outpatient therapy). The Medicare-approved amount is the amount you as the physical therapist agree to be paid for services rendered, and the client is responsible for the remaining 20%.

You should avoid waiving copays or deductibles, although you can offer financial assistance if necessary.

Keep an Eye on the Therapy Cap

Introduced in 1997, the Therapy Cap caps physical therapy and speech therapy services at a yearly amount, which does not reset for each diagnosis. You need to monitor your clients’ cap and apply for an exemption if the client needs medical necessary care despite exceeding their cap.

Get a Signed ABN

If you provide a Medicare client with services that are not covered or are not medically necessary (such as those that extend beyond the therapy cap), your client must sign an ABN. An Advance Beneficiary Notice of Noncoverage (ABN) is a signed declaration that the client will accept financial responsibility if Medicare (and it’s likely they will) denies the claim.

6. Stay on Top of Your Billing

It’s one thing to keep an eye on the Medicare aspect of your billing (by monitoring co-payments, the therapy cap, and keeping signed ABN’s), but it’s not the whole story. You also need an effective practice management software that simplifies your billing processes. In other words, if you can streamline the paperwork and admin processes of scheduling clients, reducing no-shows and billing for appointments, it will have a positive net effect on your ability to bill Medicare in a timely manner too. In addition, the ability to pre-load Medicare-approved billing codes will also improve your Medicate reimbursement success rate because your billing accuracy will be higher. Power Diary’s practice management software is ideal for physical therapists as it makes it easier to manage the end-to-end client flow from booking to remittance.

7. Contact Medicare if You’re Uncertain

One thing we’d always recommend: when in doubt, pick up the phone. If you are not sure about which billing code to use or if a service is covered by Medicare, give them a call and find out. It’s much easier to get a quick turnaround time on your claims when you’ve got everything right, and disputes or rejections are limited. It will also save you time if you don’t have to keep appealing claim denials. But the most important reason to get your Medicare billing right is that it will help you keep your practice open. If most of your clients have Medicare insurance, you will need your claims to be settled quickly for cashflow purposes.

FAQ About Medicare Billing Guidelines for Physical Therapy

When and how should I use modifiers?

There are five important modifiers that PT’s can use:

  • Modifier 59 – if you provide two distinct services during the same treatment period, you may need to apply for modifier 59.
  • KX modifier – if a client has reached the cap for their therapy but still requires additional treatment, you would include a KX modifier documenting your reasons for continuing treatment.
  • GA modifier – if you have issued an ABN (Advance Beneficiary Notice) for services that aren’t medically necessary, you should include the GA modifier to draw attention to the fact that you have an ABN on file.
  • GP modifier – this should be included with all claims for services that are performed under a physical therapy plan of care.
  • CQ modifier – if a physical therapist assistant performs more than 10% of service, the CQ modifier needs to be included to notify Medicare of their participation.

What is billable time?

This is the amount of time spent treating a client. You can’t bill for unskilled preparation time, multiple timed units (if there are multiple therapists), break times, supervision, or documentation. You should also never round up.

Medicare allows physical therapists to bill for initial evaluations in order to establish the plans of care, and, in some cases, physical therapists can bill for reevaluations if there has been a significant change in the client’s progress.

Can you bill for co-treatments?

If you bill under Medicare Part B, and there are multiple therapists, you cannot bill separately for services provided to the same client and at the same time.

If you bill under Medicare Part A, therapists can bill separate treatment sessions as long as the therapists are from different disciplines and provide different treatments.

When can you bill for a re-evaluation?

There are five different scenarios under which a reevaluation can be billed. You can bill for a reevaluation if you:

  • Notice a significant change in the client’s condition, such as a big improvement or decline in the patient that you did not anticipate.
  • Uncover new findings – this could include a new diagnosis that is added to the plan of care. It needs to be somewhat related to the original condition.
  • Find that the patient is not responding to the current POC treatment, necessitating a change to the plan of care.
  • Are treating a client with a chronic condition, and you only see the client sporadically.
  • Are mandated by the state in which you practice to carry out time-specific revaluations.

* * * * * * * * * * * * * * * * * * *

Staying on top of your billing doesn’t have to be a minefield if you understand the seven most important Medicare billing guidelines for physical therapy. The initial process of getting credentialed and establishing the right ICD-10 and CPT-4 codes to use can be a bit daunting, but once you have those covered, you’ll be well on your way to improving your reimbursement success rates from Medicare. From there, it’s a bit more straightforward as you improve your treatment notes and get to grips with Medicare’s 8-minute rule.

Then it’s important to get your billing processes on track firstly with respect to client payments (copayments, therapy caps, and ABNs) and secondly with respect to your billing software. A professional, intuitive practice management software can also help you stay on top of your administrative flow as well as streamlining billing to improve your Medicare billing accuracy.

If you know a physical therapist who tends to shy away from the financial details of their practice, please pass on this article to them. It might help debunk some of the myths and mystery around Medicare billing, which could help them turn their practice around.


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